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24 June 2014
South Euclid Attorney Ordered to Pay $523,000 in Restitution, Placed on Home ConfinementRead the Press Release
A South Euclid attorney was ordered to pay $523,253 in restitution and was sentenced to six months of home confinement for failing to report and pay employment taxes, said United States Attorney Steven M. Dettelbach and Kathy Enstrom, Special Agent in Charge of the IRS' Cincinnati Field Office.
Ronald L. Rosenfield, 70, pleaded guity to a criminal information earlier this year.
“The IRS Criminal Investigation Division takes these violations of law very seriously,” Enstrom said. "Employment tax fraud can also impact employees, who may see future benefits such as social security, Medicare and Unemployment Compensation reduced or eliminated because of their employers not complying with the law.”
The unpaid taxes consisted of income taxes and FICA taxes withheld from the wages paid by his law firm, Ronald Rosenfield Co., L.P.A., including his own wages, for the eighteen consecutive calendar quarters from December 2006 through March 2011, according to the information. The information also alleged that Rosenfield failed to report and pay an unspecified amount of additional employment taxes for all of the prior quarters dating back to June 2001.
At all relevant times, Rosenfield retained a national payroll firm, which prepared the law firm’s required employment tax returns for him to file with the Internal Revenue Service. Rosenfield, however, did not file any of those returns and made no payments of the taxes reported on those returns, according to the information. Moreover, the information alleged that Rosenfield claimed credits on his personal income tax returns for his unpaid income tax withholdings.
The case was prosecuted by Assistant United States Attorney Justin J. Roberts, following an investigation by the Internal Revenue Service – Criminal Investigation, Independence, Ohio.
Six Charged in Manhattan Federal Court for Operating Illegal Prescription Drug Ring Out of Bronx Grocery StoreRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and William J. Bratton, Commissioner of the New York City Police Department (“NYPD”), announced today criminal charges against CARLOS PANIAGUA, a/k/a “Carlos,” a/k/a “Carlito,” a/k/a “Cee-lo” (“CARLOS PANIAGUA”), JOSE OSVALDO PANIAGUA JR., a/k/a “Osvaldo,” a/k/a “Calvo” (“OSVALDO PANIAGUA JR.”), JOSE RAFAEL PANIAGUA, a/k/a “Rafaelito” (“RAFAEL PANIAGUA”), JOSE OSVALDO PANIAGUA SR., a/k/a “Nano,” a/k/a “Viejo” (“OSVALDO PANIAGUA SR.”), JOAN TORRES, a/k/a “Ronco,” and JOSE BORGEN-REYES, a/k/a “Benny,” a/k/a “Benny Blanco,” a/k/a “Scar,” for operating a massive prescription drug diversion ring, including the trafficking of both oxycodone and expensive HIV medication, out of Joaquin Grocery & Deli, a grocery store in the Bronx. CARLOS PANIAGUA, JOSE OSVALDO PANIAGUA JR., and TORRES were arrested yesterday and were presented in Manhattan federal court before Magistrate Judge James C. Francis IV. JOSE OSVALDO PANIAGUA SR. surrendered to authorities last night and will appear in Manhattan federal court before Magistrate Judge Michael H. Dolinger later today. BORGEN-REYES was previously in custody in Burlington County, New Jersey, and will be transferred to federal custody at a later date. JOSE RAFAEL PANIAGUA remains at large. Concurrently with the arrests of the defendants yesterday, and with the assistance of the New York City Law Department, the doors to the Joaquin Grocery were padlocked pursuant to a judicial order from Bronx Supreme Court.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, instead of earning an honest living at their grocery store, the defendants turned it into a drug market that took advantage of impoverished Medicaid beneficiaries, spawned violence in its neighborhood, and endangered public health and safety. Today the defendants face prison time for their actions, and the Joaquin Grocery is thankfully closed for business.”
FBI Assistant Director-in-Charge George Venizelos said: “As alleged, the defendants placed their own financial gain over the public’s health and safety. They defrauded Medicaid and the U.S. taxpayers while threatening the health of patients whose prescriptions were filled with diverted, mishandled and repackaged medications. We will continue to work with our law enforcement partners, including the NYPD, to prevent the illegal sale and misbranding of pharmaceuticals.”
Police Commissioner William J. Bratton said: “These individuals illegally amassed large quantities of prescription narcotics for resale and endangered the health of potential recipients using dangerous methods of repackaging and storage. Thanks to the efforts of our investigators, our federal law enforcement partners, and the prosecutors involved in this case, this illegal prescription drug ring has been shut down.”
According to the Complaint unsealed yesterday in Manhattan federal court, and statements made yesterday in court, it is alleged that:
All of the defendants except BORGEN-REYES currently operate Joaquin Grocery & Deli (the “Joaquin Grocery”), a grocery store at 598 Morris Avenue in the Bronx, New York. In addition to selling grocery products, the Joaquin Grocery has operated for years as a marketplace for Medicaid Beneficiaries to sell their Medicaid-reimbursed prescription medication, including Oxycontin, Percocet, and expensive HIV medications. The successful drug trade at the Joaquin Grocery has led to numerous acts of violence both inside the store and in its immediate vicinity. For example, in October 2010, a former competitor of the Joaquin Grocery was shot twice, including once in the head, while attempting to steal customers from the Joaquin Grocery just a few stores down. In March 2014, OSVALDO PANIAGUA SR. and RAFAEL PANIAGUA were held up at gunpoint inside the Joaquin Grocery in an apparent drug robbery.
The drug transactions at the Joaquin Grocery typically took place in a small room behind a door at the back of the store, where Medicaid Beneficiaries provided their pill bottles to the defendants for cash. With respect to non-controlled medication such as HIV medication, the defendants removed the patient labels from the medication bottles with lighter fluid, which contains toxic substances, so that the bottles appeared brand new and could eventually be re-sold to pharmacies. With respect to controlled medication such as Oxycontin, the defendants amassed large quantities of pills and re-sold them on the street.
Search warrants were executed at the Joaquin Grocery and at 532 Tinton Avenue, Apt. 1C, which is a stash-house used by the Paniaguas. Search warrants were also executed on two cars that the Paniaguas used. Approximately 1,000 bottles of prescription medication and hundreds of loose pills (both controlled and non-controlled substances) were seized in the store and the stash location. Agents also seized a machete at the store, and, from the stash location, lighter fluid and cotton balls (which are typically used to remove patient labels from the medication so it can be re-sold). Agents also seized thousands of dollars in cash.
CARLOS PANIAGUA, JOSE OSVALDO PANIAGUA JR., and RAFAEL PANIAGUA are brothers who were in charge of the drug business at the Joaquin Grocery. JOSE OSVALDO PANIAGUA SR. is their father, who assisted in the purchase of prescription drugs at the Joaquin Grocery. TORRES provided armed security, operated as a lookout, and also engaged in the purchase of prescription drugs at the Joaquin Grocery. BORGEN-REYES previously played the same role as TORRES until 2012.
CARLOS PANIAGUA, OSVALDO PANIAGUA JR., RAFAEL PANIAGUA, OSVALDO PANIAGUA SR., and TORRES, of the Bronx, New York, and BORGEN-REYES, of Paterson, New Jersey, are each charged with one count of engaging in a conspiracy to distribute and possess with the intent to distribute a controlled substance and one count of engaging in a conspiracy to commit the unlawful misbranding, adulteration and wholesale distribution of prescription drugs. They each face a maximum of 25 years in prison (20 years on Count One and 5 years on Count Two). The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the investigative work of the FBI and NYPD, and thanked the New York City Law Department for its assistance.
Mr. Bharara also thanked the the FBI’s Health Care Fraud Task Force for their work in this investigation, which he noted is ongoing. The New York FBI Health Care Fraud Task Force was formed in 2007 in an effort to combat health care fraud in the greater New York City area. The task force comprises agents, officers, and investigators from the FBI, NYPD, the New York State Insurance Fraud Bureau, U.S. Department of Labor, U.S. Office of Personnel Management Inspector General, U.S. Food and Drug Administration, New York State Attorney General’s Office, New York State Office of Medicaid Inspector General, New York State Health and Hospitals Inspector General, and the National Insurance Crime Bureau.
This case is being handled by the Office’s Violent and Organized Crime Unit and Narcotics Unit. Assistant U.S. Attorney Russell Capone is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.
U.S. v. Jose Carlos Paniagua et al Complaint (signed)
Shiprock Man Sentenced to Federal Prison for Setting Fire to Former Girlfriend’s ResidenceRead the Press Release
ALBUQUERQUE – Dan Curtis Thompson, 33, of Shiprock, N.M., was sentenced today to 35 months in federal prison followed by five years of supervised release for his conviction on an arson charge. Thompson also was ordered to pay $57,415.02 to the Navajo Housing Authority to pay for damage caused by his criminal conduct. The sentence was announced by U.S. Attorney Damon P. Martinez and John Billison, Director of the Navajo Nation Division of Public Safety.
Thompson and his twin sister, Christina Thompson were arrested in Oct. 2013, on an indictment charging them with willfully and maliciously setting fire to an occupied rental unit at the Navajo Housing Authority in Ojo Amarillo, located on the Navajo Indian Reservation, on Jan. 9, 2013.
On Feb. 18, 2014, Thompson pled guilty to the indictment and admitted setting fire to his former girlfriend’s residence on Jan. 9, 2013. Thompson resided in the victim’s apartment until she ejected him after he had a “forceful physical interaction” with her. As Thompson’s resentment towards the victim grew, he began putting into place plans to burn her residence. Thompson’s sister drove Thompson to the victim’s residence on Jan. 9, 2013, where he shattered a window so he could unlock the door and enter the residence. Once inside, Thompson poured gasoline in the residence; after igniting the gasoline, Thompson fled from the residence with his sister’s assistance. Thompson admitted that he did not check to see if anyone was in the residence when he lit the fire, and that he burned the victim’s residence to retaliate against her.
Christina Thompson entered a guilty plea to the indictment on April 11, 2014, and admitted helping her brother set fire to the victim’s residence. Christina Thompson admitted driving her brother to the victim’s residence where he set the residence on fire. She also admitted helping her brother flee from the site of the arson. Christina Thompson was remanded into federal custody after entering her guilty plea and remains detained pending her sentencing hearing, which has yet to be scheduled.
This case was investigated by the Shiprock Division of the Navajo Nation Division of Public Safety and is being prosecuted by Assistant U.S. Attorney Paul H. Spiers. It was brought pursuant to the Tribal Special Assistant U.S. Attorney (Tribal SAUSA) Pilot Project in the District of New Mexico which is sponsored by the Justice Department’s Office on Violence Against Women under a grant administered by the Pueblo of Laguna. The Tribal SAUSA Pilot Project seeks to train tribal prosecutors in federal law, procedure and investigative techniques to increase the likelihood that every viable violent offense against Native women is prosecuted in either federal court or tribal court, or both. The Tribal SAUSA Pilot Project was largely driven by input gathered from annual tribal consultations on violence against women, and is another step in the Justice Department's on-going efforts to increase engagement, coordination and action on public safety in tribal communities.
Romanian National Pleads Guilty to International Internet Fraud SchemeRead the Press Release
LEXINGTON, KY - An Eastern European man has admitted his involvement in an international internet fraud ring that defrauded hundreds of purchasers of motor vehicles across the U.S.
Petrica Octavian Stoian, 27, who was extradited from Hungary to the U.S. in June 2013, pleaded guilty in federal court on Monday to one count of conspiring to commit wire fraud.
As part of the scheme, the conspirators used websites, such as eBay.com and Autotrader.com to offer non-existent vehicles for sale. Members of the conspiracy negotiated with victims via telephone and e-mail and instructed them to electronically transfer the purchase funds using Western Union, MoneyGram, or bank wire transfers. The funds were first received by conspiracy members in the U.S. and then resent to co-conspirators abroad.
During his plea in federal court, Stoian admitted his involvement in the conspiracy. Specifically, Stoian acknowledged that he used numerous fraudulent identities to open bank accounts in Europe, which were used to receive funds from the U.S.
Eight other members of the conspiracy have already pleaded guilty and seven are currently awaiting sentencing. Stoian is scheduled to be sentenced on September 22, 2014 before U.S. District Judge Joseph M. Hood. He faces up to 20 years in prison and a $250,000 fine. However, the Court must consider the U.S. Sentencing Guidelines and applicable federal statutes before imposing a sentence.
This investigation was conducted by special agents with the U.S. Secret Service, Lexington Resident Office, in coordination with international law enforcement agencies.
Assistant U.S. Attorneys Erin Roth and Jordi de Llano prosecuted this case on behalf of the federal government.
Rochester Woman Pleads Guilty to Conspiring to Defraud the United StatesRead the Press Release
ROCHESTER, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Kelly Nicole Borger, 31, of Rochester, N.Y., and Los Angeles, CA, pleaded guilty before U.S. District Judge David G. Larimer to conspiring to defraud the United States. The charge carries a maximum sentence 20 years in prison, a fine of $1,064,702, or both.
Assistant U.S. Attorney John J. Field, who is handling the case, stated that from April 2011 to April 2012, Borger conspired with Michael Carney of Los Angeles, CA, to prepare and submit false income tax returns. Borger emailed Carney the names and other identifying information of 40 individuals in Rochester known to Borger. Carney then prepared 50 fraudulent tax returns in the names of these individuals claiming undeserved tax refunds totaling $532,351. Borger received at least $169,000 for her role in conspiracy.
The plea is the culmination of an investigation by Special Agents of the Internal Revenue Service, under the direction of Shantelle P. Kitchen, Acting Special Agent in Charge, New York Field Office.
Sentencing is scheduled for September 17, 2014 at 3:00 p.m. before Judge Larimer.Rochester Doctor Sentenced for Illegal Drug TraffickingRead the Press Release
BUFFALO, N.Y. – U.S. Attorney William J. Hochul announced today that John E. Maye, 59, of Rochester, N.Y., who was convicted following a federal jury trial of unlawful distribution and dispensing of a controlled substance, was sentenced to 12 months in prison by Chief U.S. District Judge William M. Skretny.
Assistant U.S. Attorney Frank T. Pimintel, who handled the case, stated that between 2004 and 2006, the defendant, a licensed physician, authorized nearly 10,000 prescriptions for medications such as Hydrocodone, Xanax, Loritab, Vicodin, Valium, and Ambien. Maye issued the prescriptions over the internet without ever seeing the estimated 12,000 patients. Evidence presented by the Government at trial showed that the defendant grossed $1,100,000 through this activity.
“This doctor took an oath to ‘first, do no harm,’” said U.S. Attorney Hochul. “Instead of complying with this promise, Maye used his medical practice as a front to become one of the largest drug dealers this area has seen. Coming at a time when the abuse of opiate-based pills has become a national epidemic, the efforts of the DEA and FDA in investigating this case, and the jury’s actions in convicting this defendant, must all be commended. And while all of us must continue to attack the perplexing opiod/heroin problem with demand-side programs, this case demonstrates that law enforcement can and will act forcefully with respect to those who supply the drugs – including doctors.”
“DEA Acting Special Agent in Charge James J. Hunt stated, "One of DEA’s top priorities is to identify those who facilitate opioid abuse throughout our towns, counties, states and nation and this conviction earmarks law enforcement’s goal. Throughout the past two years, DEA investigations that focused on the diversion of controlled substance pharmaceuticals and listed chemicals have soared resulting in a 213% increase in arrests. The arrest and conviction of Dr. Maye signifies how drug law enforcement has adapted traditional drug investigation techniques to allow for the identification of prescription drug trafficking organization’s sources of supply, such as Dr. Maye, and successfully bring them to justice.”
“The defendant in this case demonstrated blatant disregard for the health and welfare of the general public by illegally distributing controlled prescription drugs via the internet," said Mark Dragonetti, Special Agent in Charge of the U.S. Food and Drug Administration's Office of Criminal Investigations, New York Field Office. "We commend the US Attorney's office and our law enforcement partners for their dedicated and collaborative efforts in pursuing this prosecution."
The sentencing is the culmination of an investigation by the Drug Enforcement Administration, under the direction of Acting Special Agent in Charge James J. Hunt, New York Field Division, and the Food and Drug Administration, Office of Criminal Investigations, under the direction of Mark Dragonetti, Special Agent in Charge, New York Field Office.Rochester Doctor Pleads Guilty to Defrauding University of RochesterRead the Press Release
Rochester, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Doron Feldman, 54, of Williamsville, N.Y., pleaded guilty before U.S. District Judge Frank P. Geraci, Jr., to conspiracy to commit mail fraud. The charge carries a maximum penalty of 20 years in prison, a $250,000 fine or both.
Assistant U.S. Attorney Richard A. Resnick, who is handling the case, stated that the defendant practiced as anesthesiologist for CGF Anesthesia and Associates in Buffalo, N.Y. CGF provided anesthesia services to patients undergoing surgery at Strong Memorial Hospital, Highland Hospital and other medical facilities in the Rochester, N.Y. area. Between September 2007 and December 2009, Feldman, along with co-defendant Debra Bulter and others, devised a scheme to defraud and obtain money from the Department of Anesthesiology at the University of Rochester.
In September 2007, fraudulent invoices were submitted to the Department of Anesthesiology for services that were never provided by Feldman. In her position as Program Administrator for the department, Debra Bulter approved payment of the fraudulent invoices. From 2008 through 2010, the Department of Anesthesiology paid fraudulent fees totaling approximately $1,460,000 with the defendant receiving approximately $630,000 of that amount.
“Attempts to steal money are always wrong, but when the scheme involves health care, such fraud drives up the costs for all Americans,” said U.S. Attorney Hochul. “What makes this crime even worse is that the defendant violated his oath, his employer and the public.”
Debra Bulter has been convicted of conspiracy to commit mail fraud and money laundering and is awaiting sentencing.
The plea is the culmination of a joint investigation on the part of the Internal Revenue Service, under the direction of Shantelle P. Kitchen, Acting Special Agent in Charge, New York Field Office, and the United States Postal Inspection Service, under the direction of Shelly Binkowski, Acting Inspector in Charge, Boston Division, United States Postal Inspection Service.
Sentencing is scheduled for September 24, 2014 at 3:00 p.m. before Judge Gerace.Rhonda Wright Sentenced to over Nine Years in Prison for Distribution of Methamphetamine in Great FallsRead the Press Release
GREAT FALLS) The United States Attorney's Office announced that RHONDA LEE WRIGHT, 48, of Richland, Washington, was sentenced to a term of 110 months' imprisonment, to be followed by five years on supervised release, on June 19, 2014, before U.S. District Judge Brian M. Morris. Wright was sentenced in connection with her March 18, 2014, guilty plea to possession with intent to distribute methamphetamine.
Assistant U.S. Attorney Jessica Betley told the Court in an Offer of Proof that in early February 2012, Great Falls law enforcement received information that a man from the Tri-Cities area in Washington state wanted to sell methamphetamine in Montana where he could obtain a greater profit. Law enforcement introduced an undercover agent into the investigation who learned the man and his wife, Rhonda Wright, the defendant, were willing and able to distribute methamphetamine to purchasers in Great Falls. On February 9, 2012, Wright told the agent that she and her husband would bring methamphetamine to Great Falls and asked for a $2000 up-front payment on a $5000 transaction. She asked that it be sent by "money gram" and provided her full name, the appropriate store, and zip code.
On February 11, 2012, the defendant and her husband traveled to Great Falls where they met the undercover agent. Wright produced a bread crumb container and unscrewed the bottom of the container, revealing a plastic baggie containing methamphetamine. The undercover agent paid an additional $30000 and took the methamphetamine. The methamphetamine from this transaction was sent to the DEA Laboratory. The lab concluded this substance contained 55.3 grams of actual (pure) methamphetamine.
The defendant, her husband, and the undercover agent agreed to meet again in Great Falls on February 14, 2012. After being confronted by law enforcement, agents searched the defendant's car. The largest amount of methamphetamine was concealed in a lemonade can with a hidden compartment under a false top. The DEA laboratory tested this methamphetamine and found in contained 99.9 grams of actual methamphetamine. Agents found an additional 2.9 grams of actual methamphetamine in a Pringles can with a false bottom.
The term "actual" methamphetamine refers to the purity contained in the transacted amount which is usually "cut" with inert ingredients that make the actual product less pure but more profitable as drugs are generally sold based on quantity not quality.
This investigation was conducted by the Great Falls Police Department and the United States Department of Homeland Security, Homeland Security Investigations.
Rapid City Man Indicted for Failing to Update Sex Offender RegistrationRead the Press Release
United States Attorney Brendan V. Johnson announced that a Rapid City, South Dakota, man has been indicted by a federal grand jury for Failure to Register as a Sex Offender.
Delbert Bad Yellow Hair, age 75, was indicted on May 20, 2014. He appeared before U.S. Magistrate Judge Veronica L. Duffy on June 19, 2014, and pled not guilty to the Indictment.
The maximum penalty upon conviction is 10 years’ imprisonment and/or a $250,000 fine, lifetime of supervised release, and a $100 assessment to the Federal Crime Victims Fund. Restitution may also be ordered.
The Indictment charges that between October 2013 and April 2014, Bad Yellow Hair failed to update his sex offender registration as required.
The charge is merely an accusation and Bad Yellow Hair is presumed innocent until and unless proven guilty.
The investigation was conducted by the U.S. Marshals Service. Assistant U.S. Attorney Sarah B. Collins is prosecuting the case.
Bad Yellow Hair was remanded to the custody of the U.S. Marshals Service. A trial date has not been set.
Prison Inmate Pleads Guilty to Conspiracy to Smuggle Drugs and Contraband into the Taft Correctional FacilityRead the Press Release
FRESNO, Calif. —Gerardo Alvarez-Montanez, 32, an inmate at the Taft Federal Correctional Facility, pleaded guilty Monday to conspiracy to provide and possess contraband in prison, United States Attorney Benjamin B. Wagner announced.
According to court documents, between November 2013 and February 27, 2014, Alvarez-Montanez recruited and conspired with a correctional officer to smuggle cellphones, cash, alcohol, heroin and methamphetamine into the prison in return for the payment of cash.
Correctional officer Ramon Cano, 27, of Bakersfield was charged with acceptance of a bribe by a federal official and possession with intent to distribute heroin and methamphetamine. At a status conference for Cano on Monday, a change of plea hearing was scheduled for July 28, 2014, at 10:00 a.m.
This case was the product of an investigation by the Federal Bureau of Investigation and the Office of the Inspector General, U.S. Department of Justice. Assistant United States Attorney Brian K. Delaney is prosecuting the case.
Alvarez-Montanez is scheduled to be sentenced by United States District Judge Anthony W. Ishii on September 15, 2014. Alvarez-Montanez faces a maximum statutory penalty of five years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Princeton Man Pleads Guilty to Distributing Child PornographyRead the Press Release
MINNEAPOLIS — Yesterday in federal court, a 32-year-old Princeton man pleaded guilty to one count of Distribution of Child Pornography. William C. E. Strobel, who was indicted on February 19, 2014, entered his guilty plea before United States District Judge Donovan W. Frank.
In his plea agreement, Strobel admitted that between February 2010 and December 2011 he accessed a peer-to-peer file sharing program and traded images and videos depicting the sexual exploitation of children. The defendant also admitted that he possessed on his computers and other digital media more than 20,000 images and more than 600 videos depicting minors, including children under the age of 12, engaged in sexually explicit conduct.
For his crime, Strobel faces a possible maximum sentence of 40 years in federal prison. Judge Frank will determine his sentence at a future hearing, yet to be scheduled.
This case is the result of an investigation by the Federal Bureau of Investigation and the Princeton Police Department. It is being prosecuted by Assistant United States Attorney Karen B. Schommer.
This case was brought as part of Project Safe Childhood (“PSC”), a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney offices and the Justice Department’s Criminal Division, Child Exploitation and Obscenity Section, PSC marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children and identify and rescue victims. For more information about PSC, please visit http://www.justice.gov/psc/. For more information about internet safety education, please visit http://www.justice.gov/psc/resources.html and click on the tab “resources.”Pennsylvania Man Sentenced to 27 Months in Prison for Stealing More Than 900 Pieces of Verizon Wireless MerchandiseRead the Press Release
NEWARK, N.J. - A Pennsylvania man was sentenced today to 27 months in prison for misappropriating over 900 cellular telephones, handheld devices and accessories belonging to Verizon Wireless and selling those items online for a profit, U.S. Attorney Paul J. Fishman announced.
Defense counsel: Wayne Powell Esq., Cherry Hill, N.J.
James Hopkins, 35, of Telford, Pa., previously pleaded guilty before U.S. District Judge William H. Walls to an information charging him with mail fraud. Judge Walls imposed the sentence in Newark federal court.
According to documents filed in this case and statements made in court: Hopkins worked as an account executive at a branch office for Verizon Wireless in Trevose, Pa. From February through November 2009, Hopkins placed numerous orders for Verizon Wireless cellular telephones, handheld devices and accessories in the names of existing Verizon Wireless customers without their knowledge. After arranging for the merchandise to be shipped to the home of a relative in New Jersey, the defendant manipulated Verizon’s computer database to conceal the fraudulent orders and shipments. Hopkins received $328,517 worth of stolen Verizon Wireless merchandise, which he sold on eBay for a profit of $272,290.
In addition to the prison term, Judge Walls sentenced Hopkins to serve two years of supervised release, ordered him to pay $303,623 in restitution, and forfeit $272,290.
U.S. Attorney Fishman credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, for the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Joseph B. Shumofsky of the U.S. Attorney’s Office Economic Crime Unit in Newark.
14-231Pediatrician Arrested on Child Pornography Related ChargesRead the Press Release
BOSTON – A Mashpee man, who is a semi-retired pediatrician, was arrested this morning, charged with possessing and distributing child pornography.
Dr. Daniel J. O’Hern, 64, was charged by complaint of possession of child pornography and distribution and attempted distribution of child pornography.According to the affidavit, a search was conducted at O’Hern’s home this morning following an investigation into the use of peer-to-peer (P2P) file sharing programs. During the search, numerous digital devices were seized including computers, hard drives and other media storage devices. According to the affidavit, the preliminary review uncovered numerous images of children being sexually exploited, including pubescent minor females.
O’Hern appeared before Magistrate Judge Robert B. Collings in Boston today for an initial appearance. He will remain in custody pending his detention hearing on Friday, June 27 at 1:45 p.m.
Members of the public who have questions, concerns or information regarding this case should call 617-748-3274.
If convicted, O’Hern faces up to 20 years on the distribution counts with a minimum mandatory of five years in prison and a lifetime of supervised release and up to 10 years in prison on the possession charge with a lifetime of supervised release.
United States Attorney Carmen M. Ortiz; Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service; Chief Rodney Collins of the Mashpee Police Department; and Chief Paul MacDonald of the Barnstable Police Department made the announcement today. The case is being prosecuted by Kenneth G. Shine of Ortiz’s Major Crimes Unit.
The case is brought as part of Project Safe Childhood. In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by the U.S. Attorneys Offices and the Criminal Divisions CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.
Owner of Welding Supply Business Charged with Illegal Transportation of Hazardous MaterialsRead the Press Release
The United States Attorney’s Office announced the filing yesterday of a one-count information charging Raymond George, age 65, with illegal transportation of hazardous materials in connection with his operation of George Welding & Supply in Montoursville, Pennsylvania.
According to United States Attorney Peter Smith, the information alleges that from January 2001 through January 2012, George fraudulently certified that cylinders containing compressed gases used in the welding industry were properly tested and found to be safe. The information alleges that George’s business was not authorized to test cylinders, but that George applied false markings to the cylinders which certified that they had in fact been tested. He then leased the fraudulently marked cylinders to his customers.
The government also filed a plea agreement with the defendant which must be approved by the Court.
If convicted of the offense charged in the information, George faces a maximum penalty of 5 years in prison, a maximum fine of $250,000, and a supervised release term of three years.
The case was investigated by the United States Department of Transportation, Office of Inspector General, Office of Investigations. Prosecution has been assigned to Assistant United States Attorney George J. Rocktashel.
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.
Owner of $14.5 Million Telemarketing Scam Surrenders in Southern IllinoisRead the Press Release
Follow @SDILNewsStephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced that Kristina R. Cameron, 35, of Palm Beach Gardens, Florida, surrendered herself to the United States Marshals Service in East St. Louis, Illinois, yesterday in response to an arrest warrant issued by the United States District Court for the Southern District of Illinois. The arrest warrant was issued on June 17, 2014, after a federal grand jury returned an Indictment charging Cameron with conspiracy to commit wire fraud and mail fraud. The charge carries a term of imprisonment of up to 25 years, a fine of $250,000 and five years of supervised release.
The Indictment alleges that Cameron was one of the owners of C&G Marketing Associates, LLC, a Florida corporation which, in 2009, defrauded consumers across the continent using the fictitious name, Premier Timeshare Solutions (“PTS”). PTS telemarketers worked in an office building in West Palm Beach, Florida. From there, they placed phone calls to timeshare owners, falsely representing or implying that the company had found someone who wanted to buy the person’s timeshare. In exchange for an advance fee that typically exceeded $1,000, the PTS telemarketers promised to handle all the details of the sale and send the victims the proceeds after closing. Once the victims had paid the advance fee, however (usually by giving the telemarketer their credit card information), the fraudulent company simply pocketed the money. There were no interested buyers, the closings did not occur, and the timeshares were not resold.
Victims who called PTS to check on the status of their transactions were directed to customer service representatives, managed by PTS co-owner Jose Goyos, whose goal was to perpetuate the fraud by delaying and discouraging chargebacks and complaints. To accomplish that goal, representatives would lie to victims, assuring them that despite some phony, unexpected delay, their timeshare unit was still going to be sold. Repeat callers were given a series of bogus excuses, none of which had any basis in fact. By instilling a false sense of hope, PTS aimed to delay the chargeback process beyond the time that most credit card issuers allow for disputes. Goyos was indicted in September 2013 and sentencing to 96 months of imprisonment on May 2, 2014.
The Indictment returned Tuesday charges that, after PTS was shut down in late 2009, Cameron continued to defraud consumers by opening and operating another timeshare re-sale fraud scheme known as Commercial Property Partners, LLC (“CPP”). Then, according to the Indictment, after CCP shut down in 2010, Cameron operated another fraudulent telemarketing business known as Federal Fee Recovery, LLC (“Federal Fee”). Federal Fee telemarketers called victims of timeshare re-sale scams, including PTS and CPP, and, in return for an upfront fee, falsely promised that they could help the victims recover what they had lost due to the timeshare re-sale scams.
Several others have been charged in connection with PTS and two defendants have pled guilty. Last month, the grand jury returned ten one-count indictments in connection with this scheme. On June 17, 2014, in addition to indicting Cameron, the federal grand jury returned indictments against three additional PTS employees. During a recent sentencing of Goyos, the Honorable David R. Herndon, Chief Judge of the United States District Court for the Southern District of Illinois, called timeshare resale fraud an industry that recruits recovering drug addicts to steal from the financially vulnerable – “the most despicable scam in the world.”
United States Attorney Wigginton commented: “Our prosecutions of these cases are part of our ongoing commitment to bring to justice those who perpetrate these telemarketing fraud scams. I have said this before, but it bears repeating: if you get a call from someone you do not know and trust, promising something that sounds too good to be true, it is a scam. Hang up. Then, please report the call to the proper authorities.”
This prosecution is one of nearly 60 timeshare resale fraud prosecutions brought in the Southern District of Illinois over the past four years. The case is part of an ongoing investigation by the St. Louis Field Office of the Chicago Division of the United States Postal Inspection Service, the Florida Attorney General’s Office and the Florida Department of Agriculture. The prosecution of the cases is being handled by Special Assistant United States Attorney Michael Hallock and Assistant United States Attorney Scott Verseman.
An indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge until proven guilty beyond a reasonable doubt to the satisfaction of a jury.
Nursing Facility Agrees to Repay $500,000 to Resolve Civil Overpayment AllegationsRead the Press Release
Blackhawk Lifecare Center, a skilled nursing facility in Lake View, Iowa, has agreed to pay $500,000 to resolve civil allegations that the facility, which utilized a third party therapy services provider, submitted or caused to be submitted improper therapy services claims for payment to the government. The government did not allege that Blackhawk’s care resulted in patient harm or jeopardy to patients’ conditions. As part of the settlement, Blackhawk did not admit to any liability or wrongdoing.
Specifically, the government alleged that, between January 2007 and December 2009, Blackhawk submitted claims to the Medicare system for therapy services that were not justified by its residents’ conditions. The government further alleged that, by including costs for the therapy services in cost reports submitted to the Medicaid program, Blackhawk erroneously submitted inflated cost reports.
“This agreement signifies the importance our office places on ensuring a fair marketplace for all participants in federal programs and that all participants abide by all applicable rules and regulations,” said Kevin W. Techau, United States Attorney for the Northern District of Iowa. “We appreciate Blackhawk’s full cooperation throughout the investigation and its willingness to resolve the allegations without the public expenditure of costly resources to litigate the claims.”
The allegations resolved by the settlement arose from an investigation led by the Department of Health and Human Services.
New York Woman Charged with Distributing Cocaine at Area MotelsRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced the filing yesterday of a criminal charge against Jalani Kornegay, age 33, of New York, New York. A Criminal Information filed in the United States District Court alleges that Kornegay distributed cocaine in Luzerne County on May 18, 2013.
United States Attorney Peter Smith stated that the charge is the result of an investigation by the Federal Bureau of Investigation and the Pennsylvania State Police into the sale of cocaine at motels in Luzerne and Lackawanna Counties.
Prosecution is assigned to Assistant United States Attorney John Gurganus.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this particular case, the maximum penalty under the federal statute is forty years’ imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
New Jersey School District to Adopt Service Animal Policies and Pay Fine to Resolve Justice Department InvestigationRead the Press Release
The Justice Department announced today that it reached a settlement with the Delran Township School District in New Jersey under Title II of the Americans with Disabilities Act (ADA). The agreement resolves allegations that the school district violated the ADA by refusing to allow a student with autism and encephalopathy to have his service dog in school or at school-related activities. The service dog alerts to the student’s seizures, provides mobility and body support and mitigates the symptoms of his autism.
The department found that the student’s mother spent six months responding to burdensome requests for information and documentation, and still the school district refused to allow the student to be accompanied by his service dog. Despite her efforts, the student was even prevented from bringing his service dog with him on the bus for his school’s end of the year field trip. Instead, his mother followed the school bus with the service dog in her car.
Title II of the ADA prohibits discrimination on the basis of disability in public schools. Under the ADA, public schools must generally modify policies, practices or procedures to permit the use of a service dog by a student with a disability at school and school-related activities. Because service dogs must be under the control of a handler, students often act as the handler of their own service dog; when that is not possible, the family may provide an independent handler, as the family offered to do here.
The school district worked cooperatively with the department throughout the investigation. Under the agreement, the school district will pay $10,000 to the family to compensate them for the harm they endured as a result of the school district’s actions. In addition, the school district will adopt an ADA-compliant service animal policy and provide training to designated staff on the school district’s obligations under Title II of the ADA, including requirements related to service dogs.
“ The old view of service animals working only as guide dogs for individuals who are blind has given way to a new generation of service animals trained to perform tasks that further autonomy and independence for individuals with a myriad of disabilities , ” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Civil Rights Division will vigorously enforce the ADA to ensure that students who use service animals have a full and equal opportunity to participate in all school activities with their peers.”
Enforcing the ADA is a top priority of the Civil Rights Division. Those interested in finding out more about this settlement or the obligations of public entities schools under the ADA may call the department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access the ADA website . ADA complaints may be filed by email to [email protected] .
The Civil Rights Division would like to thank the U.S. Attorney’s Office for the District of New Jersey for their assistance in this matter.
Mission Woman Charged with Child AbuseRead the Press Release
United States Attorney Brendan V. Johnson announced that a Mission, South Dakota, woman has been indicted by a federal grand jury for Child Abuse.
Terri Covey, age 41, was indicted on May 13, 2014. She appeared before U.S. Magistrate Judge Mark A. Moreno on June 20, 2014, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 15 years in custody and/or a $250,000 fine, 3 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The Indictment alleges that on or about between February 1, 2013, and February 16, 2013, in Mission, Covey did abuse, expose, torture, torment, and cruelly punish a child under 7 years of age.
The charges are merely accusations and Covey is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Federal Bureau of Investigation and the Rosebud Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Marie H. Ruettgers is prosecuting the case.
Covey was released to a third party custodian pending trial. A trial date has not been set.
Minneapolis Man Sentenced to Ten Years for Conspiring to Distribute Marijuana and Money LaunderingRead the Press Release
MINNEAPOLIS— Yesterday in federal court, United States District Court Judge Donovan Frank sentenced a 35-year-old Minneapolis man to 120 months in federal prison, followed by five years of supervised release, for conspiring to distribute marijuana and money laundering. A United States grand jury indicted Irineo Serio Moreno on March 4, 2013, on the drug charge. On July 8, 2013, the United States Attorney filed an Information charging Moreno with the money laundering charge. On July 12, 2013, Moreno agreed to plead guilty to both charges.
In his plea agreement, Moreno admitted that from at least January 2009 through December 20, 2012, he conspired with Ryan Timothy Solon, Christopher David Schumacher, Shawn Andrew Withrow, Jeremy Allen Anderson, Corey William Johns, Arthur Eugene Johns, and Matthew Ryan Waste to distribute 1000 kilograms of marijuana from California to Minnesota. In addition, Moreno admitted that he owned land in Northern California where he operated a marijuana grow farm, hiring and paying others to tend to the marijuana plants. Some of the marijuana from that farm was distributed in Minnesota.
Moreno also admitted to laundering the proceeds from the sale of the marijuana by purchasing assets including a Polaris UTV (an off-road utility task vehicle) and a trailer for $17,442.
As part of his plea agreement, Moreno agreed to forfeit to the United States the land in California and a 1999 Chevrolet Tahoe.
This case was the result of an investigation by IRS- Criminal Investigation and the United States Drug Enforcement Administration. It was prosecuted by Assistant United States Attorney LeeAnn Bell.Mexican National Sentenced to Ten Years for Heroin Trafficking ConvictionRead the Press Release
ALBUQUERQUE – Ernesto Garcia-Castro, 42, a Mexican national from Ayuquilia, Oaxaca, Mexico, illegally present in the United States, was sentenced this afternoon to ten years in federal prison for his heroin trafficking conviction. Garcia-Castro will be deported after he completes his prison sentence.
Garcia-Castro and his co-defendant Luis Arturo Plazola-Jara, 32, a Mexican national from La Palma, Nayarit, Mexico, were arrested on June 17, 2013, after law enforcement officers found more than four pounds of heroin and narcotics paraphernalia when they executed a search warrant at Garcia-Castro’s residence in southeast Albuquerque. The two subsequently were indicted and charged with conspiracy and possession of heroin with intent to distribute.
Garcia-Castro pled guilty to possession of heroin with intent to distribute on Feb. 18, 2014. Plazola-Jara entered a guilty plea to possession of heroin with intent to distribute on Feb. 6, 2014 and was sentenced to 37 months in federal prison. He will be deported after he completes his prison sentence.
This case was investigated by the Albuquerque office of the DEA and the Bernalillo County Sheriff’s Office and was prosecuted by Assistant U.S. Attorney William J. Pflugrath.
Manhattan U.S. Attorney Announces Guilty Plea of New York Accountant in Connection with the Massive Fraud at Bernard L. Madoff Investment SecuritiesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that PAUL J. KONIGSBERG – a lawyer and accountant who provided services to numerous clients of Bernard L. Madoff Investment Securities (“Madoff Securities”), and who was a personal tax and business adviser to Madoff – pleaded guilty in Manhattan federal court before United States District Judge Laura Taylor Swain. KONIGBSERG pleaded guilty to a three-count superseding information charging him with one count of conspiracy to falsify the books and records of Madoff Securities and to obstruct the administration of the tax laws, as well as two substantive books and records counts. In addition to pleading guilty, KONIGSBERG has agreed to cooperate with the Government in its ongoing investigation of the fraud at Madoff Securities.
According to the superseding information, the plea agreement, and other documents filed in connection with the case:
KONIGSBERG, a lawyer and Certified Public Accountant, was the senior tax partner of Konigsberg Wolf & Co., P.C. (“Konigsberg Wolf”) and a minority shareholder of Madoff Securities International Limited, Madoff’s London-based affiliate, making KONIGSBERG the only person outside of the Madoff family to hold an ownership interest in either Madoff Securities or Madoff International.
Beginning in at least the early 1990s, Madoff began to steer several of his investors towards KONIGSBERG’s accounting practice, particularly certain long-time investors in whose accounts Madoff executed the most glaringly fraudulent transactions. By December 2008, when the scheme collapsed, Konigsberg Wolf was providing accounting services for Madoff Securities clients who aggregately held over 300 investment advisory accounts.
For example, after the death of one long-time Madoff client – who had recruited investors and so had been promised by Madoff corresponding annual commission payments in the form of guaranteed returns and fictitious, back-dated trades – Madoff encouraged the client’s widow to use KONIGSBERG as her accountant. Madoff and Frank DiPascali, Jr. – who has previously pleaded guilty for his role in the fraud and is cooperating with the Government – devised an investment “strategy” for the widow’s account: her money would be “invested” in United States Treasury bonds and cash equivalents for the first 11 months of each year, and in December, DiPascali would fabricate back-dated options trades in order to generate the promised returns. So, for instance, one of the widow’s accounts was invested in Treasuries and money market funds in January through November of 2003, resulting in net equity at the end of November 2003 of approximately $860,000. In January 2004, however, DiPascali back-dated fake options trades purportedly executed in December 2003 to generate an additional approximately $825,000, nearly doubling the value of the account. Each December, over the course of several years, KONIGSBERG called DiPascali to ensure that the widow’s accounts reflected the promised returns.
From time to time, moreover, Madoff and certain of his employees “amended” the holdings of some of his oldest clients, replacing statements reflecting one set of securities with revised statements, for the exact same time period, reflecting entirely different holdings and values. Because the existence of multiple, vastly different account statements for the same time risked exposing the fraud, Madoff could only ask certain trusted clients to return their statements in favor of the “amended” ones. Because KONIGSBERG serviced certain of Madoff’s most important accounts, however, he frequently returned statements in favor of the “amended” ones.
For example, in early 2003, Annette Bongiorno – one of the five defendants recently convicted of participating in Madoff’s massive fraud after a nearly six-month trial – created a year’s worth of profitable, back-dated trades in the account of another Madoff Securities client, who was also a client of KONIGSBERG’s. That client had suffered losses in a number of different investments in 2002, causing the client’s net worth to decline dramatically. In order to restore the client’s wealth, KONIGSBERG and the client went to Bongiorno’s office at Madoff Securities, and sat with her as she created and back-dated an entire year’s worth of profitable securities transactions and corresponding account statements for the client’s investment advisory account at Madoff Securities. Bongiorno then instructed KONIGSBERG and his client to return the original statements before receiving the new, “amended” statements. KONIGSBERG later used these back-dated, “amended” statements to prepare his client’s tax returns. Likewise, in 2008, KONIGSBERG sent back several months’ worth of statements for a different client, in favor of new ones reflecting millions of dollars in new transactions.
In addition to being paid for his accounting services by the dozens of clients referred to him by Madoff, KONIGSBERG also received payments directly from Madoff Securities of approximately $15,000 to $25,000 per month for over a decade. In addition, beginning in approximately 1992, KONIGSBERG arranged for a relative to be put on Madoff Securities’ payroll, receiving salary and employee benefits, despite not working at the firm. KONIGSBERG arranged for the relative to be paid by Madoff in lieu of accepting payments himself, despite the fact that the payments were on account of customers that KONIGSBERG recruited to invest with Madoff.
KONIGSBERG also provided tax and business advice to Madoff personally. For example, Madoff consulted KONIGSBERG about establishing Madoff Securities, which had for years been a sole proprietorship, as a Limited Liability Company. Madoff also consulted KONIGSBERG concerning accounting and bookkeeping issues in connection with Madoff International, the firm’s London affiliate.
In or about the early 1990s, Madoff consulted KONIGSBERG about the tax consequences of transferring funds to two other employees of Madoff Securities (“CC-1” and “CC-2”). KONIGSBERG advised Madoff that if the transfers were structured as loans and if CC-1 and CC-2 paid interest on those loans and paid back the principal of the loans, no taxes would be due and owing by either Madoff or by CC-1 or CC-2. Thereafter, KONIGSBERG arranged for a lawyer he worked with to draft promissory notes documenting the loans, and KONIGSBERG provided some of the financial terms of the loans, such as the applicable interest rate. The promissory notes therefore appeared to conform to the tax law, as Madoff, CC-1, and CC-2 desired. On December 10, 2008 – the day before Madoff was arrested – Madoff called KONIGSBERG to ask whether the loans had been converted into gifts, which would have created a substantial tax liability for Madoff. In fact, Madoff and KONIGSBERG had never discussed the possibility of reclassifying the loans into gifts, and KONIGSBERG told Madoff so.
KONIGSBERG, 78, faces a total statutory maximum sentence of 30 years in prison. A chart identifying the maximum penalties for each of the charged offenses is attached to this release. The maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
KONIGSBERG is also subject to mandatory restitution and criminal forfeiture and faces criminal fines up to twice the gross gain or loss derived from the offense. Pursuant to the agreement entered into with the Government, KONIGSBERG has agreed to forfeit $4.4 million. To the extent not already paid to the ongoing Securities Investor Protection Act liquidation proceedings of Madoff Securities, the forfeited funds will be used to compensate victims of the fraud through the Madoff Victim Fund, which is the victim remission fund established by the Manhattan U.S. Attorney to compensate victims of the fraud at Madoff Securities, and which has collected approximately $4 billion to date.
Judge Swain set a sentencing date for KONIGSBERG of September 19, 2014, at 2:00 p.m.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigations, and the United States Department of Labor. He also thanked the U.S. Securities and Exchange Commission.
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 Matthew L. Schwartz, John T. Zach, Randall W. Jackson, and Christopher D. Frey are in charge of the prosecution.
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Manhattan U.S. Attorney Announces Arrest of Amtrak Police Department Officer on Fraud, Embezzlement, and False Statement ChargesRead the Press Release
Preet Bharara, United States Attorney for the Southern District of New York, announced today the arrest of ERIC GIVENS, a police officer with the National Railroad Passenger Corporation (“Amtrak”), and the former treasurer of the national union for Amtrak police officers, on charges of wire fraud, embezzlement of union funds, and making a false statement to a federal investigator. GIVENS was arrested this morning in East Stroudsburg, Pennsylvania, and is expected to be presented this afternoon in Manhattan federal court before U.S. Magistrate Judge Michael H. Dolinger.
According to the allegations contained in the Complaint unsealed today in Manhattan federal court:
GIVENS has been employed as a police officer with Amtrak since May 1997, and was most recently assigned to Penn Station, in New York, New York. GIVENS served as the elected treasurer of the Amtrak Police Lodge 189 Labor Committee (the “Labor Committee”), the national union for Amtrak police officers, from 2003 through January 2010. During the same period, and continuing until November 2013, GIVENS also served as the elected treasurer of Amtrak Police Lodge 189 Inc. (the “Lodge”), a fraternal organization affiliated with the Labor Committee.
Starting by at least 2008, GIVENS improperly took at least $100,000 in total from the Labor Committee and Lodge by fraudulently charging personal expenses to the Labor Committee and Lodge and by withdrawing cash for his own purposes, and took steps to hide what he had done. During this period, GIVENS used the debit card of the Labor Committee to pay for, among other things, gasoline and food, and used the debit card of the Lodge to pay for, among other things, travel, hotels in multiple cities, and entertainment in New York and New Jersey. GIVENS also withdrew thousands of dollars in cash from Labor Committee and Lodge bank accounts.
GIVENS, 52, of East Stroudsburg, Pennsylvania, is charged with one count of wire fraud, one count of embezzlement of union funds, and one count of making a false statement to a federal investigator. He faces a total maximum sentence of thirty years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the outstanding work of the U.S. Department of Labor’s Office of Labor-Management Standards and its Office of Inspector General’s Office of Labor Racketeering and Fraud Investigations. Mr. Bharara also thanked the Amtrak Police Department’s Office of Internal Affairs for its assistance.
The case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorney Daniel C. Richenthal is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
U.S. v. Eric Givens Complaint 14 Mag 1299
Leader of Colombian Drug Trafficking Organization Sentenced to 27 Years in Federal PrisonRead the Press Release
Tampa, Florida – U.S. District Judge Susan C. Bucklew today sentenced Jose Samir Renteria-Cuero (51, Cali, Colombia), a/k/a “Jose Morfi,” to 27 years in federal prison for conspiring with others to distribute 5 kilograms or more of cocaine onboard a vessel subject to the jurisdiction of the United States. Renteria-Cuero pleaded guilty on February 6, 2014.
According to court documents, Renteria-Cuero was involved in maritime cocaine smuggling operations from the 1980s until at least 2009. He started out as a mechanic, servicing go-fast vessels (GFVs) and participating in GFV smuggling operations. Eventually, he acquired and built GFVs and self-propelled semi-submersible (SPSS) vessels and recruited mariners to participate in maritime cocaine smuggling operations. Renteria-Cuero worked with others to transport and store cocaine in Colombia, construct and repair GFVs and SPSS vessels, and dispatch those stateless vessels from Colombia. Renteria-Cuero acted as a “general contractor,” accepting contracts to build SPSS vessels from cocaine owners in Colombia. Renteria-Cuero provided maritime cocaine transportation services aboard stateless vessels that were used to smuggle the drugs from Colombia to Mexico, via the Pacific Ocean, in international waters - knowing and intending that the cocaine would ultimately be imported unlawfully into the United States. Many of these ventures involved at least 1,000 kilograms of cocaine.
Renteria-Cuero was arrested in Cali, Colombia in March 2012, and subsequently extradited to the United States, first arriving at a place in the Middle District of Florida.
This case was investigated by the Panama Express South Strike Force, a standing Organized Crime Drug Enforcement Task Forces (OCDETF) investigation comprised of agents and analysts from the Federal Bureau of Investigation, the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Coast Guard Investigative Service, the Naval Criminal Investigative Service, and U.S. Southern Command's Joint Interagency Task Force South. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
The case was prosecuted by Assistant United States Attorney Christopher F. Murray. The Department of Justice’s Office of International Affairs assisted with extradition of the defendant from Colombia.
Kentucky Man Pleads Guilty to Robbing Old National Bank in HarrisburgRead the Press Release
Follow @SDILNewsCasey Allen Heflin, 28, of Boaz, Kentucky, pled guilty yesterday in United States District Court in East St. Louis to an indictment charging him with robbing the Old National Bank branch facility in Harrisburg, Illinois, announced Stephen R. Wigginton, United States Attorney for the Southern District of Illinois. The indictment, returned by a Federal Grand Jury on March 4, 2014, alleged that Heflin robbed the bank on October 17, 2013. As a part of his plea, Heflin admitted that he entered the bank with a loaded firearm, pointed it at a teller, and demanded money. A total of $4197 was taken.
Sentencing was set for September 24, 2014, at 11:00 a.m. at the United States District Courthouse in East St. Louis. At that time, Heflin faces up to 20 years in prison, a $250,000 fine, and 3 years of supervised release to follow his incarceration.
Heflin has been held without bond in the custody of the United States Marshal since his arrest on the federal charge in March. He was again remanded to the Marshal’s custody to await sentencing.
The on-going federal investigation into the robbery is being conducted by the Federal Bureau of Investigation, the Illinois State Police Zone 7 Investigations unit in Carmi, and the United States Attorney’s Office.
The case is being prosecuted by Assistant United States Attorney James M. Cutchin.
Johnstown Man Failed to Report Taxable Income to IRSRead the Press Release
JOHNSTOWN, Pa. - A resident of Johnstown, Pa., pleaded guilty in federal court to a charge of filing a false tax return, United States Attorney David J. Hickton announced today.
Keith D. Nash pleaded guilty to one count before United States District Judge Kim R. Gibson.
In connection with the guilty plea, the court was advised that Nash filed an individual income tax return for the calendar year 2009, whereby he failed to report $161,267 in taxable income, resulting in an underpayment of $52,466 in income tax owed to the United States.
Judge Gibson scheduled sentencing for Dec. 8, 2014, at 11 a.m. The law provides for a total sentence of three years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney John J. Valkovci, Jr., is prosecuting this case on behalf of the government.
The Internal Revenue Service/Criminal Investigation conducted the investigation that led to the prosecution of Nash.
Jacksonville Man Sentenced in Scheme to Defraud over $904,000Read the Press Release
Jacksonville, Florida – U.S. District Judge Timothy J. Corrigan today sentenced David Allen Dinsbeer (37, Jacksonville) to 33 months in federal prison for his role in defrauding Hickory Foods, a Jacksonville company. He was also sentenced to serve a 2-year term of supervision, following his incarceration, and ordered to pay $904,373 in restitution. Dinsbeer was allowed to remain free on bond pending designation by the Bureau of Prisons for the commencement of his sentence. Dinsbeer pleaded guilty to 16 counts of conspiracy to commit wire fraud and wire fraud on March 19, 2014.
According to court records, between January 2011 and May 2012, Dinsbeer defrauded the Hickory Foods group of companies out of approximately $904,000. The Hickory Foods companies are best known for Bubba Burgers. The investigation revealed that Dinsbeer used phony supplier companies to bill for supplies which were never delivered. He then deposited the checks, which were issued on false invoices, into bank accounts for the phony companies, which he controlled. An FBI forensic accountant determined that the companies had no legitimate business expenses and that Dinsbeer withdrew money from the accounts and used the accounts to pay his personal expenses. According to court records, Dinsbeer conspired with an employee of Hickory Foods companies in order to carry out the scheme.
This case was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Dale Campion.
Jacaman SentencedRead the Press Release
LAREDO,Texas – Robert Jacaman Sr., 60, former owner of Jacaman Guns and Ammo, has received his federal sentence for conspiring to smuggle firearm ammunition and magazines to Mexico, announced United States Attorney Kenneth Magidson along with Special Agent in Charge Janice Ayala of Homeland Security Investigations (HSI) in San Antonio and Special Agent in Charge Robert Elder of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Jacaman pleaded guilty Jan. 28, 2014. Now a convicted felon, he surrendered his federal firearms license, is no longer a firearms dealer and is prohibited from possessing firearms, ammunition and destructive devices.
“Today’s sentence is a direct result of the dedicated efforts of HSI, the U.S. Attorney's Office and our law enforcement partners in creating a safer community for the citizens of Laredo and the surrounding area,” said Ayala. “Seizing illicit weapons and proceeds, and arresting those who attempt to illegally use and smuggle weaponry is a priority for HSI.”
Today, visiting U.S. District Judge Keith P. Ellison handed Jacaman a total sentence of 60 months in federal prison to be immediately followed by three years of supervised release. He was further ordered to pay a $4,000 fine. At the hearing, Jacaman testified that he is currently blind and in constant physical pain due to a motorcycle injury in 1984 and requires around-the-clock attention. In handing down the sentence, Judge Ellison noted Jacaman had those ailments when he committed the crime and, although sympathetic to his ailments, believed the Bureau of Prisons could accommodate someone with his medical conditions.
“Enforcing the federal firearms laws through a cooperative effort with ATF Industry Operations, as well as Laredo Police Department and Border Patrol is paramount to our Frontline Strategy of utilizing our resources to have the greatest impact,” said Elder. “While 99% of federal firearms licensees abide by ATF regulations, it is paramount that we remain vigilant against the outlier who markets firearms illegally."
Jacaman had admitted to unlawfully conspiring with others to fraudulently and knowingly export .223 caliber and 7.62 mm ammunition and high capacity rifle magazines designed to fit AR 15-type and AK47-type firearms, contrary to the Arms Export Control Act. Several violations Jacaman committed as part of the conspiracy were discussed with federal U.S. Magistrate Judge Diana Song Quiroga, who presided over the guilty plea in January.
Jacaman admitted being in direct contact with Oswaldo Roberto Borrego-Ramos, 32, aka “Baldo,” of Nuevo Laredo, Tamaulipas, Mexico, during the conspiracy, who negotiated the purchase and delivery of the ammunition and firearm magazines with Jacaman. Borrego-Ramos would then send couriers to deliver cash to Jacaman and others to pick up the items to smuggle them into Mexico. In one instance, Jacaman even advised Borrego-Ramos of an outstanding balance which he had not paid for prior sales.
Another co-defendant, Alejandro Rivera-Ruiz, 39, of Laredo, admitted delivering more than $100,000 to Jacaman on behalf of Borrego-Ramos. According to court documents, Borrego-Ramos told agents he was working for “Los Zetas” Mexican criminal organization, supplying them with firearms, ammunition and firearm accessories such as firearm magazines from various sources, including Jacaman.
On March 14, 2012, authorities arrested Mexican nationals Abraham Garcia-Perguero, 41, and Maria Isabel Rodriguez-Olivio 38, who had just received 27,000 rounds of .223 caliber ammunition from Jacaman’s gun store. They admitted they were on their way to deliver the ammunition to an awaiting Mexican truck driver who would smuggle the ammunition to Mexico. They admitted working for Rivera-Ruiz and Borrego-Ramos.
Borrego-Ramos, Rivera-Ruiz and the two Mexican Nationals have all pleaded guilty and are serving their sentences in federal prison for their respective crimes.
Also sentenced today were Atanacio “None” Gonzalez-Torres, 45, Jose Luis Estrada, 25, who had all also pleaded guilty for their roles in this conspiracy. Jacaman’s wife, Veronica Jacaman, 43, who was convicted of the misdemeanor offense of failure to record a firearm transaction by a firearms dealer, will serve six months and pay a $1,000 fine, while Gonzalez-Torres and Estrada were ordered to serve 28 and 21 months, respectively for their conviction of smuggling goods from the U.S.
The ammunition and magazines referenced in this indictment were intercepted before being delivered to Mexico.
Jacaman, his wife and Estrada were permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.
The case is being investigated by Homeland Security Investigation and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) with the assistance of the Laredo Police Department. Assistant United States Attorney Jose Homero Ramirez is prosecuting this case.
Inmate at USP Canaan Charged with Assault with Intent to Murder Another InmateRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that a federal grand jury sitting in Scranton today indicted Joseph Wing, age 27, an inmate at the United States Penitentiary Canaan in Waymart, Pennsylvania, for assaulting another inmate with intent to commit murder.
According to United States Attorney Peter Smith, the grand jury alleges that Wing committed the assault on May 16, 2014, in the prison.
Wing is also charged with assault resulting in serious bodily injury.
The charges against Wing resulted from an investigation by the Federal Bureau of Investigation and Bureau of Prisons staff.
If convicted, Wing faces up to 20 years in prison and a $250,000 fine.
The case is being prosecuted by Assistant U.S. Attorney Francis P. Sempa.
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.
Information: Federal Court ArraignmentsRead the Press Release
The United States Attorney's Office today announced that those persons listed below were arraigned before the U.S. Magistrate and the indictments handed down by the Grand Jury unsealed.
Appearing before U.S. Magistrate Judge Lynch in Missoula on June 24, 2014 and entering pleas of Not Guilty were:
- NYA BRACKETT, a 41-year-old resident of Missoula, appeared on charges of wire fraud, theft of government property and false statements. If convicted of the most serious charges contained in the indictment, BRACKETT faces 20 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by the Social Security Administration Office of Inspector General. PACER Case Reference: 14-34
- RY MARK FOX, a 47-year-old resident of Hamilton, appeared on charges of false statements, use of immigration documents by fraud. If convicted of the most serious charge contained in the indictment, FOX faces 10 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by Homeland Security Investigations. PACER Case Reference: 14-31
Appearing before U.S. Magistrate Judge Strong in Great Falls on June 24, 2014 and entering pleas of Not Guilty were:
- HN CHANCE HOULE, a 50-year-old resident of Box Elder, appeared on charges of bribery and obstruction of justice. If convicted of the most serious charges contained in the indictment, HOULE faces 20 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by U.S. Department of Interior Office of Inspector General, Federal Bureau of Investigation, Internal Revenue Service and Environmental Protection Agency. PACER Case Reference: 14-45
- HN CHANCE HOULE, a 50-year-old resident of Box Elder, appeared on charges of conspiracy to embezzle tribal funds, theft from an Indian tribal organization and theft. If convicted of the most serious charges contained in the indictment, HOULE faces 10 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by U.S. Department of Interior Office of Inspector General, Federal Bureau of Investigation, Internal Revenue Service and Environmental Protection Agency. PACER Case Reference: 14-49
- HN CHANCE HOULE, a 50-year-old resident of Box Elder, appeared on charges of bribery and obstruction of justice. If convicted of the most serious charges contained in the indictment, HOULE faces 20 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by U.S. Department of Interior Office of Inspector General, Federal Bureau of Investigation, Internal Revenue Service and Environmental Protection Agency. PACER Case Reference: 14-45
- HN CHANCE HOULE, a 50-year-old resident of Box Elder, appeared on charges of conspiracy to embezzle money from an Indian tribal organization, theft from an Indian tribal organization, bribery, theft and obstruction of justice. If convicted of the most serious charges contained in the indictment, HOULE faces 20 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by U.S. Department of Interior Office of Inspector General, Federal Bureau of Investigation, Internal Revenue Service and Environmental Protection Agency. PACER Case Reference: 14-50
- CHAEL A. MORRIS, 39-year-old resident of Choteau, appeared on charges of conversion of secured property and federal agricultural loan fraud. If convicted of the most serious charges contained in the indictment, MORRIS faces 5 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by U.S. Department of Agriculture Office of Inspector General.. PACER Case Reference: 14-43
- UCE HAROLD SUNCHILD, a 69-year-old resident of Box Elder, appeared on charges of conspiracy to embezzle money from an Indian tribal organization, theft from a Indian tribal organization, theft from Indian tribal government receiving federal funds. If convicted of the most serious charges contained in the indictment, SUNCHILD faces 10 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by U.S. Department of Interior Office of Inspector General, Federal Bureau of Investigation, Internal Revenue Service and Environmental Protection Agency. PACER Case Reference: 14-47
If any of the above cases are of interest to your media organization and the community it serves, we encourage you to monitor the progress of the case regularly through the U.S. District Court calendar and the PACER system so that you stay current and not miss any important developments in the case.
To establish a PACER account, which will allow you to review documents filed in the case, please go to, http://www.pacer.gov/register.html. To access the district court's calendar, please go to https://ecf.mtd.uscourts.gov/cgi-bin/PublicCalendar.pl.
Illegal Alien Gets Maximum Sentence for Distribution of Child PornographyRead the Press Release
HOUSTON – Carmen Hernandez has been sentenced to the statutory maximum of 20 years for distributing child pornography, announced U.S. Attorney Kenneth Magidson. Hernandez, 37, pleaded guilty to the charge March 31, 2014.
Today, U.S. District Judge David Hittner handed Hernandez the maximum 240 months in in federal prison to be followed by life on supervised release. He must also register as a sex offender. Due to his illegal status in the country, he is expected to face deportation proceedings following his release from prison.
Hernandez utilized peer-to-peer software to obtain and distribute child pornography images and videos via the Internet. A savvy computer user, he had provided technological assistance to his neighbor and used their wi-fi to facilitate his criminal behavior. This unsuspecting family was then subject of a search warrant executed at the location which authorities believed was traceable to Hernandez. The investigation revealed Hernandez had access to their Internet service provider. He later admitted to the illegal activity.
Forensic analysis resulted in the discovery of child pornography images/videos on computer media belonging to Hernandez. These images included those involving bondage and children under 12 being penetrated by adults and foreign objects.
The charges were the result of an investigation conducted by members of the Houston Area Cyber Crimes Task Force of the FBI which focuses its attention on, among other things, investigating offenses involving the exploitation of children via the Internet.
This case, prosecuted by Assistant U.S. Attorney Sherri L. Zack, was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Gulfport Man Pleads Guilty to Oil Spill FraudRead the Press Release
Gulfport, Miss. – Brian K. Lee, 40, of Gulfport, pled guilty on June 24, 2014 to one count of mail fraud in connection with the Deepwater Horizon oil spill, U.S. Attorney Gregory K. Davis announced.
Lee submitted a fraudulent claim to BP’s Gulf Coast Claims Facility for lost earnings and profits which he claimed he incurred as a result of the oil spill for his loss of employment as a customer service representative at Gulf South Seafood in Biloxi and Long Beach, Mississippi. An investigation revealed that the documents and claims submitted by Brian Lee were fraudulent, the named businesses did not exist, and Lee never worked at any such company. As a result of Lee’s fraudulent scheme, a check was mailed to him in the amount of $23,541.88.
Lee will be sentenced on Thursday, October 2, 2014, at 9:30 a.m., by U.S. District Judge Sul Ozerden and faces a maximum sentence of 20 years in prison and a $250,000 fine.
This case was investigated by 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.
Georgia Man Admits Defrauding Investors Out of More Than $800,000Read the Press Release
NEWARK, N.J. – A Georgia business owner who held himself out to be an investor and loan broker admitted his role in defrauding investors of more than $800,000, U.S. Attorney Paul J. Fishman announced.
Ronnie Singleton, 41, of Lithonia, Ga., pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to Count One of an indictment charging him with conspiring to commit wire fraud.According to documents in this case and statements made in court:
Singleton owned and operated a business called Wonder World Inc. and held himself out to be a financier. Using the Internet and telephone, he met his codefendant, Michael Woodruff, 66, of Peeples Valley, Ariz., and the two agreed to work together to find investors. Singleton falsely represented that he would providing financing for real estate deals through a “European system of financing” that involved leasing financial instruments. Singleton received more than $800,000 in investors’ funds, $360,000 of which he wired to Woodruff. Instead of obtaining the promised financing for the real estate projects, Singleton instead used the investors’ money for his own personal benefit.
The count to which Singleton pleaded guilty carries a maximum potential penalty of 20 years in prison and a fine of $250,000 or twice the gross amount of any gain or loss from the offense. Sentencing is scheduled for Sept. 30, 2014. The charges against Woodruff are pending.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, for the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Jenny Kramer of the Economic Crimes Unit and Assistant U.S. Attorney Charlton Rugg of the Criminal Division.
The charges and allegations against Woodruff are merely accusations and he remains innocent unless and until proven guilty.
14-232
Defense counsel: Paul Condon Esq., Jersey City, N.J.Singleton, Ronnie Indictment
Frederick Man Sentenced for Fraudulently Receiving at Least $110,000 in Disability BenefitsRead the Press Release
Baltimore, Maryland – U.S. District Judge William D. Quarles, Jr. sentenced Charles David Jones, Sr., age 58, of Frederick, today to a year and a day in prison, followed by three years of supervised release, for theft of government property arising from his fraudulent receipt of disability benefits. Judge Quarles also ordered that Jones pay $110,000 in restitution.The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Michael McGill of the Social Security Administration - Office of Inspector General, Philadelphia Field Division.
According to his plea agreement, in March 2002, Jones filed for disability benefits with the Social Security Administration (SSA), claiming that he could no longer work and was disabled. He agreed to notify SSA if he started to work as an employee or through self-employment.Starting sometime in July 2002, Jones began working as a cook at Lohr’s Family Restaurant in Frederick. Within a few months, he was promoted to manager and head chef. Witnesses stated that Jones supervised other employees and handled some of the cooking for the restaurant himself. Jones never reported this work to the SSA.
Instead, in November 2002, Jones requested a hearing on his application for disability and filed additional forms in support of his disability benefits application. He falsely claimed that he was not working and could not work. Wage and earnings reports confirm that Jones was receiving a salary from Lohr’s Family Restaurant at this time.
On October 13, 2003, Jones purchased Lohr’s Family Restaurant. Jones continued to manage and operate the restaurant. Witnesses also confirmed that through at least August 2011, Jones remained actively involved in managing the restaurant, supervising employees, cooking, developing the menu, and running the catering side of the business.
In February 2004, Jones was awarded disability benefits by SSA, retroactively to August 2002. Jones continued to receive benefits until they were suspended in 2011. Jones received at least $110,000 in benefits due to his false application for benefits.
In March 2010, Jones signed and submitted to SSA a report claiming that he was not working, and was not able to work. He described his activities for a typical day without mentioning the restaurant.
United States Attorney Rod J. Rosenstein praised the SSA - OIG for its work in the investigation and thanked Assistant U.S. Attorney Justin S. Herring, who prosecuted the case.
Four Face Public Corruption Charges in Connection with Operation of Dayton Charter SchoolRead the Press Release
CONTACT: Fred Alverson
Public Affairs Officer
COLUMBUS, Ohio – A federal grand jury has indicted four people, alleging that they offered and accepted bribes and kickbacks as part of a public corruption conspiracy in their roles as managers and a consultant for Arise! Academy, a charter school in Dayton, Ohio.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Kevin Cornelius, Special Agent in Charge, Federal Bureau of Investigation (FBI) and Ohio Attorney General Mike DeWine whose office oversees the Ohio Bureau of Criminal Investigation (BCI) announced the indictment today.
The indictment charges Shane K. Floyd, 42, Strongsville, Ohio, who served as superintendent of Arise, Carl L. Robinson, 47, Durham, North Carolina, who operated an educational consulting business called Global Educational Consultants, and Arise board members Christopher D. Martin, 44, Springfield, Ohio and Kristal N. Screven, aka Kristal Allen, 38, Dayton, Ohio.
The indictment alleges that Floyd, Martin and Screven solicited and accepted bribes from Robinson in exchange for awarding a lucrative, unbid consulting contract to Global. The indictment says Arise paid Global $420,919 over 12 months starting in October 2008 at a time when Arise had difficulty making payments to other vendors and staff. In exchange for the consulting contract, Robinson paid Floyd more than $5,000 in cash, gave Martin cash and a trip to Las Vegas, and bribed Screven with cash and payments for a school security services company she and her husband owned.
All four are charged with conspiracy, a crime punishable by up to five years in prison, and with aiding and abetting federal programs bribery, which is punishable by up to ten years in prison. In addition, Floyd, Screven and Martin are each charged with one count of making false statements, punishable by up to five years imprisonment. Screven is also charged with one count of witness tampering for allegedly telling a witness to lie to the grand jury investigating the case. Witness tampering is punishable by up to 20 years in prison. All counts also carry potential fines of up to $250,000.
The indictment also seeks a total of $420,919 in forfeiture that the defendants will have to pay if they are convicted. The amount represents the money derived from the crimes.
Floyd, Robinson and Martin will be summoned to appear in federal court. Screven surrendered to members of the FBI’s Central Ohio Public Corruption Task Force, which includes special agents from the FBI and Ohio BCI, today. She will receive an initial appearance today before a federal magistrate in Dayton. Senior U.S. District Judge James L. Graham will preside over the case.
Arise! Academy was an Ohio Community School, commonly known as a charter school, which operated with federal funds provided through the state of Ohio.
U.S. Attorney Stewart commended the investigation by the FBI’s Central Ohio Public Corruption Task Force and Assistant U.S. Attorneys Doug Squires and Heather Hill, who are prosecuting the case.
An indictment merely contains allegations, and the defendants are presumed innocent unless proven guilty in a court of law.
Former Postmaster of Capitan Post Office Pleads Guilty to Federal Embezzlement ChargeRead the Press Release
ALBUQUERQUE – Kristi K. Sepkowitz, 55, of Alto, N.M., pleaded guilty this morning in federal court in Las Cruces, N.M., to a felony information charging her with embezzling money belonging to the United States. Sepkowitz was the Postmaster of the Capitan Post Office in Lincoln County, N.M., when she committed the offense to which she pled guilty.
In her plea agreement, Sepkowitz acknowledged that as Postmaster of the Capitan Post Office, she held a position of trust with respect to funds belonging to the U.S. Postal Service that came into her possession. Sepkowitz admitted that between Feb. 2012 and Dec. 2013, she betrayed that trust by engaging in an unlawful scheme pursuant to which she embezzled and converted funds, including cash and money orders, belonging to the U.S. Postal Service to her own use.
During the course of the scheme, Sepkowitz issued postal money orders to herself without making appropriate payment. She also took cash from daily postal deposits and used the cash for her own purposes. Sepkowitz attempted to pay back the postal funds she embezzled by writing checks on her personal bank account and depositing the checks with the daily postal deposits.
According to court filings, Sepkowitz embezzled and converted more than $450,000 in postal funds over the course of the scheme. She has fully repaid the U.S. Postal Service for the postal funds she embezzled and converted to her own use.
Under the terms of her plea agreement, Sepkowitz will be sentenced to three years of probation and required to pay a $1,000.00 fine. She remains on conditions of release pending her sentencing hearing, which has yet to be scheduled.
This case was investigated by the U.S. Postal Service, Office of Inspector General and is being prosecuted by Assistant U.S. Attorney Brock E. Taylor, of the U.S. Attorney’s Las Cruces Branch Office.
Former Louisiana State Corrections Official Pleads Guilty to Civil Rights ViolationsRead the Press Release
Acting Assistant Attorney General Jocelyn Samuels for the Justice Department’s Civil Rights Division and U.S. Attorney Walt Green for the Middle District of Louisiana announced today that a third former state corrections official has pleaded guilty to civil rights violations related to the beating of an inmate at the Louisiana State Penitentiary in Angola, Louisiana.
Mark Sharp, 33, of Amite, Louisiana, pleaded guilty today to one count of deprivation of rights under color of law and one count of making a false statement to the FBI.
Sharp’s charges were based on his conduct while employed as a captain at the Louisiana State Penitentiary. According to the factual basis filed in court in connection with his guilty plea, on Jan. 24, 2010, Sharp joined in a search to apprehend an inmate who had escaped from his assigned location. After the inmate was captured, Sharp and two other officers – Kevin Groom and C.B. – were ordered to escort the inmate, who was handcuffed behind his back, to the prison’s medical unit. The three officers got into the bed of a truck with the inmate. Sharp admitted that, during the drive to the medical unit, he repeatedly struck the inmate with a police baton. Sharp also saw C.B. kick the inmate in his head and shoulder area. Sharp then lied to the FBI during the federal civil rights investigation of the beating.
Two other former state corrections officials have been charged and convicted in connection with the attack on the inmate. Kevin Groom and Jason Giroir have both been charged and pleaded guilty to falsifying records in a federal investigation and making false statements to the FBI. Groom and Giroir await sentencing.
Sharp faces a statutory maximum sentence of 15 years in prison, a fine up to $500,000 and up to three years of supervised release following his prison term.
This matter is being handled by the the Civil Rights Division, the U.S. Attorney’s Office for the Middle District of Louisiana and the FBI. It is being prosecuted by Trial Attorney AeJean (Angie) Cha of the Civil Rights Division and Assistant U.S. Attorney Robert W. Piedrahita for the Middle District of Louisiana.
Former Lawrence Resident Sentenced for Child PornographyRead the Press Release
WICHITA, KAN. – A former resident of Lawrence was sentenced Tuesday to 87 months in federal prison for distributing child pornography, U.S. Attorney Barry Grissom said.
Christian Curtis, 27, Hays, Kan., pleaded guilty to receiving and distributing child pornography. In his plea, he admitted that investigators found more than 1,000 images of child pornography on his computer.The investigation began in March 2010 when an FBI agent in New York used a peer-to-peer file sharing network to downloaded child pornography from Curtis’ computer. Investigators followed an electronic trail to Curtis’ apartment in the 3100 block of Ousdahl Road in Lawrence. An examination of the computer showed Curtis had been chatting online, posing as a teenage girl. While posing as a girl, he solicited young boys to perform sexual acts.
His sentence will be followed by eight years on supervised release. He also was ordered to pay an $3,000 fine.
Grissom commended the FBI and Assistant U.S. Attorney Kim Martin for their work on the case.
Former Detroit Police Officer Sentenced to Prison for Leaking Information to A Drug TraffickerRead the Press Release
A former City of Detroit police officer was sentenced to prison today for leaking sensitive and confidential law enforcement information to a drug trafficker, U.S. Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by FBI Special Agent in Charge Paul M. Abbate and DEA Special Agent in Charge James Allen.
During a hearing before U.S. District Judge John Corbett O’Meara, Lamar Coody, 35, of Detroit, Michigan, was sentenced to twelve months in prison and one year of supervised release on his plea of guilty to misprision of a felony. During an FBI and DEA investigation, Coody was captured over a court-authorized wiretap leaking confidential information to a Detroit-based multi-kilogram cocaine-trafficker. Coody leaked the information while he was a sworn City of Detroit police officer. Included among the information leaked by Coody to the cocaine dealer was the fact that a Detroit police narcotics squad was investigating the dealer, and that the police had an informant deep within the dealer’s organization. In addition, Coody fixed six traffic tickets for the drug dealer, helped identify police surveillance vehicles, and provided advice to the dealer about how to explain away cash proceeds from drug sales. In return, Coody borrowed the drug trafficker’s Corvette, Range Rover, and Cadillac Escalade, borrowed money, and was wined and dined by the dealer. Coody was not directly involved in transporting or dealing drugs or drug proceeds.
Deshon Catchings, the drug trafficker who received the leaked information from Coody, was previously sentenced by Judge O’Meara to 151 months in prison for his cocaine trafficking. Six other defendants who participated in Catchings’ drug trafficking organization also have pleaded guilty and been sentenced to prison.
“By leaking information to a drug dealer under investigation, this officer jeopardized the investigation and the safety of the investigators," McQuade said. "Officers who breach their duty to serve the public will be held accountable."
The case was investigated by agents of the FBI and the DEA. It is being prosecuted by Assistant United States Attorneys David A. Gardey, Steven Cares, and B. Michael Ortwein.
Former Credit Suisse Managing Director Sentenced in Manhattan Federal Court in Connection with Scheme to Hide Losses in Mortgage-Backed Securities Trading BookRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that DAVID HIGGS, a former Managing Director in the Investment Banking Division of Credit Suisse Group (“Credit Suisse”), was sentenced today to time served in connection with a scheme to hide more than $100 million in losses in a mortgage-backed securities trading book at Credit Suisse. On February 1, 2012, HIGGS pled guilty, pursuant to a cooperation agreement, to the offense of conspiracy to falsify the books and records of the bank.
The bonds at issue were composed of subprime residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”). Once discovered, the manipulation of these bond prices contributed to Credit Suisse taking a $2.65 billion write-down of its 2007 year-end financial result. Higgs was sentenced by U.S. District Judge Alison J. Nathan.
According to the Information to which Higgs pled guilty, and statements made during court proceedings:
HIGGS was employed at Credit Suisse as a Managing Director in the bank’s London office. He reported to Kareem Serageldin, the Global Head of the Structured Credit Group in the Securities Department of Credit Suisse’s Investment Banking Division. The Structured Credit Group held and traded ABS (“Asset Backed Security”) cash bonds, which included RMBS and CMBS. HIGGS oversaw and managed a trading book known as “ABN1.” The ABN1 book was composed primarily of several thousand individual long and short subprime-related positions, and also included other securities. The long positions consisted of, among other things, various types of cash securities, including AAA-rated and non-AAA-rated cash bonds. Until March 2008, ABN1 had a net asset value of approximately $5.35 billion, approximately $3.71 billion of which consisted of ABS cash bonds, including RMBS and CMBS positions.
Pricing of Mortgage-Backed Securities
Credit Suisse traders were required at all relevant times to price securities they held at their fair value, that is, on a “mark-to-market” basis, which was determined by reference to either the current market price of the asset or liability, or the current price for a similar asset or liability. In the absence of a liquid market, Credit Suisse traders were required to look to other indicia in order to determine the fair value of the assets on their books. During this time, the ABX Index served as a benchmark for certain securities backed by home loans. It was widely understood within Credit Suisse that traders were to consult the corresponding ABX indices when pricing RMBS bonds and related products.
The Bond Pricing Scheme
The deterioration throughout 2007 of the real estate market in the United States, including the subprime housing market, led to significant reductions in valuations of mortgage-backed securities. As mortgage delinquencies increased across the country, the value of the securities backed by these mortgages decreased and the market for them became increasingly illiquid.
By late November 2007, HIGGS, Serageldin, and their co-conspirators were aware that the market for mortgage-backed securities had declined enormously. On November 28, 2007, Serageldin told HIGGS, a co-conspirator named Salmaan Siddiqui, and another co-conspirator that “the housing market [was] going down the tubes” and that they had to “find a way to sell these bonds,” i.e., mortgage-backed bonds in ABN1. As they recognized, “[t]hose bonds are going to start trading worse than the [ABX] Index.” Serageldin, Higgs, and their co-conspirators did not sell the bonds because the market prices for the bonds were substantially below the inflated value at which they marked the bonds.
From August 2007 through February 2008, Serageldin, HIGGS, Siddiqui, and their co-conspirators artificially increased the price of bonds in order to create the false appearance of profitability in the ABN1 trading book. Specifically, Serageldin directed HIGGS on numerous occasions to reach specific Profit & Loss (“P&L”) targets on a daily and month-end basis. HIGGS, in turn, instructed Siddiqui and another co-conspirator to mark the books so as to achieve the particular P&L targets specified by Serageldin, rather than to reflect the fair value of the bonds.
Credit Suisse’s ABN1 Trading Book Was Falsely Inflated as a Result of the Scheme
As a result of the scheme, there was a growing disparity between the values ascribed to the marks in the ABN1 book and the available external benchmarks, such as the ABX Index. From August 2007 through the end of that year, as ABX Index prices fell, bond prices in ABN1 that were supposed to reflect the ABX Index remained effectively stable, thereby giving the false impression to Credit Suisse senior management that the ABN1 book was profitable. On one occasion in January 2008, Serageldin expressed concern to HIGGS that the overpriced bonds were at risk of being discovered: “We should mark these down because someone is going to spot this,” he said.
The February 2008 Mark-Down
On March 20, 2008, Credit Suisse issued a press release which announced completion of its internal review and stated that the fair value reduction, or write-down, of the ABS positions – which included but was not limited to the ABNl book – was approximately $2.65 billion. Approximately $540 million of this write-down was attributable to the ABN1 trading book and included ABS cash bonds for the fourth quarter 2007 that Serageldin, HIGGS, and their co-conspirators manipulated and inflated in connection with his scheme.
Judge Nathan also sentenced HIGGS, a citizen of the United Kingdom, to no supervised release. HIGGS also was ordered to pay forfeiture in the amount of $900,000, a $50,000 fine, and a $100 special assessment.
Mr. Bharara praised the work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission for its assistance in the investigation of this case.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. 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 United States Attorney Eugene Ingoglia is in charge of the prosecution.
Former Chesapeake, Virginia Subcontractor Sentenced for Conspiracy to Commit BriberyRead the Press Release
Roderic J. Smith, 50, the co-founder and former president of a government contracting company, was sentenced yesterday to 48 months in prison, followed by one year of supervised release, for conspiracy to bribe public officials. Smith was ordered to forfeit $175,000.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Dana J. Boente, for the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office, Acting Executive Assistant Director Charles T. May, Jr., of the Naval Criminal Investigative Service (NCIS) Atlantic Operations, and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement today after sentencing by United States District Judge Henry Coke Morgan, Jr. of the Eastern District of Virginia.
On March 5, 2014, Smith pleaded guilty to a criminal information. According to court documents, Smith was the co-founder and president of a contracting company located in Chesapeake, Virginia, that sought contracting business from the United States Navy Military Sealift Command. In approximately November 2004, Smith joined an extensive bribery conspiracy that spanned four years, involved multiple co-conspirators, including two different companies, and resulted in the payment of more than $265,000 in cash bribes, among other things of value, to two public officials performing work for the Military Sealift Command, Kenny E. Toy and Scott B. Miserendino, Sr. In exchange for the bribe payments, Smith’s business, referred to as Company A in court documents, received lucrative business from the Military Sealift Command that amounted to approximately $3 million in task orders during the time period of the conspiracy.
As part of his guilty plea, Smith also admitted to engaging in a scheme to conceal his criminal activity. According to the plea agreement, Smith admitted to paying more than $85,000 to his business partner, Dwayne A. Hardman, in an attempt to prevent Hardman from reporting the bribery scheme to law enforcement authorities.
Earlier this year, four other individuals pleaded guilty in connection with the bribery scheme. On Feb. 12, 2014, Kenny Toy, the former Afloat Programs Manager for the Military Sealift Command’s N6 Command, Control, Communication, and Computer Systems Directorate, pleaded guilty to accepting bribes from Smith and others. On Feb. 18, 2014, Smith’s business partner, Dwayne A. Hardman, pleaded guilty to bribery. On Feb. 19, 2014 and April 4, 2014, respectively, Smith’s associate, Michael P. McPhail, and another Smith associate, Adam C. White, pleaded guilty to conspiracy to commit bribery.
On May 23, 2014, a grand jury in the Eastern District of Virginia indicted two individuals in connection with the bribery scheme, Scott B. Miserendino, Sr., a former government contractor who performed work for the Military Sealift Command, and Timothy S. Miller, a businessman whose company sought contracting business from the Military Sealift Command. The indictment charges Miserendino with one count of conspiracy to commit bribery, one count of bribery, one count of conspiracy to obstruct a criminal investigation and to tamper with a witness, and one count of obstruction of a criminal investigation. The indictment charges Miller with one count of conspiracy to commit bribery and two counts of bribery. The trial on these charges is scheduled to begin on Sept. 30, 2014, before Chief Judge Rebecca Beach Smith. The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case was investigated by the FBI, NCIS and DCIS. The case was prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the U.S. Attorney’s Office for the Eastern District of Virginia.Former Chesapeake, Virginia Subcontractor Sentenced for Conspiracy to Commit BriberyRead the Press Release
WASHINGTON– Roderic J. Smith, 50, the co-founder and former president of a government contracting company, was sentenced yesterday to 48 months in prison, followed by 1 year of supervised release, for conspiracy to bribe public officials. Smith was ordered to forfeit $175,000.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Dana J. Boente, for the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office, Acting Executive Assistant Director Charles T. May, Jr., of the Naval Criminal Investigative Service (NCIS) Atlantic Operations Royce E. Curtin and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement today after sentencing by Senior United States District Judge Henry Coke Morgan, Jr. of the Eastern District of Virginia.
On March 5, 2014, Smith pleaded guilty to a criminal information. According to court documents, Smith was the co-founder and the president of a contracting company located in Chesapeake, Virginia, that sought contracting business from the United States Navy Military Sealift Command. In approximately November 2004, Smith joined an extensive bribery conspiracy that spanned four years, involved multiple co-conspirators, including two different companies, and resulted in the payment of more than $265,000 in cash bribes, among other things of value, to two public officials performing work for the Military Sealift Command, Kenny E. Toy and Scott B. Miserendino, Sr. In exchange for the bribe payments, Smith’s business, referred to as Company A in court documents, received lucrative business from the Military Sealift Command that amounted to approximately $3 million in task orders during the time period of the conspiracy.As part of his guilty plea, Smith also admitted to engaging in a scheme to conceal his criminal activity that involved Smith and others paying a co-conspirator money. According to the plea agreement, Smith admitted to paying more than $85,000 to his business partner, Dwayne A. Hardman, in an attempt to prevent Hardman from reporting the bribery scheme to law enforcement authorities.
Earlier this year, four other individuals pleaded guilty in connection with the bribery scheme. On Feb. 12, 2014, Kenny Toy, the former Afloat Programs Manager for the Military Sealift Command’s N6 Command, Control, Communication, and Computer Systems Directorate, pleaded guilty to accepting bribes from Smith and others. On Feb. 18, 2014, Smith’s business partner, Dwayne A. Hardman, pleaded guilty to bribery. On Feb. 19, 2014, Smith’s associate, Michael P. McPhail, pleaded guilty to conspiracy to commit bribery. On April 4, 2014, Smith’s associate, Adam C. White, pleaded guilty to conspiracy to commit bribery.
On May 23, 2014, a grand jury in the Eastern District of Virginia indicted two defendants in connection with the bribery scheme, Scott B. Miserendino, Sr., a former government contractor who performed work for the Military Sealift Command and Timothy S. Miller, a businessman whose company sought contracting business from the Military Sealift Command. The indictment charges Miserendino with one count of conspiracy to commit bribery, one count of bribery, one count of conspiracy to commit obstruction of criminal investigations and to commit tampering with a witness, and one count of obstruction of criminal investigations. The indictment charges Miller with one count of conspiracy to commit bribery and two counts of bribery. Trial is set for Sept. 30, 2014, before Chief Judge Rebecca Beach Smith.
The case was investigated by the FBI, NCIS and DCIS. The case was prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the U.S. Attorney’s Office for the Eastern District of Virginia.Former Blackfeet Po’Ka Project Officials Sentenced for Massive Grant Fraud HHS Inspector General Claims $4.6 Million in Potential FraudRead the Press Release
GREAT FALLS -- The United States Attorney's Office announced today that former officials of the Blackfeet Tribe's Po'Ka Project, a multi-million dollar federally funded effort to address the needs of troubled youth on the reservation, were sentenced in federal court in Great Falls by U.S. District Court Judge Brian M. Morris.
FRANCIS KAY ONSTAD, 61, of Valier, the former Director of the Po'Ka Program, was sentenced to 38 months imprisonment, 3 years supervised release and $1,000,000 in restitution. Onstad had previously entered guilty pleas to Conspiracy to defraud the United States, Conspiracy to File False Claims against the United States, Theft from an Indian Tribal Government Receiving Federal Funding, and Tax Evasion.
DELYLE SHANNY AUGARE, 58, of Browning, the former Assistant Director of the Po'Ka Program, was sentenced to 44 months imprisonment, 3 years supervised release and $1,000,000 in restitution. Augare had previously entered guilty pleas to Conspiracy to defraud the United States, Conspiracy to File False Claims against the United States, Theft from an Indian Tribal Government Receiving Federal Funding, and Tax Evasion.
KATHERYN ELIZABETH SHERMAN, 67, of Browning, a former Po'Ka staffer who handled the In-Kind invoicing for the program starting in late 2010, was sentenced to 12 months imprisonment, 3 years supervised release, and $250,000 in restitution. Sherman had entered a guilty plea to a charge of Conspiracy to Submit False Claims against the United States.
DOROTHY MAY STILL SMOKING, 64, of Browning, was sentenced to 30 months' probation and $100,000 in restitution. Still Smoking had entered a guilty plea to a charge of Conspiracy to Submit False Claims against the United States.
Codefendant Charlotte New Breast entered a guilty plea and was sentenced in 2013. Dr. Gary Conti, formerly of Sand Springs, Oklahoma and a professor at Oklahoma State University, and now residing in Three Forks, was tried and convicted of bankruptcy fraud in March of 2014. That jury was unable to reach a unanimous verdict on 27 other counts and a mistrial was declared. In May of 2014, Conti was retried on the mistried counts and found guilty of 26 of 27 counts of corruption related offenses, including conspiracy, wire fraud, embezzlement and money laundering.
The Blackfeet Po'Ka Project was developed to help troubled Native American youth. Po'Ka was funded by a federal grant from 2005 through 2011 by the Substance Abuse and Mental Health Services Administration (SAMHSA) of the Department of Health and Human Services. Beginning in 2005 with a $1,000,000 federal disbursement, the grant ultimately became a $9.3 million program over a six year period (2005-2011). The Po'Ka Project was designed to become a self-sufficient program - entirely supported by the Tribe - by the end of the grant period. To achieve the goal of final self-sufficiency, the Tribe was required to provide in-kind or matching contributions to continue to secure federal payments with the idea that as federal participation declined tribal participation and investment would rise to fill the funding void left by the absence of federal dollars. It was the intent of the parties and SAMHSA that the Po'Ka Project would survive on its own once federal funding was no longer forthcoming.
An in-kind contribution is a non-cash contribution provided by non-federal third parties in support of the project funded by the grant, and its objectives. Third party in-kind contributions may be in the form of real property, equipment, supplies and other expendable property, and the value of goods and services directly benefitting and specifically identifiable to the project or program.
Only if Po'Ka met the in-kind contribution targets could they receive the maximum amount of federal money from the grant. Consistent with the sustainability objective of the grant, the Tribe's in-kind contribution requirement was the highest in the later years of the grant. The Blackfeet Tribe was required to provide $7.0 million of in-kind contributions from FYs 2009 through 2011. That created an environment where the appearance of substantial in-kind contributions became paramount if the maximum flow of federal money from the grant was going to continue.
However, the in-kind commitment could never be honestly met, so the conspirators began making up facts and documents to try and satisfy SAMHSA and the auditors that the in-kind contributions represented on their reports to SAMHSA were legitimate. They did so by inflating the figures related to in-kind contributions, assigning values to non-existent and illegitimate "contributions," and manufacturing fraudulent invoices and records to support fictional or inflated contributions. The misrepresentations as to in-kind amounts were made in monthly reports to SAMHSA and the documents were generated to placate auditors conducting a required annual audit of the Tribe's operations. These annual audits are required of tribe's accepting federal grant funds to insure that the grant funds are being used for their intended purpose and that the requirements of the contract agreement are being met. If auditors make negative findings, those findings can result in action by the federal agency to rescind the contract, demand repayment, or make an offset, where the government deducts money from future payments.
Several witnesses, whose names were used as in-kind contributors, denied preparing or signing the invoice and denied contributing time or goods to the Po'Ka Project, at least in the amount claimed.
Based on email evidence and the statements of cooperating witnesses, Onstad, Augare, and Still Smoking, along with others, conspired to make the false representations as to the in-kind contributions made to the Po'Ka Project, and then actively managed the creation of false documentation to cover the representations so that the auditors would not question the contributions and the federal money would continue flowing unabated. The false representations were in effect false claims that resulted in the expenditure of federal grant money
An audit report from the Department of Health and Human Services, Office of Inspector General, determined that $4.6 million in claims for grant payments paid to the Tribe on the basis of Po'Ka' s in-kind contribution are unsupported, inflated, or completely falsified.
Onstad and Augare embezzled from the program in a myriad of relatively minor ways - travel fraud, misuse of Po'Ka credit cards, exorbitant claims of overtime, etc. - but the most significant embezzlement came in the agreement they appeared to reach with the grant's national evaluator. Certain federal grants require the participation of a national evaluator; an outside observer whose job is to monitor the progress of the project. Onstad and Augare reached an agreement with the national evaluator whereby they would approve significant payments to the evaluator who would in turn kick back a sizable portion of what was provided to him. Between August 2008 and August 2011, Onstad and Augare approved over $475,000 in Po'Ka grant monies for the national evaluator, then doing business under an alias business name. In turn, between August 2008, and September 2011, the national evaluator transferred $231,550 to the Child Family Advocacy Center (commonly referred to as the Child Family Advocacy Fund or CFAF) bank accounts at the Wells Fargo Bank in Cut Bank, Montana.
Between September 2008 and September 2011, Onstad and Augare withdrew $225,482 from the CFAF accounts. Much of that money went into their personal accounts at Stockman Bank and from those accounts much was spent on gambling and travel.
In 2009, Onstad and Augare both filed federal income tax returns for the calendar year 2008 in which they claimed a certain amount of taxable income based on their salaries from the Po'Ka Program. However, they had also taken significant sums from the CFAF accounts, all of which constituted unreported income. By concealing that income from the Internal Revenue Service, Onstad and Augare paid approximately half of what was owed to the IRS.
The case was pursued by the Federal Bureau of Investigation and the Department of Health and Human Services' Office of Inspector General. The FBI and the IG also received substantial assistance from the Internal Revenue Service's Criminal Investigation Division.
U.S. Attorney Mike Cotter lauded the work of the FBI and the Inspector General's Office in the Po'Ka case as well as the myriad other cases investigated and prosecuted since the Guardians Project was made public in 2013. He commented when guilty pleas were entered that:
Rarely does government produce such an effective anti-corruption team as has been created by the agents of the Guardians Project. Abandoning the traditional model of "You work your case and I'll work mine", these agencies have committed themselves to mutual cooperation. Working closely together-providing each other with time, resources, and expertise-has made these investigators the champions of Indian Country communities eager to rid themselves of corruption and the abuses of trust and power."
Fontana Man Pleads Guilty to Conspiring to Distribute over 30 Pounds of MethamphetamineRead the Press Release
FRESNO, Calif. — Marco Antonio Granados, 20, of Fontana, pleaded guilty Monday to conspiring to distribute and possess with intent to distribute methamphetamine, United States Attorney Benjamin B. Wagner announced.
According to court documents, Granados admitted that on October 16, 2013, he and his cousin met with a confidential informant to negotiate the sale of 30 pounds of methamphetamine. After several minutes of negotiations, Granados and his cousin showed the informant their stash of methamphetamine that was in a large brown cardboard box in the rear cargo area of their vehicle. At this point, law enforcement personnel arrived on scene and arrested them. Officers searched the vehicle and recovered 31 individually brown wrapped and “food saver” sealed packages of methamphetamine.
This case is the product of an investigation by the Drug Enforcement Administration and the Kern County Sheriff’s Office. Assistant United States Attorney Brian K. Delaney is prosecuting the case.
Granados is scheduled to be sentenced by United States District Judge Anthony W. Ishii on September 15, 2014. Granados faces a statutory penalty of 10 years to life in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Fayette County Woman Pleads Guilty to Mail FraudRead the Press Release
Former Sheriff’s Department Employee Created False Records to Hide Theft
Charleston, W.Va. – A 44-year old Fayette County woman faces up to 20 years in prison after pleading guilty today to mail fraud, United States Attorney Booth Goodwin announced. Cheryl Gray of Hilltop, West Virginia, entered a guilty plea before United States District Court Judge John T. Copenhaver, Jr. in Charleston.
Gray is a former employee of the Fayette County Sheriff’s Department. While at the Sheriff’s Department, Gray was charged with collecting application fees for concealed weapon permits, recording fees paid, and transmitting a list to the West Virginia State Police of permits issued each month. For over six months, from October of 2012 through June of 2013, Gray kept cash payments for permits and failed to record the names of persons who paid cash on the State Police report. To disguise her theft, Gray created a false set of receipt books. The fraud resulted in losses to the State Police and Fayette County Sheriff’s Department of approximately $40,000.
Gray is scheduled to be sentenced on September 23, 2014 in Charleston.
The West Virginia State Police, Fayette County Sheriff’s Department, and the Federal Bureau of Investigation conducted the investigation. Assistant United States Attorney Blaire L. Malkin is in charge of the prosecution.
Fairview Park Man and Cleveland Company Indicted for Making Illegal Discharges into Sewer SystemRead the Press Release
An indictment was filed in federal court charging Thomas E. White, 49, of Fairview Park, and Kelly Plating Company with making illegal discharges with high concentrations of metals such as chrome and zinc into the sewer system, which in turn, after treatment, discharges to Lake Erie, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
The Kelly Plating Company is a metal plating operation located in Cleveland. White was an employee at Kelly Plating and responsible for operating the equipment which reduced the amount of pollutants discharged into the sewer system to an acceptable level, according to the indictment.
Starting around January 28, 2012, White changed the way wastewater at the Kelly Plating facility was processed. During the weekdays, White ensured that the pollution control equipment was operated properly, according to the indictment.
However, on the weekends White bypassed the pollution control equipment and discharged partially treated wastewater and sludge directly into the sewer system. These discharges contained high concentrations of chrome and zinc. This practice ended on May 19, 2012, according to the indictment.
“Our greatest resource in Ohio is our clean water,” Dettelbach said. “We will aggressively investigate and prosecute cases in which people pollute Ohio’s streams, rivers and lakes.”
“Ohio EPA will not tolerate those who blatantly disregard the law, and don’t show consideration for the health of others or the environment,” Ohio EPA Director Craig W. Butler said. “We will continue to work with our partners at the local, state and federal level to be sure responsible parties are held accountable for their actions. Ohio EPA’s Office of Special Investigations worked hard to put an end to these illegal sewer system discharges, and I commend their efforts.”
“Our nation’s environmental laws are designed to protect human health and safety from those trying to cut costs illegally,” said Randall K. Ashe, Special Agent in Charge of U.S. EPA’s criminal enforcement program in Ohio. "The metals used in this case were especially harmful, requiring proper handling and disposal. Today’s indictment by a federal grand jury demonstrates how serious these offenses are and shows that EPA will take action to protect communities from pollution.”
“Whether it’s into sewers or directly into waterways, illegal dumping is always a threat to Ohioans,” said Ohio Attorney General Mike DeWine. “My office is committed to investigating and prosecuting the intentional dumping of chemicals and the attempts to cover up those actions.”
“It was through the continuous water quality monitoring of the Northeast Ohio Regional Sewer District that it identified rising levels of pollution at its Westerly Wastewater Treatment Plant. The Sewer District then took action and identified the source,” said Julius Ciaccia, NEORSD Executive Director. “The Sewer District worked with the US EPA, the Ohio EPA and the Ohio BCI to determine the extent of the wrongdoing by Kelly Plating. The Sewer District has made significant investments to improve water quality in our region, and will not tolerate actions that jeopardize that investment.”
This case is being prosecuted by Special Assistant U.S. Attorney Brad Beeson following an investigation by the Ohio EPA, U.S. EPA, the Ohio Bureau of Criminal Investigation, and Northeast Ohio Regional Sewer District.
The statutory maximum for violating the Clean Water Act for individuals is three years in prison, one year of supervised release and a fine of $50,000 per day of violation or $250,000, whichever is larger. For corporations the maximum penalty for violating the Clean Water Act is five years of probation and a fine of $50,000 per day of violation or $500,000, whichever is larger.
If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record (if any), the defendant’s role in the offenses and the characteristics of the violations. In all cases, the sentences will not exceed the statutory maximum and in most cases they will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Edcouch Woman Charged with Embezzling More Than $90K from Halfway HouseRead the Press Release
McALLEN, Texas – Ofelia Alvarado Vallejo, 44, of Edcouch, has made an initial appearance on charges she embezzled more than $90,000 from the Mid Valley House Residential Reentry Center while working there, announced U.S. Attorney Kenneth Magidson.
Vallejo appeared before U.S. Magistrate Judge Peter E. Ormsby this morning to hear the charges outlined in a criminal information filed June 9, 2014. Judge Ormsby ordered Vallejo released upon posting a $30,000 bond.
The criminal information alleges Vallejo embezzled $90,519.70 from March 2012 through February 2013 from the Mid Valley House Residential Reentry Center.
During the one-year period beginning on March 1, 2012, Mid Valley received more than $10,000 in federal funding.
If convicted, Vallejo could face up to 10 years in federal prison and a fine of up to $250,000.
This case was investigated by Department of Justice - Office of Inspector General, with the assistance of the Edinburg Police Department. Assistant U.S. Attorney Christopher Sully is prosecuting the case.
A defendant is presumed innocent unless convicted through due process of law.Defendant Sentenced on Federal Drug ChargesRead the Press Release
United States Attorney Kenyen Brown announces that Ricardo Cruz was sentenced today in Federal Court after pleading guilty to conspiracy to possess with intent to distribute cocaine. Cruz received a sentence of 35 months imprisonment, with 5 years of supervised release to follow.
The Federal Bureau of Investigation conducted the investigation, which involved a total of 14 defendants, with the assistance of the Mobile Police Department, the Foley Police Department, the Fairhope Police Department, the Gulf Shores Police Department and the Alabama State Port Authority. The FBI presented the case for prosecution to the United States Attorney=s Office, and Assistant United States Attorney Daryl Atchison handled the prosecution of the case on behalf of the United States.
Danville Business Owner Sentenced to 10 Years for Wire Fraud and Identity TheftRead the Press Release
FRANKFORT, KY - The owner of a children’s fun and gaming center in Danville, Ky., has been sentenced to 10 years in prison for defrauding investors in his business.
U.S. District Judge Gregory Van Tatenhove sentenced 50-year-old Paul Christopher Turner on Monday, for aggravated identity theft and wire fraud. Under federal law, Turner will have to serve at least 85 percent of his prison sentence.
According to court documents, Turner used the personal identifying information of some investors without their permission and forged signatures of a notary public, in order to obtain loans and open lines of credit for his business.
Turner previously pled guilty to an indictment that alleged from approximately 2004 through 2013 he raised millions of dollars from investors to promote his company. Turner improperly lured some of that money from investors through misrepresentations and falsehoods about how the investors’ money would be used. Turner then applied some of the funds toward his own living expenses.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Dugan Wong, Inspector in Charge, United States Postal Inspection Service, Pittsburgh Division; and Rodney Brewer, Commissioner, Kentucky State Police jointly made the announcement today.
The investigation was conducted by the United States Postal Inspection Service and the Kentucky State Police. The case was prosecuted by Assistant U.S. Attorney Kenneth R. Taylor.
Dallas Man Known as “Baja Bandit” Admits Committing Armed Robberies of Local Insurance BusinessesRead the Press Release
DALLAS — A Dallas man, who admitted committing the armed robberies of insurance companies in Dallas last year, has pleaded guilty to federal charges, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Michael Dewayne Cleveland, 31, pleaded guilty this morning, before U.S. Magistrate Judge David L. Horan, to four of seven counts charged in an indictment returned by a federal grand jury in Dallas in December 2013. Specifically, Cleveland pleaded guilty to two count of interference with commerce by robbery and two counts of carrying or possessing a firearm during and in relation to a crime of violence.
Cleveland faces a maximum statutory penalty of 20 years in federal prison and a $250,000 fine for each robbery conviction. For the first firearm conviction, he faces seven years in federal prison, because he brandished the weapon, which will run consecutively to all other charges. For the second firearm conviction, he faces 25 years in federal prison that will also run consecutively to all other charges. Sentencing is set for October 15, 2014, before U.S. District Judge Ed Kindeade.
According to plea documents filed in the case, Cleveland admitted entering a Baja Insurance company office in Dallas on September 3, 2013, approaching an employee with a gun drawn and demanding money. He admitted stating, “Tell me where it’s at or I’m gonna kill you.” The employee, in fear for her life, pointed to a desk drawer. Cleveland, later dubbed the “Baja Bandit,” took the money from the drawer and left the location.
Cleveland also admitted entering a State Farm Insurance company office in Dallas on September 18, 2013, pulling out a gun, pointing it at employees and demanding money. Two employees, in fear for their lives, complied with Cleveland’s demands. Cleveland took money and credit cards from the business and fled.
Baja Insurance lost money as a direct result of the robbery, temporarily closed its office and lost several employees who feared for their safety. The State Farm office also lost money as a direct result of the robbery, temporarily closed its office and the branch made less in overall monthly proceeds. The robberies had a direct effect on both company’s revenue and commerce.
The FBI, Bureau of Alcohol, Tobacco, Firearms and Explosives and the Dallas Police Department investigated the case, and Assistant U.S. Attorney Taly Haffar is in charge of the prosecution.