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3 June 2014
Quality Egg, Company Owner, and Top Executive Plead Guilty in Connection with Distribution of Adulterated EggsRead the Press Release
Company Also Pleads Guilty To Bribery Of Public Official And Introduction Of Misbranded Eggs
Quality Egg, LLC, Austin “Jack” DeCoster, and Peter DeCoster pled guilty today in federal court in Sioux City, Iowa, in connection with the distribution of adulterated eggs in interstate commerce. As part of their plea agreements, the company and the two individuals admitted the company’s shell eggs were adulterated in that they contained a poisonous and deleterious substance, Salmonella Enteriditis, that may have rendered the eggs injurious to health.
Quality Egg, an egg production company with operations in Wright County, Iowa, pled guilty to one count of bribery of a public official, one count of introducing a misbranded food into interstate commerce with intent to defraud, and one count of introducing adulterated food into interstate commerce. Austin “Jack” DeCoster, age 79, of Turner, Maine, and Peter DeCoster, age 51, of Clarion, Iowa, each pled guilty to one count of introducing adulterated food into interstate commerce.
As part of its plea agreement, Quality Egg acknowledged that, on at least two occasions in 2010, its employees gave a cash bribe to an Inspector of the U.S. Department of Agriculture (“USDA”). The USDA Inspector’s job responsibilities included inspecting shell eggs at one or more of Quality Egg’s production facilities in Iowa. Quality Egg admitted its employees provided the bribe to the USDA Inspector (now deceased) in an attempt to corruptly influence the Inspector to exercise his authority to release pallets of retained eggs for sale without re-processing the eggs as required by law and USDA standards. The eggs had been retained or “red tagged” for failing to meet minimum USDA quality grade standards.
On September 12, 2012, former Quality Egg employee Tony Wasmund, age 63, pled guilty to one count of conspiracy to bribe a public official, sell restricted eggs with intent to defraud, and introduce misbranded food into interstate commerce with intent to defraud and mislead. Wasmund is scheduled to be sentenced before United States District Court Judge Mark W. Bennett on September 12, 2014, at 8:00 a.m.
Quality Egg also pled guilty to introducing misbranded eggs into interstate commerce with the intent to defraud. As part of its plea agreement, Quality Egg admitted that, beginning no later than January 2006 and continuing through August 12, 2010, its employees affixed labels to egg shipments that indicated false expiration dates with the intent to mislead state regulators and retail egg customers regarding the true age of the eggs. Quality Egg acknowledged that there were a number of ways that the company mislabeled older eggs with newer processing and expiration dates prior to shipping the eggs to customers in California, Arizona, and other states. Sometimes Quality Egg personnel did not put any processing or corresponding expiration dates on the eggs when they were processed. The eggs would be kept in storage for several days or up to several weeks. Then, just prior to shipping the eggs, Quality Egg personnel labeled the eggs with processing dates that were false in that the dates were more recent than the dates that the eggs had actually been processed and with corresponding false expiration dates.
As part of its plea agreement to the charge of introducing adulterated eggs into interstate commerce, Quality Egg admitted that, between about the beginning of 2010 and in or about August 2010, the company sold shell eggs that were adulterated in that they contained a poisonous and deleterious substance, Salmonella Enteriditis. The company acknowledged that it produced, processed, held, and packed the contaminated eggs in Iowa and sold and caused the distribution of the eggs to buyers in states other than Iowa.
Austin “Jack” DeCoster and Peter DeCoster each pled guilty to one count of introducing adulterated eggs into interstate commerce.
As part of his plea agreement, Austin “Jack” DeCoster admitted that he was the trustee of a trust that owned Quality Egg (also doing business as Wright County Egg, and Environ), and he exercised substantial control over the operations of Quality Egg and related entities and assets in Iowa. Austin “Jack” DeCoster acknowledged that he was the person ultimately responsible for the operations of Quality Egg and the various egg facilities in Iowa associated with Quality Egg.
Peter DeCoster, as part of his plea agreement, admitted that was the Chief Operating Officer of Quality Egg, and he exercised some control over the production and distribution of shell eggs by Quality Egg and related entities and assets in Iowa. Peter DeCoster acknowledged he was one of the persons responsible for running the operations of Quality Egg and the various egg facilities in Iowa associated with Quality Egg.
Both Austin “Jack” DeCoster and Peter DeCoster admitted that between about the beginning of 2010 and in or about August 2010, Quality Egg introduced and caused to be introduced into interstate commerce shell eggs that were adulterated, in that they contained a poisonous and deleterious substance, Salmonella Enteriditis.Sentencing before United States District Court Judge Mark W. Bennett will be set after presentence reports are prepared. Austin “Jack” DeCoster and Peter DeCoster remain free on bail pending sentencing.
On the bribery count, Quality Egg faces a sentence of probation for at least one and up to five years and a fine equal to the greater of three times the monetary equivalent of the thing of value given, offered, or promised as part of the offense, or $500,000. Quality Egg also agreed to forfeit a money judgment of $10,000 representing proceeds of the bribery offense.
On the introducing misbranded eggs into interstate commerce with the intent to defraud count, Quality Egg faces a maximum sentence of probation for at least one and up to five years and a fine equal to the greater of twice the gross gain resulting from the offense, twice the gross loss resulting from the offense, or $500,000.
On the introducing adulterated eggs in interstate commerce count, Quality Egg faces a sentence of probation for up to five years and a fine equal to the greater of twice the gross gain resulting from the offense, twice the gross loss resulting from the offense, or $100,000.
Austin “Jack” DeCoster and Peter DeCoster each face a maximum sentence of up to one year imprisonment or a term of probation of not more than five years; a fine equal to the greater of twice the gross gain or the gross loss resulting from the offense, or $100,000; and a term of supervised release after any imprisonment for up to one year.
The case is being prosecuted by Assistant United States Attorney Peter Deegan of the U.S. Attorney’s Office for the Northern District of Iowa and Trial Attorneys Lisa Hsiao and Christopher Parisi of the Consumer Protection Branch of the Civil Division of the Department of Justice. They were assisted by Associate Chief Counsel Michael Varrone of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services. The case was investigated by the Food and Drug Administration’s Office of Criminal Investigations, the United States Department of Agriculture Office of Inspector General, and the Federal Bureau of Investigation.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 14-CR-3024.
Pleasant Hill Woman Pleads Guilty in Identity Theft Tax SchemeRead the Press Release
OAKLAND – Sherry L Hender pleaded guilty today to theft of government property and aggravated identity theft, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the plea and court documents, beginning in August 2011, Hender assisted in preparing hundreds of false income tax returns, claiming fraudulent tax credits and fraudulent tax refunds. In order to conduct her tax scheme, Hender created an identification information form, “ID-DOC”, which was used to prepare the fraudulent income tax returns. This form contained questions about personal identification, including name, date of birth, Social Security number, income, number of dependents, expenses, and occupation. In January 2012, Hender opened a business bank account in the name of She-File Tax Assistance for Household Employees (She-File bank account), which was used to receive tax refunds. Between Jan. 18, 2012 and Feb. 21, 2012, Hender prepared and submitted what she believed to be fraudulent income tax returns directing the IRS to send the refunds to her “She-File bank account”. On Feb. 7, 2012 and Feb. 24, 2012, Hender told IRS Special Agents that she knew the tax refund money was obtained fraudulently and agreed to return it to the IRS. She did not return the money to the IRS, instead she withdrew the funds and spent it on personal items and illegal drugs. Hender obtained $51,629 in fraudulent refunds.
Hender, 50, of Pleasant Hill, was charged on May 21, 2013, with thirteen counts of theft of government property and one count of aggravated identity theft. She pleaded guilty to one count of theft of government property and to the aggravated identity theft count.
Hender’s sentencing hearing is scheduled for Sept. 9, 2014, at 1:00 p.m., before the Honorable Jeffrey S. White, United States District Court Judge, in Oakland. The maximum statutory penalty for each count of theft of government property, in violation of Title 18, U.S.C § 641, is 10 years in prison and a fine of $250,000. The maximum penalty for aggravated identity theft, in violation of Title 18, U.S.C § 1028A, is two years in prison, consecutive to the underlying felony.
Assistant US Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
(Hender unsealed indictment )
Philadelphia Woman Charged with Bilking Social Security and Veterans AffairsRead the Press Release
Geraldine Jones, 68, of Philadelphia, was charged by information, filed on May 30, 2014, with one count of theft of government funds, announced United States Attorney Zane David Memeger. According to the information, the defendant received retirement and pension benefits from the Social Security Administration and the Department of Veterans Affairs that were intended for a deceased individual, after that individual’s death in May 1999, until her fraud was discovered in early 2014. The defendant’s alleged actions resulted in a loss to the Social Security Administration of approximately $103,356 and a loss to the Department of Veterans Affairs of approximately $52,442, for a total loss to the government of approximately $155,798.
If convicted, the defendant faces a maximum possible sentence of 10 years imprisonment, a three-year period of supervised release, restitution to the government of $155,798, a $250,000 fine, and a $100 special assessment.
The case was investigated by the Social Security Administration Office of Inspector General, and the Department of Veterans Affairs Office of Inspector General, and is being prosecuted by Special Assistant United States Attorney Amanda R. Reinitz.
Click here to view the indictment
An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Philadelphia Man Charged with Stealing BenefitsRead the Press Release
John Bernhardt, 30, of Philadelphia, PA, was charged by information with one count of theft of Government funds and one count of social security fraud, announced United States Attorney Zane David Memeger. The information alleges that between June 2010 and October 2012, John Bernhardt implemented a scheme to receive and convert to his own use disability insurance benefits intended for the use of another, for over two years, resulting in total losses to the government of approximately $27,191.
If convicted, Bernhardt faces a maximum possible sentence of 15 years in prison, a $500,000 fine, three years of supervised release, and restitution of $27,191.
The case was investigated by the Social Security Administration’s Office of the Inspector General and is being prosecuted by Special Assistant United States Attorney Thomas Moshang III.
Click here to view the indictment
An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Pharmacist Charged with Illegal Distribution of PainkillersRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-0100 ● Contact: Matthew Lyman, Public Affairs Specialist/Community Outreach CoordinatorCLARKSBURG, WEST VIRGINA – A West Virginia pharmacist has been indicted on charges that he dispensed prescription painkillers outside the scope of his professional practice.
United States Attorney William J. Ihlenfeld, II announced that Mario Blount, 51 of Bridgeport, W. Va., was arrested this morning on charges of conspiracy to possess and distribute schedule II controlled substances, distribution of oxycodone and failure to report the filling of a prescription.
Blount, who is employed by Best Care Pharmacy, is alleged to have conspired with two other individuals over the last three years to distribute prescription painkillers for non-legitimate medical purposes.
Angela Davis, 50, also of Bridgeport, W. Va. and her daughter, April Davis, 23 of Marietta, Ga, are charged with conspiring with Blount to possess and distribute oxycodone and other prescription painkillers. Angela Davis has also been charged with attempting to fraudulently obtain controlled substances and with the attempted distribution of oxycodone.
The Greater Harrison County Drug Task Force executed search warrants in October 2013 at Best Care pharmacy locations in the West Virginia towns of Bridgeport, Lumberport and Belington.
The evidence gathered during those searches was used to bring charges against Blount and his co-conspirators. The Task Force includes agents and officers from the: Bridgeport Police Department, Clarksburg Police Department, the West Virginia State Police – Bureau of Criminal Investigation (BCI), and the Drug Enforcement Administration.“Mr. Blount abused the trust of the citizens of Bridgeport and the customers at Best Care Pharmacy. These arrests serve as a warning that the illicit distribution of controlled substances will not be tolerated in Harrison County,” said Karl C. Colder, Special Agent in Charge, Drug Enforcement Administration, Washington D.C. Field Division. “Over approximately three years, Mr. Blount illegally dispensed over 11,000 oxycodone and oxymorphone pills. Today’s arrests are the culmination of a ten month investigation, which truly exemplifies the strong working partnership between DEA and the Greater Harrison County Drug Task Force,” concluded Colder.
Blount faces up to 20 years in prison on the conspiracy and distribution charges and up to 4 years on the failure to report a prescription charge. Angela Davis and April Davis each face up to 20 years in prison. Under the Federal Sentencing Guidelines the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant. The charges contained in the Indictment are merely accusations, and each defendant is presumed innocent unless and until proven guilty.
The case will be prosecuted by Assistant U.S. Attorney, John C. Parr.
Periodontist Pleads Guilty to Filing A False Tax ReturnRead the Press Release
PITTSBURGH - A Pittsburgh man pleaded guilty in federal court to a charge of filing a false income tax return, United States Attorney David J. Hickton announced today.
Periodontist Charles W. Schwimer, pleaded guilty to a one-count information before United States District Judge Arthur J. Schwab.
In connection with the guilty plea, the court was advised that in March of 2010 Schwimer filed a false income tax return for the year 2009. The return was false in that Schwimer had included approximately $29,000 in deductions for business expenses in connection with his dental practice on his tax return, which were in fact purely personal expenditures that were not business related, such as condo fees, personal auto insurance, landscaping, utility and home cleaning expenses. The return was also false in that he failed to report cash that he had received directly from his employees who in turn had received cash payments from the patients of his dental practice.
Judge Schwab scheduled sentencing for Sept. 24 at 8:30 am. The law provides for a total sentence of no more than 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 criminal history, if any, of the defendant.
Pending sentencing, the court released Mr. Schwimer on $10,000 bail.
The Internal Revenue Service/Criminal Investigations conducted the investigation that led to the prosecution of Schwimer.
Owners of Elizabethtown Hematology Oncology, PLC Agree to Pay over $3.7 Million to Settle False Billings to Government Health Care ProgramsRead the Press Release
– United States alleges owners engaged in improper conduct by extending chemotherapy treatment times to maximize reimbursements and inappropriately billing office visits for infusion therapies
LOUISVILLE, Ky. –Elizabethtown Hematology Oncology, PLC, and its owners have agreed to pay $3,739,325.41 to resolve allegations that they submitted or caused to be submitted false claims for payment to the Medicare, Medicaid, TRICARE – the health care program for Uniformed Service members, retirees and their families worldwide – and the Federal Employee Health Benefit Program (FEHBP) for extending the duration of chemotherapy infusion treatment to patients and inappropriately billing office visits for infusion therapy treatments, announced the Office of Inspector General of the Department of Health and Human Services and David J. Hale, United States Attorney for the Western District of Kentucky.
"Manipulating treatment protocols and lengthening infusion times to increase reimbursement reflect an extraordinary lack of regard for patient welfare and the integrity of our health care system. This settlement will end these unacceptable practices and restore funds paid for improper claims during the relevant time period,” stated David J. Hale, United States Attorney for the Western District of Kentucky. “Pursuing health care fraud is a priority of my Office and the Department of Justice. We will continue to work with the Department of Health and Human Services to pursue medical providers who engage in improper conduct and overbill government health care programs."
"Improper and unnecessary services cost the taxpayers millions of dollars each year and drains our nation’s health care system," said Derrick L. Jackson, Special Agent in Charge of the Office of Inspector General, U.S. Department of Health and Human Services in Atlanta. "The OIG will continue to aggressively pursue false claims cases that return much needed dollars to government health care programs."
"These health care providers did not only violate the laws of the United States - they violated the trust placed in them by their patients," said Patrick E. McFarland, Inspector General of the U.S. Office of Personnel Management. "To subject cancer patients to unnecessary treatments that are physically draining and emotionally stressful is utterly unconscionable. Every patient deserves health care providers that meet the highest standards of ethical and professional behavior. Today's settlement reminds all providers that they must observe those standards, and reflects the commitment of Federal law enforcement organizations to pursue improper and illegal conduct that puts the health and wellbeing of their patients at risk."
"We take very seriously our obligation to hold accountable those who put profits ahead of patient care," Attorney General Jack Conway said. "I remain committed to recovering taxpayer money that is lost to health care fraud in Kentucky. I appreciate the efforts of my Medicaid fraud investigators who work every day to ensure that health care providers participating in this type of deceptive behavior are held accountable, and I am proud that our Medicaid Fraud Unit has been recognized as one of the most aggressive in the country."
According to the settlement agreement, the United States and Commonwealth of Kentucky contend that Dr. Rafiq Ur Rahman and Dr. Yusuf K. Deshmukh, owners of Elizabethtown Hematology Oncology, PLC (EHO), billed Medicare, TRICARE, FEHBP and Medicaid from January 1, 2005, through December 31, 2010, for unnecessary office visit evaluations at the same time patients were receiving chemotherapy or other types of infusion treatments. The United States and Commonwealth of Kentucky contend that EHO did this by improperly billing evaluation and management codes using Modifier-25 (allows for billing evaluation and management necessary prior to the performance of a procedure).
The United States and Commonwealth of Kentucky further contend that during a seven year period, between January 1, 2006 and December 31, 2012, Dr. Rahman, Dr. Deshmukh, and EHO unnecessarily and improperly extended the duration of chemotherapy infusion treatment times for their patients in order to improperly bill Medicare, TRICARE, FEHBP and Medicaid for those additional hours of chemotherapy infusion treatments.
Some of the allegations covered by today’s settlement were raised in a lawsuit filed against EHO and its owners under the qui tam, or whistleblower, provisions of the federal False Claims Act. United States ex rel. Dr. Ijaz Mahmood v. Elizabethtown Hematology et al., Civil Action No. 3:11-cv-376-H (WDKY). The False Claims Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. In part of his lawsuit, Dr. Mahmood alleged that EHO developed written protocols that increased chemotherapy infusion times by a factor of three or more beyond generally recognized standards of medical practice. Dr. Mahmood alleged that EHO prolonged these chemotherapy infusion times for longer than was medically necessary in order to inflate billings. Relator, Dr. Ijaz Mahmood, will receive $283,412.90 as part of today’s settlement.
In addition to the $3.7 million payment, EHO and Dr. Deshmukh entered into a three-year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. The agreement requires enhanced accountability and wide-ranging monitoring activities conducted by both internal and independent external reviewers.his settlement agreement is neither an admission of liability by Rahman and Deshmukh nor a concession by the United States and Commonwealth of Kentucky that its claims are not well founded.
This case was prosecuted by Assistant United States Attorney Benjamin S. Schecter and it was investigated by the Office of Inspector General for the Department of Health and Human Services and by the Kentucky Attorney General’s Medicaid Fraud and Abuse Control Unit.
Orange City Man Convicted of Theft from Union FundRead the Press Release
Orlando, Florida – United States Attorney A. Lee Bentley, III announces that a federal jury today found Phillip Simmons (50, Orange City) guilty of one count of conspiracy and two counts of theft from an employee benefit plan. Simmons faces a maximum penalty of 5 years in federal prison for each count. Sentencing has been set for August 20, 2014.
According to the evidence presented at trial, Angela Deleon worked at Advance Administration, Inc. (AAI), which was the third-party administrator of an employee benefit plan for the Ironworkers Local 808. As the third-party administrator for the Ironworkers Local 808 Annuity Fund, AAI was responsible for processing members’ payment applications, paying the Fund’s bills, and speaking with union members. Deleon’s duties at AAI included data entry and the processing of payments.
Over a period of about fourteen months, Deleon wrote forty-six checks from the Fund, totaling over $427,000, to individuals who were not members of the Local 808 or participants in the Fund, including Simmons. Simmons cashed two of the checks provided to him by Deleon and split the stolen proceeds with her. In addition, Simmons assisted his mother, Marta Blackmer, in cashing at least one of the checks that she received from Deleon.
Ten individuals have been charged in connection with this case. Deleon was previously sentenced to 2 years in federal prison for her participation in these crimes and ordered to serve a one-year term of supervision, upon her release. She was also ordered to pay $594,000 in restitution to the Ironworkers Local 808 Annuity Fund. The $594,000 in restitution consists of the over $427,000 that she stole from the Fund, plus the amounts spent by the Fund to audit and reconstruct the records that were impacted by Deleon’s scheme.
Seven other individuals have pleaded guilty and are pending sentencing in July and August of this year, including Brandon Alfonso (28, Orange City), Marta Blackmer (71, Orange City), James McCall (32, Orange City), Ian Chase Dove (26, Orange City), Jason Wesson (37, Deltona), Michael Giesinger (36, Deltona), and Shane Riley (31, Deland). Each one faces a maximum penalty of 5 years in federal prison.
Another individual, Jason Ferrari (33, Orange City), is pending trial for one count of conspiracy and one count of theft from an employee benefit plan. If convicted, he faces a maximum penalty of 5 years in federal prison for each count.
These cases were investigated by the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, and the U.S. Department of Labor’s Employee Benefits Security Administration. They are being prosecuted by Assistant United States Attorney Roger B. Handberg.
Newton County Former Youth Pastor Guilty of Child Pornography ViolationRead the Press Release
Department of Justice
Office of Public AffairsBEAUMONT, Texas – A 23-year-old former youth pastor has pleaded guilty to child pornography violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Trevion Lechay Ethridge, of Newton, Texas, pleaded guilty to production of child pornography today before U.S. District Judge Ron Clark.According to information presented in court, from November 2012 to March 2013, while Ethridge was the youth pastor at a Newton County church, he persuaded a minor to video and photograph pornographic images and to send the pornography to Ethridge via smart phone. Ethridge was indicted by a federal grand jury on Oct. 3, 2013. Trial began in this case on May 12, 2014 and was recessed after two days. Trial resumed on June 3, 2014, at which time Ethridge changed his plea to guilty and under oath, admitted to sending the minor pornographic images and videos of himself and enticing the minor to send pornographic images and videos in return.
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This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Ethridge faces a minimum of 15 years and up to 30 years in federal prison. A sentencing date has not been set.
This case is being investigated by the Homeland Security Investigations, the Newton Police Department and the Beaumont Police Department and prosecuted by Assistant U.S. Attorneys Randall L. Fluke and Lauren Gaston.New Haven Man Sentenced to More Than 7 Years in Federal Prison for Illegally Possessing FirearmRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that ANGEL L. MELENDEZ, 27, of New Haven, was sentenced today by U.S. District Judge Robert N. Chatigny in Hartford to 90 months of imprisonment, followed by three years of supervised release, for illegally possessing a firearm.
According to court documents and statements made in court, in September 2013, MELENDEZ sold crack cocaine to an individual working with law enforcement. At the time, MELENDEZ was on transitional supervision with the Connecticut Department of Correction. On September 18, 2013, MELENDEZ was arrested at a family member’s home in New Haven where he shared a bedroom with a young child. A search of a closet in that bedroom revealed a loaded Beretta Model 1935, 7.65 mm, semi-automatic pistol with an obliterated serial number, approximately $2,000 in heroin packaged for distribution, and $700 in cash. MELENDEZ admitted that the seized items were his.
MELENDEZ’s criminal history includes multiple felony drug convictions. It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce.
MELENDEZ has been detained since his arrest. On December 9, 2013, he pleaded guilty to one count of possession of a firearm by a convicted felon.
This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the New Haven Police Department. This case was prosecuted by Assistant U.S. Attorney Anthony E. Kaplan.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]Monmouth County, N.J., Man Charged with Receiving Sexually Explicit Images of 12-Year Old Pennsylvania GirlRead the Press Release
TRENTON, N.J. – A Monmouth County, N.J., man is expected to make his initial court appearance today on a charge that he received sexually explicit images of a 12-year old Pennsylvania girl with whom he had an online relationship, U.S. Attorney Paul J. Fishman announced.
Chad C. Weber, 21, of Colts Neck, N.J., is charged by complaint with one count of receiving child pornography. He surrendered this morning and made his initial court appearance before U.S. Magistrate Judge Tonianne J. Bongiovanni in Trenton federal court.
According to the complaint:
In April 2013, law enforcement agents learned Weber had been communicating with a 12-year-old girl from Pennsylvania. The agents obtained and reviewed copies of various chat logs and other internet-based messages, which reflect Weber’s online communications with the victim between February 2013 and April 2013. Many of these communications were sexually explicit. Weber and the victim also traded sexually explicit photographs of each other through the internet and discussed the photographs in online chats. During some of these communications, Weber acknowledged that the victim was 12 years old.
Weber was released on $100,000 bond and will be subject to home detention with electronic monitoring, no possession or use of computers and no contact with minors unless in the presence of a parent or guardian who is notified about this case.
The charge of receiving child pornography carries a mandatory minimum term of five years in prison and a maximum of 20 years in prison and a $250,000 fine.
U.S. Attorney Fishman credited special agents of the U.S. Department of Homeland Security Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge Andrew M. McLees in Newark, for the investigation leading to the charges.
The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Criminal Division in Trenton.
14-201Defense counsel: Brian P. Reilly Esq., Assistant Federal Public Defender, Trenton
Weber, Chad Complaint
Massachusetts Man Pleads Guilty to Importing and Selling Counterfeit Intergrated Circuits from China and Hong KongRead the Press Release
Peter Picone, 41, of Methuen, Massachusetts, pleaded guilty today in U.S. District Court in Hartford, Connecticut to importing thousands of counterfeit integrated circuits (ICs) from China and Hong Kong and then reselling them to U.S. customers, including contractors supplying them to the U.S. Navy for use in nuclear submarines.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Deirdre M. Daly for the District of Connecticut made the announcement.
Picone pleaded guilty before U.S. Magistrate Judge Donna Martinez of the District of Connecticut to an indictment charging him with conspiracy to traffic in counterfeit military goods. As part of a plea agreement with the government, Picone agreed to a forfeiture money judgment of $70,050 and the forfeiture of 12,960 counterfeit ICs seized during the execution of a search warrant at his business and residence. Sentencing was set for Aug. 22, 2014.
According to court filings, from 2007 through 2012, Picone conspired with his suppliers in China and Hong Kong to sell millions of dollars’ worth of ICs bearing the counterfeit marks of approximately 35 major electronics manufacturers, including Motorola, Xilinx and National Semiconductor. Picone sold counterfeit ICs to contractors knowing that they would be supplied to the United States Navy for use in nuclear submarines.
Many of Picone’s customers specified in their orders that they would not accept anything but new ICs that were not from China, but Picone told them that the ICs were new and manufactured in Europe. Testing by the Navy and one of its contractors revealed that in fact the ICs purchased from Picone had been resurfaced to change the date code and to affix counterfeit marks, all in order to hide their true pedigree. Federal agents searched Picone’s business and residence on April 24, 2012, and recovered 12,960 counterfeit ICs.
This is the second conviction ever on a charge of trafficking in counterfeit military goods, a relatively new provision in the U.S. Criminal Code that was enacted as part of the National Defense Authorization Act of 2011.
The case was investigated by the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and Homeland Security Investigations. The case is being prosecuted by Trial Attorney Kendra Ervin and Senior Counsel Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS), Special Assistant U.S. Attorney Carol Sipperly of the District of Connecticut, Trial Attorney Anna Kaminska of the Criminal Division’s Fraud Section, and Trial Attorney Kristen Warden of the Criminal Division’s Asset Forfeiture and Money Laundering Section. Significant assistance was provided by the CCIPS Cybercrime Lab.
Los Angeles Physician Indicted <br /> in $33 Million Medicare Fraud SchemeRead the Press Release
A Los Angeles physician was indicted today for a $33 million scheme to defraud Medicare, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) for the Los Angeles Region and Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office.
Robert A. Glazer, 67, of Los Angeles, California, was indicted in the Central District of California and charged with one count of conspiracy to commit health care fraud.
According to court documents, Glazer operated a medical clinic located in Los Angeles. From approximately January 2006 through May 2014, Glazer allegedly billed Medicare for services that were not medically necessary, and at times were not provided to the Medicare beneficiaries. In addition, Glazer allegedly signed prescriptions, certifications, and other medical documents for medically unnecessary home health services, hospice services, and power wheelchairs and other durable medical equipment (DME). Glazer’s co-conspirators then sold the prescriptions and certifications to DME supply companies, home health agencies, and other providers, knowing that the prescriptions and certifications were fraudulent. Based on these fraudulent prescriptions and certifications, the DME supply companies, home health agencies, and other providers then allegedly submitted false and fraudulent claims to Medicare.
As further alleged in court documents, from approximately January 2006 through May 2014, fraudulent prescriptions and certifications from Glazer were responsible for approximately $33,484,779 in false and fraudulent claims to Medicare, and Medicare paid approximately $22,056,332 on those claims.
The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. This case is being prosecuted by Trial Attorneys Fred Medick and Blanca Quintero of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .Local Doctor and Four Others Charged with Defrauding Medicare of Nearly $3 MillionRead the Press Release
HOUSTON – Leonard Kibert M.D., 63, of Houston, has been charged in a 47-count indictment alleging a conspiracy to defraud Medicare of $2.9 million, announced United States Attorney Kenneth Magidson. Also charged in the indictment are Tsolak Gevorgyan, 28, Christopher O’Brien, 41, Gregorius Brown, 48, and Robert Manning, 58, all also of Houston.
The five defendants were charged in a sealed indictment, returned May 14, 2014. That indictment was unsealed this morning upon their arrest by federal authorities. Kibert, O’Brien, Brown and Manning are expected to make their initial appearances before U.S. Magistrate Judge Frances Stacy this afternoon. Gevorgyan was arrested this morning in Glendale, Calif., and should make his initial appearance before a U.S. magistrate judge in Los Angeles sometime today.According to the indictment, the fraudulent Medicare billing was for diagnostic testing at the New Life Sleeping & Allergy Disorder Center, located on the 2100 block of Chenevert Street in Houston. The facility was owned by Kibert and managed by Gevorgyan.
The indictment charges all five with health care fraud for filing false claims with Medicare for medical procedures which either were never performed or were not medically necessary. Gevorgyan and Manning are also charged with conspiracy to pay and receive illegal kickbacks in addition to four kickback counts. Kibert is also charged with money laundering.According to the allegations in the indictment, Kibert was the only doctor working at the New Life Center. O’Brien and Brown allegedly worked as physician assistants at New Life even though O’Brien held no such license. Manning, allegedly paid by Gevorgyan, was a recruiter/marketer who brought patients to the clinics, according to the indictment. Manning was allegedly paid more than $229,000 in kickbacks for bring patients to New Life.
If convicted, each of the 37 health care fraud counts, the conspiracy charge and money laundering carries a maximum penalty of 10 years in a federal prison. For conspiracy to pay and receive kickbacks and paying and receiving of kickbacks, the possible sentence is a maximum five years in prison. All charges also carry a maximum possible $250,000 fine, if convicted.
The criminal charges are the result of a joint investigation conducted by agents of the FBI, U.S. Department of Health and Human Services - Office of Inspector General, Internal Revenue Service - Criminal Investigation and the Medicaid Fraud Control Unit of the Texas Attorney General's Office. Assistant United States Attorney (AUSA) Al Balboni and Special AUSA Adrienne Frazior are prosecuting the case.
A defendant is presumed innocent unless and until convicted through due process of law.Justice Department Announces Investigation of Detention Center in Hinds County, MississippiRead the Press Release
The Justice Department announced today that it is opening a pattern or practice investigation of Hinds County Detention Center including both the Hinds County facility in Raymond, Mississippi, and the Jackson Detention Center, in Jackson, Mississippi. The investigation will focus on whether Hinds County protects prisoners from harm at the hands of other prisoners and staff. Attorneys for the County Board and the Sheriff were notified on June 2, 2014. They pledged cooperation with the investigation
The department opened the investigation pursuant to the Civil Rights of Institutionalized Persons Act. The investigation will include a comprehensive review of policies, procedures, and records, as well as interviews with county officials, jail administrators, staff, and current and former inmates. The Justice Department will also reach out to other stakeholders, including members of the community and groups with knowledge of conditions in the two facilities.
“Our investigation will focus on whether Hinds County protects prisoners from the harm that can result from prisoner on prisoner violence and the improper use of force,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division. “We have not prejudged this matter, and will seek cooperation from county officials and other stakeholders during the course of the investigation.”
“The Office of the United States Attorney for the Southern District of Mississippi will work diligently with the Civil Rights Division to ensure that the investigation into the detention center is one that will ultimately yield results that are helpful to the citizenry of the Southern District of Mississippi, and specifically, Hinds County,” said Gregory K. Davis, United States Attorney for the Southern District of Mississippi.Individuals who have allegations about unlawful conditions in the Jail are encouraged to contact the Justice Department by phone at (202) 514-6255, by email at [email protected] or by mail at:
U.S. Department of Justice
Civil Rights Division
Special Litigation Section
950 Pennsylvania Avenue N.W.
Washington, D.C. 20530
(202) 514-6255For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.
Joplin Man Pleads Guilty to Disaster Fraud Related to Tornado BenefitsRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Joplin, Mo., man pleaded guilty in federal court today for fraudulently receiving (or applying for) federal disaster benefits following the tornado that struck the city of Joplin on May 22, 2011, killing 158 people and causing more than $2.9 billion in damage.
Dustin Joe Showalter, 36, of Joplin, pleaded guilty before U.S. District Judge M. Douglas Harpool to the charge contained in a Feb. 25, 2014, federal indictment.
By pleading guilty today, Showalter admitted that he committed disaster fraud by making false statements to the Federal Emergency Management Agency (FEMA) in an application for disaster benefits.
Showalter fraudulently received disaster benefits by claiming to have lived at a residence in Joplin at the time of the May 22, 2011, tornado, when in fact he did not live at that residence. On the basis of his application to FEMA, Showalter received $938 to which he was not entitled.
Under federal statutes, Showalter is subject to a sentence of up to 30 years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Steven M. Mohlhenrich. It was investigated by the U.S. Department of Homeland Security – Office of Inspector General, the FBI and the Joplin, Mo., Police Department.
Disaster Fraud Hotline
Anyone with information about disaster fraud related to the Joplin tornado should call the National Center for Disaster Fraud hotline at 866-720-5721, the Joplin Police Department at 417-623-3131, or the FBI’s Joplin office at 417-206-5700.
Johnstown Man Charged with Distributing Crack CocaineRead the Press Release
JOHNSTOWN, Pa. - A resident of Johnstown, Pa., has been indicted by a federal grand jury in Johnstown on a charge of distribution of cocaine base, in the form commonly known as "crack", United States Attorney David J. Hickton announced today.
The one-count indictment named John D. Malden, 39, as the sole defendant.
According to the indictment presented to the court, on April 25, 2013, Malden distributed less than 28 grams of cocaine base.
The law provides for a maximum total sentence of 20 years in prison, a fine of $1,000,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney John J. Valkovci, Jr., is prosecuting this case on behalf of the government.
The Federal Bureau of Investigation and the Cambria County Drug Task Force conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
John Charles Mccluskey Sentenced to Life in Prison<br /> for Carjacking and Murdering Oklahoma CoupleRead the Press Release
John Charles McCluskey, 49, was sentenced this morning by U.S. District Judge Judith C. Herrera of the District of New Mexico to serve life in prison followed by a consecutive term of 2,820 months (235 years) in prison for carjacking and murdering a retired couple from Oklahoma in August 2010.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Damon P. Martinez of the District of New Mexico, Special Agent in Charge Carol K.O. Lee of the FBI’s Albuquerque Division and New Mexico State Police Chief Pete N. Kassetas made the announcement.
McCluskey and his co-defendants, Tracy Allen Province, 46, and Casslyn Mae Welch, 47, were charged with numerous capital offenses in an indictment arising out of the Aug. 2, 2010, carjacking and murders of Gary and Linda Haas, both 61, in Quay County, New Mexico. On Jan. 20, 2012, Province and Welch entered guilty pleas to crimes arising out of the carjacking and murder of Mr. and Mrs. Haas, and agreed to testify during McCluskey’s capital trial. Yesterday, Province was sentenced to five consecutive terms of life imprisonment without the possibility of release as required by his plea agreement and Welch was sentenced to 40 years in prison.
On Oct. 7, 2013, McCluskey was found guilty on all counts of the indictment after an eight-week trial, and later was found eligible for the death penalty on Nov. 5, 2013, following a three-week proceeding. McCluskey’s capital trial concluded on Dec. 11, 2013, when the jury said it was unable to reach a unanimous verdict on the death penalty, thus requiring that McCluskey be sentenced to life in prison.
“With the help of his conspirators, John Charles McCluskey mercilessly killed two innocent victims and burned their bodies as he fled law enforcement after escaping from prison,” said Assistant Attorney General Caldwell. “Our thoughts are with those whose lives were changed forever by these heinous crimes.”
“Today’s sentencing hearing brings to a close a case that focused on an exceptionally violent episode in the summer of 2010, during which John Charles McCluskey and Tracy Allen Province escaped from prison with help from Casslyn Mae Welch, committed multiple kidnappings during their interstate flight from justice, and mercilessly killed two innocent victims to eliminate them as witnesses,” said U.S. Attorney Martinez. “While the sentences imposed on McCluskey and his co-conspirators cannot restore the loss of Gary and Linda Haas, I hope that they bring some measure of comfort and closure to their families and friends and I commend the prosecutors and investigators who worked tirelessly to seek justice for Gary and Linda Haas.”
The evidence presented during McCluskey’s capital trial established that, on July 30, 2010, McCluskey and Province escaped from an Arizona state prison with Welch’s aid. On Aug. 2, 2010, McCluskey, Province and Welch carjacked Mr. and Mrs. Haas and their pickup truck and camping trailer at a rest stop off Interstate 40 in Quay County. McCluskey shot and killed Mr. and Mrs. Haas in the trailer in a remote location east of Tucumcari, New Mexico. The three associates then drove the Haases’ truck and trailer to a remote area in Guadalupe County, New Mexico, where they unhitched, burned and abandoned the trailer with the Haases’ remains still inside. On Aug. 4, 2010, the New Mexico State Police discovered the burned remains of Mr. and Mrs. Haas in the trailer. Province was arrested in Wyoming on Aug. 9, 2010, and McCluskey and Welch were arrested in Arizona on Aug. 19, 2010, following a nationwide, multi-agency manhunt.
“The rationale behind violent crimes like the ones committed against the Haases may be hard to understand, but our message today is crystal clear: the FBI and its partners will vigorously investigate and prosecute those who show such a callous disregard for innocent lives,” said FBI Special Agent in Charge Lee. “I am proud of the hard work of the FBI investigators and support personnel who worked on this case, alongside the federal prosecutors, victim/witness specialists, the New Mexico State Police and U.S. Marshals Service.”
“The conviction of John McCluskey and subsequent sentence of life in prison, without the chance of parole, is one that will make the community safer not only for the citizens we serve but also for the law enforcement officers who are sworn to protect them,” said New Mexico Police Chief Kassetas. “McCluskey was and is a criminal predator who has no respect for the basic rights and liberties that we as a society value so greatly. I can only hope that he is kept in a maximum level incarceration facility that will eliminate his ability to cause harm to anyone while he serves out his life sentence. I again want to thank the FBI, U.S. Attorney's Office and all the other New Mexico and Arizona law enforcement agencies that assisted with the Haas murder investigation, and with the capture and prosecution of McCluskey.”
The case was investigated by Albuquerque and Phoenix Divisions of the FBI and the New Mexico State Police. It was prosecuted by Trial Attorney Michael S. Warbel of the Criminal Division’s Capital Case Section and Assistant U.S. Attorney Linda Mott and former Assistant U.S. Attorney Gregory J. Fouratt of the District of New Mexico, with assistance from Kristopher N. Houghton, a contract attorney employed by the U.S. Attorney’s Office.John Charles Mccluskey Sentenced to Life in Prison for Carjacking and Murdering Oklahoma CoupleRead the Press Release
ALBUQUERQUE – John Charles McCluskey, 49, was sentenced this morning by U.S. District Judge Judith C. Herrera of the District of New Mexico to life imprisonment followed by a consecutive term of 2,820 months (235 years) in prison for carjacking and murdering a retired couple from Oklahoma in Aug. 2010. The sentence was announced by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Damon P. Martinez of the District of New Mexico, Special Agent in Charge Carol K.O. Lee of the FBI’s Albuquerque Division, and New Mexico State Police Chief Pete N. Kassetas.
McCluskey and his co-defendants, Tracy Allen Province, 46, and Casslyn Mae Welch, 47, were charged with numerous capital offenses in an indictment arising out of the Aug. 2, 2010, carjacking and murders of Gary and Linda Haas, both 61, in Quay County, N.M. On Jan. 20, 2012, Province and Welch entered guilty pleas to numerous crimes arising out of the carjacking and murder of Mr. and Mrs. Haas, and agreed to testify during McCluskey’s capital trial. Yesterday, Province was sentenced to five consecutive terms of life imprisonment without the possibility of release as required by his plea agreement and Welch was sentenced to 40 years in prison.
On Oct. 7, 2013, McCluskey was found guilty on all counts of the indictment after an eight-week trial, and later was found eligible for the death penalty on Nov. 5, 2013, following a three-week proceeding. McCluskey’s capital trial concluded on Dec. 11, 2013, when the jury said it was unable to reach a unanimous verdict on the death penalty, thus requiring that McCluskey be sentenced to life in prison.
“With the help of his conspirators, John Charles McCluskey mercilessly killed two innocent victims and burned their bodies as he fled law enforcement after escaping from prison,” said Assistant Attorney General Caldwell. “Our thoughts are with those whose lives were changed forever by these heinous crimes.”
“Today’s sentencing hearing brings to a close a case that focused on an exceptionally violent episode in the summer of 2010, during which John Charles McCluskey and Tracy Allen Province escaped from prison with help from Casselyn Mae Welch, committed multiple kidnappings during their interstate flight from justice, and mercilessly killed two innocent victims to eliminate them as witnesses,” said U.S. Attorney Martinez. “While the sentences imposed on McCluskey and his co-conspirators cannot restore the loss of Gary and Linda Haas, I hope that the sentences will bring a measure of comfort and closure to their family and friends and I commend the prosecutors and investigators who worked tirelessly to seek justice for Gary and Linda Haas.”
The evidence presented during McCluskey’s capital trial established that, on July 30, 2010, McCluskey and Province escaped from an Arizona state prison with Welch’s aid. On Aug. 2, 2010, McCluskey, Province and Welch carjacked Mr. and Mrs. Haas and their pickup truck and camping trailer at a rest stop off Interstate 40 in Quay County. McCluskey shot and killed Mr. and Mrs. Haas in the trailer in a remote location east of Tucumcari, N.M. The three confederates then drove the Haases’ truck and trailer to a remote area in Guadalupe County, N.M., where they unhitched, burned and abandoned the trailer with the Haases’ remains still inside. On Aug. 4, 2010, the New Mexico State Police discovered the burned remains of Mr. and Mrs. Haas in the trailer. Province was arrested in Wyoming on Aug. 9, 2010, and McCluskey and Welch were arrested in Arizona on Aug. 19, 2010, following a nationwide, multi-agency manhunt.FBI Special Agent in Charge Carol K.O. Lee said, “The rationale behind violent crimes like the ones committed against the Haases may be hard to understand, but our message today is crystal clear: the FBI and its partners will vigorously investigate and prosecute those who show such a callous disregard for innocent lives. I am proud of the hard work of the FBI investigators and support personnel who worked on this case, alongside the federal prosecutors, victim/witness specialists, the New Mexico State Police, and U.S. Marshals Service.”
"The conviction of John McCluskey and subsequent sentence of life in prison, without the chance of parole, is one that will make the community safer for not only the citizens for which we serve but also for the law enforcement officers who are sworn to protect them. McCluskey was and is a criminal predator who has no respect for the basic rights and liberties that we as a society value so greatly. I can only hope that he is kept in a maximum level incarceration facility that will eliminate his ability to cause harm to anyone while he serves out his life sentence,” said New Mexico Police Chief Pete N. Kassetas. “I again want to thank the FBI, U.S. Attorney's Office and all the other New Mexico and Arizona law enforcement agencies that assisted with Haas murder investigation, capture and prosecution of McCluskey.”
The case was investigated by Albuquerque and Phoenix Divisions of the FBI and the New Mexico State Police and was prosecuted by Assistant U.S. Attorney Linda Mott and former Assistant U.S. Attorney Gregory J. Fouratt of the District of New Mexico, and Trial Attorney Michael S. Warbel of the Criminal Division’s Capital Case Section, with assistance from Kristopher N. Houghton, a contract attorney employed by the U.S. Attorney’s Office.
Iowa Company and Top Executives Plead Guilty in Connection with Distribution of Adulterated EggsRead the Press Release
Quality Egg LLC (Quality Egg), Austin “Jack” DeCoster and Peter DeCoster pleaded guilty today in federal court in Sioux City, Iowa, in connection with the distribution of adulterated eggs in interstate commerce. As part of their plea agreements, the company and the two individuals admitted the company’s shell eggs were adulterated in that they contained a poisonous and deleterious substance, Salmonella Enteriditis, that may have rendered the eggs injurious to health.
Assistant Attorney General Stuart F. Delery of the Justice Department’s Civil Division and U.S. Attorney Kevin W. Techau of the Northern District of Iowa made the announcement.
Quality Egg, an egg production company with operations in Wright County, Iowa, pleaded guilty to one count of bribery of a public official, one count of introducing a misbranded food into interstate commerce with intent to defraud, and one count of introducing adulterated food into interstate commerce. Austin “Jack” DeCoster, 79, of Turner, Maine, and Peter DeCoster, 51, of Clarion, Iowa, each pled guilty to one count of introducing adulterated food into interstate commerce.
As part of its plea agreement, Quality Egg acknowledged that, on at least two occasions in 2010, its employees gave a cash bribe to an Inspector of the U.S. Department of Agriculture (USDA). The USDA Inspector’s job responsibilities included inspecting shell eggs at one or more of Quality Egg’s production facilities in Iowa. Quality Egg admitted its employees provided the bribe to the USDA Inspector (now deceased) in an attempt to corruptly influence the inspector to exercise his authority to release pallets of retained eggs for sale without re-processing the eggs as required by law and USDA standards. The eggs had been retained or “red tagged” for failing to meet minimum USDA quality grade standards.
On Sept. 12, 2012, former Quality Egg employee Tony Wasmund, 63, pleaded guilty to one count of conspiracy to bribe a public official, sell restricted eggs with intent to defraud, introduce misbranded food into interstate commerce with intent to defraud and mislead. Wasmund is scheduled to be sentenced before United States District Court Judge Mark W. Bennett of the Northern District of Iowa on Sept. 12, 2014.
Quality Egg also pleaded guilty to introducing misbranded eggs into interstate commerce with the intent to defraud. As part of its plea agreement, Quality Egg admitted that, beginning no later than January 2006 and continuing through Aug. 12, 2010, its employees affixed labels to egg shipments that indicated false expiration dates with the intent to mislead state regulators and retail egg customers regarding the true age of the eggs. Quality Egg acknowledged that there were a number of ways that the company mislabeled older eggs with newer processing and expiration dates prior to shipping the eggs to customers in California, Arizona and other states. Sometimes Quality Egg personnel did not put any processing or corresponding expiration dates on the eggs when they were processed. The eggs would be kept in storage for several days or up to several weeks. Then, just prior to shipping the eggs, Quality Egg personnel labeled the eggs with processing dates that were false.
As part of its plea agreement to the charge of introducing adulterated eggs into interstate commerce, Quality Egg admitted that, between about the beginning of 2010 and in or about August 2010, the company sold shell eggs that were adulterated in that they contained a poisonous and deleterious substance, Salmonella Enteriditis. The company acknowledged that it produced, processed, held, and packed the contaminated eggs in Iowa and sold and caused the distribution of the eggs to buyers in states other than Iowa.
Austin “Jack” DeCoster and Peter DeCoster each pleaded guilty to one count of introducing adulterated eggs into interstate commerce.
As part of his plea agreement, Austin “Jack” DeCoster admitted that he was the trustee of a trust that owned Quality Egg (also doing business as Wright County Egg, and Environ), and he exercised substantial control over the operations of Quality Egg and related entities and assets in Iowa. Austin “Jack” DeCoster acknowledged that he was the person ultimately responsible for the operations of Quality Egg and the various egg facilities in Iowa associated with Quality Egg.
Peter DeCoster, as part of his plea agreement, admitted that was the Chief Operating Officer of Quality Egg, and he exercised some control over the production and distribution of shell eggs by Quality Egg and related entities and assets in Iowa. Peter DeCoster acknowledged he was one of the persons responsible for running the operations of Quality Egg and the various egg facilities in Iowa associated with Quality Egg.
Both Austin “Jack” DeCoster and Peter DeCoster admitted that between about the beginning of 2010 and in or about August 2010, Quality Egg introduced and caused to be introduced into interstate commerce shell eggs that were adulterated, in that they contained a poisonous and deleterious substance, Salmonella Enteriditis.
Sentencing will be set before Judge Mark W. Bennett after presentence reports are prepared. Austin “Jack” DeCoster and Peter DeCoster remain free on bail pending sentencing.
On the bribery count, Quality Egg faces a sentence of probation for at least one and up to five years and a fine equal to the greater of three times the monetary equivalent of the thing of value given, offered, or promised as part of the offense, or $500,000. Quality Egg also agreed to forfeit a money judgment of $10,000 representing proceeds of the bribery offense.
On the introducing misbranded eggs into interstate commerce with the intent to defraud count, Quality Egg faces a maximum sentence of probation for at least one and up to five years and a fine equal to the greater of twice the gross gain resulting from the offense, twice the gross loss resulting from the offense, or $500,000.
On the introducing adulterated eggs in interstate commerce count, Quality Egg faces a sentence of probation for up to five years and a fine equal to the greater of twice the gross gain resulting from the offense, twice the gross loss resulting from the offense, or $100,000.
Austin “Jack” DeCoster and Peter DeCoster each face a maximum sentence of up to one year imprisonment or a term of probation of not more than five years; a fine equal to the greater of twice the gross gain or the gross loss resulting from the offense, or $100,000; and a term of supervised release after any imprisonment for up to one year.
The case is being prosecuted by Trial Attorneys Lisa Hsiao and Christopher Parisi of the Consumer Protection Branch of the Justice Department’s Civil Division and Assistant U.S. Attorney Peter Deegan of the Northern District of Iowa. They were assisted by Associate Chief Counsel Michael Varrone of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services. The case was investigated by the Food and Drug Administration’s Office of Criminal Investigations, the United States Department of Agriculture Office of Inspector General, and the FBI.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 14-CR-3024.Hogsett Announces National Anti-violence Summit to Take Place in IndianapolisRead the Press Release
Meeting will convene U.S. Attorneys, Department of Justice officials to discuss rising violence
INDIANAPOLIS – Joseph H. Hogsett, the United States Attorney, announced today that in response to the growing violence in Indianapolis, he has organized and convened an anti-violence summit that will take place this summer. Featuring public safety leaders from across the country, the event will address proven anti-violence techniques and strategies. The summit is slated to take place in Indianapolis from September 3rd through September 5th.
“The simple fact is that we cannot banish these senseless acts of violence with a ‘magic bullet’ program or slogan,” Hogsett said. “But across the country, many cities have seen a reduction in murders while Indianapolis has struggled with the worst outbreak of violence in a generation. We must do all we can to bring those successful strategies to the streets of our city.”
Indianapolis has experienced more than 60 homicides in the first five months of the year, a near-record pace of violence. Per capita, the homicide rate for Indianapolis now meets or exceeds a number of larger metropolitan areas across the country, including Chicago and New York. Over this same period of time, the overall national trend has reflected a reduction in homicides.
Hogsett has invited dozens of Department of Justice officials and United States Attorneys from major urban areas around the country to participate in a three-day conversation about “best practices” designed to bring greater safety to Indianapolis neighborhoods. Confirmed panelists include top public safety officials from Chicago, Detroit, Philadelphia, St. Louis, Las Vegas, Seattle, Baltimore, Nashville, Buffalo, Louisville, and Gary, Indiana.
These federal prosecutors are members of the United States’ Department of Justice’s Violent and Organized Crime Committee, and possess a wealth of experience in combatting gun crime, the drug trade, and criminal activity by well-organized gangs. Presentations and panel discussions will feature proven crime prevention programs, effective enforcement techniques, as well as successful re-entry initiatives.
The summit comes as the U.S. Attorney’s Office continues to marshal federal resources to assist local law enforcement efforts in and around Marion County. This includes the continuation and expansion of efforts launched last year in response to the outbreak of violence:
• The utilization of strategic targeting and other long-term investigative techniques aimed at completely dismantling the most destructive criminal enterprises currently operating in Indianapolis.
• The coordination of a one-day statewide drug conference for representatives of federal and local enforcement agencies from across the state to promote greater effectiveness in responding to the rise of heroin abuse on the streets of our cities.
• The hiring of six more criminal prosecutors whose priority will be to coordinate increased levels of collaboration between federal and local law enforcement agencies in Indianapolis and throughout the state.
• The continued implementation of enhanced ballistic information tracking through the National Integrated Ballistic Information Network (NIBIN), which assists law enforcement in combatting the illegal trade of firearms.
• The designation of a Special Assistant United States Attorney (SAUSA) to serve as a liaison between the United States Attorney’s Office and the Marion County Prosecutor’s office, coordinating joint investigations and focusing on federally prosecuting violent crime cases in the most violent neighborhoods in the city.Additional information on the violent crime summit will be released by the U.S. Attorney’s Office in the coming weeks.
Gang Member Sentenced to 84 Months in Prison for Drug ChargesRead the Press Release
BOISE – U.S. Attorney Wendy J. Olson announced today that Anthony Rennie Jones, 29, of Nampa, Idaho, was sentenced to 84 months in prison followed by four years of supervised release for distribution of methamphetamine. U.S. District Judge Edward J. Lodge sentenced Jones at the federal courthouse in Boise. Jones, a documented member of a criminal gang, pleaded guilty to the charges on January 15, 2014.
According to the plea agreement and information presented in court, Jones admitted to selling methamphetamine to a person who was acting as a confidential informant. Jones sold methamphetamine to the confidential informant on four separate occasions beginning in October 2012. In January 2013, the Treasure Valley Metro Violent Crimes Task Force served search warrants at Jones’ residence and place of business. Agents located multiple handguns, approximately $15,000, and other items associated with drug dealing.
During the court hearing today, Judge Lodge found that Jones possessed the handguns in connection with the drug distribution. Additional evidence was presented to establish that Jones is a documented gang member.
The case was investigated by the Treasure Valley Metro Violent Crimes Task Force. The Metro Task Force is comprised of federal, state and local agencies, including the Federal Bureau of Investigation; Bureau of Alcohol, Tobacco, Firearms and Explosives; Boise Police Department; Ada County Sheriff’s Office; Caldwell Police Department; Nampa Police Department; Meridian Police Department; Canyon County Sheriff’s Office; and the Idaho Department of Correction.
The Organized Crime and Drug Enforcement Task Force (OCDETF) also contributed to the investigation. Federal partners include the Federal Bureau of Investigation; Drug Enforcement Administration; Bureau of Alcohol, Tobacco, Firearms and Explosives; U. S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Internal Revenue Service-Criminal Investigation; and U.S. Marshals Service.
The case was prosecuted by the Special Assistant U.S. Attorney hired by the Treasure Valley Partnership and the State of Idaho to address gang crimes. The Treasure Valley Partnership is comprised of a group of elected officials in southwest Idaho dedicated to regional coordination, cooperation, and collaboration on creating coherent regional growth. For more information, visit treasurevalleypartners.org.
Fresno Man Pleads Guilty to Shining Laser at CHP PlaneRead the Press Release
FRESNO, Calif. — David Walter Fee, 22, of Fresno, entered a guilty plea on Monday to aiming a laser pointer at a California Highway Patrol airplane, announced U.S. Attorney Benjamin B. Wagner and Monica Miller, Special Agent in Charge of the FBI’s Sacramento Field Office.
According to court documents, the CHP airplane, identified as Air 43, was struck up to 50 times by a powerful green laser pointer. As a result, the pilot suffered temporary blindness and Air 43 was forced to break away from its duties relating to a burglary in progress at a Fresno middle school.
Fee is scheduled to be sentenced before U.S. District Judge Lawrence J. O’Neill on August 25, 2014. He faces a maximum prison term of five years and a fine of up to $250,000. 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.
This case was investigated by the FBI’s Fresno Office, the California Highway Patrol, and the Fresno Police Department. Assistant U.S. Attorneys Karen A. Escobar and Michael G. Tierney are prosecuting this case.
The FBI announced a national campaign today to deter people from pointing lasers at aircraft. The FBI is offering a reward of up to $10,000 for information that leads to the arrest of any individual who aims a laser at aircraft. The reward is available for 90 days in all 56 FBI field offices. Thousands of laser attacks go unreported every year. If you have information about a laser strike, or see someone pointing a laser at an aircraft, call your local FBI field office or dial 911.
Fourth Circuit Court of Appeals Affirms Freddie Grant's Federal ConvictionRead the Press Release
Contact Person: Stacey Haynes (803) 929-3000
Columbia, South Carolina ----- The United States Attorney’s Office stated today that the Fourth Circuit Court of Appeals issued a published opinion today affirming the federal conviction of FREDDIE GRANT, age 54, of Elgin, South Carolina. The written opinion may be found at http://www.ca4.uscourts.gov/opinions/daily-opinions. The Fourth Circuit Court of Appeals heard oral arguments on the case on March 26, 2014, before a special session of the court held at the University of South Carolina School of Law. GRANT is currently serving a 212 months (17.6 years) imprisonment federal sentence for being a felon in possession of ammunition, in violation of Title 18, United States Code, Sections 922(g)(1) and 924(e). GRANT was convicted in January 2013, following a one-day trial in federal court in Columbia. Senior United States District Judge Cameron McGowan Currie imposed the sentence on April 18, 2013, which will be followed by five (5) years of supervised release.Founder of USA Harvest Guilty of Embezzling from the Charity and Tax FraudRead the Press Release
– Hugh “Stan” Curtis admits to stealing $183,354 in charitable donations
– Curtis failed to report $553,891.67 in income from donations made to USA HarvestLOUISVILLE, Ky. – USA Harvest founder, Hugh “Stan” Curtis pleaded guilty in United States District Court this afternoon before Chief Judge Joseph H. McKinley Jr, to a seven count federal indictment charging him with mail fraud, money laundering and filing false income tax returns with the Internal Revenue Service, announced David J. Hale, United States Attorney for the Western District of Kentucky.
“Stan Curtis used his position as sole officer of USA Harvest to divert donations meant for the poor and hungry – our neediest citizens,” stated U.S. Attorney David J. Hale. “He is now being held accountable for his actions. The investigation and prosecution of crimes against charitable entities will remain a priority of my office. Crimes such as this impact the entire community.”
Hugh “Stan” Curtis, 65, of Louisville, Kentucky, admitted that from September 2005 through September 2007, he stole $183,354 in donations that he solicited on behalf of USA Harvest, non-profit, I.R.C. 501(c)(3) organization he founded. Of these donated funds, Curtis acknowledged that he deposited $164,620 into his personal account and cashed donation checks totaling $18,734 – and thereafter used the funds for his personal benefit. The $164,620 includes checks written to USA Harvest on August 29, 2007 for $20,000 from Play Like the Pros, LLC and a September 5, 2007 donation from Richemont North America, Inc., for $25,000 which Curtis deposited into his own personal bank account and used for his own personal gain. Curtis did not report the $183,354 as income with the Internal Revenue Service.
Curtis also admitted that from 2005 through 2008, he failed to report to the Internal Revenue Service approximately $341,646 in personal income derived from donations made to USA Harvest. From 2005 through 2008 Curtis falsely included approximately $353,165 in unreimbursed travel expense deductions on his federal income tax returns. Of the $553,891.67 in unreported income, Curtis used approximately $370,537.67 in USA Harvest funds to pay for personal meals, personal travel and personal entertainment expenses. In total, defendant Curtis failed to pay $270,000 in federal income tax from calendar years 2005 through 2008.
Curtis admitted to filing false tax returns with the Internal Revenue Service. In 2005, Curtis failed to report approximately $160,549.56 in income and falsely deducted approximately $134,623 in unreimbursed travel expenses from USA Harvest on his 2005 federal income tax return filed on April 15, 2006. For the year 2006 Curtis failed to report approximately $217,085.18 income and falsely deducted approximately $130,739 in unreimbursed travel expenses from USA Harvest on his 2006 federal income tax return filed on May 9, 2007. For the year 2007 Curtis failed to report approximately $97,264.48 and falsely deducted approximately $87,803 in unreimbursed travel expenses from USA Harvest on his federal income tax return filed on April 15, 2008. For the year 2008 Curtis failed to report approximately $78,992.45 in income from USA Harvest on his 2008 federal income tax return filed on October 16, 2009. The return was filed by Curtis and signed under the penalty of perjury.
Curtis was determined to be competent to enter a guilty plea by Magistrate Judge Dave Whalin, following an earlier competency hearing held in U.S. District Court on November 8, 2013.
“Honest American taxpayers deserve to know that there are consequences for individuals who intentionally try to dodge their tax obligations. IRS Criminal Investigation will continue to investigate those who abuse the tax system and avoid paying their fair share. No one is above the law,” stated Christopher Henry, Special Agent in Charge, IRS Criminal Investigations-Nashville Field Office.
At sentencing, the United States will recommend a sentence of 24 months in prison and inform the court that it should order payment of a total of $183,354 in restitution. Restitution to the IRS will be handled independently by the civil division of the IRS, and the amount owed in taxes will be calculated independently by the IRS.
This case is being prosecuted by Assistant United States Attorney Bryan Calhoun and was investigated by the Internal Revenue Service, Criminal Investigations Division.
Former St. Joseph Police Detective Pleads Guilty to Withholding Information about Illegal FirearmRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a former longtime detective with the St. Joseph, Mo., Police Department pleaded guilty in federal court today to withholding information about a prohibited person who illegally possessed a firearm used in a gang-related shooting.
Scott Thomas Coates, 42, of St. Joseph, pleaded guilty before U.S. District Judge Dean Whipple to the felony charge of misprision of a felony. Under the terms of today’s plea agreement, Coates was forced to resign from the St. Joseph Police Department and may never be employed in any law enforcement-related job in the future.
By pleading guilty today, Coates admitted that between Oct. 24, 2007, and Sept. 7, 2010, he had knowledge that Corey Andrew Barr was in illegal possession of a firearm, but failed to inform his superior officers of that offense when they asked him about Barr’s conduct.
Under federal law, Barr was prohibited from possessing a firearm due to his domestic violence conviction. Coates admitted that on multiple, separate occasions over a period of time, he failed to disclose to his superior officers that Barr illegally possessed the firearm. Coates’s superior officers directly questioned him about Barr’s conduct during a gang-related shooting on Oct. 18, 2007, near 22nd and Messanie in St. Joseph. Barr brandished a Smith and Wesson .40-caliber handgun and repeatedly fired at other persons during the shootout.
The handgun was returned to Barr on Sept. 1, 2010. Barr was arrested on Sept. 7, 2010, when St. Joseph police officers responded to a disturbance call involving people with firearms, including assault rifles. A witness told officers that one of the men involved in the disturbance was walking through a nearby park. Officers located Barr in the park; he was carrying the loaded handgun in a holster on his waist. Barr was indicted by a federal grand jury for illegally possessing a firearm. After pleading guilty, Barr was sentenced to 47 months in federal prison.
Under the terms of today’s plea agreement, the government will recommend a sentence of probation. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by U.S. Attorney Tammy Dickinson and Deputy U.S. Attorney Gene Porter. It was investigated by the FBI, with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives and the cooperation of officers from the St. Joseph, Mo., Police Department.Former Hollywood Business Figure Arrested in Tax ConspiracyRead the Press Release
Indictment Alleges that Millions Were Diverted from Leading Payroll Company
LOS ANGELES – The former CEO of Axium International, Inc., which was a leading Hollywood payroll services company until its collapse in 2008, has been arrested on federal tax charges that allege he took millions of dollars of company funds and failed to report the income to the IRS.
John Visconti, 71, of Beverly Hills, was arrested Monday without incident by special agents with IRS - Criminal Investigation at a Los Angeles Superior Court facility where he had gone to appear on an unrelated matter.
Visconti was arraigned and the three-count indictment against him was unsealed during a hearing late Monday afternoon in United States District Court. Visconti entered a not guilty plea to the charges, and a trial was scheduled for July 29.
Axium was one of the largest payroll services companies serving the entertainment industry, at its height processing hundreds of millions of dollars in payroll for its clients. As the payroll services provider and employer of record for its clients, Axium regularly submitted payroll tax returns to the IRS and the tax authorities of several states. The filing of the tax returns regularly generated tax refunds. Axium collapsed in 2008, after revelations that it owed tens of millions of dollars in payroll taxes, which led to Axium’s lender foreclosing on its bank accounts. A Chapter 11 bankruptcy case for Axium, filed in January 2008, remains an active case.
According to the indictment, which was returned by a federal grand jury on May 28, Visconti and another Axium officer used a variety of mechanisms to divert millions from Axium. In some cases, Visconti and his co-conspirator allegedly pocketed tax refunds that should have gone to to Axium and its subsidiaries. The indictment alleges that Visconti and his co-conspirator opened secret bank accounts in the names of Axium and its subsidiaries in which to deposit the purloined refund checks.
The indictment further alleges that, for more than two years, Visconti and his co-conspirator took weekly cash payments from Axium that averaged $8,000. Furthermore, Visconti and his co-conspirator allegedly formed a construction consulting company that billed Axium for $570,000 worth of services and they concealed from Axium that they were profiting from the arrangement. And, Visconti arranged for about half of the net salary paid to a purported Axium employee – approximately $82,000 – to be cycled back to a bank account controlled by Visconti.
Despite diverting millions of dollars from Axium, Visconti reported none of the diverted funds on his federal income tax returns, the indictment alleges.
The indictment charges Visconti with conspiracy, tax evasion and filing a false tax return. If convicted of the three counts, Visconti would face a statutory maximum sentence of 13 years in federal prison.
During Monday’s hearing, a United States Magistrate Judge ordered Visconti freed on a $100,000 bond, but he will be subject to electronic monitoring during his pre-trial release.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
The investigation into Visconti was conducted by IRS - Criminal Investigation.
Release No. 14-069
Former Grangeville Postal Employee Sentenced for Embezzling MoneyRead the Press Release
COEUR D’ALENE – Mari A. Mort, 46, of Grangeville, Idaho, was sentenced today in United States District Court to five years of probation, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill also ordered Mort to pay $7,721.58 in restitution. Mort pleaded guilty to the charge of misappropriating postal funds in March 2014.
According to court documents between February 14, 2011, and June 13, 2013, Mort, who was employed at the U.S. Post Office in Grangeville, Idaho, stole money from Water Oz, a company located just outside Grangeville. Mort embezzled funds by charging Water Oz for packages the company did not mail and refunding the money to herself.
The case was investigated by the Office of Inspector General for the United States Postal Service.
Former District of Columbia Council Candidate Pleads Guilty to Conspiring to Violate D.C. Campaign Finance Laws-Campaigns Secretly Received More Than $30,000 from D.C. Businessman-Read the Press Release
WASHINGTON – Kelvin Robinson, a former candidate for the Council of the District of Columbia, pled guilty today to a felony charge for conspiring to defraud the District of Columbia’s Office of Campaign Finance by receiving and concealing campaign contributions in excess of those permitted under D.C. campaign finance laws.
The guilty plea was announced by U.S. Attorney Ronald C. Machen Jr., Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, and Thomas J. Kelly, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Robinson, 53, pled guilty in the Superior Court of the District of Columbia to a charge of conspiring to violate District of Columbia campaign finance laws by defrauding the District of Columbia’s Office of Campaign Finance. The Honorable Anita Josey-Herring scheduled sentencing for August 13. The charge carries a statutory maximum of five years in prison and potential financial penalties. Under the Court’s voluntary sentencing guidelines, the parties have agreed that Robinson faces a range of one to 12 months in prison, or, possibly, probation.
The guilty plea calls for Robinson to cooperate fully in an ongoing investigation. The charge involves contributions to Robinson’s 2010 campaigns for At-Large Member of and for the Ward 6 seat on the Council of the District of Columbia. Robinson admitted that about $33,500 was secretly channeled to his campaigns from businessman Jeffrey E. Thompson.
Thompson is the former chairman, chief executive officer, and majority owner of Thompson, Cobb, Bazilio and Associates (TCBA), a corporation that provided accounting, management, consulting, and tax services. He also is the former chairman, chief executive officer, and owner of D.C. Healthcare Systems, Inc. (DCHSI), an investment holding and for-profit corporation. Both companies generated millions of dollars in government contracts.
Thompson and five others earlier pled guilty to charges involving Thompson’s illegal contributions to numerous federal and District of Columbia campaigns. Others who have pled guilty include Eugenia C. Harris, the owner of two businesses in the District of Columbia; Lee A. Calhoun, an executive for TCBA; Stanley Straughter, the owner of a business based in Philadelphia; Vernon Hawkins, who was a volunteer advisor in 2010 for a 2010 mayoral campaign; and Troy White, the owner of a marketing company based in New York.
Another person, former District of Columbia Council member Michael A. Brown, pled guilty to charges in an unrelated bribery investigation. In those proceedings, he publicly admitted that his campaign committees had secretly received money from Thompson.
As part of Thompson’s guilty plea, on March 10, 2014, he agreed to cooperate fully in an ongoing investigation. No date has been set for his sentencing.
“Today Kelvin Robinson became the second candidate for political office to publicly admit to taking illegal campaign cash from Jeff Thompson,” said U.S. Attorney Machen. “Although Mr. Robinson conspired to engage in illicit shadow campaign activities with Mr. Thompson in 2010, he should be commended for having the courage to come forward today, save the taxpayer the cost of a trial, and own up to his illegal conduct.”
“Today, Mr. Robinson admitted to concealing in-kind contributions to his campaign for D.C. Council and filing false reports to the D.C. Office of Campaign Finance,” said Assistant Director in Charge Parlave. “Campaign finance laws are in place to ensure fairness in our elections so the people’s interests are realized. Accepting illegal contributions is unacceptable and the FBI remains vigilant to such abuse. We urge anyone with information about fraud or corruption to come forward and contact the FBI.”
According to a statement of offense submitted as part of today’s guilty plea, Robinson had two principal campaign committees in 2010. One was for an At-Large seat. Ultimately, Robinson decided instead to pursue election as the Ward 6 Council representative, and a second campaign committee was formed. Robinson did not win the Democratic primary election.
Robinson admitted that Thompson, with Robinson’s knowledge, provided in-kind contributions, financing “shadow campaigns.” Thompson channeled much of this money through Harris, according to the statement of offense. In May 2010, for example, Thompson made about $7,500 in contributions in coordination with Robinson’s At-Large campaign. Also, from May 2010 until September 2010, Thompson made about $26,000 in contributions to Robinson’s Ward 6 campaign. Among other things, the money was used to purchase yard signs, banners, posters, and t-shirts, and fund get-out-the-vote efforts, as well as to pay rent for a campaign office.
The District of Columbia Campaign Act imposes limits on the amount of money that can be contributed to a District of Columbia candidate and that candidate’s principal campaign committee. It also prohibits any person or corporation from making a contribution in the name of another, including by reimbursement. Finally, it requires principal campaign committees to file periodic reports of receipts and disbursements.
The law limits the amount that an individual or entity can contribute in the aggregate in the primary and general elections to any one candidate for At-Large member of the D.C. Council and the campaign committee of that candidate to $1,000. It likewise has a $500 limit for candidates seeking election to Ward seats and their campaign committees.
In his guilty plea, Robinson admitted that he caused his campaign committees to file false and misleading reports to the D.C. Office of Campaign Finance by concealing the excessive and unreported in-kind contributions provided directly and indirectly by Thompson.
In announcing the guilty plea, U.S. Attorney Machen, Assistant Director in Charge Parlave, and Special Agent in Charge Kelly commended the work of those who investigated the case from the FBI’s Washington Field Office and IRS-CI.
They also expressed appreciation for the work of Assistant U.S. Attorneys Michael K. Atkinson, Loyaan A. Egal, Ellen Chubin Epstein, Lionel André, Jonathan P. Hooks, Ephraim “Fry” Wernick and Ted Radway, of the Fraud and Public Corruption Section of the U.S. Attorney’s Office for the District of Columbia, who are prosecuting cases in the investigation.
Finally, they acknowledged the efforts of others who worked on the case from the U.S. Attorney’s Office, including Deborah Connor, Chief of the Fraud and Public Corruption Section, as well as Criminal Investigators Matthew J. Kutz, Mark Crawford, Melissa Matthews, and Durand Odom; Forensic Accountants Crystal Boodoo and Maria Boodoo; Paralegal Specialists Krishawn Graham, Tasha Harris, and Corrine Kleinman; Former Paralegal Specialists Shanna Hays and Nicole Wattelet; and Legal Assistant Angela Lawrence.
14-129Former DISD Employee and Co-Conspirator Arrested on Mail Fraud ConspiracyRead the Press Release
DALLAS — A former employee with the Dallas Independent School District (DISD) and her co-conspirator were arrested by U.S. Postal Inspectors this morning in Irving, Texas, on an indictment returned by a federal grand jury last month charging each of them with one count of conspiracy to commit mail fraud, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Maricella Reed, 40, and Adrian Bevelle, 31, appeared this afternoon before U.S. Magistrate Judge Renée Harris Toliver for their initial appearances and both were released on bond.
Reed was employed by the DISD as a data specialist in the worker’s compensation section of the district’s Risk Management Department. The indictment alleges that from May 7, 2009 to May 9, 2011, Reed used her position at DISD to cause approximately $160,000 in unauthorized payments to Bevelle.
Specifically, Reed altered information sent to Accounts Payable, substituting Bevelle’s name in place of legitimate claimants and adding Bevelle’s name and payment amounts to the list of legitimate claimants. She also created and submitted payment voucher forms for Bevelle in various amounts. Based on the information Reed provided, Accounts Payable issued checks to Bevelle and mailed the checks to him at addresses in Dallas and Irving. Bevelle received, endorsed and cashed the checks at various locations.
An indictment is an accusation by a federal grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty. However, if convicted, conspiracy to commit mail fraud carries a maximum statutory penalty of 20 years in federal prison and a $250,000 fine. Restitution could also be ordered.
The U.S. Postal Inspection Service is investigating. Special Assistant U.S. Attorney Michelle Allen-McCoy is prosecuting.
(Download Factual Basis)
Former Charlotte Mayor Pleads Guilty to Public CorruptionRead the Press Release
Patrick Cannon Admitted To Carrying Out A Bribery Scheme And Accepting At Least $50,000 In Exchange For Using His Official Position To Benefit His Payors
CHARLOTTE, N.C. – Former Charlotte Mayor Patrick D. Cannon pleaded guilty today to one count of honest services wire fraud, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division.
A federal criminal bill of information charging the former mayor and a filed plea agreement were unsealed on Monday, June 2, 2014. Cannon, 47, appeared in court today and formally pleaded guilty to the charge before U.S. Magistrate Judge David S. Cayer.
“Former Mayor Cannon used his elected official position to enrich himself at the expense of the City of Charlotte,” said U.S. Attorney Tompkins in making today’s announcement. “Through his actions, Cannon betrayed the trust of his constituents and his peers, compromised the integrity of our local government and damaged Charlotte’s good reputation as a city that does business the honest way. Cannon will now be held accountable for depriving the citizens of Charlotte of their right to his honest and faithful services and for putting personal gain over the greater good. As we move forward, let one message be clear: My office will continue to investigate allegations of public corruption and go after anyone who uses public office as a means of getting rich. Charlotte has no room for corrupt politicians.”
“This nearly four year investigation was complex and required a great deal of diligence and dedication from the FBI Special Agents and prosecutors involved. By its very nature, public corruption is conducted in a shroud of secrecy and can be difficult to detect. Fortunately, the FBI has the capability to use a number of lawful, sophisticated tools and techniques to capture key evidence. The criminal actions of Patrick Cannon brought undeserved shame and embarrassment upon the city of Charlotte. As the city begins to heal, citizens should be reassured, this investigation does not end with today’s guilty plea. FBI agents will continue to follow the trail of evidence in this case and look into related allegations as the investigation moves forward,” said John A. Strong, Special Agent in Charge of the FBI in North Carolina.
According to the criminal bill of information to which Cannon pleaded guilty, other documents filed in this case and statements made in court:
I. Background
Beginning in on or about December 7, 2009, and continuing through March 26, 2014, Cannon devised a bribery scheme and used his official position to enrich himself. During the course of the scheme, Cannon was an elected official serving as a member of the City Council, and/or Mayor Pro Tem or Mayor of the City of Charlotte. During the relevant time period, Cannon solicited and accepted gifts, payments and other things of value in exchange for a pattern of official actions favorable to the persons who secretly paid him. Specifically, Cannon accepted a total of at least $50,000 from a Charlotte business owner and two undercover agents posing as investors interested in opening businesses in Charlotte. Cannon accepted the bribes in exchange for use of his official position on an “as needed” basis, including communicating with City and County officials and others to assist his payors’ projects and intervening with any zoning, permitting and transportation issues, among others. Cannon’s actions and fraudulent bribery scheme defrauded the citizens and the government of Charlotte and deprived them of their right to Cannon’s honest and faithful services.
II. The Scheme to Defraud
a. The Scheme to Solicit and Accept Things of Value from Businessman No. 1 (“BM1”)
The criminal bill of information identifies BM1 as the owner of a company that owns and operates a live adult entertainment club in the Charlotte area (the “Club”). During the relevant time period, Cannon secretly solicited, accepted and agreed to accept periodic payments and checks from or on behalf of BM1 in exchange for Cannon’s use of his elected offices to exert influence over City zoning, planning and transportation officials, as needed or required by BM1. Specifically, in and around January 2013, Cannon accepted approximately $2,000 in cash from BM1 in exchange for Cannon’s influence in relocating the Club away from the proposed LYNX Blue Line Extension (BLE), thereby enabling BM1 to keep his establishment open as an adult club.
b. The Scheme to Solicit and Accept Things of Value from Undercover Employee No. 1 (“UCE1”)
UCE1 was an FBI undercover agent who Cannon believed to be a business manager for a Chicago-based venture capital company interested in opening a nightclub/bar in Charlotte at a property identified as the “Firehouse.” The selected location had numerous zoning and parking issues. Beginning no later than December 12, 2012 through on or about March 26, 2014, Cannon secretly solicited, accepted and agreed to accept $12,500 in cash and the occasional use of an apartment in exchange for Cannon’s influence and intervention as needed to assist UCE1 in dealing with City and County officials and working out any zoning, licensing and permit issues associated with the selected property.
c. The Scheme to Solicit and Accept Things of Value from Undercover Employee No. 2 (“UCE2”)
UCE2 was an FBI undercover agent, who Cannon believed to be a Las Vegas real estate developer looking to secure foreign investors to finance commercial real estate developments in Charlotte. Beginning no later than May 21, 2013 through on or about March 26, 2014, Cannon secretly solicited, accepted and agreed to accept a total of $36,000 in cash, a trip to Las Vegas and the occasional use of an apartment in exchange for use of his elected position to create and make false representations on behalf of UCE2 to individuals Cannon believed to be foreign investors. Specifically, at the request of UCE2, Cannon traveled to Las Vegas, and in his official capacity as Charlotte’s Mayor Pro Tem delivered a presentation to purported investors during which Cannon falsely told them that he had successfully used his position in the past to assist with a similar project in Charlotte. Over the course of his dealings with UCE2, Cannon promised to use his new position as Mayor to make contacts and exert his official influence over City and County officials to secure federal financing for transportations projects that would benefit UCE2’s company; offered to use and used the Mayor’s office to persuade one of UCE2’s purported skeptical investors to invest in UCE2’s company; and promised to give UCE2’s company preferential treatment over other potential developers.
During the relevant time period, Cannon never disclosed to any City and County employees whom he contacted his relationship with BM1, UCE1 and UCE2 or that he was receiving cash, gifts and other things of value from them in exchange for use of his official position.
III. The Charged Offense and Penalties
Cannon has pleaded guilty to one count of honest services wire fraud. In pleading guilty, Cannon has admitted to defrauding and depriving the citizens of Charlotte and the Charlotte government of their right to Cannon’s honest and faithful services through bribery and the concealment of material information.
The charge carries a maximum prison term of 20 years, a $250,000 fine or both. According to the terms of the plea agreement, Cannon has also agreed to pay restitution. Cannon’s final sentence and restitution amount will be determined by a federal judge at sentencing. Cannon is currently released on bond and a date for his sentencing hearing has not been set.
The case is being prosecuted by Assistant United States Attorneys Michael E. Savage and Craig D. Randall of the U.S. Attorney’s Office in Charlotte. The ongoing investigation is being handled the FBI.
A copy of this press release and related documents can be found at:
http://www.justice.gov/usao/ncw/calendar.htmlFormer Alabama Corrections Officers Sentenced for Identity Theft and Tax FraudRead the Press Release
Bryant Thompson was sentenced today to serve 120 months in prison and Quincy Walton was sentenced to serve 84 months in prison for their roles in a stolen identity refund fraud scheme, announced Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama. Thompson and Walton, both former Alabama corrections officers, were convicted of conspiracy to defraud the United States following a week-long jury trial in January 2014. Thompson was also convicted of seven counts of wire fraud and seven counts of aggravated identity theft, and Walton was also convicted of one count of aggravated identity theft. In addition to their prison sentences Thompson and Walton have been ordered to pay $176,114 in restitution.
According to evidence introduced at trial, Thompson was assigned to the shift clerk position at an Alabama state prison, which gave him access to the personal identifying information of every inmate in the custody of the Alabama Department of Corrections, past and present. Thompson and Walton, his former co-worker, used information stolen from the databases to file false federal income tax returns in the names and Social Security numbers of inmates.
According to the evidence introduced at trial, the investigation revealed that several internet protocol (IP) addresses were used to file the fraudulent tax returns, including one IP address directly assigned to Thompson’s residence at the time certain tax returns were filed. Circumstantial evidence tied both Thompson and Walton to the other IP addresses.
Also according to the evidence introduced at trial, the two directed the stolen tax refunds onto prepaid debit cards and requested other refunds in the form of U.S. Treasury checks. Evidence showed that the cards and checks were mailed to several addresses associated with Thompson and Walton in Montgomery and Prattville, Alabama, and that several of the checks were cashed at a local retail store by Walton’s uncle and by a local check casher. During this time, Thompson purchased a new paint job and new rims for his SUV and later purchased a BMW.
According to evidence from the sentencing, altogether Thompson and Walton filed over 180 false tax returns claiming over $750,000 in tax refunds. The IRS was able to identify many of the returns as fraudulent when filed and did not pay the refunds claimed, but was defrauded into issuing a total of $176,114 in improper refunds.
The case was investigated by IRS-Criminal Investigation and was prosecuted by Trial Attorneys Jason Poole and Alexander Effendi of the Tax Division, with the assistance of the U.S. Attorney’s Office for the Middle District of Alabama.
More information about the Tax Division and its enforcement efforts against stolen identity/refund crimes may be found at www.justice.gov/tax.Federal Grand Jury IndictmentsRead the Press Release
Contact Person: Stacey Haynes (803) 929-3000
Columbia, South Carolina ----- United States Attorney Bill Nettles stated today that a Federal Grand Jury in Columbia, South Carolina, returned Indictment(s) against the following: Columbia Man Charged with Trafficking Counterfeit Medications
Arthur Fleming Moler, age 51, of Gaston, was charged in a four count Indictment with Trafficking in Counterfeit Goods, Copyright Infringement, Smuggling and Theft of Government Funds, in violation of Title 18, United States Code, Sections 2320(a), 506(a)(1), 545 and 641 respectively. The maximum penalty he could receive is 20 years imprisonment and a fine of $2,000,000. The case was investigated by Immigration and Customs Enforcement and the United States Postal Service and is assigned to Assistant United States Attorney T. DeWayne Pearson of the Columbia office for prosecution.
The United States Attorney stated that all charges in these Indictments are merely accusations and that all defendants are presumed innocent until and unless proven guilty.Fall River Gang Leader Sentenced to 22 YearsRead the Press Release
BOSTON – Following his conviction on drug and weapons charges, an armed career criminal affiliated with the Bloods street gang was sentenced today to 22 years in federal prison.
U.S. District Judge F. Dennis Saylor IV sentenced Ernesto Monell, 35, of Fall River, to 262 months in prison and three years of supervised release. In December 2013, a jury convicted Monell of possessing a firearm and ammunition and possessing crack cocaine with intent to distribute. In 2012, Monell was arrested after officers executed a search warrant at his apartment where they found him barricaded alone holding a pistol. Officers subsequently found ammunition, as well as 37 rocks of crack cocaine, drug scales, and other drug paraphernalia.
Monell, a lifelong violent criminal, has 11 felony convictions, including five involving violence or firearms. Monell, who is affiliated with the Bloods, obstructed justice on two occasions during the trial. First, he was caught on tape attempting to convince his former girlfriend to falsely testify that the drugs and guns found at the apartment belonged to her, telling her “you gotta do you now because if you don’t do it, I’m done.” When she refused to take the rap for him, Monell moved on to what he called “Plan B”: convincing a fellow gang disciple, who is serving 9-10 years in state prison for attempted murder, to falsely testify on Monell’s behalf.
Explaining the imposed sentence, Judge Saylor noted that society needs to be protected from violent criminals and gang members such as Monell. Judge Saylor also noted that, since he has been detained in connection with this case, Monell has been involved with additional violent incidents in prison, including a gang-related prison riot in Rhode Island which has resulted in a separate federal conviction. Judge Saylor also found that Monell’s obstruction of justice warranted a serious prison sentence.
“This sentence mirrors the Justice Department’s commitment to removing dangerous, violent criminals from the streets,” said United States Attorney Carmen M. Ortiz. “Individuals who possess firearms, sell illegal drugs and threaten community safety will be held responsible for their criminal activity.”
“Dangerous criminal offenders instill fear through intimidation and the use of violence,” said Special Agent in Charge Daniel J. Kumor of the Bureau of Alcohol, Tobacco, Firearms and Explosive’s Boston Field Division. “ATF’s priority is combating violent crime and removing those dangerous offenders from the communities on which they prey.”
U.S. Attorney Ortiz and SAC Kumor made the announcement today. The case was prosecuted by Assistant U.S. Attorneys David S. Schumacher of Ortiz’s Health Care Fraud Unit and Glenn A. MacKinlay of Ortiz’s Strike Force Unit.
Ex-Controller of Court Services Firm Admits Embezzling $3.3 MillionRead the Press Release
SANTA ANA, California – The former controller of a company that provides supervision services, including electronic monitoring programs, to courts and probation departments pleaded guilty today to federal charges of embezzling well over $3 million from the company over the course of two years.
Steven A. Hagstrom, 37, of Anaheim, who was an accountant and then controller of the Irvine-based Sentinel Offender Services, LLC, pleaded guilty this afternoon to one count of embezzlement before United States District Judge David O. Carter.
As controller of Sentinel, Hagstrom had access to Sentinel’s bank accounts where fines, court fees and restitution payments from criminal defendants were held in trust. The accounts also held money paid to Sentinel for services provided to state and federal court systems. Beginning in early 2012 and continuing until April 2013, Hagstrom transferred approximately $3,338,197 from Sentinel’s bank accounts to bank accounts he controlled, where they could be used for his own benefit.
Judge Carter is scheduled to sentence Hagstrom on September 29. The embezzlement count carries a statutory maximum sentence of 10 years in federal prison. About half of the embezzled money has already been returned to Sentinel, and Hagstrom has agreed to make full restitution to his former employer.
The investigation into Hagstrom was conducted by the Federal Bureau of Investigation and IRS - Criminal Investigation.
Release No. 14-070
Eight Individuals Charged in Four Separate Cyber Fraud SchemesRead the Press Release
Miami Task Force Targets Cyber Fraud
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announce the arrests of eight individuals charged in four separate cases for their alleged participation in various cyber fraud schemes.
The cases announced today are, in large part, the result of the Miami Cyber Task Force (MCTF) initiative launched by the FBI in January 2014. The MCTF initiative is designed to combat the growing cyber fraud threat in South Florida. The MCTF initiative brings together federal, state and local law enforcement to investigate and prosecute federally a myriad of cyber fraud offenders, including personal identity thieves, hackers, access device manufacturers, runners and others.
U.S. Attorney Ferrer, joined by members of the MCTF, announce the following cases:
1. United States v. Kenneth Key, et al., Case No. 14-60122-Cr-Zloch. United States v. Kaleb Trotman, et al., Case No. 14-60123-Cr-Hurley
On May 29, 2014, Kenneth Key, 32, of Pompano Beach, Jonathan Mackey, 23, of Fort Lauderdale, Quenikka Brown, 28, of Atlanta, Georgia, Kaleb Trotman, 25, of Pompano Beach, Tsafiq Samuels, 24, of Miramar, and Tanya Morgan, 27, of Miami Gardens, were charged by indictment in two related schemes to steal AT&T customer information for the purpose of committing cell phone insurance fraud.
According to the indictments, defendants Key, Mackey, Brown, Samuels, and Morgan were employed as customer service representatives at two private companies that operated call centers located in Broward County, on behalf of AT&T. As customer service representatives, the defendants used their access to corporate databases to steal AT&T customer personal identification and account information.
The defendants are charged with conspiring to sell the stolen AT&T customer information to co-conspirators, including Trotman, who used the information to impersonate AT&T customers and submit fraudulent cell phone insurance claims.
The indictments also charge the defendants with conspiracy to commit computer fraud and aggravated identity theft.
The case is being prosecuted by Assistant U.S. Attorney Christopher B. Browne.
2. United States v. Richard Garcia Diaz, Case No. 14-2682-MJ-JG
On June 2, 2014, Richard Garcia Diaz, 50, of Hialeah, was charged by complaint for his involvement in a scheme to steal thousands of cable boxes and modems and to illegally modify these cable boxes and modems to receive free service.
According to the complaint, between April 2013 and July 2013, thousands of cable boxes and modems were ordered from Comcast with similar names and identity information for delivery to addresses in or around Coral Way in Miami. FBI surveillance revealed that co-conspirator J.L.B. (a UPS driver) took these Comcast packages loaded with cable boxes and/or modems to addresses on his delivery route and diverted them to co-conspirator J.R.P.’s residence in Miami. Post-arrest, J.R.P. advised that J.R.P. provided the cable boxes and modems to the defendant so that the modems could be provisioned to receive unlimited service.
The defendant was charged with conspiracy to commit mail fraud and unauthorized reception of cable service.
This case is being prosecuted by Assistant U.S. Attorney Michael N. Berger.
3. United States v. Ricardo Prieto, Case No. 14-20389-Cr-Moreno
On May 30, 2014, Ricardo Prieto, 49, of Miami, was charged by indictment with access device fraud and aggravated identity theft.
According to the indictment, Prieto trafficked in and used counterfeit credit cards on several dates from August 2011 through February 2012 and used the means of identification of a real person in connection with that activity.
The case is being prosecuted by Assistant U.S. Attorney Frank Maderal.
If convicted, the defendants face the following possible maximum terms in prison: conspiracy to commit mail fraud: 20 years in prison; access device fraud: 10 or 20 years in prison; conspiracy to commit access device fraud: five years in prison; conspiracy to commit computer fraud: five years in prison; and aggravated identity theft: mandatory two years in prison consecutive to any sentence.
Mr. Ferrer commended the investigative efforts of all the federal, state and local agencies participating in the MCTF, including the FBI, the City of Miami Police Department, the Miami-Dade Police Department, the Hialeah Police Department, the Bal Barbour Police Department, the Davie Police Department, the Florida Division of Insurance Fraud, and the Palm Beach Sherriff’s Office.
A complaint or indictment is only an accusation and the defendant is presumed innocent until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Dubuque Man Sentenced to Ten Years' Imprisonment for Unlawful Possession of A Firearm by A FelonRead the Press Release
A man who shot someone in a bar fight was sentenced today to ten years in federal prison.
Tyrone Clifton, age 27, from Dubuque, Iowa, received the prison term after a March 11, 2014, guilty plea to one count of possession of a firearm by a felon.
In a plea agreement, Clifton admitted that on the morning of November 22, 2013, he was involved in an altercation in a Dubuque bar and shot someone. Clifton fled before the police arrived but was apprehended later that day in a car with a loaded 9mm pistol. Clifton had previously been convicted in Cook County, Illinois, of possession of a controlled substance with intent to deliver in 2005, possession of a controlled substance in 2006, delivery of a controlled substance in 2008, escape in 2008, and aggravated unlawful use of a weapon by a felon in 2011, all felony offenses.
Clifton was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Clifton was sentenced to 120 months’ imprisonment. A special assessment of $100 was imposed. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Clifton is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Daniel C. Tvedt and investigated by the Dubuque Police Department and the Bureau of Alcohol, Tobacco, and Firearms.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 14-CR-1003.
Defendant Involved in $900,00 BP Fraud IndictedRead the Press Release
United States Attorney Kenyen R. Brown of the Southern District of Alabama announced that Crystal Lani Kitt, a resident of the Washington D.C. metropolitan area, was arrested today by the FBI. Kitt was charged in a seven count Indictment with conspiracy to commit mail fraud and wire fraud and with mail fraud.
It is alleged in the Indictment that Kitt prepared fraudulent BP claims in names of other members of the conspiracy and in names of individuals who were unaware their names and identifies were being. Thereafter, Kitt submitted the false claims to the Gulf Coast Claims Facility (GCCF) or had members of the conspiracy submit them to GCCF. It is also alleged that Kitt and other members of the conspiracy provided one of several mailing addresses to the GCCF, to include but not limited to 2661 Holly Brook Dr., Mobile, Alabama 36605 and 557 Mohawk Street, Mobile, Alabama 36605, knowing those addresses would be used as mailing addresses for checks generated by the GCCF in payment for the fraudulent BP claims. The Grand Jury charged that Kitt assisted in submitting more than one-hundred fraudulent BP claims, defrauding the GCCF out of more than $900,000.00. Kitt, it is alleged, deposited someof the checks which were payable to the individuals who had not authorized her to file fraudulent claims into a bank account where she was the only one authorized to conduct business on that account.
The matter was investigated by the FBI and will be prosecuted by AUSA Deborah Griffin. Several individuals who paid Kitt to file false claims for them have also been prosecuted.
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until and unless he or she is proven guilty at trial.
Dallas Man Admits Sex Trafficking of A Minor ChildRead the Press Release
DALLAS — A Dallas man who met a 15-year-old female run-away at a bus station, took her, and made her engage in sex acts for money, pleaded guilty this afternoon in federal court before U.S. Magistrate Judge David L. Horan, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Dereck Johnson, 33, pleaded guilty to one count of sex trafficking of children. If the Court accepts the plea agreement executed between the defendant and the government, the parties agree the appropriate term of imprisonment in this case is 180 months in federal prison. Sentencing is set for September 15, 2014, before U.S. District Judge David C. Godbey.
According to documents filed in the case, on June 1, 2012, a 15-year old female, “Jane Doe,” took $200 from her father before spending the night at a friend’s house. While there, she asked a friend to drive her to a Greyhound station where she bought a ticket, with several transfers, to Arizona where a friend lived. Her bus stopped at the Greyhound station in downtown Dallas, where Johnson approached her. Jane Doe told Johnson she was 15 and that her parents did not know where she was. Johnson told her to go with him, and he would help her find Wi-Fi for her phone. Instead, he called a friend who picked them up and eventually took them to his home.
While at the house, Johnson used methamphetamine and provided it to Jane Doe. When Johnson’s friend came home and discovered Jane Doe was underage, he made them leave. He drove them back to the Greyhound bus station where Johnson and Jane Doe took a taxi to a Flying J Truck stop. There, they got a ride from a truck driver to a Love’s truck stop near another Greyhound station in Dallas. At that bus station, Jane Doe used a Greyhound employees’ cellphone to call her father to come pick her up, but she was unable to describe exactly where she was. She rushed off the phone and Johnson was waiting for her. He told her not to contact her father again, that she was staying with him, and she needed to come with him. Jane Doe’s father called the number back and spoke to a Greyhound employee who told him Jane Doe had left with a man.
Johnson took Jane Doe back to the Love’s truck stop with him, where he begged for money. Johnson found a truck driver who was willing to drive them to Houston. Johnson told Jane Doe they needed to make money so she needed to go into a specific man’s truck cab. After entering the man’s truck cab, the man repeatedly raped her and then provided compensation for the sex.
A few days later, on June 5, 2012, Johnson sent her to take a shower, and while she was in the bathroom at the truck stop, she plugged in her prepaid cellphone and was able to send out a text message for the first time since arriving at the truck stop. She was rescued soon thereafter.
U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) investigated. Assistant U.S. Attorney Cara Foos Pierce is prosecuting.
D&R Car Lot Owners Sentenced to Federal Prison for Flooring Loan FraudRead the Press Release
PORTLAND, Ore. — U.S. District Court Judge Michael Simon sentenced the former owners of D&R Auto Sales, D&R Motors, and D&R Ford/Mercury to federal prison for conspiring to defraud KeyBank in a car flooring loan scheme. On May 27, 2014, Judge Simon sentenced David Spangenberg, 55, to 18 months in federal prison, and sentenced Roger Spangenberg, 52, to one year and one day in federal prison. Upon their release, both Spangenbergs will serve a five-year term of supervised release. Judge Simon also ordered the brothers to pay $2.5 million in restitution to KeyBank.
The Spangenberg brothers owned the now-closed D&R automobile dealerships, formerly located in Hermiston and Enterprise, Oregon, and co-defendant Steven Johnson served as a manager. All three defendants have pled guilty to the bank fraud conspiracy. They have admitted that from January 2007 through August 2008, they conspired to defraud KeyBank in connection with a Floorplan Line of Credit and Security Agreement, known in the automobile industry as a “flooring loan.” KeyBank extended a line of credit to the D&R dealerships to purchase new inventory, but the Spangenbergs and Johnson failed to repay KeyBank after they sold the inventory. The Spangenbergs and Johnson deceived KeyBank into believing the dealerships had not yet sold inventory, including asking customers to return recently purchased automobiles to the dealerships to receive a free service on the day of an audit, and misrepresenting to KeyBank that automobiles not present on the lot were being used as rental cars. The defendants also submitted false Vehicle Identification Numbers (VIN) to KeyBank to receive funding for inventory the dealerships never purchased, and “double floored” vehicles with more than one financial institution. Steven Johnson is scheduled to be sentenced on July 9, 2014.
“Bank fraud victimizes not only the bank and its employees, but also every consumer in this district,” stated U.S. Attorney Amanda Marshall. “Fraudsters who steal from banks will find themselves in federal prison, alongside those who rob banks, for the harm is indistinguishable.”
This case stemmed from a joint investigation by the Internal Revenue Service Criminal Investigation Division and the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorney Stacie Beckerman.
Convicted Felon Sentenced to 110 Months in Prison for Violating Federal Drug Trafficking and Gun LawsRead the Press Release
PADUCAH, Kentucky –Senior United States District Judge Thomas B. Russell sentenced a Fulton, Kentucky, man to 110 months in prison followed by a three-year term of Supervised Release for violating federal drug trafficking and gun laws, announced David J. Hale, United States Attorney for the Western District of Kentucky. White will serve the federal sentence after he completes a current state sentence. There is no parole in the federal system.
Joshua White, age 23, of Fulton, Kentucky, had previously pleaded guilty to trafficking in methamphetamine and being a felon in possession of a firearm. White had a previous felony conviction for drug trafficking. On or about February 11, 2010, White was convicted in criminal case number 09-CR-00042 in Fulton Circuit (Kentucky) Court, of first degree trafficking in a controlled substance (cocaine) in violation of Ky. Rev. Stat. 218A.1412 and trafficking in a controlled substance within 1,000 yards of a school in violation of Ky. Rev. Stat. 218A.1411.
According to court records, on March 25, 2013, in Fulton County, Kentucky, White knowingly and intentionally possessed with the intent to distribute methamphetamine. On that same date, he possessed a loaded Hi-Point, .380 caliber pistol, bearing serial number P8051850. He used the pistol to shoot at a Kentucky State Police Trooper.
Assistant United States Attorney Jo E. Lawless prosecuted the case. The Kentucky State Police conducted the investigation.
Columbia Man Sentenced to over 15 Years on Firearm and Ammunition ChargeRead the Press Release
Contact Person: Stacey Haynes (803) 929-3000
Columbia, South Carolina ----- United States Attorney Bill Nettles stated today that Charles Tarron Carter, age 28, of Columbia, South Carolina was sentenced today in federal court to 188 months (15.8 years) imprisonment, which will be followed by five (5) years of supervised release. The sentence stemmed from Carter’s earlier guilty plea to being a felon in possession of a firearm and ammunition, in violation of Title 18, United States Code, Sections 922(g)(1) and 924(e). Senior United States District Judge Cameron McGowan Currie imposed the sentence.
Evidence presented at the earlier change of plea hearing established that on the afternoon of June 29, 2011, officers with the Columbia Police Department responded to a burglary alarm at a residence on Muller Avenue. Officers found a door to the residence, as well as a door to an apartment in the back of the residence, ajar. While checking for intruders, officers noticed crack cocaine and a Smith & Wesson .45 caliber handgun in plain view, along with items belonging to Carter, who utilized the rear apartment.
The investigation revealed that Carter is prohibited under federal law from possessing firearms and/or ammunition based upon his prior state convictions. Carter has previously been convicted in state court for burglary 2nd degree of a dwelling (2 separate convictions) and possession with intent to distribute crack cocaine (2 separate convictions). The court determined that Carter was an armed career criminal subject to enhanced penalties on the firearm charge in light of his prior state convictions for violent felonies and serious drug offenses.
The case was investigated by the Columbia Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and was prosecuted as part of the joint federal, state and local Project CeaseFire initiative, which aggressively prosecutes firearm cases. Assistant United States Attorney Stacey D. Haynes of the Columbia office handled the case.Charleston Felon Sentenced to Prison for Illegal Possession of FirearmsRead the Press Release
CHARLESTON, W. Va. – Keary A. Drake, 45, of Charleston, was sentenced today to five months in prison followed by five months of home confinement for being a felon in illegal possession of firearms, United States Attorney Booth Goodwin announced. The firearms have been returned to their lawful owner.
Drake, along with Lucas Lynch, a co-conspirator, entered into a scheme to sell two firearms and split the proceeds of the sale. Drake is prohibited from possessing any guns due to a prior grand larceny felony conviction from April 2, 2002. On September 8, 2013, Drake and Lynch drove to a St. Albans home where they picked up two guns. While driving through St. Albans, St. Albans Patrolman Phillip Bass attempted to pull over Drake for a traffic infraction. Both guns (a Bushmaster .223 rifle and Ithaca shotgun) were in Drake’s car at the time. Drake did not immediately pull over. Lynch jumped from Drake’s car around Rock Lake, South Charleston. Drake continued to evade police until his car engine malfunctioned in South Charleston and he was forced to stop. Drake gave a statement to law enforcement admitting his participation in the scheme and that he knew he was not permitted to possess the firearms. Lynch, Drake’s co-conspirator, also pleaded guilty and is scheduled to be sentenced on July 9, 2014. Lynch faces up to 10 years’ incarceration and a $250,000 dollar fine.
The St. Albans Police Department conducted the investigation, assisted by the United States Bureau of Alcohol, Firearms and Tobacco Enforcement. Assistant United States Attorneys Erik S. Goes and Jennifer Rada prosecuted the matter on behalf of the United States. United States District Judge Thomas E. Johnston imposed today’s sentence.
Buffalo Woman Pleads Guilty to Bank FraudRead the Press Release
BUFFALO, N.Y. - U.S. Attorney William J. Hochul, Jr. announced today that Adlyn Marie Echevarria Robles, 21, of Buffalo, N.Y., pleaded guilty to bank robbery before U.S. Magistrate Judge Leslie G. Foschio. The charge carries a maximum penalty of 20 years in prison, a $250,000 fine, or both.
Assistant U.S. Attorney Mary Catherine Baumgarten, who is handling the case, stated that on July 5, 2013, the defendant entered the M&T Bank at 1580 Hertel Avenue in Buffalo. Robles passed the teller a demand note threatening the use of a weapon. The teller gave the defendant a specific amount of money.
On July 24, 2013, the defendant entered the M&T Bank at 709 Elmwood Avenue in Buffalo and passed the teller a demand note threatening the use of a weapon. The teller gave Robles a specific amount of money.
The plea is the culmination of an investigation by the Federal Bureau of Investigation.
Sentencing will take place at a later date before Chief U.S. District Judge William M. Skretny.Bank Robber Sentenced to 70 Months in Federal Prison for Robbing A Garland, Texas Branch of Bank of AmericaRead the Press Release
DALLAS — A Dallas man, who robbed a Garland, Texas branch of Bank of America last year, was sentenced this afternoon in federal court in Dallas, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Jason Wayne Hulsebus, 34, was sentenced to 70 months in federal prison and ordered to pay $10,090 in restitution, following his guilty plea in February 2014 to one count of bank robbery.
Hulsebus admitted that on October 25, 2013, he robbed the Bank of America, located at 5402 North President George Bush Highway in Garland. When he entered the bank, he approached the teller and passed a piece of paper that stated, “Do not scream! I will not hurt you! Give me all the money in the drawer now!” In fear of her life, the teller placed the cash inside a Wal-Mart bag supplied by Hulsebus. While standing at the teller counter, Hulsebus held a BB pistol in his hand, but because of the counter’s height, the teller never saw the pistol. Hulsebus fled the bank with the money.
Evidence recovered from the robbery indicated Hulsebus was the robber. He was arrested on November 13, 2013, on a federal criminal complaint.
The Garland Police Department and the FBI investigated. Assistant U.S. Attorney Keith Robinson prosecuted.
72 Individuals Indicted for Drug Trafficking in the Municipality of San JuanRead the Press Release
SAN JUAN, Puerto Rico – On May 28, 2014, a federal grand jury in the District of Puerto Rico returned an indictment against 72 defendants charged with conspiracy to possess with intent to distribute controlled substances, announced Rosa Emilia Rodríguez-Vélez, United States Attorney for the District of Puerto Rico. Today, FBI agents and officers of the Puerto Rico Police Department (PRPD) and the San Juan Municipal Police, the agencies in charge of the investigation, executed the arrest warrants with assistance from ATF, and DEA.
The indictment charges 72 individuals with conspiracy to knowingly and intentionally possess with intent to distribute cocaine base (crack), heroin, cocaine, marihuana, Oxycodone (commonly known as Percocet) and Alprazolam (commonly known as Xanax), all within 1,000 feet of the real property comprising the Jardines de Monte Hatillo Housing Project and other areas nearby, all located within the Municipality of San Juan, all for significant financial gain and profit.
The indictment alleges that beginning in 2007, the organization established drug distribution points located at different areas in Monte Hatillo, San Martin Housing Project, Jardines de Berwind Towers, and El Polvorin Ward. Leaders would routinely authorize and instruct other co-conspirators to provide free “samples” of narcotics to “customers” in order to promote the sales of a specific brand of drug at the drug points.Some of the defendants would routinely possess, carry, brandish and use firearms, including “high power” rifles, to protect themselves and the drug trafficking organization from rival gangs. They would have access to different type of vehicles, including but not limited to cars, motorcycles and scooters, in order to transport money, narcotics and firearms. Also, these vehicles would often be used by some of the defendants and their co-conspirators to conduct drive by shooting and to “hunt” members of rival gangs.
As part of the manner and means of the conspiracy, leaders would collect monies from the sales of the drug point to shifts to create a money depository (known as “el pote,” in Spanish) in order to buy weapons and ammunition, for the use of the members of the drug trafficking organization, and/or for the payment of legal fees and matters for the benefit of the members of the drug trafficking organization.The 72 co-conspirators had many roles in order to further the goals of the conspiracy. According to the indictment this organization had 27 leaders/drug point owners/drug point administrators. The remainder defendants acted as enforcers, suppliers, drug processors, runners, sellers, and facilitators. Twenty-one of the individuals are facing one count of using and carrying firearms during and in relation to a drug trafficking crime.
“This investigation and six-count indictment represent a top-to-bottom dismantling of a violent criminal organization intent on polluting our neighborhoods with drugs,” said Rosa Emilia Rodríguez-Vélez, U.S. Attorney for the District of Puerto Rico. “The criminal activity laid out in this indictment shows the lengths people will go to sell drugs, but it should also underscore our commitment to fighting back. Federal and local law enforcement agencies remain committed to work tirelessly to target and eliminate the most significant threats to our communities.”
Assistant U.S. Attorneys Alberto López-Rocafort and Teresa Zapata-Valladares are in charge of the prosecution of the case. If convicted the defendants face a minimum sentence of 10 years up to life in prison. Indictments contain only charges and are not evidence of guilt. Defendants are presumed to be innocent until and unless proven guilty.
2 June 2014
U.S. Leads Multi-National Action Against “Gameover Zeus” Botnet and “Cryptolocker” Ransomware, Charges Botnet AdministratorRead the Press Release
The Justice Department today announced a multi-national effort to disrupt the Gameover Zeus Botnet – a global network of infected victim computers used by cyber criminals to steal millions of dollars from businesses and consumers – and unsealed criminal charges in Pittsburgh, Pennsylvania, and Omaha, Nebraska, against an administrator of the botnet. In a separate action, U.S. and foreign law enforcement officials worked together to seize computer servers central to the malicious software or “malware” known as Cryptolocker, a form of “ransomware” that encrypts the files on victims’ computers until they pay a ransom.
Deputy Attorney General James M. Cole, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, FBI Executive Assistant Director Robert Anderson Jr., U.S. Attorney David J. Hickton of the Western District of Pennsylvania, U.S. Attorney Deborah R. Gilg of the District of Nebraska, and Department of Homeland Security’s (DHS) Deputy Under Secretary Dr. Phyllis Schneck made the announcement.
Victims of Gameover Zeus may use the following website created by DHS’s Computer Emergency Readiness Team (US-CERT) for assistance in removing the malware: https://www.us-cert.gov/gameoverzeus .
“This operation disrupted a global botnet that had stolen millions from businesses and consumers as well as a complex ransomware scheme that secretly encrypted hard drives and then demanded payments for giving users access to their own files and data,” said Deputy Attorney General Cole. “We succeeded in disabling Gameover Zeus and Cryptolocker only because we blended innovative legal and technical tactics with traditional law enforcement tools and developed strong working relationships with private industry experts and law enforcement counterparts in more than 10 countries around the world.”
“These schemes were highly sophisticated and immensely lucrative, and the cyber criminals did not make them easy to reach or disrupt,” said Assistant Attorney General Caldwell. “But under the leadership of the Justice Department, U.S. law enforcement, foreign partners in more than 10 different countries and numerous private sector partners joined together to disrupt both these schemes. Through these court-authorized operations, we have started to repair the damage the cyber criminals have caused over the past few years, we are helping victims regain control of their own computers, and we are protecting future potential victims from attack.”
“Gameover Zeus is the most sophisticated botnet the FBI and our allies have ever attempted to disrupt,” said FBI Executive Assistant Director Anderson. “The efforts announced today are a direct result of the effective relationships we have with our partners in the private sector, international law enforcement, and within the U.S. government.”
“The borderless, insidious nature of computer hacking and cybertheft requires us to be bold and imaginative,” said U.S. Attorney Hickton. “We take this action on behalf of hundreds of thousands of computer users who were unwittingly infected and victimized.”
“The sophisticated computer malware targeting of U.S. victims by a global criminal enterprise demonstrates the grave threat of cybercrime to our citizens,” said U.S. Attorney Gilg. “We are grateful for the outstanding collaboration of our international and U.S. law enforcement partners in this successful investigation.”
“The FBI has demonstrated great leadership in continuing to help combat cyber crime, and our international and private sector partners have made enormous contributions as well,” said Deputy Under Secretary Schneck. “This collective effort reflects our ‘whole-of-government’ approach to cybersecurity. DHS is proud to support our partners in helping to identify compromised computers, sharing that information rapidly, and developing useful information and mitigation strategies to help the owners of hacked systems.”
Gameover Zeus Administrator Charged
A federal grand jury in Pittsburgh unsealed a 14-count indictment against Evgeniy Mikhailovich Bogachev, 30, of Anapa, Russian Federation, charging him with conspiracy, computer hacking, wire fraud, bank fraud and money laundering in connection with his alleged role as an administrator of the Gameover Zeus botnet. Bogachev was also charged by criminal complaint in Omaha with conspiracy to commit bank fraud related to his alleged involvement in the operation of a prior variant of Zeus malware known as “Jabber Zeus.”
In a separate civil injunction application filed by the United States in federal court in Pittsburgh, Bogachev is identified as a leader of a tightly knit gang of cyber criminals based in Russia and Ukraine that is responsible for the development and operation of both the Gameover Zeus and Cryptolocker schemes. An investigation led in Washington, D.C., identified the Gameover Zeus network as a common distribution mechanism for Cryptolocker. Unsolicited emails containing an infected file purporting to be a voicemail or shipping confirmation are also widely used to distribute Cryptolocker. When opened, those attachments infect victims’ computers. Bogachev is alleged in the civil filing to be an administrator of both Gameover Zeus and Cryptolocker. The injunction filing further alleges that Bogachev is linked to the well-known online nicknames “Slavik” and “Pollingsoon,” among others. The criminal complaint filed in Omaha alleges that Bogachev also used “Lucky12345,” a well-known online moniker previously the subject of criminal charges in September 2012 that were unsealed in Omaha on April 11, 2014.
Disruption of Gameover Zeus Botnet
Gameover Zeus, also known as “Peer-to-Peer Zeus,” is an extremely sophisticated type of malware designed to steal banking and other credentials from the computers it infects. Unknown to their rightful owners, the infected computers also secretly become part of a global network of compromised computers known as a “botnet,” a powerful online tool that cyber criminals can use for numerous criminal purposes besides stealing confidential information from the infected machines themselves. Gameover Zeus, which first emerged around September 2011, is the latest version of Zeus malware that began appearing at least as early as 2007. Gameover Zeus’s decentralized, peer-to-peer structure differentiates it from earlier Zeus variants. Security researchers estimate that between 500,000 and 1 million computers worldwide are infected with Gameover Zeus, and that approximately 25 percent of the infected computers are located in the United States. The principal purpose of the botnet is to capture banking credentials from infected computers. Those credentials are then used to initiate or re-direct wire transfers to accounts overseas that are controlled by cyber criminals. The FBI estimates that Gameover Zeus is responsible for more than $100 million in losses.
The Gameover Zeus botnet operates silently on victim computers by directing those computers to reach out to receive commands from other computers in the botnet and to funnel stolen banking credentials back to the criminals who control the botnet. For this reason, in addition to the criminal charges announced today, the United States obtained civil and criminal court orders in federal court in Pittsburgh authorizing measures to redirect the automated requests by victim computers for additional instructions away from the criminal operators to substitute servers established pursuant to court order. The order authorizes the FBI to obtain the Internet Protocol addresses of the victim computers reaching out to the substitute servers and to provide that information to US-CERT to distribute to other countries’ CERTS and private industry to assist victims in removing the Gameover Zeus malware from their computers. At no point during the operation did the FBI or law enforcement access the content of any of the victims' computers or electronic communications.
Besides the United States, law enforcement from the Australian Federal Police; the National Police of the Netherlands National High Tech Crime Unit; European Cybercrime Centre (EC3); Germany’s Bundeskriminalamt; France’s Police Judiciare; Italy’s Polizia Postale e delle Comunicazioni; Japan’s National Police Agency; Luxembourg’s Police Grand Ducale; New Zealand Police; the Royal Canadian Mounted Police; Ukraine’s Ministry of Internal Affairs – Division for Combating Cyber Crime; and the United Kingdom’s National Crime Agency participated in the operation. The Defense Criminal Investigative Service of the U.S. Department of Defense also participated in the investigation.
Invaluable technical assistance was provided by Dell SecureWorks and CrowdStrike. Numerous other companies also provided assistance, including facilitating efforts by victims to remediate the damage to their computers inflicted by Gameover Zeus. These companies include Microsoft Corporation, Abuse.ch, Afilias, F-Secure, Level 3 Communications, McAfee, Neustar, Shadowserver, Anubis Networks, Symantec, Heimdal Security, Sophos and Trend Micro.
The DHS National Cybersecurity and Communications Integration Center (NCCIC), which houses the US-CERT, plays a key role in triaging and collaboratively responding to the threat by providing technical assistance to information system operators, disseminating timely mitigation strategies to known victims, and sharing actionable information to the broader community to help prevent further infections.
Disruption of Cryptolocker
In addition to the disruption operation against Gameover Zeus, the Justice Department led a separate multi-national action to disrupt the malware known as Cryptolocker (sometimes written as “CryptoLocker”), which began appearing about September 2013 and is also a highly sophisticated malware that uses cryptographic key pairs to encrypt the computer files of its victims. Victims are forced to pay hundreds of dollars and often as much as $700 or more to receive the key necessary to unlock their files. If the victim does not pay the ransom, it is impossible to recover their files.
Security researchers estimate that, as of April 2014, Cryptolocker had infected more than 234,000 computers, with approximately half of those in the United States. One estimate indicates that more than $27 million in ransom payments were made in just the first two months since Cryptolocker emerged.
The law enforcement actions against Cryptolocker are the result of an ongoing criminal investigation by the FBI’s Washington Field Office, in coordination with law enforcement counterparts from Canada, Germany, Luxembourg, the Netherlands, United Kingdom and Ukraine.
Companies such as Dell SecureWorks and Deloitte Cyber Risk Services also assisted in the operation against Cryptolocker, as did Carnegie Mellon University and the Georgia Institute of Technology (Georgia Tech). The joint effort aided the FBI in identifying and seizing computer servers acting as command and control hubs for the Cryptolocker malware.
The FBI’s Omaha and Pittsburgh Field Offices led both malware disruptions and conducted the investigation of Bogachev. The prosecution in Pittsburgh is being handled by Assistant U.S. Attorney Shardul Desai of the Western District of Pennsylvania, and the prosecution in Omaha by Trial Attorney William A. Hall of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Steven Russell of the District of Nebraska. The civil action to disrupt the Gameover Zeus botnet and Cryptolocker malware is led by Trial Attorneys Ethan Arenson and David Aaron of CCIPS and Assistant U.S. Attorney Michael A. Comber of the Western District of Pennsylvania.
The Criminal Division’s Office of International Affairs provided significant assistance throughout the criminal and civil investigations.
The details contained in the indictment, criminal complaint and related pleadings are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Anyone claiming an interest in any of the property seized or actions enjoined pursuant to the court orders described in this release is advised to visit the following website for notice of the full contents of the orders: http://www.justice.gov/opa/gameover-zeus.html .U.S. Leads Multi-National Action Against “Gameover Zeus” Botnet and “Cryptolocker” Ransomware, Charges Botnet AdministratorRead the Press Release
WASHINGTON, D.C. – The Justice Department today announced a multi-national effort to disrupt the Gameover Zeus Botnet – a global network of infected victim computers used by cyber criminals to steal millions of dollars from businesses and consumers – and unsealed criminal charges in Pittsburgh, Pennsylvania, and Omaha, Nebraska, against an administrator of the botnet. In a separate action, U.S. and foreign law enforcement officials worked together to seize computer servers central to the malicious software or “malware” known as Cryptolocker, a form of “ransomware” that encrypts the files on victims’ computers until they pay a ransom.
Deputy Attorney General James M. Cole, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, FBI Executive Assistant Director Robert Anderson Jr., U.S. Attorney David J. Hickton of the Western District of Pennsylvania, U.S. Attorney Deborah R. Gilg of the District of Nebraska, and Department of Homeland Security’s (DHS) Deputy Under Secretary Dr. Phyllis Schneck made the announcement.
Victims of Gameover Zeus may use the following website created by DHS’s Computer Emergency Readiness Team (US-CERT) for assistance in removing the malware: https://www.us-cert.gov/gameoverzeus.
“This operation disrupted a global botnet that had stolen millions from businesses and consumers as well as a complex ransomware scheme that secretly encrypted hard drives and then demanded payments for giving users access to their own files and data,” said Deputy Attorney General Cole. “We succeeded in disabling Gameover Zeus and Cryptolocker only because we blended innovative legal and technical tactics with traditional law enforcement tools and developed strong working relationships with private industry experts and law enforcement counterparts in more than 10 countries around the world.”
“These schemes were highly sophisticated and immensely lucrative, and the cyber criminals did not make them easy to reach or disrupt,” said Assistant Attorney General Caldwell. “But under the leadership of the Justice Department, U.S. law enforcement, foreign partners in more than 10 different countries and numerous private sector partners joined together to disrupt both these schemes. Through these court-authorized operations, we have started to repair the damage the cyber criminals have caused over the past few years, we are helping victims regain control of their own computers, and we are protecting future potential victims from attack.”
“Gameover Zeus is the most sophisticated botnet the FBI and our allies have ever attempted to disrupt,” said FBI Executive Assistant Director Anderson. “The efforts announced today are a direct result of the effective relationships we have with our partners in the private sector, international law enforcement, and within the U.S. government.”
“The borderless, insidious nature of computer hacking and cybertheft requires us to be bold and imaginative,” said U.S. Attorney Hickton. “We take this action on behalf of hundreds of thousands of computer users who were unwittingly infected and victimized.”
“The sophisticated computer malware targeting of U.S. victims by a global criminal enterprise demonstrates the grave threat of cybercrime to our citizens,” said U.S. Attorney Gilg. “We are grateful for the outstanding collaboration of our international and U.S. law enforcement partners in this successful investigation.”
“The FBI has demonstrated great leadership in continuing to help combat cyber crime, and our international and private sector partners have made enormous contributions as well,” said Deputy Under Secretary Schneck. “This collective effort reflects our ‘whole-of-government’ approach to cybersecurity. DHS is proud to support our partners in helping to identify compromised computers, sharing that information rapidly, and developing useful information and mitigation strategies to help the owners of hacked systems.”
Gameover Zeus Administrator Charged
A federal grand jury in Pittsburgh unsealed a 14-count indictment against Evgeniy Mikhailovich Bogachev, 30, of Anapa, Russian Federation, charging him with conspiracy, computer hacking, wire fraud, bank fraud and money laundering in connection with his alleged role as an administrator of the Gameover Zeus botnet. Bogachev was also charged by criminal complaint in Omaha with conspiracy to commit bank fraud related to his alleged involvement in the operation of a prior variant of Zeus malware known as “Jabber Zeus.”
In a separate civil injunction application filed by the United States in federal court in Pittsburgh, Bogachev is identified as a leader of a tightly knit gang of cyber criminals based in Russia and Ukraine that is responsible for the development and operation of both the Gameover Zeus and Cryptolocker schemes. An investigation led in Washington, D.C., identified the Gameover Zeus network as a common distribution mechanism for Cryptolocker. Unsolicited emails containing an infected file purporting to be a voicemail or shipping confirmation are also widely used to distribute Cryptolocker. When opened, those attachments infect victims’ computers. Bogachev is alleged in the civil filing to be an administrator of both Gameover Zeus and Cryptolocker. The injunction filing further alleges that Bogachev is linked to the well-known online nicknames “Slavik” and “Pollingsoon,” among others. The criminal complaint filed in Omaha alleges that Bogachev also used “Lucky12345,” a well-known online moniker previously the subject of criminal charges in September 2012 that were unsealed in Omaha on April 11, 2014.
Disruption of Gameover Zeus Botnet
Gameover Zeus, also known as “Peer-to-Peer Zeus,” is an extremely sophisticated type of malware designed to steal banking and other credentials from the computers it infects. Unknown to their rightful owners, the infected computers also secretly become part of a global network of compromised computers known as a “botnet,” a powerful online tool that cyber criminals can use for numerous criminal purposes besides stealing confidential information from the infected machines themselves. Gameover Zeus, which first emerged around September 2011, is the latest version of Zeus malware that began appearing at least as early as 2007. Gameover Zeus’s decentralized, peer-to-peer structure differentiates it from earlier Zeus variants. Security researchers estimate that between 500,000 and 1 million computers worldwide are infected with Gameover Zeus, and that approximately 25 percent of the infected computers are located in the United States. The principal purpose of the botnet is to capture banking credentials from infected computers. Those credentials are then used to initiate or re-direct wire transfers to accounts overseas that are controlled by cyber criminals. The FBI estimates that Gameover Zeus is responsible for more than $100 million in losses.
The Gameover Zeus botnet operates silently on victim computers by directing those computers to reach out to receive commands from other computers in the botnet and to funnel stolen banking credentials back to the criminals who control the botnet. For this reason, in addition to the criminal charges announced today, the United States obtained civil and criminal court orders in federal court in Pittsburgh authorizing measures to redirect the automated requests by victim computers for additional instructions away from the criminal operators to substitute servers established pursuant to court order. The order authorizes the FBI to obtain the Internet Protocol addresses of the victim computers reaching out to the substitute servers and to provide that information to US-CERT to distribute to other countries’ CERTS and private industry to assist victims in removing the Gameover Zeus malware from their computers. At no point during the operation did the FBI or law enforcement access the content of any of the victims' computers or electronic communications.
Besides the United States, law enforcement from the Australian Federal Police; the National Police of the Netherlands National High Tech Crime Unit; European Cybercrime Centre (EC3); Germany’s Bundeskriminalamt; France’s Police Judiciare; Italy’s Polizia Postale e delle Comunicazioni; Japan’s National Police Agency; Luxembourg’s Police Grand Ducale; New Zealand Police; the Royal Canadian Mounted Police; Ukraine’s Ministry of Internal Affairs – Division for Combating Cyber Crime; and the United Kingdom’s National Crime Agency participated in the operation. The Defense Criminal Investigative Service of the U.S. Department of Defense also participated in the investigation.
Invaluable technical assistance was provided by Dell SecureWorks and CrowdStrike. Numerous other companies also provided assistance, including facilitating efforts by victims to remediate the damage to their computers inflicted by Gameover Zeus. These companies include Microsoft Corporation, Abuse.ch, Afilias, F-Secure, Level 3 Communications, McAfee, Neustar, Shadowserver, Anubis Networks and Symantec.
The DHS National Cybersecurity and Communications Integration Center (NCCIC), which houses the US-CERT, plays a key role in triaging and collaboratively responding to the threat by providing technical assistance to information system operators, disseminating timely mitigation strategies to known victims, and sharing actionable information to the broader community to help prevent further infections.
Disruption of Cryptolocker
In addition to the disruption operation against Gameover Zeus, the Justice Department led a separate multi-national action to disrupt the malware known as Cryptolocker (sometimes written as “CryptoLocker”), which began appearing about September 2013 and is also a highly sophisticated malware that uses cryptographic key pairs to encrypt the computer files of its victims. Victims are forced to pay hundreds of dollars and often as much as $700 or more to receive the key necessary to unlock their files. If the victim does not pay the ransom, it is impossible to recover their files.
Security researchers estimate that, as of April 2014, Cryptolocker had infected more than 234,000 computers, with approximately half of those in the United States. One estimate indicates that more than $27 million in ransom payments were made in just the first two months since Cryptolocker emerged.
The law enforcement actions against Cryptolocker are the result of an ongoing criminal investigation by the FBI’s Washington Field Office, in coordination with law enforcement counterparts from Canada, Germany, Luxembourg, the Netherlands, United Kingdom and Ukraine.
Companies such as Dell SecureWorks and Deloitte Cyber Risk Services also assisted in the operation against Cryptolocker, as did Carnegie Mellon University and the Georgia Institute of Technology (Georgia Tech). The joint effort aided the FBI in identifying and seizing computer servers acting as command and control hubs for the Cryptolocker malware.
The FBI’s Omaha and Pittsburgh Field Offices led both malware disruptions and conducted the investigation of Bogachev. The prosecution in Pittsburgh is being handled by Assistant U.S. Attorney Shardul Desai of the Western District of Pennsylvania, and the prosecution in Omaha by Trial Attorney William A. Hall of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Steven Russell of the District of Nebraska. The civil action to disrupt the Gameover Zeus botnet and Cryptolocker malware is led by Trial Attorneys Ethan Arenson and David Aaron of CCIPS and Assistant U.S. Attorney Michael A. Comber of the Western District of Pennsylvania.
The Criminal Division’s Office of International Affairs provided significant assistance throughout the criminal and civil investigations.
The details contained in the indictment, criminal complaint and related pleadings are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Anyone claiming an interest in any of the property seized or actions enjoined pursuant to the court orders described in this release is advised to visit the following website for notice of the full contents of the orders: http://www.justice.gov/opa/gameover-zeus.html.
Two Southern California Men Sentenced to Prison for Fraud and Aggravated Identity TheftRead the Press Release
SAN FRANCISCO – Ngoc Duong a/k/a Danny Duong and Hong Lee Wong a/k/a William Wong were sentenced on Friday, May 30, 2014, to 30 and 28 months in prison, respectively, for wire fraud and aggravated identity theft, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Duong and Wong were convicted on Feb. 11, 2014, after an 11 day jury trial. The jury found that Duong, a partner in Incom Trading Corporation, Inc., and Wong, a principal in Powell Trading, Inc. and Powell Commodity, Inc., defrauded three companies: Cheery Way, Inc., of Brisbane, Calif. and two Chinese companies, Zheijang Metals and Materials and Zheijang Concentrating. Duong and Wong falsely claimed to have an agreement with the City of New Orleans for the rights to scrap metal from a Six Flags amusement park damaged by Hurricane Katrina. The jury found that as part of the fraud Duong and Wong sent emails to the defrauded companies in which they falsely represented that the project was delayed and attached false documents to those emails in which they fraudulently used the names and email addresses of City of New Orleans officials. Duong was convicted of eight counts of wire fraud and four counts of aggravated identity theft. Wong was convicted of one count of wire fraud and one count of aggravated identity theft.
Duong, 61, of Fountain Valley, Calif., and Wong, 46, of Torrance, Calif., were indicted by a federal grand jury on July 19, 2012, for conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, wire fraud, in violation of 18 U.S.C. § 1343, and aggravated identity theft, in violation of 18 U.S.C. § 1028A. Duong was arrested on July 26, 2012, at the Houston International Airport. Wong was arrested on July 27, 2012, at his Torrance residence. Both initially appeared in federal court in San Francisco on Aug. 6, 2012, and were released on bail.
The sentences were handed down by the Honorable Susan Illston, United States District Court Judge. Judge Illston also sentenced the defendants to a 3-year period of supervised release and ordered them jointly forfeiture $106,500. A hearing to determine restitution has been set for July 18, 2014. Both defendants remain out of custody and will begin serving their prison sentences on Aug. 8, 2014.
Denise Marie Barton is the Assistant U.S. Attorney who is prosecuting the case with the assistance of AUSA David Countryman, Muffy Mallory, and Bridget Kilkenny. The prosecution is the result of an investigation by the FBI.
(Duong and Wong indictment )
Two Federal Inmates Sentenced for Racially-Motivated MurderRead the Press Release
ATLANTA - Donald R. LaFond, Jr., was sentenced today to life imprisonment, and Jason Robert Widdison was sentenced to 31 years and eight months in federal prison, for murdering a fellow prison inmate at the United States Penitentiary in Atlanta. Both defendants were convicted of second-degree murder after a jury trial on February 3, 2014.
“These defendants, members of a white supremacist prison gang, brutally murdered another inmate for not objecting to having an African-American cellmate,” said United States Attorney Sally Quillian Yates. “Whether racially-motivated violence occurs on our streets or in our prisons, we will hold the perpetrators accountable.”
J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated: “Law and order within a correctional facility setting is paramount in protecting the safety and lives of not only those inmates living within the walls of the facility but also for those working there. The FBI will continue to provide investigative assistance to the U.S. Bureau of Prisons in ensuring that these inmates with gang or supremacy affiliations are held accountable for their violent actions.”
According to United States Attorney Yates, the charges and other information presented in court: On March 1, 2011, LaFond and Widdison, both members of white supremacist prison gangs, were exercising inside the special housing unit recreation area of the United States Penitentiary in Atlanta, Ga. The victim, a white inmate who was not a gang member, joined the defendants in the area and attempted to make conversation and walk around with them.
After a short period of time, LaFond and Widdison suddenly began to punch the victim from both front and behind, knocking the victim to the ground. Both LaFond and Widdison then stomped on the victim’s head and neck, as many as ten times each. Corrections officers witnessed the incident and intervened. Both men complied with the officers’ orders to stop beating the victim, but by then, the victim was unconscious. The victim was taken to a hospital but never regained consciousness. As a result of his injuries, the victim died on April 5, 2011.
The evidence at trial showed that, in the weeks leading up to the assault, LaFond and Widdison expressed anger towards the victim because the victim refused to protest the fact that he had an African-American cellmate. The defendants pressured the victim to take any steps necessary to be reassigned to another cell. Further evidence showed that the victim refused to comply with the defendants’ demands and that the defendants regarded this refusal as a violation of their gang code.
Donald R. LaFond, Jr., 53, of New Bedford, Massachusetts, and Jason Robert Widdison, 35, of Morgan, Utah, were convicted by a jury of second-degree murder on February 3, 2014, after a week-long trial. The sentences were imposed by U.S. District Judge William S. Duffey, Jr., and will be served consecutively to the defendants’ current prison sentences.
This case was investigated by the Federal Bureau of Investigation.
Assistant United States Attorneys Nekia S. Hackworth and Brent Alan Gray prosecuted the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao/gan/.