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22 May 2014
MHIT “Blitz” Leads to Arrests, Recovery of DrugsRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-0100 ● Contact: Chris Zumpetta-Parr, Public Affairs SpecialistBoard Members announce results of extra patrols
BRIDGEPORT, WEST VIRGINIA – Bridgeport Police Chief John Walker, Clarksburg Police Chief Robbie Hilliard, and Captain James Merrill of the West Virginia State Police today announced the results of an enhanced operation by the Mountaineer Highway Interdiction Team (MHIT South) that occurred over the past week in Harrison County.
Leaders of the MHIT South agencies explained that a “Blitz”, or saturation patrol, took place between May 19 and May 22 with increased patrols on highways and secondary roads throughout the area. Neighborhoods in Harrison County received extra attention as part of the project, as did parcels and packages that were being shipped to and from Northern West Virginia. In addition to the three regular members of MHIT South, an additional twenty-three officers participated in the saturation patrols this week.
Captain Merrill explained that as a result of the effort, five felony charges and eleven misdemeanor charges were filed, and sixty-eight citations were issued. There were also arrests for driving under the influence, transferring stolen property, and a fugitive warrant was served. Drugs with a street value of $48,060 were recovered, and one active felony warrant was served. Substances recovered included heroin, synthetic cathinones, and marijuana.
“We listened to our citizens and increased our presence in certain hot spots in the county,” said Chief Walker. “I encourage the public to continue to make us aware of areas that need extra patrols. While MHIT South will continue to operate on a daily basis, we look forward to organizing enhanced patrols like this one again in the future.”
The leaders of MHIT South explained that the resources now available to the team on a regular basis include three officers and two K-9 handlers. The agencies involved have been very pleased with the team approach to interdiction.
“MHIT South increases our presence on local roadways and serves as a partner for the Greater Harrison Drug and Violent Crimes Task Force,” said Captain Merrill. “We work with the Task Force every day to disrupt drug trafficking organizations that attempt to operate in the region.”
Between February 1 and May of 2014, MHIT South officers have filed twenty felony charges, thirty-nine misdemeanor charges, and have issued thirty-six misdemeanor citations. Nearly one hundred searches have been conducted, including sixty-three by K-9 units. Marijuana worth $18,765.00 has been seized, and other drugs valued at $37,690 have been seized.
MHIT’s primary purpose is to enhance regional interdiction operations in order to slow the flow of illegal drugs into and through the State of West Virginia. The major focus of MHIT South is on highways and state routes but it also concentrates on airports, bus terminals, hotels, motels and parcel and package interdiction.
Besides enhancing regional highway interdiction operations, MHIT South has the added benefit of preserving citizen safety on West Virginia highways through effective traffic and commercial vehicle enforcement. MHIT South also assists in investigating kidnapings, bank robberies, carjackings, Amber Alerts and interstate theft; the detection and enforcement of firearms and explosives; human trafficking and immigration violations; and fugitive apprehension.
Regular updates on the work of MHIT South will be made via press releases from its member agencies as well as via the official Twitter feed of the United States Attorney’s Office, @NDWVnews.
Lincoln Woman Sentenced for Possession with Intent to Distribute MethamphetamineRead the Press Release
On May 22, 2014, Krystal Lynn Burke, 47, of Lincoln, was sentenced to 42 months in prison for possession with intent to distribute methamphetamine. On January 3, 2013, a search warrant was served at Burke’s Lincoln residence. During the search, officers found 107 grams of methamphetamine which tested as at least 95% pure with a digital scale on a freezer in the basement. Additional small amounts of methamphetamine were found in Burke’s basement bedroom. Burke waived her Miranda rights and said all the methamphetamine in the house belonged to her.
Following the prison term, Burke will serve three years on supervised release. She was also ordered to forfeit $388 cash found during the search.
This case was investigated by the Lincoln/Lancaster County Drug Task Force.
Leesville Man Sentenced to 240 Months in Prison for Receiving Child PornographyRead the Press Release
LAKE CHARLES, La. –United States Attorney Stephanie A. Finley announced today that Elliot R. Duke, 30, of Leesville, La., was sentenced by U.S. District Judge Patricia Minaldi, to 240 months in prison and a lifetime of supervised release for receiving child pornography.
According to evidence presented at the guilty plea on January 23, 2014, after receiving information that child pornography was on Duke’s computer, law enforcement personnel searched Duke’s residence on May 14, 2013. The search revealed there was child pornography on his laptop, and upon further investigation, agents also discovered that Duke had been discussing and trading child pornography with other persons through email. A forensic examination of Duke’s laptop was conducted and revealed approximately 168 videos and 187 still images of child pornography.
Homeland Security Investigations, Louisiana State Police, and the Vernon Parish Sheriff’s Office investigated the case. Assistant U.S. Attorney Daniel J. McCoy prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The U.S. Attorney’s Office and the U.S. Department of Homeland Security/Homeland Security Investigations/Immigration & Customs Enforcement (ICE) encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at (866) DHS-2ICE. Investigators are available at all hours to answer hotline calls. Tips or other information can also be submitted to ICE online at www.ice.gov/exec/forms/hsi-tips/tips.asp.
Lead Defendant Admits Stealing Identities from Elderly Victims in Order to Steal More Than $250,000 in Taxpayer’s Money Federal Authorities Continue to Focus on the Growing Problem of Identity Theft.Read the Press Release
Arman Eritsian pled guilty today to conspiracy to commit wire fraud as part of his conspiracy to defraud the Internal Revenue Service of over $250,000 – by filing false tax returns in the names of stolen identities.
As set forth in his plea agreement, Eritsian admitted stealing personal identity information from innocent victims in order to file false tax returns in their names. These false returns generated hundreds of thousands of dollars in fraudulent tax refunds that should never have been taken from the U.S. Treasury. As part of this scheme, Eritsian and his fellow conspirators directed the IRS to send the ill-gotten refunds to postal addresses and/or bank accounts under their control.
For his part, Eritsian admitted that he stole the identities of people to use on the fraudulent tax returns. Eritsian also informed the Court that he attempted to conceal and disguise his illegal activity by using multiple email addresses to communicate with conspirators, and using debit cards to access the proceeds of the fraudulent refunds. In all, Eritsian admitted filing false tax returns in the names of more than a score of victims. In addition to jail time, Eritsian is required by the terms of his plea to make full restitution to the IRS for the losses caused by his criminal conduct.
Eritsian’s plea is the latest in a series of 22 guilty pleas following the September arrests of over 30 people in “Operation Trillions Trouble” a multi-agency investigation – led by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation Division -- into multiple tax fraud conspiracies, as well as several schemes to defraud various banks. These disparate criminal plans resulted in the bringing of four related indictments charging 58 defendants, 28 of whom are international fugitives.
United States Attorney Laura E. Duffy praised the hard work of the agents from the FBI and IRS on their continued success in these related cases. AToday's guilty plea is yet another example of our office's commitment to investigate and prosecute those who illegally take advantage of others for their own personal gain and at the expense of the American taxpayer.
FBI Special Agent in Charge Daphne Hearn commented, “The FBI will continue to work with our law enforcement partners and provide leadership and expertise when it comes to investigating sophisticated and complex criminal conspiracies. The FBI will aggressively pursue these cases to prevent criminals from lining their own pockets with precious taxpayer's dollars.”
Erick Martinez, Special Agent in Charge of IRS Criminal Investigation, stated, “Our agents investigated and worked together with our law enforcement partners in bringing to light a massive tax fraud scheme. Arman Eritsian’s guilty plea represents another major step forward in bringing this sophisticated network of scammers to justice.”
DEFENDANT Case Number: Arman Eritsian Age: 35 San Diego, CA CHARGESCount 1: Title 18, United States Code, Section 371 B Conspiracy
PROGRESS OF CASES CHARGED AS PART OF
Maximum penalties: 5 years custody; $250,000 fine; 3 years supervised release; mandatory restitution.
OPERATION TRILLIONS TROUBLE
Summary: As of May 22, 2014,
22 of 30 (non-fugitive) defendants have been convicted.13CR3479-BTM B Convictions (Conspiracy to commit wire fraud)
Harout Gevorgyan
Yvonne Mihailescu
Yelena Sklyarova
Yermek Dossymbekov
Vyacheslav Tsoy13CR3480-BTM B Convictions
Arman Eritsian – Conspiracy to commit wire fraud13CR3481-BTM B Convictions (Conspiracy to commit bank fraud – All defendants)
Karen Galstian
Vahag Stepanyan
George Karapetian
Ara Adamyan
Christopher Buckely
Carlos Ferrufino
Akop Galstian
Farbob Golhassani
Paul Gonnelly
Tatiana Kabachinskya
Sedrak Movesyan
Robert Rodriguez
Christopher Ruiz13CR3482-BTM B Convictions (Conspiracy to commit bank fraud – All defendants)
INVESTIGATING AGENCY
Tigran Eritsyan
Konstantin Yugay
Mae Barbara WeissbergerFederal Bureau of Investigation
Internal Revenue Service
Los Angeles Police Department*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Last Defendant Sentenced in Marriage Fraud SchemeRead the Press Release
SACRAMENTO, Calif. — United States District Judge Morrison C. England Jr. sentenced Sergey Potepalov, 58, of Citrus Heights, today to two years and three months in prison for directing a marriage fraud scheme, United States Attorney Benjamin B. Wagner announced. He was the last of nine defendants to be sentenced in the case.
According to court documents, Potepalov, a naturalized U.S. citizen of Russian descent, was involved in an elaborate immigration fraud scheme involving foreign nationals from Eastern Europe and Russia who paid up to five-figure fees to enter into sham marriages with locally recruited U.S. citizens in an effort to legalize their immigration status. For foreign nationals, marriage to an American citizen is one means of obtaining lawful permanent residency in the United States. To initiate that process, aliens who are outside the country must apply for a fiancé visa that enables them to travel to the United States to marry the citizen spouse. Alternatively, foreign nationals who are already in the United States and entered the country legally may wed here and apply for lawful permanent residence based upon the marriage. Upon entry to the United States, they might also apply for political asylum.
According to court documents, co-defendant Keith O’Neil, 47, of Sacramento, entered into two sham marriages and accompanied Potepalov on three trips to Moscow. He filed petitions for fiancé visas for four women from Russia, Uzbekistan, and Armenia; all of the petitions were ultimately denied.
The other defendants sentenced in the case were either foreign nationals who attempted to obtain fiancé visas and “green cards” or U.S. citizens who agreed to enter into sham marriages with the aliens in return for promised payments of up to $5,000. Documents filed in the case reveal that participants in the scheme went to significant lengths to make the sham marriages appear legitimate: posing for wedding pictures together, establishing apartments in both spouses’ names, and rehearsing false answers for interviews with immigration officials. All have pleaded guilty and sentenced as follows:
Keith O’Neil sentenced to 18 months in prison
Marla Brennan, 33, of Sacramento, sentenced to six months prison and six months home confinement
Richard Vargas, 39, of Sacramento, sentenced to one year in prison
Olga Nekrasova, 29, of San Francisco, sentenced to four months in prison
Brian Barnes, 35, of Sacramento, sentenced to 10 months in prison
Anthony Rivera, 38, Sacramento, sentenced to two years in prison
Veranika Koushal, 35, of West Palm Beach, Fla., sentenced to two years of probation
Marlena Colvin, 30, of Sacramento, sentenced to 10 months of probationU.S. Attorney Wagner said: “Potepalov essentially built a business out of phony marriages between U.S. Citizens and persons who sought citizenship. Our office is committed to prosecuting those — aliens and U.S. citizens alike — who try to profit from circumventing our immigration laws through fraud and deceit.”
“Marriage fraud and other immigration benefit fraud schemes undermine the integrity of our legal immigration system and potentially rob deserving immigrants of benefits they rightfully deserve,” said Daniel Lane, assistant special agent in charge of HSI Sacramento. “America’s legal immigration system is not for sale—and as this sentence makes clear —HSI will aggressively target those who conspire to corrupt the integrity of that system simply for personal profit.”
According to documents filed in the case, ICE HSI first began investigating Potepalov’s activities in 2006 after receiving information from the U.S. Department of State’s Diplomatic Security Service indicating the immigration consultant was filing fraudulent visa petitions on behalf of Russian and Ukrainian nationals. As the investigation progressed, HSI agents worked closely with personnel from U.S. Citizenship and Immigration Service’s (USCIS) Fraud Detection and National Security Unit (FDNS) in Sacramento to identify aliens who may have sought to benefit from the scheme.
“Immigration scams meant to circumvent our laws are a cruel insult to those who wait patiently to immigrate, respectful of our laws,” said Mari Carmen Jordan, district director of USCIS Sacramento District. “We’re proud of the work our Fraud Detection and National Security unit did to reveal this scheme, including site visits, interviews and in-depth research.”
This case is the product of an investigation spearheaded by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), with substantial assistance from U.S. Citizenship and Immigration Services and the Department of State’s Diplomatic Security Service. Assistant United States Attorney Michele M. Beckwith prosecuted the case.
Laredo Couple Enter Pleas in Mexican Mafia CaseRead the Press Release
LAREDO, Texas - Carlos Contreras, 33, and his wife Ana Rosa Contreras, 31, have entered guilty pleas in relation to a massive drug trafficking and money laundering case involving members of the Texas Mexican Mafia prison gang, announced United States Attorney Kenneth Magidson.
The two Laredo residents were charged along with several other members and associates of the Texas Mexican Mafia in an indictment alleging conspiracy to possess with intent to distribute heroin, cocaine and methamphetamine and money laundering.
Carlos Contreras entered a plea today to conspiracy to possess with the intent to distribute 10 kilograms of heroin, while his wife pleaded guilty to money laundering. Both have admitted to purchasing their residence in the prestigious Lakeside subdivision with the proceeds of drug sales. As a result of their pleas, the government is seeking the forfeiture of the residence, valued at more than $300,000.
Mr. Contreras faces a minimum of 10 years and up to life in prison as well as a possible $10 million fine. His wife could receive up to a maximum of 20 years in federal prison and $500,000 fine, or twice the pecuniary gain.
To date, the 21 defendants arrested thus far in the investigation have all entered guilty pleas before U.S. Magistrate Judge Guillermo R. Garcia and are pending sentencing at varying times before U.S. District Judge Diana Saldana. The indictment remains sealed as to those charged but not as yet in custody.
The indictment is part of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation named “Operation X3,” investigated by the FBI, Drug Enforcement Administration, Homeland Security Investigations and Internal Revenue Service – Criminal Investigation. They were assisted at different times by the U.S. Marshals Service, police departments in Laredo, Austin and San Marcos, Customs and Border Protection, Texas Department of Public Safety - Criminal Investigations Division and the LaSalle County Sheriff’s Office. The case is being prosecuted by Assistant U.S. Attorneys Andy Guardiola and James Hepburn.
Lafayette Man Pleads Guilty to Possession of Cocaine with Intent to Distribute ChargeRead the Press Release
LAKE CHARLES, La. –United States Attorney Stephanie A. Finley announced today that Calvin James Catalon Jr., 35, of Lafayette, La., pleaded guilty before U.S. District Judge Patricia Minaldi, to charges of possession of cocaine with intent to distribute.
According to evidence presented at the guilty plea, a Lake Charles police officer stopped the defendant’s vehicle for a traffic violation on January 17, 2014 on I-10. After questioning Catalon, the officer conducted a search of the vehicle. A bag containing white powder was found. The powder was tested at a Drug Enforcement Administration laboratory in Dallas and was identified as cocaine with a net weight of approximately 991.8 grams.
Catalon faces five to 40 years in prison, four years of supervised release, and a $5 million fine for one count of possession with intent to distribute cocaine. A sentencing date of August 28, 2014 was set.
The FBI, U.S. Drug Enforcement Administration, Lake Charles Police Department and the Calcasieu Anti-drug Team conducted the investigation. Assistant U.S. Attorney Joseph T. Mickel is prosecuting the case.
Kern County Methamphetamine Trafficking IndictmentsRead the Press Release
FRESNO, Calif. — A federal grand jury returned a one-count indictment today against Santos Acevedo Gutierrez, 41, of Shafter, charging him with possession with intent to distribute methamphetamine, United States Attorney Benjamin B. Wagner announced.
According to court documents, on April 30, 2014, Kern County Sheriff’s deputies executed a search warrant at Gutierrez’s home and seized approximately four pounds of methamphetamine as well as a digital scale, packaging materials, and more than $10,000 in cash.
This case is the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Kern County Sheriff’s Office.
Last week, a federal grand jury returned a two-count indictment against Armando Andrade Rubio, 26, of Fontana, charging him with conspiracy to distribute, and possession with intent to distribute methamphetamine. (Docket #: 1:14-cr-100-LJO)
According to court documents, on May 7, 2014, Rubio arranged to deliver a shipment of methamphetamine from Mexico to a government informant in Bakersfield. When the two met in a Lowes parking lot, Rubio showed the informant a suitcase with 18 pounds of methamphetamine.
This case is the product of an investigation by the Drug Enforcement Administration, the Kern County Sheriff’s Office, and the Southern Tri-County High Intensity Drug Trafficking Area Task Force. Assistant United States Attorney Brian K. Delaney is prosecuting both cases.
If convicted, both defendants face a maximum statutory penalty of life in prison and a $10 million fine. Any sentence, however, would 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. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Jerseyville Woman Indicted for Threatening to Destroy Calhoun County High SchoolRead the Press Release
Follow @SDILNewsThe United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today that Michelle Lynn Smith, 36, of Jerseyville, Illinois, was charged in an indictment for conveying a false threat. On April 29, 2014, authorities arrested Smith. On May 1, 2014, Smith was charged by criminal complaint. She is currently detained.
On April 28, 2014, authorities responded to a potential bomb threat at the Calhoun County High School in Hardin. The response was prompted by the discovery of a computer-generated note in the ladies’ washroom. The note read as follows:
This school is going down today. KABOOM!!!!!!!!!!!!!! Im tired of all the people here. Everyone is going down, the school will b n flames. It is so stupid here. I cant take it ne more. The teachers suck and don’t do ne thing to help u. All that matters is what ur name is. If I had certain names I would not have the truble I do. Don’t matter, this place sucks and will not be here for long. So long and GOOD-BYE!!!!!!!!!
Following this, law enforcement found evidence and conducted interviews which lead to the criminal charges against Smith, a teacher at the high school.
The charge of Conveying a False Threat carries maximum penalties of five years of imprisonment, three years of supervised release, and a $250,000 fine.
An indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge and is entitled to a fair trial at which the Government must prove guilt beyond a reasonable doubt.
The case was investigated by the Illinois State Police, with the assistance of the Calhoun County State’s Attorney, Calhoun County Sheriff’s Department, Jersey County Sheriff’s Department, the Jerseyville Police Department, the Illinois Secretary of State Police Bomb Squad and Capitol Police K-9s, and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Liam Coonan and Special Assistant U.S. Attorney Michael Hallock.
Jennings Man Sentenced to 18 Months in Prison for Importing and Distributing Anabolic SteroidsRead the Press Release
LAKE CHARLES, La. –United States Attorney Stephanie A. Finley announced today that Christopher Paul Benoit, 34, of Jennings, La., was sentenced by U.S. District Judge Patricia Minaldi to 18 months in prison and three years of supervised release for conspiring to unlawfully import and possess with the intent to distribute anabolic steroids. He was also ordered to pay a $2,000 fine.
According to evidence presented at the guilty plea on January 20, 2014, Benoit conspired with others to import and distribute anabolic steroids from January 2007 to June 2012 using the U.S. mail. Benoit ordered the steroids online and paid for the drugs using money wires or debit cards to foreign accounts. The indictment lists five such orders delivered from China to Jennings from January 2011 to February 2012. Benoit and his co-conspirators would then take the powdered steroids from the packages, liquefy them, and place them into vials for sale. One of the co-conspirators, Regan Chase Benoit, 26, also of Jennings and Christopher Benoit’s first cousin, approached Christopher Benoit in 2010 to purchase steroids. Regan Benoit admitted he later assisted his cousin in liquefying the powder steroids for distribution. Regan Benoit pleaded guilty to steroid importation, possession, and distribution charges on September 5, 2013.
Homeland Security Investigations, U.S. Customs and Border Protection, the U.S. Postal Inspection Service, and the Jennings Police Department conducted the investigation. Assistant U.S. Attorney Brett L. Grayson prosecuted the case.
Japanese Automotive Parts Manufacturer Executive Indicted for <br /> Role in Conspiracy to Fix Prices and for Obstruction of JusticeRead the Press Release
A Detroit federal grand jury returned a two-count indictment against an executive of a Japanese manufacturer of automotive parts for his participation in a conspiracy to fix prices of heater control panels and for obstruction of justice for ordering the destruction of evidence related to the conspiracy, the Department of Justice announced today.
The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Hitoshi Hirano with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize and maintain the prices of heater control panels sold to Toyota Motor Corp. and Toyota Motor Engineering & Manufacturing North America Inc. (collectively, Toyota) for installation in vehicles manufactured and sold in the United States and elsewhere. Hirano, who served as an executive managing director at Tokai Rika Co. Ltd., was also charged with knowingly and corruptly persuading, and attempting to persuade, executives of Tokai Rika to destroy documents and delete electronic data that may contain evidence of antitrust crimes in the United States and elsewhere.
“The Antitrust Division will not tolerate executives directing their subordinates to engage in illegal cartels and conspiracies,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Attempts to then obstruct justice and destroy evidence will give rise to additional charges.”
The indictment alleges, among other things, that from at least as early as October 2003 and continuing until at least February 2010, Hirano and others attended conspiratorial meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the prices for heater control panels sold to Toyota. According to the indictment, Hirano participated directly in the conspiratorial conduct, and directed, authorized and consented to his subordinates’ participation. In addition, the indictment charges that in February 2010, after Hirano learned that the FBI had searched Tokai Rika’s U.S. subsidiary, he knowingly and corruptly persuaded employees at Tokai Rika to destroy paper documents and delete electronic data intending to prevent the grand jury from obtaining evidence of antitrust crimes.
Tokai Rika is a manufacturer of automotive parts, including heater control panels, based in Nagoya, Japan. Tokai Rika pleaded guilty on Dec. 12, 2012, for its role in the conspiracy and to obstruction of justice, and was sentenced to pay a $17.7 million criminal fine.
Heater control panels are located in the center console of an automobile and control the temperature of the passenger compartment of a vehicle. Heater control panels differ by function and design for a particular vehicle model. Examples include automatic heater control panels, which maintain the temperature within the vehicle to a designated temperature point, and manual heater control panels, which regulate the temperature through manual controls operated by vehicle occupants.
Including Hirano, 34 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry, 24 of whom have pleaded guilty or agreed to plead guilty. Of those, 22 have been sentenced to serve prison terms ranging from a year and one day to two years. Additionally, 27 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.3 billion in fines.
Hirano is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. The maximum penalty for obstruction of justice is 20 years in prison and a $250,000 criminal fine for individuals.
Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by four of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.
Information: Federal Court ArraignmentsRead the Press Release
The United States Attorney's Office today announced that those persons listed below were arraigned before the U.S. Magistrate and the indictments handed down by the Grand Jury unsealed.
Appearing before U.S. Magistrate Judge Lynch in Missoula on May 15, 2014 and entering pleas of Not Guilty were:
- MICHAEL LEWIS ANDREWS, a 64-year-old resident of Billings, appeared on charges of threatening to destroy a building with explosives, false information and hoaxes. If convicted of the most serious charges contained in the indictment, ANDREWS faces 10 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by the Federal Bureau of Investigation and the Violent Crime Task Force. PACER Case Reference: 14-26
- DEANDRE LARON CLEMONS, 28-year-old resident of Flint, Michigan, appeared on charges of conspiracy to distribute methamphetamine, possession with intent to distribute methamphetamine and distribution of heroin. If convicted of the most serious charges contained in the indictment, CLEMONS faces 20 years imprisonment, $1,000,000 in fines and 3 years supervised release. The case was investigated by the Missouri River Drug Task Force and the Bozeman Police Department. PACER Case Reference: 14-10
Appearing before U.S. Magistrate Judge Strong in Great Falls on May 15, 2014 and entering pleas of Not Guilty were:
- TYLER ALLEN WILSON, a 25-year-old resident of Lewiston, appeared on charges of being a felon in possession. If convicted of the charge contained in the indictment, WILSON faces 10 years imprisonment, $250,000 in fines, and 3 years supervised release. PACER Case Reference: 14-24
Appearing before U.S. Magistrate Judge Ostby in Billings on May 19, 2014 and entering pleas of Not Guilty were:
- DAVID DELCARMEN, a 32-year-old resident of Los Angeles, California, appeared on charges of conspiracy to possess with intent to distribute methamphetamine and possession with intent to distribute methamphetamine. If convicted of the most serious charge contained in the indictment, DELCARMEN, faces life imprisonment, $10,000,000 in fines and 4 years supervised release. The case was investigated by the Federal Bureau of Investigation, the Eastern Montana HIDTA, and Montana Division of Criminal Investigations. PACER Case Reference: 14-38
- BRET ALLEN HITSHEW, a 48-year-old resident of Missoula, appeared on charges of being a felon in possession of a firearm. If convicted of the charge contained in the indictment, HITSHEW faces 10 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by the Bureau of Alcohol, Tobacco and Firearms and the Montana Highway Patrol. PACER Case Reference: 13-25
Appearing before U.S. Magistrate Judge Strong in Great Falls on May 20, 2014 and entering pleas of Not Guilty were:
- BRENDEN JAMES LEISCHNER, a 23-year old resident of Great Falls, appeared on charges of conspiracy to defraud the United States, federal student aid fraud/false statements, federal student aid fraud/theft of government money, and aggravated identity theft. If convicted of the most serious charges contained in the indictment, LEISCHNER faces 10 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by the Federal Bureau of Investigation, U.S. Department of Interior Office of Inspector General and the U.S. Department of Education. PACER Case Reference: 14-34
- TAMMY KAY LEISCHNER, a 43-year-old resident of Laurel, appeared on charges of conspiracy to defraud the United States, federal student aid fraud/false statements, and federal student aid fraud/theft of government money. If convicted of the most serious charges contained in the indictment, LEISCHNER faces 10 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by the Federal Bureau of Investigation, U.S. Department of Interior Office of Inspector General and the U.S. Department of Education. PACER Case Reference: 14-34
- MARK CRAIG LEISCHNER, a 47-year-old resident of Laurel, appeared on charges of conspiracy to defraud the United States, federal student aid fraud/false statements, federal student aid fraud/theft of government money, and aggravated identity theft. If convicted of the most serious charges contained in the indictment, LEISCHNER faces 10 years imprisonment, $250,000 in fines and 3 years supervised release. The case was investigated by the Federal Bureau of Investigation, U.S. Department of Interior Office of Inspector General and the U.S. Department of Education. PACER Case Reference: 14-34
If any of the above cases are of interest to your media organization and the community it serves, we encourage you to monitor the progress of the case regularly through the U.S. District Court calendar and the PACER system so that you stay current and not miss any important developments in the case.
To establish a PACER account, which will allow you to review documents filed in the case, please go to, http://www.pacer.gov/register.html. To access the district court's calendar, please go to https://ecf.mtd.uscourts.gov/cgi-bin/PublicCalendar.pl.
Idaho Falls Man Sentenced to 39 Months for Possessing Child PornographyRead the Press Release
POCATELLO — Daniel Joseph Dalton, 38, of Idaho Falls, Idaho, was sentenced today in United States District Court to 39 months in federal prison for possessing sexually explicit images of minors, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill also sentenced Dalton to 15 years of supervised release. Dalton pleaded guilty to the charge in January 2014.
According to court records, over 300 video files of suspected child pornography were discovered on a desktop computer owned and used by Dalton after Dalton left the computer at a local computer repair shop. When interviewed by a Bonneville County Sheriff’s detective, Dalton admitted to downloading sexually explicit images of children using Limewire peer-to-peer file sharing software. Dalton also admitted that he was responsible for the child pornography that police found on an external hard drive at his residence.
The case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Bonneville County Sheriff’s Office.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
Hogsett Announces Federal Charges in an Armed Marion County CarjackingRead the Press Release
U.S. Attorney maintains relentless pursuit of individuals who illegally use and possess firearms to reduce violence throughout Indianapolis
INDIANAPOLIS- Joseph H. Hogsett, the United States Attorney, announced today federal charges against a man who allegedly carjacked an Indianapolis man and discharged a firearm into the dashboard of his vehicle. Jaime Martinez-Elvir, 32, was charged with carjacking and discharging a firearm during a crime of violence.
“The revolving door of justice was closed for Mr. Martinez today,” said Hogsett. “Those individuals who choose to view federal firearms laws as mere ‘suggestions’ will spend a long time in prison contemplating their actions.”
Court documents recently unsealed allege that during the early morning hours of March 31, 2013, Martinez invaded a home in the 800 block of North Sherman Drive, robbed a husband and wife at gun point of jewelry and cash, and then forced the husband and wife to drive him to a bar on the east side of Indianapolis. During the incident, Martinez fired the gun although neither of the victims was hit.
Later that same day, documents allege Martinez committed a second carjacking near Washington and Belmont. During that incident, it is alleged that Martinez forced the victim at gun point to drive an ATM to withdraw money from the victim’s ATM account. When no money was available from the ATM it is alleged that Martinez fired a shot into the dashboard of the victim’s car.
Based on that incident, a federal grand jury returned an indictment yesterday charging Martinez with carjacking and discharge of a firearm during a crime of violence.
“Carjacking is a serious crime that puts the public in danger and the FBI is committed to working with our law enforcement partners to protect the public,” stated Robert A. Jones, Special Agent in Charge of the Federal Bureau of Investigation.
This prosecution comes as part of the U.S. Attorney’s Violent Crime Initiative (VCI), and is the result of a collaborative investigation by the Federal Bureau of Investigation, the Department of Homeland Security Investigations and the Indianapolis Metropolitan Police Department.
Announced in March of 2011, the Violent Crime Initiative represents a district-wide strategy to work with local law enforcement and county prosecutors to combat drug traffickers and criminals that use and carry firearms in their illegal activities. The VCI has produced a dramatic increase in the number of gun-related charges brought federally. In the year preceding the initiative, there were just 14 defendants charged with federal gun crimes by the U.S. Attorney’s Office. In the nearly three years since, more than 325 defendants have been charged.
“Through our Violent Crime Initiative, and in working with our law enforcement partners here in Central Indiana, we’re sending a united message that violent criminals will not be tolerated and will face the full force of federal law,” Hogsett added.
According to Assistant U.S. Attorney Matt Rinka, who is prosecuting the case for the government, Martinez faces up to 15 years in prison if convicted of the carjacking, and a sentence of 10 years to life if convicted of the gun charge. He remains in the custody of the United States Marshal’s Service.
An indictment is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
Hector Galvan, Jr., Sentenced to Five Years in Prison for Being A Convicted Felon in Possession of Firearms, Wire Fraud Conspiracy, and Aggravated Identity TheftRead the Press Release
KNOXVILLE, Tenn. - On May 22, 2014, Hector Galvan, Jr., 34, of Jonesborough, Tenn., was sentenced by the Honorable Pamela L. Reeves, U.S. District Judge for the Eastern District of Tennessee, to serve 60 months in prison. Galvan pleaded guilty in April 2013 to a federal indictment charging him with conspiracy to commit wire fraud, aggravated identity theft, and being a convicted felon in possession of firearms.
Galvan, his wife, and sister-in law conspired in a scheme to negotiate counterfeit checks at retailers in Tennessee, Arkansas, North Carolina, South Carolina, Georgia, Virginia, West Virginia, Kentucky, and Texas, resulting in losses in excess of $1 million. The conspirators were able to steal the identities of people who had indicated on social media that they “liked” certain retailers. The trio posed as the persons whose identities they stole to negotiate counterfeit checks to purchase electronics and other merchandise which they re-sold on an internet auction website, and prepaid credit cards.
During the execution of a federal search warrant at his home, Galvan, a convicted felon, was found to be in possession of 11 firearms, including a stolen 9 mm pistol, which led to the firearms charges in the indictment.
The indictment and subsequent conviction of Galvan was the result of an investigation conducted by the United States Secret Service and Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant U.S. Attorney Matthew T. Morris represented the United States.
Granite City Woman Indicted for Obtaining Controlled Substances by FraudRead the Press Release
Follow @SDILNewsAbbe L. Terry, 49, of Granite City, Illinois, was charged on May 21, 2014, for obtaining controlled substances by fraud, forgery, and deception, in an Indictment returned by a Federal Grand Jury sitting in East St. Louis, IL, Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today.
Terry was indicted on three counts of obtaining Duragesic Patches (Fentanyl), a powerful Schedule II narcotic pain killer, from pharmacies by using forged prescriptions. The indictment alleged that she obtained the drugs in Madison County, Illinois on May 10, 2013, October 17, 2013 and October 23, 2013.
Terry faces up to 4 years in federal prison, up to a $250,000 fine, and a year of supervised release as to each of the three counts. A $100 Special Assessment is also assessed for each count.
An Indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge until proved guilty beyond a reasonable doubt to the satisfaction of a jury.
The investigation in this case was conducted by the United States Drug Enforcement Administration, Office of Diversion Control. The case is being handled by Assistant United States Attorney Ranley R. Killian.
Gary Conti Found Guilty on 26 of 27 Counts of Public CorruptionRead the Press Release
The United States Attorneys Office announced today that a federal trial jury has just found Gary Joseph Conti guilty of the following charges: Conspiracy to defraud the United States (1 count); Scheme to Defraud the United States and the Blackfeet Tribe (21 counts); Theft of Federal Property by Fraud (1 count); Federal False Claims Act Conspiracy (1 count); Theft From an Indian Tribal Government Receiving Federal Grants (1 count); and Money Laundering (1 count). The defendant has been release pending sentencing which has been set for September 4, 2014 at 9:00 am in Great Falls.
Four Orthodox Jewish Rabbis, One of Their Sons Indicted in Divorce-Compelling Kidnap ConspiracyRead the Press Release
TRENTON, N.J. - A federal grand jury today indicted four Orthodox Jewish Rabbis and one of their sons for allegedly conspiring to kidnap and force Jewish men to grant their wives religious divorces, U.S. Attorney Paul J. Fishman announced.
The indictment charges all five men with kidnapping conspiracy and variously charges the defendants with specific instances of kidnapping and attempted kidnapping. Rabbis Mendel Epstein, Martin Wolmark, Jay Goldstein, a/k/a “Yaakov” and Binyamin Stimler had previously been charged, along with others, with conspiracy to commit kidnapping in a complaint unsealed Oct.10, 2013. Four of the others charged, including Jay Goldstein’s sons, Avrohom Goldstein, 34, and Moshe Goldstein, 31, both of Brooklyn, N.Y., have since pleaded guilty to extortion charges in connection with the case. The rest of the charges are pending.
David Epstein was previously charged with a 2009 kidnapping to compel a religious divorce, or get, in a complaint filed on May 15, 2014.
The defendants and charges are outlined in the following chart. Each count also carries a maximum $250,000 fine, or twice the gross gain or loss from the offense.
Defendant
Count/Charge
Max Penalty
1 – conspiracy to commit kidnapping
life in prison
5 – attempted kidnapping
20 years in prison
Martin Wolmark, 56, Monsey, N.Y.
1 – conspiracy to commit kidnapping
life in prison
3 – kidnapping
5 – attempted kidnapping
20 years in prison
Jay Goldstein, 60, Brooklyn
1 – conspiracy to commit kidnapping
life in prison
3 – kidnapping
4 – kidnapping
5 – attempted kidnapping
20 years in prison
Binyamin Stimler, 38, Brooklyn
1 – conspiracy to commit kidnapping
life in prison
5 – attempted kidnapping
20 years in prison
David Epstein, 39, Lakewood
1 – conspiracy to commit kidnapping
life in prison
2 – kidnapping
3 – kidnapping
4 - kidnapping
According to documents filed in this case and statements made in court:
The FBI began an undercover operation after becoming aware of incidents in which David Epstein and Jay Goldstein allegedly were involved in the kidnapping and assaulting of Orthodox Jewish men in order to compel them to grant religious divorces.
During the investigation, Mendel Epstein and Wolmark were recorded discussing plans to kidnap and torture victims. In an in-person meeting with undercover agents at his home on Aug. 14, 2013, Mendel Epstein laid out the plans for a particular target, including trapping him in a van and assaulting him with an electric cattle prod.
At that meeting, Mendel Epstein stated that the kidnapping would cost $10,000 to pay for the rabbinical court, or beth din, to approve the kidnapping and use of violence and an additional $50,000 to $60,000 to pay for the “tough guys” who would conduct the beating of the husband. One of the undercover agents made a payment of approximately $10,000 to Mendel Epstein for the purpose of engaging his organization.
Law enforcement tracked subsequent planning phone calls discussing tactics and payment, as well as a trip by Mendel Epstein and Jay Goldstein to inspect the warehouse in Middlesex, N.J., where they planned to hold the victim. Undercover agents also recorded the convening of a beth din at Wolmark’s Monsey office and a subsequent meeting at Mendel Epstein’s home.
On Oct. 9, 2013, Goldstein, Stimler traveled with others from New York to the warehouse to execute the kidnapping.The team arrived at the warehouse in two dark minivans shortly after 8:00 p.m. Some put on masks and entered the warehouse office with one of the undercover agents, while others walked around the outside of the warehouse with flashlights. Members of the team went in and out of the office wearing disguises, including ski masks, Halloween masks and bandanas. They discussed the plan. Among them, they carried rope, surgical blades, a screwdriver, plastic bags, and items used to ceremonially record a get.
Law enforcement moved into the office and arrested the eight members of the team, including Goldstein and Stimler.U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation.
The government is represented by Assistant U.S. Attorneys R. Joseph Gribko and Sarah Wolfe of the U.S. Attorney’s Office Criminal Division in Trenton.
The pending charges and allegations against related defendants are merely accusations and they are considered innocent unless and until proven guilty.
Defense counsel:
Mendel Epstein: Susan Necheles Esq., New York
Martin Wolmark: Bejjamin Brafman Esq., New York
Jay Goldstein : Aiden O’Connor Esq., Hackensack, N.J.
David Epstein: Henry Mazurek Esq., New York
Binyamin Stimler: Nathan Lewin Esq., WashingtonEpstein, Mendel et al. Indictment
Former President of Guatemala, Alfonso Portillo, Sentenced in Manhattan Federal Court for Laundering Millions of Dollars Through United States BanksRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that ALFONSO PORTILLO, the former President of Guatemala, was sentenced today in Manhattan federal court to 70 months in prison for laundering millions of dollars through bank accounts located in the United States. PORTILLO, who served as the President of Guatemala from January 14, 2000, to January 14, 2004, arrived in the Southern District of New York on May 24, 2013, after being extradited to the United States by the Government of Guatemala. On March 18, 2014, Portillo pled guilty to the sole charge in the Indictment before United States District Judge Robert P. Patterson, who imposed today’s sentence.
United States Attorney Preet Bharara said: “Alfonso Portillo, the former head of state in Guatemala, used his office as a siphon to extract millions of dollars in bribes from Taiwan. Today he has been sentenced to a lengthy prison term for laundering the proceeds of his influence-peddling. The U.S. banking system is not open for business to those seeking to hide illegal funds.”
According to the Indictment, PORTILLO’s plea allocution, and the evidence at sentencing:
From December 1999 through August 2002, while serving as President of Guatemala, PORTILLO received $2.5 million in bribery payments from the Government of Taiwan. In his plea allocution, PORTILLO stated, “I understood that, in exchange for these payments, I would use my influence to have Guatemala continue to recognize Taiwan diplomatically.” Knowing that the $2.5 million was the proceeds of illegal payments from Taiwan, PORTILLO conspired with others to launder the $2.5 million through bank accounts located in the United States. PORTILLO also stated that he and others had the illegally obtained funds “carried from Guatemala to the United States” and then deposited into the U.S. accounts. The $2.5 million in payments consisted of five checks provided by the Government of Taiwan’s Embassy in Guatemala. Three of the checks, totaling $1.5 million, were issued in 2000, and were endorsed personally by PORTILLO. PORTILLO then caused the checks to be deposited in a bank account in Miami, Florida. Two additional checks totaling $1 million were issued in 2002 and were made payable to a company known as Oxxy Financial Corp. (“Oxxy Financial”). These two checks were deposited at the International Bank of Miami, in an account held by Oxxy Financial. As PORTILLO stated in his guilty plea allocution, these and other transactions were “designed, in part, to conceal and disguise the source and ownership of the money.” More than $1.5 million of the Taiwanese payments received by PORTILLO were ultimately deposited into bank accounts in the name of PORTILLO’s former wife and daughter at Banco Bilbao Vizcaya Argentaria (“BBVA”) in Paris, France. Money transferred into the BBVA accounts was further laundered through financial institutions in Luxembourg and Switzerland, among other places.
In addition to the prison term, PORTILLO, 62, was ordered to pay $2.5 million in forfeiture and a $100 special assessment fee.
Mr. Bharara praised the outstanding investigative work of the New York Field Office of the Internal Revenue Service, Criminal Investigation ("IRS-CI"), DEA’s New York Organized Crime Drug Enforcement Strike Force – which comprises agents and officers of the DEA, the New York City Police Department, Immigration and Customs Enforcement’s Homeland Security Investigations, the New York State Police, the U. S. Internal Revenue Service Criminal Investigation Division, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Secret Service, and the U.S. Marshals Service – the DEA’s Guatemala Country Office, the Department of State, and the U.S. Department of Justice's Office of International Affairs for their work in this investigation. Mr. Bharara also recognized and thanked the United Nations Commission Against Impunity in Guatemala ("CICIG"), the Guatemalan Special Prosecutor's Office for the CICIG, and the Ministerio Público in Guatemala for their assistance in the investigation.
This prosecution is being handled by the Office's Terrorism and International Narcotics Unit. Assistant United States Attorneys Adam Fee and Shane T. Stansbury are in charge of the prosecution.
Former Piedmont Jail Supervisor Found Guilty of Conspiracy, False Tax Returns, and Bank FraudRead the Press Release
RICHMOND, Va. – William A. Coles, Jr., 49, of Pamplin, Va., was convicted by a federal jury today on seven counts involving conspiracy with his wife, Sybil Coles, to defraud the United States, assisting in the preparation and filing of false tax returns, and bank fraud. Coles faces a maximum penalty of 48 years of incarceration when he is sentenced by United States District Judge Henry E. Hudson on August 21, 2014.
Dana J. Boente, United States Attorney for the Eastern District of Virginia; Mark R. Herring, Attorney General of Virginia; Thomas J. Kelly, Special Agent in Charge, IRS Criminal Investigation, Washington D.C. Field Office; and Kathryn Keneally, Assistant Attorney General of the Justice Department's Tax Division, made the announcement after the verdict was announced.
The indictment alleged that William Coles and his wife, who was sentenced on May 12, 2014, in a related case to five years’ imprisonment, engaged in a false tax return conspiracy from at least 2008 through 2012. At trial, several of William Coles’ co-workers at the Piedmont Regional Jail testified that Coles claimed his wife knew of secret law enforcement loopholes to get larger tax refunds and took their tax documents and collected fees for his wife to prepare false tax returns unbeknownst to his co-workers.The evidence at trial also showed that William and Sybil Coles electronically deposited checks generated from fraudulent federal and State of Virginia returns filed on their behalf and on behalf of numerous other individuals, along with thousands of dollars in United States currency, into student bank accounts in the name of their college-age daughter. The Coles spent this money on personal living expenses, including mortgage and car loan payments and family vacations. William Coles was interviewed by Special Agents with the Internal Revenue Service Criminal Investigation and failed to disclose the use of the multiple bank accounts where tax refunds and cash were deposited, but admitted that he knew his wife was filing false tax returns and that he had solicited clients from the Jail.
In addition, the trial evidence included multiple sworn claims by William Coles of inflated income and corroborating false documents, including false W-2s and paystubs for him and his wife, that were submitted to the Bank of America and finance companies to obtain a home refinance loan and two car loans.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.
The case is being prosecuted by Department of Justice, Tax Division Trial Attorney and Special Assistant United States Attorney, Rebecca Perlmutter, and Assistant Attorney General and Special Assistant United States Attorney Michael Jagels. IRS-Criminal Investigation in Richmond, Virginia investigated the case.Former Miami-Dade Department of Public Works Employee Pleads Guilty to Accepting $150,000 in Bribes from ContractorRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announce that Garfield Perry, 67, of North Miami Beach, pled guilty to a one-count information charging him with conspiring to accept bribes in connection with programs receiving federal funds and to commit extortion, all in violation of Title 18, United States Code, Section 371. Sentencing is scheduled for July 29, 2014 at 9:00 a.m. before U.S. District Judge Cecilia M. Altonaga.
According to the stipulated statement of facts executed by the parties, from at least 2002 through 2009, Perry was the Roadway Lighting Coordinator for the Department of Public Works in Miami-Dade County. In this capacity, Perry was responsible for, among other things, overseeing the maintenance of more than 22,000 street lights in the county’s roadway system. The information charges that from 2006 through October 2009, Perry accepted bribe payments from a Manufacturer’s Representative totaling approximately $150,000. Perry regularly directed the Manufacturer’s Representative to make the bribe payments by paying down debts owed by Perry, including payments on two home mortgages, one car loan, two home insurance policies, two car insurance policies, and eight credit cards. Perry accepted as bribe payments from the Manufacturer’s Representative, cruise vacations, domestic and international airline tickets, payments for hotels and theatre tickets. Perry regularly directed the Manufacturer’s Representative to make bribe payments by issuing checks payable to third parties, and, after the checks were cashed, determined the manner in which the proceeds were to be split. Perry falsely certified to Miami-Dade County that he was not engaged in any outside employment and did not receive any gratuities. In return for the bribe payments, Perry helped to ensure that lighting products used in Public Works’ projects were represented by the Manufacturer’s Representative.
At sentencing, Perry faces a possible maximum statutory sentence of up to five years in prison.
Mr. Ferrer commended the investigative efforts of the FBI and IRS-CI. The case is being prosecuted by Assistant U.S. Attorney Jeffrey N. Kaplan.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Former Erie County Sheriff's Deputy Sentenced on Gun ChargeRead the Press Release
Buffalo, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that Thomas J. Blajszczak, 44, of Lancaster, N.Y., who was convicted of being an unlawful user of a controlled substance in possession of a firearm, was sentenced to six months home confinement by U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorney Joseph M. Tripi, who handled the case, stated that the defendant was intercepted in November and December of 2009, pursuant to a court-authorized wiretap, communicating with an a cocaine supplier named Jose De Leon. De Leon was previously convicted of conspiracy to distribute five kilograms or more of cocaine. The conversations between the defendant and De Leon, his cocaine supplier, established that Blajszczak was receiving cocaine for his personal use while employed by the Erie County Sheriff’s Department. At that time, the defendant owned and was in possession of a Glock, Model No. 23, .40 caliber semi-automatic pistol.
During an interview with the FBI, the defendant admitted that part of a monetary debt referenced during some of the intercepted telephone conversations related to money owed by the defendant to his cocaine supplier for powder cocaine. Blajszczak further admitted that he provided at least one box of 9mm ammunition, and one box of .45 caliber ammunition, to Jose De Leon.
Blajszczak’s sentencing is part of an FBI investigation which resulted in the arrest of a group of individuals between December 2009 and February 2010, who were involved in trafficking kilograms of cocaine from sources in Puerto Rico, and in New Jersey, and re-distributing the cocaine to drug dealers and users in Buffalo New York. The defendant is the 27th person convicted in the investigation.
The sentencing is the culmination of an investigation on the part of Special Agents of the Federal Bureau of Investigation, the New York State Police, under the direction of Major Michael Cerretto, and the Erie County Sheriff’s Department, under the direction of Sheriff Timothy Howard.Former Detroit Water Director Sentenced in Kilpatrick Corruption CaseRead the Press Release
The former Director of the Detroit Water and Sewerage Department was sentenced to eight months in a halfway house after having pleaded guilty to conspiracy in the case of former Detroit Mayor Kwame Kilpatrick, announced U.S. Attorney Barbara L. McQuade.
Joining on the announcement were Paul M. Abbate, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation, Carolyn Weber, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation Division and Randall K. Ashe, Special Agent in Charge, Environmental Protection Agency, Criminal Investigation Division (EPA-CID).
U.S. District Judge Nancy G. Edmunds imposed sentence on Victor Mercado, 62, of Stuart, Florida.
According to the superseding information, from June 2002 to June 2008, Mercado served as Director of the Detroit Water and Sewerage Department (DWSD), reporting directly to Kilpatrick. In this capacity, Mercado was responsible for administering more than $2 billion in contracts with private companies.
The plea documents stated that Mercado, acting at the direction of Kilpatrick, unlawfully steered contracts and payments to Kilpatrick co-conspirator Bobby Ferguson. Mercado influenced the procurement process to Ferguson's advantage, and directed a bidder to include Ferguson on a DWSD contract if the bidder wanted to receive favorable consideration on the bid. Mercado took these steps as a result of regular and consistent pressure from Kilpatrick and his staff to help Ferguson obtain DWSD business regardless of procurement policies, rules and regulations.
“Although Mr. Mercado was acting under pressure from the mayor, he must be held accountable for abusing his position of trust and causing harm to the city,” McQuade said.
“While Director of the Detroit Water and Sewerage Department, Mr. Mercado violated the law by unlawfully steering business contracts at the direction of the former mayor,” stated Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “This criminal conduct inflicted economic harm upon the city, and Mr. Mercado must be held accountable for his actions.”
“Illegally influencing the bidding process for managing wastewater and sewage can significantly endanger public health and safety,” said Randall K. Ashe, Special Agent in Charge of EPA’s criminal enforcement program in Michigan. “As a public servant charged with protecting Detroit’s residents, these actions are particularly egregious. Today’s sentence sends a clear message that EPA and its partners will prosecute municipal officials that skirt their responsibility to protect those they serve.”
“Public corruption remains a top priority for IRS-Criminal Investigation and this case represents the value of the collaborate efforts of law enforcement to hold those in positions of public trust accountable,” said IRS Acting Special Agent in Charge Carolyn Weber.
From January 2002 to January 2006, Kilpatrick served as Special Administrator over the DWSD. That designation, arising from a federal consent decree resolving a lawsuit alleging federal environmental violations, gave Kilpatrick authority to award DWSD contracts directly with outside parties, bypassing city procurement procedures, and also gave Kilpatrick responsibility over the operation of DWSD's wastewater treatment plant to ensure compliance with environmental standards.
As stated in the plea documents, Kilpatrick used his position as Mayor of Detroit and Special Administrator of DWSD to pressure city contractors to give subcontracts or payments obtained under those contracts to Ferguson, or risk having the contracts delayed, awarded to competitors, or canceled, resulting in economic harm. Invoking and otherwise exploiting his well-known affiliation with former Mayor Kilpatrick, Ferguson pressured city contractors to hire or pay him for DWSD contracts.
This case was investigation by special agents of the FBI, IRS and EPA-CID and was prosecuted by Assistant United States Attorney Mark Chutkow, Michael Bullotta and Eric Doeh.
Fairfield County Hedge Fund Executives Plead Guilty to Federal Conspiracy OffenseRead the Press Release
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The United States Attorney for the District of Connecticut, the New Haven Division of the Federal Bureau of Investigation and the U.S. Department of Labor, Office of Inspector General, today announced that DAVID BRYSON, 45, of Ridgefield, BART GUTEKUNST, 62, of Weston, and RICHARD PEREIRA, 42, of Ridgefield, all former executives of New Stream Capital, LLC (“New Stream”), a Ridgefield-based hedge fund, pleaded guilty yesterday in New Haven federal court to a federal conspiracy charge stemming from a scheme to deceive investors in order to obtain and maintain investments. BRYSON and GUTEKUNST were managing partners and principals at New Stream and PEREIRA was the Chief Financial Officer.
According to court documents and statements made in court, in November 2007, New Stream launched new feeder funds, one based in the United States (“U.S. Fund”) and a series of funds based in the Cayman Islands (“Cayman Fund”). New Stream also announced that its existing Bermuda Fund would be closing, and all foreign investors would have to move their investments into the Cayman Fund. Rather than transfer into the new structure, New Stream’s largest investor placed a redemption on its whole investment in the Bermuda Fund in March 2008. At risk of losing their largest investor, BRYSON, GUTEKUNST and PEREIRA set in motion a scheme to secretly keep the Bermuda Fund open and give priority to Bermuda Fund investors in an effort to reverse the redemption. As part of the scheme, BRYSON, GUTEKUNST and PEREIRA had New Stream staff secretly reorganize the fund structure so as to effectuate the priority change.
As part of the scheme, New Stream failed to inform investors who had transferred from the Bermuda Fund into the Cayman Fund that the Bermuda Fund was remaining open or that it was being given priority over the Cayman Fund. Moreover, New Stream continued to market to investors by concealing from them the magnitude of the actual pending redemptions and by using deceptive marketing materials that failed to disclose the existence of New Stream’s Bermuda Fund.
BRYSON, GUTEKUNST and PEREIRA each pleaded guilty to one count of conspiracy to commit wire fraud, a charge that carries a maximum term of imprisonment of five years. BRYSON is scheduled to be sentenced by Chief U.S. District Judge Janet C. Hall on August 19, 2014, and GUTEKUNST and PEREIRA are scheduled to be sentenced by Judge Hall on August 22, 2014.
The defendants were arrested on February 26, 2013. BRYSON and GUTEKUNST are currently released on $5 million bonds, and PEREIRA is released on a $300,000 bond.
This matter has been investigated by the Federal Bureau of Investigation and the U.S. Department of Labor, Office of Inspector General, with the assistance of the Securities and Exchange Commission. The case is being prosecuted by Assistant U.S. Attorneys Liam Brennan and Michael McGarry, and Special Assistant U.S. Attorney Sheldon L. Pollock.
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(203) 821-3722 [email protected]Eight California National Guard Members Alleged to Have Participated in Recruitment FraudRead the Press Release
SACRAMENTO, Calif. — Grand juries in Fresno and Sacramento have indicted eight current or former members of the California National Guard, in seven separate cases, charging them with wire fraud for fraudulently obtaining recruiting referral bonuses, United States Attorney Benjamin B. Wagner announced.
According to court documents, the United States Army contracted with a company called Document and Packaging Broker Inc. (DOCUPAK) to administer the Guard Recruiting Assistance Program (G-RAP). Under G-RAP, members of the California National Guard served as Recruiting Assistants. If a Recruiting Assistant referred a potential Guard member to a recruiting office and that person ultimately enlisted, the Recruiting Assistant was eligible to receive monetary compensation disbursed by DOCUPAK.
Each of the defendants indicted today served in the California National Guard and is alleged to have played a role in causing DOCUPAK to issue unearned recruiting compensation by falsely claiming that various enlistees had been referred to recruiting offices by particular eligible Recruiting Assistants, when in fact they had not. Each of the indicted defendants is alleged to have received recruiting compensation as a result of those false referrals.
U.S. Attorney Wagner stated: “Ripping off a program intended to enhance our armed services is not just illegal, it is reprehensible. We will continue to pursue those who attempt to undermine the military for their own personal profit.”
“We take allegations of fraud very seriously in the U.S. Army and will continue to pursue those allegations with steadfast commitment and aggressive investigative techniques where ever the evidence leads us,” said Mr. Frank Robey, Director of the Major Procurement Fraud Unit of the Army's Criminal Investigative Command.
“The Army National Guard trusted the individuals indicted today to attract and assist others through the recruiting process, and compensated them for these efforts,” said Special Agent in Charge Monica M. Miller of the Sacramento FBI. “Instead, the recruiting assistants are alleged to have stolen federal funds by circumventing established processes, claiming recruitment of individuals whom they often had never met, and in some cases, diverting portions of the payments to others who are prohibited from receiving the funds.”
"Today's indictments reflect the essential interagency coordination between the California National Guard and law enforcement agencies across the nation," said Maj. Gen. David S. Baldwin, Adjutant General for the California National Guard. "We stand ready to fully cooperate with civil and law enforcement agencies as these cases progress, ensuring that those who fall short of the California Guard's core values are held accountable."
These cases are the product of an ongoing investigation by the Army Criminal Investigative Command Major Procurement Fraud Unit, the Defense Criminal Investigative Service, and the Federal Bureau of Investigation. Assistant United States Attorney Michael G. Tierney is prosecuting the Fresno cases and Assistant United States Attorney Matthew G. Morris is prosecuting the Sacramento cases.
The defendants indicted today are as follows:
- Joaquin Cuenca, 36, of San Diego, was a Recruiter and allegedly is responsible for causing $30,000 in fraudulent bonuses.
- Leonardo Pesta, 46, of Mountain View, was a Recruiter and allegedly is responsible for causing $20,000 in fraudulent bonuses.
- Nicholas Huerta, 32, of Fresno; was a Recruiter and allegedly is responsible for causing $25,000 in fraudulent bonuses.
- Jimmy Maldonado, 33, a Recruiter, and his wife, Mayra Garcia Maldonado, 27, a Recruiting Assistant, both of Fresno, are allegedly responsible for causing $40,000 in fraudulent bonuses.
- Sarah N. Nattress, 26, of Paradise, was a Recruiting Assistant and is allegedly responsible for $28,000 in fraudulent bonuses.
- Brian M. Kaps, 40, of Chico, was a Recruiting Assistant and is allegedly responsible for $16,000 in fraudulent bonuses.
- Richard C. Sihner, 52, of Elk Grove, was a Recruiting Assistant and is allegedly responsible for $95,000 in fraudulent bonuses. Sihner is also charged with one count of making false statements to a federal agent.
If convicted, each defendant faces a maximum statutory penalty of 20 years in prison and a $250,000 fine for each count of wire fraud. Any sentence, however, would 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. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Doctor Pleads Guilty to Tax EvasionRead the Press Release
Dr. Michael N. Mangold pleaded guilty to tax evasion and making false statements today in the U.S. District Court for the Eastern District of Wisconsin, announced the Justice Department and Internal Revenue Service (IRS). Mangold was indicted in October 2012.
According to court documents, Mangold was a medical doctor specializing in emergency medicine and urgent care who, since 1993, had worked as a physician for various hospitals, emergency rooms and urgent care facilities. At times, he also worked as a physician in state and county correctional facilities. Mangold primarily earned income through a combination of employee wages and independent contractor payments.
In his plea agreement, Mangold admitted that from 1997 through 2007, he willfully concealed his income by filing false tax returns and making frivolous legal arguments to the IRS with regard to his overall tax liabilities. Mangold further admitted that he made false statements to the civil and criminal-side of the IRS during the investigation. In total, Mangold owed the IRS approximately $191,577 in taxes based on his income and wages during the relevant calendar years, plus interest.
Mangold also admitted that he made materially false statements in the course of a civil lawsuit concerning his failure to repay federal loan obligations by submitting a false financial affidavit to government officials, which contained false statements about the amount of income he earned as a doctor.
As a result of his plea, Mangold faces a maximum sentence of 10 years in prison and a $350,000 fine.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles M. Edgar Jr. and Rebecca Perlmutter of the Justice Department’s Tax Division are prosecuting the case.
Detroit-Area Home Health Agency Owner Sentenced to 72 Months in Prison for His Role in $13.8 Million <br /> Medicare Fraud SchemeRead the Press Release
The owner of a home health agency involved in a $13.8 million Medicare fraud scheme was sentenced today to serve 72 months in prison.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Paul M. Abbate of the FBI Detroit Field Office and Special Agent in Charge Lamont Pugh III of the Detroit Office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations made the announcement.
Zahir Yousafzai, 44, was sentenced by U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan. In addition to his prison term, Yousafzai was sentenced to three years of supervised release and was ordered to pay $4,131,135 in restitution, jointly and severally with his co-defendants.
According to court records, in 2009, Yousafzai and his co-conspirators acquired beneficial ownership and control over two home health companies, First Care Home Health Care LLC and Moonlite Home Care Inc. Yousafzai also assisted in the operation of two additional home health care agencies, Physicians Choice Home Health Care LLC and Quantum Home Care Inc., owned by co-conspirators.
Also according to court records, Yousafzai, a physical therapist assistant, paid and directed the payment of various medical professionals, including doctors, nurses, physical therapists and physical therapist assistants, to create fictitious patient files to document purported home health services that were never provided.
In addition, according to court records, Yousafzai paid and directed the payment of kickbacks to recruiters who obtained beneficiaries’ Medicare information that he used to submit claims for home health care that was never provided. The beneficiaries sometimes pre-signed forms that were later falsified to indicate they received home health services, when they did not. In other instances, the beneficiaries’ signatures were forged. Yousafzai signed patient files falsely stating that physical therapy services were provided.
Additionally, according to court records, Yousafzai incorporated a shell company known as A-1 Nursing and Rehab Inc., through which he laundered the proceeds of the health care fraud.
Between July 2008 and September 2011, Medicare paid approximately $13.8 million in fraudulent home health claims submitted by the four home health agencies associated with Yousafzai. Of this amount, Medicare paid more than $4 million to First Care and Moonlite, the companies that Yousafzai owned in whole or in part.
This case was investigated by the FBI and HHS-OIG and was brought by the Medicare Fraud Strike Force, a joint effort of the U.S. Attorney’s Office for the Eastern District of Michigan and the Criminal Division’s Fraud Section. The case was prosecuted by Assistant Chief Catherine K. Dick and Trial Attorney Matthew C. Thuesen 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 almost 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is 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 .Detroit Heroin Dealer Sentenced to Federal PrisonRead the Press Release
CHARLESTON, W.Va. – A man who admitted coming to Charleston from Detroit, Michigan, to sell heroin was sentenced today to federal prison, announced U.S. Attorney Booth Goodwin. Kermit Ware, III, 26, of Detroit, Michigan pleaded guilty last January to using a communication device to facilitate a drug trafficking crime, and he was sentenced today to five months’ imprisonment. Ware came to West Virginia in the summer of 2013 to distribute heroin after being recruited by a member of a Detroit-based heroin distribution ring with ties to Kanawha County. In July 2013, Ware used his cellular telephone to facilitate several heroin sales to undercover police in and around Charleston.
This case was investigated by the Kanawha Bureau of Investigations. Assistant United States Attorney Joshua Hanks handled the prosecution.
United States District Judge John T. Copenhaver, Jr., is presiding over the case and imposed today’s sentence.
Defendant Pleads Guilty to Federal Offense of Sex Trafficking of A ChildRead the Press Release
Defendant Faces Imprisonment term of 10 years to Life
BINGHAMTON, NEW YORK - United States Attorney Richard S. Hartunian announced that Edward Tilden, 32 years of age and from Utica, New York, pleaded guilty today in federal court to an offense charging him with Sex Trafficking Of A Child.
In pleading guilty, Edward Tilden admitted that in and about February of 2012, in the Broome, Oneida, and Onondaga counties in the Northern District of New York and elsewhere, defendant Tilden and others, aiding and abetting each other, while in and affecting interstate commerce, did knowingly recruit, entice, harbor, transport, provide, obtain, and maintain by any means a person with the initials M.L., who had not attained the age of 18 years, knowing, or in reckless disregard of the fact that M.L. would be caused to engage in one or more commercial sex acts, and did benefit, financially and by receiving things of value, from participation in the venture which has engaged in the act described above, in violation of Title 18, United States Code, §§ 1591(a) & (b) and 2.
Tilden further admitted that he and others, while aiding and abetting each other, knowingly recruited, enticed, harbored, transported, provided, obtained, and maintained a minor with the initials M.L., who was 16 years of age at the time, in order to prostitute M.L. to adult men in exchange for money and controlled substances. Tilden and the others photographed and caused M.L. to be photographed in sexually seductive poses wearing only lingerie and posted said photographs of M.L. on Backpage.com, an internet classified advertising website, offering M.L. for sex in exchange for money. Additionally, Tilden and the others utilized cellular telephones to send mass cellular texts offering M.L. for sex to customers in exchange for money. Furthermore, Tilden and the others transported and caused M.L. to be transported to various locations including hotels where M.L. was instructed and caused to engage in commercial sex acts, in that, M.L. engaged in sexual acts including intercourse and oral sex with customers in exchange for money and controlled substances. Tilden and the others benefitted, both financially and by receiving things of value, by prostituting M.L. to customers, in that, Tilden and the others shared the money and controlled substances acquired from customers with whom M.L. was caused to engage in sex acts.
The federal charge stems from an investigation conducted by the FBI-Albany Division, New York State Police, Oneida County District Attorney’s Office, Utica Police Department, and the Oneida County Child Advocacy Center. The investigation concerned a prostitution ring involved in selling a minor to engage in sexual conduct in exchange for money and drugs. The prostitution ring utilized the website Backpage.com to advertise the prostitution. The ring also utilized a texting network to advertise their prostitution business. The Oneida County District Attorney has charged several other defendants with state crimes in connection to this overall joint investigation.
Edward Tilden continues to be held in the custody of the U.S. Marshal’s Service pending sentencing. Tilden is scheduled to be sentenced on September 19, 2014. At sentencing, he faces a statutory mandatory minimum term of 10 years prison and a maximum of life. The maximum possible fine is $250,000.
Convicted Money Launderers Sentenced to Prison<br /> in Connection with Health Care Fraud SchemeRead the Press Release
Two Florida men were sentenced today in the Middle District of Florida for their roles in a fraud scheme involving the submission of more than $10 million in fraudulent claims to Medicare for physical therapy.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney for the Middle District of Florida A. Lee Bentley III, Acting Special Agent in Charge Brian P. Martens of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Florida region, and Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office made the announcement.
Rafael Roche, 43, and Alain Remy, 36, previously pleaded guilty to an indictment charging them with conspiracy to commit money laundering involving financial proceeds from a health care fraud scheme. Today, they were sentenced to serve 46 months and 37 months respectively in prison to be followed by three years of supervised release. In addition, they will be required to pay $1,847,222 in restitution, jointly and severally with co-conspirators.
According to documents filed in the case, Roche, Remy and others were part of a Medicare fraud conspiracy involving Renew Therapy Center of Port St. Lucie LLC (Renew Therapy), an outpatient rehabilitation facility. From November 2007 through August 2009, Renew Therapy submitted approximately $10,549,361 in fraudulent claims for reimbursement to Medicare for therapy services that were not legitimately prescribed by physicians and not provided to Medicare beneficiaries. As a result, Medicare deposited approximately $6,248,056 into a Renew Therapy bank account. The fraud proceeds in that account were subsequently disbursed to various individuals and entities, including a combined total of $1,847,222 to Ariguanabo Investment Group Inc. and IRE Diagnostic Center Inc., which are shell companies that Roche and Remy controlled, and was then moved to additional shell companies that Roche and Remy established and controlled.
This case was investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida. This case was prosecuted by Trial Attorney Christopher J. Hunter of the 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 the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov .Contractor Sentenced to Prison for Environmental CrimeRead the Press Release
Contact Person: Jim May (803) 929-3000
Columbia, South Carolina ----- United States Attorney Bill Nettles stated today that David Braswell was sentenced in federal court in Florence, South Carolina, for violation of the Clean Air Act, 42 U.S.C. § 7412. United States District Judge R. Bryan Harwell of Florence sentenced Mr. Braswell to six months in prison, six months house arrest, three years supervised release and a $10,000.00 fine.
Evidence presented at the change of plea hearing in October established that the defendant ran CoolCote, a construction and renovation company in the Myrtle Beach area. The defendant was contracted to remove and replace siding on a high rise beach front condominium complex in Myrtle Beach. The defendant was made aware that the existing siding contained asbestos material and agreed to do the job for a lower price. The defendant did not provide the proper protection to his employees or obtain the proper permits to allow for the removal of asbestos. United States Bill Nettles stated: "The United States Attorney's Office is committed to protecting the citizens of South Carolina, our land, our water, and our air from contamination. Our office will continue to prioritize the environmental work we do with both federal and state agencies, to ensure these cases are brought to the forefront. I ask that you report any violations to the EPA at (800)241-1754 or http://www2.epa.gov/enforcement/report-environmental-violations."
"The defendant was hired to renovate a beach-front condominium building which he knew contained asbestos in the exterior surface coating,” said Maureen O’Mara, Special Agent in Charge of EPA’s criminal enforcement program in South Carolina. “Instead of removing the asbestos containing material legally and safely, he directed workers to pressure wash the material in violation of the work practice standards and as a result, contaminated a local beach and adjacent properties. Today’s sentence should serve notice that EPA and its partner agencies remain committed to protecting communities through tough enforcement of the nation’s environmental laws.”
The case was investigated by agents of the Environmental Protection Agency and South Carolina Department of Health and Environmental Control, Assistant United States Attorney Jim May of the Columbia office prosecuted the case.Colombian Man Charged with Importation of Heroin Through the Orlando International AirportRead the Press Release
Orlando, Florida – United States Attorney A. Lee Bentley, III, announces that a federal grand jury has returned an indictment charging William Paez Rubiano (40) with importing approximately 3.3 kilograms of heroin into the United States from Colombia. If convicted, he faces a maximum sentence of 20 years in federal prison.
According to court records, on May 8, 2014, Paez arrived in Orlando from Bogota, Colombia, aboard JetBlue Airways Flight 1784. Paez was traveling with his wife and their seven-year-old daughter. Upon arrival at the Orlando International Airport, a U.S. Customs and Border Protection (CBP) K-9 Officer conducted a canine sweep of Paez and his family, including their carry-on luggage. The canine positively alerted to the odor of narcotics emanating from the carry-on luggage. Paez’s carry-on luggage was examined and the officers discovered, concealed inside the linings of the luggage, a brown powder substance which yielded positive results to the presence of heroin. Paez accepted responsibility for the drugs and was placed under arrest. He is currently detained pending trial.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. It is being prosecuted by Assistant United States Attorney Ilianys Rivera Miranda.
Chastain Montgomery, Sr. Pleads Guilty to Robbery and Murder of Henning Postal WorkersRead the Press Release
Memphis, TN – Chastain Montgomery, Sr., 50, of Lavergne, TN, pleaded guilty today to seven federal crimes committed during a six-month spree that included the murders of United States Postal Service employees Paula Robinson and Judy Spray, announced U.S. Attorney Edward L. Stanton III; Keith Fixel, Inspector in Charge of the Charlotte Division, United States Postal Inspection Service; and Mark Gwyn, Director of the Tennessee Bureau of Investigation.
Montgomery’s sentencing has been set for August 12, 2014 at 9:00 a.m. before Senior U.S. District Judge Jon P. McCalla. He is facing consecutive life sentences in federal prison without the possibility of parole.
Montgomery’s guilty plea means he will not face the death penalty for his crimes. Had the case gone to trial and Montgomery been found guilty, a second unanimous vote of the jury on the issue of capital punishment would have resulted in a death sentence.
“For the Spray and the Robinson/Croom families, today represents one more step on the road to finding justice for their loved ones,” said U.S. Attorney Stanton. “The callous and unconscionable nature of the murders of these two innocent women and dedicated federal employees illustrates the depravity of these senseless crimes and underscores the importance of ensuring that the defendant can never inflict this type of mayhem again.”
“Millions of Americans see postal workers serving their families as a comforting thought. That makes the senseless murder of two innocent postal employees resonate with our country as a whole and our employees on a deeply personal level,” said Inspector in Charge Fixel. “The safety and security of postal employees is our highest priority and we are thankful for the hard work and dedication of our Inspectors along with the other law enforcement agencies that helped to bring this case to a conclusion.”
“We are grateful for the multi-agency effort that led to Montgomery’s capture and today’s admission of guilt,” said TBI Director Gwyn. “Though it can never fully comfort the families of the two women who died because of his actions, I hope it brings a small sense of comfort and closure to know the man responsible will never go free.”
According to the facts alleged in the superseding indictment and revealed during subsequent hearings, on October 18, 2010, Montgomery, Sr. and his son Chastain Montgomery, Jr. drove from Nashville, TN to Henning, robbed the United States Post Office, and then murdered Sales and Service Associate Robinson and Rural Carrier Associate Spray.
Following their crimes, they returned to Nashville. Eight days later, Montgomery, Jr. stole a Nissan Frontier pick-up truck in Smyrna, TN and used it as the getaway vehicle following their robbery at gunpoint of Southeast Financial Credit Union in Lavergne, TN on October 29, 2010.
One month later on November 29, 2010, the pair stole a Chevy Venture minivan and used it as a getaway vehicle following the robbery at gunpoint of Mid-South Bank in Smyrna, TN.
On February 14, 2011, the pair made plans to leave the Middle Tennessee area. Montgomery, Jr. carjacked a man and stole his Chevrolet pick-up truck, driving it from Nashville to Mason, TN. During the journey he was observed by Chief Deputy Sheriff Mike Smothers of the Haywood County Sheriff’s Department, who began a vehicular pursuit.
Chief Deputy Smothers reported that Montgomery, Jr. began driving at an excessive rate of speed and veered into other lanes in what appeared to be an attempt to cause an auto accident. Chief Deputy Smothers was joined in his pursuit by Mason Police Chief J. C. Paris.
When Montgomery, Jr. entered the town of Mason, he exited his vehicle and began shooting at members of law enforcement and innocent civilians outside a nearby market. Chief Deputy Smothers returned fire and struck Montgomery, Jr. who died at the scene.
Law enforcement immediately cordoned off the crime scene and began processing evidence. While doing so, officials noticed Montgomery, Sr. cross the crime scene barrier and begin moving toward the Chevy truck driven by his son. He was taken into custody and transported to the Tipton County Sheriff’s Department. While there, Montgomery, Sr. was interviewed by United States Postal Inspectors and made a full confession to all of his crimes.
Law enforcement confiscated a number of weapons and other items from the Mason crime scene, including the Ruger 9mm pistol and the Smith & Wesson .40 caliber pistol used to kill Robinson and Spray; a .45 caliber Glock pistol; a .380 pistol; two Mossburg 12 gauge shotguns; a Remington 12 gauge shotgun; a Springfield 9mm pistol; a Rossi .357 Magnum revolver; large amounts of ammunition; ski masks and latex gloves.
This case was investigated by the United States Postal Inspection Service; the Tennessee Bureau of Investigation; the Tennessee Highway Patrol; 25th District Attorney General Mike Dunavant’s Office; the Lauderdale County Sheriff’s Department; the Tipton County Sheriff’s Department; the Haywood County Sheriff’s Department; the Mason Police Department; the Henning Police Department; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Federal Bureau of Investigation; the United States Secret Service; the Tennessee Department of Correction; the U.S. Marshals Service; the Lavergne Police Department; the Smyrna Police Department; and the Metropolitan Nashville Police Department.
This case is being prosecuted by United States Attorney Edward L. Stanton III; Assistant U.S. Attorney Tony Arvin; Assistant U.S. Attorney Lorraine Craig; Assistant U.S. Attorney Stuart Canale; and Capital Case Section Attorney Michael Warbel.Caseyville Man Indicted for Stealing Funds from Railroad Retirement BoardRead the Press Release
Follow @SDILNewsThe United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today that Dennis Harold French, 51, of Caseyville, Illinois, was indicted by a federal grand jury on charges that he stole unemployment and disability benefits from the United States Railroad Retirement Board.
The indictment alleges that, from May 2009 through June 2012, French fraudulently obtained monies belonging to the U.S. Railroad Retirement Board, an agency of the United States, by concealing his employment status in order to receive occupational disability benefits.
The charge carries a maximum penalty of 10 years in prison, a $250,000 fine, and up to 3 years of supervised release.
An indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge and is entitled to a fair trial at which the Government must prove guilt beyond a reasonable doubt.
The case was investigated by agents of the U.S. Railroad Retirement Board, Office of Inspector General, Office of Investigations. The case is being prosecuted by Assistant U.S. Attorney Liam Coonan.
If you suspect or know of an individual or company that is committing fraud against any U.S. Railroad Retirement Board program, you may report this to the U.S. Railroad Retirement Board's Office of Inspector General by calling 1.800.772.4258 or by e-mailing a complaint or information to: [email protected].
Business Owner Pleads Guilty to Wire FraudRead the Press Release
RALEIGH – United States Attorney Thomas G. Walker announced that today in federal court, before Chief United States District Judge James C. Dever III, HILDA PARKER , 57, of Goldsboro, North Carolina, entered a guilty plea to wire fraud.
According to information in the public record, Hilda Parker owned and operated Parker Products, which operated as a broker of goods for the Defense Logistics Agency (“DLA”). Between April 2007 and December 2007, Parker Products was awarded 217 purchase orders valued at $346,508.26 under a streamlined fast-pay purchase system. With respect to 29 of the 217 purchase orders (total value of $128,983.45), Parker Products failed to deliver the goods ordered. HILDA PARKER, however falsely verified via wire shipment of the goods and received payments in connection with those 29 purchase orders. Because of the fast-pay purchase system, DLA made payment on the verification rather than actual receipt of the goods ordered.
Some of the items ordered through HILDA PARKER d/b/a/ Parker Products, Inc. were mission critical (e.g., a valve for a Navy ship leaving for Iraq or first aid kits for deployed marines). This resulted in the degradation of operational readiness for a number of military units.
The maximum penalty that PARKER faces at sentencing is twenty years imprisonment, a $250,000.00 fine and restitution.
The criminal investigation of this case was conducted by Defense Criminal Investigation Service. Assistant United States Attorney Banumathi Rangarajan is handling the prosecution of the case.
Bossier City Man Sentenced to 18 Months in Prison for Production and Sale of Counterfeit U.S. MoneyRead the Press Release
SHREVEPORT, La. –United States Attorney Stephanie A. Finley announced today that Corey Crosby, 23, of Bossier City, La., was sentenced by U.S. District Judge Donald E. Walter, to 18 months in prison for making and selling counterfeit Federal Reserve notes.
According to evidence presented at the guilty plea on February 21, 2014, Crosby was identified as the seller and manufacturer of counterfeit money in the Shreveport/Bossier City area in June of 2013. He sold the counterfeit money and uncut sheets of counterfeit money in denominations of $100, $20, and $10. Investigators matched Crosby’s fingerprints to a printer used to manufacture the counterfeit notes. Crosby was previously convicted on state charges in Caddo Parish for forgery in November of 2012.
The U.S. Secret Service - Shreveport Office, Caddo Parish Sheriff’s Office, Shreveport Police Department, and Bossier Parish Sheriff’s Office conducted the investigation. Assistant U.S. Attorney Brandon B. Brown prosecuted the case.
Bethpage Woman Pleads Guilty to Filing False Tax ReturnRead the Press Release
Failed to Report Over $600,000 in Embezzled Funds
B Traci Lynne Howes, 40, of Bethpage, Tennessee, pleaded guilty today to filing a false tax return which failed to report funds she embezzled from her employer, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Howes faces up to three years in prison and a fine of up to $250,000.
At the plea hearing, Howes admitted that while she was employed as the office manager at Drywall Systems, Inc., in Gallatin, Tenn., from January 2008 through July 2011, she embezzled approximately $605,796 from her employer, including wiring approximately $477,622 to her personal and business bank accounts and making unauthorized charges on the company’s credit cards. In addition, during the last quarter of 2010 and the first two quarters of 2011, Howes failed to file quarterly federal tax returns and did not pay to the IRS the taxes that had been withheld from employees’ paychecks.
For tax years 2008-2011, Howes failed to report the embezzled income on her personal tax returns, which caused a tax loss of approximately $139,525, not including penalties and interest. Additionally, during the last quarter of 2010 and the first and second quarters of 2011, Howes withheld employee trust fund taxes of approximately $117,592 from employee paychecks, but failed to pay that amount to the IRS. She also failed to pay the employer’s portion of payroll taxes in the amount of $88,631.
In the plea agreement, Howes agreed to the entry of a restitution order of at least $605,769 to Drywall Systems and $139,525 to the IRS.
A sentencing hearing is scheduled for September 5, 2014, before United States District Court Judge Kevin H. Sharp. This investigation was conducted by the IRS- Criminal Investigation. Assistant U.S. Attorney Kathryn W. Booth represents the government.
Bellevue Man who Sold Drugs on ‘Silk Road’ Internet Site Pleads Guilty to Drug Distribution ConspiracyRead the Press Release
A 40-year-old Bellevue, Washington man who was a prolific drug dealer on the online marketplace “Silk Road,” pleaded guilty today to conspiracy to distribute illegal drugs, announced U.S. Attorney Jenny A. Durkan. STEVEN SADLER sold cocaine, heroin and methamphetamine to people who ordered over the internet via the Silk Road site. He shipped the drugs through the mail. When sentenced by U.S. District Judge Ricardo S. Martinez on September 4, 2014, SADLER faces a mandatory minimum five years and up to 40 years in prison because of the volume of drugs he sold.
According to the plea agreement, SADLER, under the screen name NOD, began selling drugs on Silk Road in 2012. The internet site was dubbed an anonymous marketplace, where the majority of the business was the sale of illegal drugs. When police searched his apartment on July 31, 2013, they found more than a kilogram of cocaine and heroin each, as well as 400 grams of methamphetamine. They also found a .45 caliber semi-automatic pistol hidden under the mattress in his bedroom. SADLER is also forfeiting a 2007 BMW 525 and $4,200 cash seized the day the search warrants were served.
The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the U.S. Postal Inspection Service. The case is being prosecuted by Assistant United States Attorney Thomas Woods.
Attorney General Holder Announces Significant Policy Shift <br /> Concerning Electronic Recording of StatementsRead the Press Release
WASHINGTON—Following a collaborative and thorough review, Attorney General Eric Holder on Thursday announced a new policy for the Department of Justice that creates a presumption that statements made by individuals in federal custody, following arrest but prior to their first appearance in court, will be electronically recorded. Attorney General Holder said that the new policy will help to ensure accountability and promote public confidence in the institutions and processes that guide the nation’s law enforcement efforts.
“Creating an electronic record will ensure that we have an objective account of key investigations and interactions with people who are held in federal custody,” Attorney General Holder said. “It will allow us to document that detained individuals are afforded their constitutionally-protected rights. And it will also provide federal law enforcement officials with a backstop, so that they have clear and indisputable records of important statements and confessions made by individuals who have been detained.”The new policy was formally spelled out in a memorandum to U.S. Attorneys signed by Deputy Attorney General James M. Cole.
Beginning on July 11, 2014, the new policy establishes a presumption that the FBI, the Drug Enforcement Administration (DEA), the Bureau of Alcohol, Tobacco, Firearms, and Explosive (ATF), and the United States Marshals Service (USMS) will electronically record interviews occurring in a place of detention with suitable recording equipment.
According to the policy, prosecutors and agents are directed to use video recording to satisfy the presumption whenever possible. If video recording equipment considered suitable under agency policy is not available, audio equipment may be substituted. The policy applies broadly to all statements of persons in federal custody of the FBI, DEA, ATF or USMS after arrest, but prior to initial appearance.
The policy applies to all places of detention where persons are held in connection with federal criminal charges and can be interviewed. Importantly, any electronic recording equipment used for these purposes must capture the entirety of the interview.
The Attorney General, in an effort to expeditiously implement the sweeping new policy, has directed U.S. Attorney’s and field offices across the country to perform district-wide joint training for agents and prosecutors. These trainings will instruct agents and prosecutors on best practices associated with the electronic recording of interviews. Additionally, investigative agencies are expected to utilize recording equipment in sufficient numbers to meet anticipated needs for recording of such interviews.
The complete text of the Attorney General’s video message is below:
“Every day, in big cities and small towns across the country, hardworking prosecutors, agents, and investigators perform exceptional work in order to combat violent crime and other threats to the public. They approach this high-stakes work with the utmost integrity and dedication.
“The professionalism of our personnel gives us the confidence to be as transparent as possible about how we perform our work. We at the Department of Justice are committed to ensuring accountability and promoting public confidence in the institutions and processes that guide our law enforcement efforts. Doing so not only strengthens the rule of law; it also enhances public safety – by building trust and fostering community engagement.
“That’s why we are announcing a new step to raise our already high standards of accountability. The Department of Justice is instituting a sweeping new policy pertaining to interviews of individuals in law enforcement custody. This new policy, which will take effect on July 11th, creates a presumption that statements made by individuals in federal custody, after they have been arrested but before their initial appearance, will be electronically recorded. The policy applies in a place of detention that has suitable recording equipment, and it encourages video recording whenever possible and audio recording when video is unavailable. The policy also encourages agents and prosecutors to consider electronic recording in investigative or other circumstances not covered by the presumption.
“This presumption in favor of recording applies to statements made by individuals in the custody of the FBI, the DEA, the ATF, and the United States Marshals Service. It allows for certain exceptions—such as when the interviewee requests that the recording not occur or when recording is not practicable.
“Creating an electronic record will ensure that we have an objective account of key investigations and interactions with people who are held in federal custody. It will allow us to document that detained individuals are afforded their constitutionally-protected rights. And it will also provide federal law enforcement officials with a backstop, so that they have clear and indisputable records of important statements and confessions made by individuals who have been detained.
“This policy will not – in any way – compromise our ability to hold accountable those who break the law. Nor will it impair our national security efforts. On the contrary: it will reduce uncertainty in even the most sensitive cases, prevent unnecessary disputes, and improve our ability to see that justice can be served.
“Federal agents and prosecutors throughout the nation are firmly committed to due process in their rigorous and evenhanded enforcement of the law. This new recording policy not only reaffirms our steadfast commitment to these ideals – it will provide verifiable evidence that our words are matched by our deeds. And it will help to strengthen the robust and fair system of justice upon which all Americans depend – and which every American deserves.”
The full video message is available at http://www.justice.gov/agwa.php.
Assistant Attorney General John Carlin Delivers Remarks at the Brookings Institute's Emerging National Security Threats ForumRead the Press Release
WASHINGTON - Thanks for that kind introduction. I’m grateful to be here at Brookings today discussing emerging national security threats.
On Monday, the Department of Justice announced charges against five members of the Chinese military for computer hacking, economic espionage, and other offenses directed at six American victims in the U.S. nuclear power, metals, and solar products industries.
Today, I’ll focus on this growing threat: state-sponsored cyber intrusions targeting, for profit, sensitive and proprietary information of U.S. companies.
These charges against uniformed members of the Chinese military were the first of their kind. Some said they could not be brought.
At the Department, we follow the facts and evidence where they lead. Sometimes, the facts and evidence lead us to a lone hacker in a basement in the U.S., or an organized crime syndicate in Russia.
And sometimes, they lead us to a uniformed member of the Chinese military. But, no matter where they lead, there can be no free passes.
We should not stand idly by, tacitly giving permission to anyone to steal from us. We will hold accountable those who steal – no matter who they are, where they are, or whether they steal in person or through the Internet. Because cybercrime has real victims.
While cases like the one brought in Pittsburgh are extremely challenging, this week we proved that they are possible. The criminal justice system must be a critical component of our nation’s cybersecurity strategy. As long as criminals continue stealing from American businesses, we will continue pursuing those criminals.
The charges announced on Monday were groundbreaking. They represent a significant step forward in our cyber approach.
And they were many years in the making.The National Security Division
Within the Justice Department, the National Security Division – or NSD – focuses on cyber threats to the national security – those posed by terrorists and nation states.
Our approach to these threats is deeply rooted in our Division’s history, and our success in the cyber arena builds upon a solid foundation.
NSD was created in response to the grave threat of terrorism. After the devastating attacks of September 11, it became clear that the Justice Department needed to reorganize to tackle terrorism and national security threats more effectively.
We needed a single Division to integrate the work of prosecutors and law enforcement officials with intelligence attorneys and the Intelligence Community.
So, in 2006, Congress created the Department’s first new litigating division in almost half a century: NSD.
NSD works closely with partners throughout the government to ensure we leverage all available tools to combat the terrorism threat. And we’ve proven, in that context, that the criminal justice system is a vital part of our nation’s counterterrorism strategy.
Just this week, Abu Hamza al-Masri was convicted by a jury in New York on eleven counts. He was involved in an attack in Yemen in December 1998 that resulted in the deaths of four hostages and provided material support to terrorists, including al Qaeda and the Taliban.
In March, Sulaiman Abu Ghaith was convicted of conspiring to kill Americans and other terrorism charges. Abu Ghaith was the son-in-law of Usama bin Laden and a senior member of al Qaeda. He was the face and voice of al Qaeda in the days and weeks after the 9/11 attacks.
In both of these cases, it took more than a decade, but as a result of our integrated approach to combating terrorism, these men were brought to justice. These cases are the two most recent in a long line of successful terrorism prosecutions.
Recently, we took the lessons we learned from counterterrorism and applied them to our work on national security cyber threats. In the face of escalating threats, we recognized the need to reorganize. To integrate.
When I was chief of staff for Director Bob Mueller, the FBI undertook a transformation to meet the growing cyber threat. In 2011, NSD did the same.
In late fall of 2011, ten years after 9/11, we established a review group to evaluate NSD’s existing work on national security threats and chart out a plan for the future. Six months later, that team issued recommendations that shaped what NSD’s national security cyber program looks like today.
Most significantly, in 2012, we created and trained the National Security Cyber Specialists’ Network to focus on combating cyber threats to the national security. This Network – known as NSCS – includes prosecutors from every U.S. Attorney’s Office around the country, along with experts from the Department’s Computer Crime and Intellectual Property Section and attorneys from across all parts of NSD.
Adopting the successful counterterrorism model, we now have prosecutors nationwide routinely meeting with the FBI to review intelligence and investigative files.
The creation of the NSCS Network was motivated by a desire to make a tangible impact on U.S. cybersecurity efforts through criminal investigation and prosecution. By December 2012, we made public predictions that with the establishment of the NSCS – by empowering more than a hundred prosecutors in the field working with the FBI on these cases – one would be brought.
The Pittsburgh Case
And this week, we made good on that promise. It is this new, integrated approach that made the Pittsburgh case possible. As part of the creation of the NSCS, we brought prosecutors from around the country – Wisconsin, New York, and Georgia – to help NSD build this case.
We partnered with the Western District of Pennsylvania, where victims were repeatedly hit. And we worked with offices across the FBI – from California, to Oregon, to Oklahoma, and back here in D.C.
Our team thought creatively. They worked collaboratively. They explored all available options for stopping this activity.
That’s how we were able to indict five members of the Third Department of the People’s Liberation Army, or “3PLA,” and its “Unit 61398.” These men stand accused of cyber intrusions targeting a range of U.S. industries.
The indictment alleges, with particularity, specific actions on specific days by specific actors to use their computers to steal information from across our economy.
It alleges that while the men and women of our American businesses spent their business days innovating, creating, and developing strategies to compete in the global marketplace, these members of Unit 61398 spent their business days in Shanghai stealing the fruits of Americans’ labor.
It alleges that they stole information particularly beneficial to Chinese companies, and took communications that would provide competitors with key insight into the strategy and vulnerabilities of the victims.Answering Critics
Now, some question this law enforcement action. Generally speaking, these questions fall into three categories:- First , whether there is a clear line between what these individuals have been accused of, and what the U.S. or other nations do;
- Second, whether charges like these can truly impact cybersecurity, particularly when there may be significant challenges to arresting and ultimately trying these individuals in criminal court;
- And third, whether the government should instead focus on hardening defenses rather than pursuing charges.
Stealing Is Stealing
As to the first question: while some commentators may ask whether this is a new line to draw, in fact we are aware of no nation that publicly states that theft of information for commercial gain is acceptable.
Even in this case, China has not attempted to justify the allegations. Instead, they deny them.
And this has been a consistent response. A little over a year ago, the Chinese Government flatly denied reports that Unit 61398 was hacking U.S. companies. A spokesman for China’s Ministry of National Defense said, “Chinese military forces have never supported any hacking activities.”
China also challenged the United States to present “hard evidence, evidence that could stand up in court,” that cyber attacks against American targets are connected to the Chinese military. Well, we did.
The response? Hours after Monday’s announcement, the Chinese Foreign Ministry called the accusations “purely fictitious, extremely absurd.”
Now, we are confident that we have the evidence to back up these accusations in a court of law. Read the indictment. For the first time, we have exposed the real faces and names behind the keyboards in Shanghai used to steal from American businesses.
This is not conduct that responsible nations within the global economic community should tolerate.
In the United States, we believe that individuals and companies are entitled to the results of our creativity, including our property—and intellectual property. And we believe their work should not simply be taken from them and given to others.
This is not a uniquely American value. Individuals around the world believe that people shouldn’t take what others make.
Responsible nations do conduct intelligence activities. And nations openly acknowledge that they have intelligence services. Like others, our intelligence activities are focused on the national security needs of our country.
That is why the President, earlier this year, reaffirmed in PPD-28 that “[i]t is not an authorized foreign intelligence . . . purpose to collect such information to afford a competitive advantage to U.S. companies and U.S. business sectors commercially.”
U.S. foreign intelligence collection occurs under the framework of the rule of law, involving oversight by all three branches of Government. As the Church Committee Report recognized back in 1976, “the Constitution provides for a system of checks and balances and interdependent power as between the Congress and the executive branch with respect to foreign intelligence activity.”
The very protections built into that legal framework subject that information to rigorous oversight, and prevent sharing it with private companies for their private gain.
But let’s be clear: those same protections do not exist in certain other countries that are targeting, every day, American trade secrets, sensitive business information, and intellectual property in order to steal specific information and pass it along to their domestic companies in order to give them a competitive edge. To pretend otherwise is to promote a narrative of false equivalency.
Even though we know of no nation that stands up publicly to defend corporate theft for the profit of state-owned enterprises, in the shadows, some appear to encourage and support it.
In short, we allege the members of Unit 61398 committed theft, pure and simple.
So although this case is the first of a kind, it is also, in some respects, just business as usual. As they have for decades, prosecutors in the field and at CCIPS use criminal investigation and prosecution to disrupt cyber crime. CCIPS is one of our most important partners in the fight against cyber threats.
Law enforcement has long been used to combat cyber threats and, as recently as this week, has made a tremendous impact on our nation’s cybersecurity.
As you have likely seen, on Monday, the Department of Justice announced charges in connection with Blackshades malicious software. These charges were part of the largest-ever global cyber law enforcement operation, involving more than 90 arrests and other law enforcement actions in 19 countries.
Likewise, in the national security arena, when criminal law enforcement is the most effective tool we have to disrupt a terrorist threat, we employ it no matter how far away or shielded from prosecution the defendants may seem today.
When criminal enterprises steal our intellectual property and personal information, or threaten our security, we investigate and prosecute them.
These are not the first charges that we have lodged against individuals who steal from Americans to benefit state-owned enterprises.
As just one example, in March, we successfully obtained a significant conviction for economic espionage.
Walter Liew, an electrical engineer, obtained one of DuPont’s secrets – a process, honed over many decades, for making a multi-purpose white pigment – and passed it to a large Chinese state-owned company.
What Liew stole was something Americans see and use daily. Something that does not have a national security implication. Something that simply brings a profit.
Liew stole the formula for the color white. He was brought to justice in the U.S. criminal justice system.
Like Liew, we allege that the members of Unit 61398 stole to benefit Chinese state-owned enterprises. The thefts are similar. They both took place here. The difference is that Unit 61398 operated remotely, from the previously safe spaces in Shanghai.
We will no longer permit safe havens. Individuals cannot avoid the consequences of their actions simply by capitalizing on 21st century tools and operating from the comfort of their desks half a world away.Meeting the Threat of Cyber Economic Espionage
These crimes are the same as many crimes that we have investigated and prosecuted before. Only the method or means is different.
But the threat we face is increasingly moving out of the physical world and into cyberspace, and thus, prosecutions of those who steal from us remotely must and will become the new normal. We will continue to pursue this option, along with others available to us.
The threat of economic espionage is serious, and the threat of cyber economic espionage is mounting. Some estimate that, every year, the U.S. loses more than $300 billion from theft of our intellectual property. That figure is about equivalent to the current annual level of U.S. exports to Asia.
Losses of that magnitude cost the American economy untold numbers of jobs. They reduce the profit that American firms make from research and development, which in turn reduces the incentives and resources for innovation. As U.S. Attorney David Hickton said on Monday, “When these cyber-intrusions occur, production slows, plants close, workers get laid off and lose their homes.”
Such activity also undermines the trust between countries and companies that is necessary to do business in a globalized economy.
And our companies cannot face it alone. Companies cannot depend solely on their antivirus software to defend against attackers linked to deep state military budgets. It’s not a fair fight.
To defend against those empowered by a government, we need our government on our side. We must support our entrepreneurs by using every tool we have, to prevent, deter, and disrupt this conduct in any way we can.
And likewise, we need you. Just as the local police can’t control crime without victims calling in those crimes, our law enforcement officials, too, need cooperation from victims. It’s our hope that the more cases we bring and the more perpetrators we bring to justice, the higher the level of cooperation we’re likely to receive.
We cannot let this conduct go undeterred. Doing so would threaten our nation’s security.Deterring Cyber-Enabled Economic Espionage
Cases like the Pittsburgh case will have a deterrent effect.
To those critics who raise questions about whether these charges will have any impact in light of the challenges associated with arresting and trying these individuals – the deterrent effect of charges can be significant.
General Keith Alexander, former NSA Director, explained that “the only way to deter cyber attack is to work to catch perpetrators and take strong and public action when we do.”
FBI Director Mueller called for figuring out who is targeting us and going after them, saying: “We must remember that behind every intrusion is a person responsible for that intrusion—a warm body behind the keyboard, whether he or she sits in Tehran or Tucson; Shanghai or Seattle; Bucharest or the Bronx. Our ultimate goal must be to identify and deter the persons behind the keyboards.” The government and private sector alike are increasing the call for prosecuting cyber theft of trade secrets.
We need to prevent attacks. And deterrence helps. Prosecutions can simultaneously punish those who have already committed bad acts and deter those who might otherwise commit bad acts in the future. In other words, by going after these crimes, we can help to stop the next group of criminals.
It is, of course, possible that we will never obtain custody. But even if these five defendants evade arrest, laying bare this criminal activity takes it out of the shadows.Law Enforcement: One Piece of the Puzzle
Law enforcement investigations can also support other valuable tools. Criminal charges can justify economic sanctions from our colleagues in the Treasury Department, sanctions that prevent criminals from engaging in financial transactions with U.S. entities and deny access to the U.S. financial system.
They can facilitate diplomacy by the State Department, as our nation’s diplomats lay out evidence of state-sponsored cyber theft to foreign government officials and force them to answer for those actions, or coordinate with other victimized countries. Furthermore, the investigations themselves can lead other governments to take action, even when the United States doesn’t end up doing so.
So, we will continue to bring these kinds of cases. However, it is not easy. Prosecutions like this present unique challenges.
Cases can take years to investigate, and it can sometimes be tough to attribute the unlawful activity to particular individuals.
They involve difficult decisions regarding how to protect sensitive sources and methods. And even after charging, it can be challenging to obtain custody of the defendants and bring them to justice.
But difficult does not mean impossible, and the status quo simply will not do. As the Attorney General said earlier this week in announcing these charges, “enough is enough.”
We would not stand idly by as people hauled away our wealth in trucks. Likewise, we cannot allow it to be sucked out through the Internet.
The indictment I’ve been discussing is an important first step. But it must be just that – the first. Prosecutions will not do it alone.
We need to build on this success and keep responding—with prosecutions where possible and with all of the other tools in our toolkit.
We need to keep at it, and we appreciate the bipartisan support we’ve received from Congress, including particularly supportive words from Senators King and Whitehouse as well as from the House Intelligence and Homeland Security Committees.
Many of these individuals provided resources and encouragement as we undertook transformation. We must continue until our adversaries realize that the costs of stealing from our companies outweigh the benefits.Cyber Defense – Empowering victims
So far, we talked primarily about criminal prosecution and other tools. But we recognize that stopping attacks before they ever take place is the ultimate goal. We will have succeeded when there are no more criminal charges to bring.
To that end, we also worked hard to improve cyber defenses, both in Government and with the private sector.
The FBI works closely with companies that have been the victims of hackers through, among other things, its InfraGard program. That program, which has more than 25,000 active members, brings together individuals in law enforcement, government, the private sector, and academia to talk about how to protect our critical infrastructure.
Likewise, the Department of Homeland Security, the Department of Energy, and other departments and agencies routinely work closely with companies to protect critical infrastructure.
The Department heard from you and is taking steps to respond to the concerns of the private sector. Just last month, we teamed up with the Federal Trade Commission to issue a policy statement making it clear that antitrust law is not and should not be a bar to legitimate cyber security information sharing.
And earlier this month, the Justice Department offered a white paper clarifying that the Stored Communications Act doesn’t ordinarily restrict network operators from sharing certain data with the Government to guard information. This guidance will help the private sector collaborate more freely to protect itself. All of this is just a start. Going forward, we need legislation to facilitate greater information sharing between the private sector and the government.Educating the Public
The charges announced earlier this week benefit not only victims but also the broader American people, and others worldwide.
Chief Justice Burger once noted that criminal prosecutions, as a general matter, have an “educative effect” on the public.
While we may appreciate, on a theoretical level, that hacking to steal corporate secrets poses a major national security threat, there’s no substitute for the educative effect that an indictment has.
Putting a face at the keyboard, and quantifying the damage done, may help to galvanize all of us to improve our cyber security. It may also make us more vigilant to the economic, military, and geopolitical dangers associated with cyber space. For example, it might lead companies and other entities to examine their connection logs a little bit more closely to see what activities those reveal, and from where.Conclusion
To wrap up, I want to applaud the dedicated investigators and prosecutors whose hard work produced this week’s important indictment. It’s only a first step but it’s a big step, and it’s part of our growing effort to hold accountable those who steal American innovation.
At the same time, we must acknowledge that prosecution alone is, ultimately, just one tool in the broader toolset for addressing the cyber threat. Prosecutions alone will not solve the problem.
Trust in government depends, in part, on our ability to defend, protect, and obtain justice for our citizens. Indictments and prosecutions are one clear and powerful way in which we the people, governed by the rule of law, legitimize and prove our allegations.
And those actions have real consequences for the criminals they target, and deter those who might otherwise become criminals in the future.
We continue to protect Americans from being victimized through cyberspace, and we need your support.
Thank you for your attention. I look forward to questions.# # #
Army Soldier Sentenced for Facilitating <br /> Thefts of Fuel in AfghanistanRead the Press Release
United States Army soldier Albert Kelly III of Fort Knox, Kentucky, was sentenced to serve 18 months in prison for his role in stealing fuel at Forward Operating Base (FOB) Salerno in Afghanistan. In addition to his prison term, Kelly was sentenced to three years of supervised release and ordered to pay $100,000 in restitution.
Acting Assistant Attorney General David O’Neil of the Justice Department’s Criminal Division and U.S. Attorney David J. Hale of the Western District of Kentucky made the announcement after the sentence was imposed by Senior U.S. District Court Judge Charles R. Simpson III in the Western District of Kentucky.
According to court documents, from January 2011 to January 2012, Kelly was assigned to FOB Salerno, and for most of that time he served as a specialist. Kelly’s duties included overseeing the delivery of fuel into FOB Salerno. Typically, the fuel was brought into the base by Afghan trucking companies driven by Afghan nationals. Kelly’s duties included verifying the amounts of the fuel that were delivered at FOB Salerno and preparing and certifying documents that accounted for the fuel that was delivered.
From in or about November 2011 through January 2012, Kelly diverted and permitted the diversion of fuel delivery trucks from FOB Salerno to other locations, where the diverted fuel would then be removed from the trucks and stolen. To conceal this diversion, he falsely certified that the diverted fuel was in fact delivered at FOB Salerno.
Also according to court documents, in exchange for assisting in the theft of fuel as described, Kelly received approximately $57,000 from the Afghan trucking company. He admitted the amount of fuel he permitted to be diverted amounted to approximately 25,000 gallons. The United States Army paid approximately $4.00 per gallon for that fuel, and the loss to the government was approximately $100,000.
The case was investigated by the Special Inspector General for Afghanistan Reconstruction. This case was handled by Special Trial Attorney Mark H. Dubester, on detail from the Special Inspector General for Afghanistan Reconstruction, and Assistant U.S. Attorney Michael Bennett of the Western District of Kentucky.Army Soldier Sentenced for Facilitating Thefts of Fuel in AfghanistanRead the Press Release
WASHINGTON – United States Army soldier Albert Kelly III of Fort Knox, Kentucky, was sentenced to serve 18 months in prison for his role in stealing fuel at Forward Operating Base (FOB) Salerno in Afghanistan. In addition to his prison term, Kelly was sentenced to three years of supervised release and ordered to pay $100,000 in restitution.
Acting Assistant Attorney General David O’Neil of the Justice Department’s Criminal Division and U.S. Attorney David J. Hale of the Western District of Kentucky made the announcement after the sentence was imposed by Senior U.S. District Court Judge Charles R. Simpson III in the Western District of Kentucky.
According to court documents, from January 2011 to January 2012, Kelly was assigned to FOB Salerno, and for most of that time he served as a specialist. Kelly’s duties included overseeing the delivery of fuel into FOB Salerno. Typically, the fuel was brought into the base by Afghan trucking companies driven by Afghan nationals. Kelly’s duties included verifying the amounts of the fuel that were delivered at FOB Salerno and preparing and certifying documents that accounted for the fuel that was delivered.
From in or about November 2011 through January 2012, Kelly diverted and permitted the diversion of fuel delivery trucks from FOB Salerno to other locations, where the diverted fuel would then be removed from the trucks and stolen. To conceal this diversion, he falsely certified that the diverted fuel was in fact delivered at FOB Salerno.
Also according to court documents, in exchange for assisting in the theft of fuel as described, Kelly received approximately $57,000 from the Afghan trucking company. He admitted the amount of fuel he permitted to be diverted amounted to approximately 25,000 gallons. The United States Army paid approximately $4.00 per gallon for that fuel, and the loss to the government was approximately $100,000.
The case was investigated by the Special Inspector General for Afghanistan Reconstruction. This case was handled by Special Trial Attorney Mark H. Dubester, on detail from the Special Inspector General for Afghanistan Reconstruction, and Assistant U.S. Attorney Michael Bennett of the Western District of Kentucky.
Arizona U.S. Attorney Statement- Significant Policy Shift Concerning Electronic Recording of StatementsRead the Press Release
PHOENIX – Today, following Attorney General Holder’s announcement of significant policy shift concerning electronic recording of statements, United States Attorney John S. Leonardo offers the following statement:
“In announcing a new Department of Justice policy today that statements made by individuals in federal custody between arrest and their initial court appearance will be electronically recorded, the Attorney General has taken a positive step in bringing added transparency to federal law enforcement. Such recordings will serve to ensure accountability and promote public confidence in federal law enforcement. Federal agents and prosecutors in Arizona and throughout the country are committed to due process and the rigorous, evenhanded enforcement of the law. This new policy reaffirms this commitment and strengthens the fairness that all Americans expect and deserve in their criminal justice system.”
RELEASE NUMBER: 2014-030_USA_Statement-Electronic_RecordingsFor more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news and updates.Anamosa Man Charged with Manufacturing Meth Near A SchoolRead the Press Release
Zackery Lee Smock, age 36, from Anamosa, Iowa, has been charged with one count of attempted manufacture of methamphetamine by a drug felon near a school. The charge is contained in an Indictment filed May 7, 2014, in United States District Court in Cedar Rapids.
The Indictment alleges that, on or about March 7, 2014, Smock manufactured and attempted to manufacture methamphetamine within 1,000 feet of St. Patrick’s School in Anamosa. According to information disclosed in court, Smock’s attempted manufacture of methamphetamine resulted in a house fire. At the time of the fire, Smock and four other adults were in the house.If convicted, Smock faces a possible maximum sentence of 60 years’ imprisonment, a $4,000,000 fine, a $100 special assessment, and at least six years of supervised release following any imprisonment.
Smock appeared May 22, 2014, in federal court in Cedar Rapids and was held without bond. Smock’s next appearance for a detention hearing is set for May 27, 2014.
As with any criminal case, a charge is merely an accusation and a defendant is presumed innocent until and unless proven guilty.
The case is being prosecuted by Special Assistant United States Attorney Lisa C. Williams and was investigated by the Anamosa Police Department, Anamosa Fire Department, Iowa Division of State Fire Marshal, and the Iowa Division of Narcotics Enforcement.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 14-CR-0057.
American Commercial Colleges, Inc. and Its President Plead Guilty to Federal ChargesRead the Press Release
Responsible for Theft of Nearly $1 Million
LUBBOCK, Texas — The president of American Commercial Colleges, Inc. (ACC), Doyle Brent Sheets, appeared this morning in federal court in Lubbock, Texas, before U.S. District Judge Sam R. Cummings, and pleaded guilty personally, and on behalf of ACC, to federal charges. U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement this afternoon.
Sheets, 58, of Lubbock, Texas, pleaded guilty to an Information charging one count of misprision of a felony. He faces a maximum statutory penalty of three years in federal prison and a $250,000 fine. Authorized by corporate resolution, Sheets pleaded guilty to one count of theft of government funds and aiding and abetting, on behalf of ACC. ACC faces a maximum statutory penalty of five years’ probation, a $500,000 fine, or up to twice the gross gain or loss resulting from the offense. Judge Cummings ordered presentence investigation reports with sentencing dates to be set following the completion of those reports.
According to Sheets’ plea agreement with the government, ACC stole government funds by converting Federal Student Aid (FSA) program funds, and thus caused a loss to the government of approximately $972,794. Sheets admitted that he knew about the theft but did not report it, and he agreed that he would be personally, individually, jointly and severally liable for the total loss amount.
According to ACC’s plea agreement with the government, ACC is excluded, directly and indirectly from participating in any FSA programs. This voluntary exclusion is also a voluntary debarment, and ACC will not contest any actions taken to execute the debarment. ACC agrees that it will not have any ownership or interest in, or serve as an officer, director or any legal entity acting as a post-secondary educational institution participating in any FSA program.
Two others associated with ACC have also been charged, in Informations filed on May 19, 2014, with federal offenses. Michael James Otto, 61, of Lubbock, who served as the Chief Operating Officer and Campus Director for ACC’s Lubbock campus, is charged with one count of misprision of a felony. Bruce Alan Reed, 64, of San Angelo, Texas, who served as the Campus Director for ACC’s San Angelo campus is charged with the same offense.
ACC is a proprietary institution with corporate office in Lubbock. At one time, ACC operated five campuses in Texas — Lubbock, Abilene, Odessa, San Angelo and Wichita Falls — and one in Shreveport, Louisiana. ACC admitted that it knowingly converted FSA program funds from its students solely for its benefit to represent falsely to the U.S. Department of Education that it was in compliance with the requirement that a proprietary institution may not derive more than 90% of its revenue from the FSA program to remain eligible to participate in the FSA program. The remaining 10% of revenue must come from other sources. This is known as the 90/10 Rule, and if an institution did not satisfy it, it would lose its eligibility to participate in the FSA programs.
In 2007, 2008 and 2009, ACC failed to meet the requirements of the 90/10 Rule, however, as early as 2003, ACC had devised a scheme to represent falsely to the Department of Education that it had met the requirements. From 2007-2009, ACC had students obtain private loans from a private bank in San Angelo, Texas, with whom ACC had made arrangements, of approximately $953,897. ACC recorded the loan funds received from the private bank as “good cash,” thus falsely representing to the Department of Education that ACC complied with the 90/10 Rule. By obtaining the loans from the private bank and delaying the students’ FSA program funds, ACC lowered their total FSA program funds revenue for the 90/10 Rule. ACC repaid and intended to repay those loans with approximately $972,794 of FSA program funds to give the appearance of complying with the 90/10 Rule. The private short-term loans were obtained entirely to benefit ACC so that it could falsely represent its compliance. To further the scheme, ACC employees advised students that the school would close if they did not satisfy the 90/10 Rule, and this would jeopardize the students’ education at ACC.
The investigation is being conducted by the United States Department of Education, Office of Inspector General. Assistant U.S. Attorney Paulina Jacobo is in charge of the prosecution.
Alton Man Sentenced for Aiding and Abetting an Armed RobberyRead the Press Release
Case is one of many brought as a result of United States Attorney Stephen R. Wigginton’s Metro-East Armed Robbery Initiative
Follow @SDILNewsAn Alton, Illinois, man was sentenced on May 22, 2014, on the charge that he and his co-defendant, Taylor C. Harkey, aided and abetted each other in the commission of an Armed Robbery, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. The Armed Robbery count is a federal “Hobbs Act Robbery.” The Hobbs Act makes it a crime to obstruct, delay, or affect interstate commerce by robbery, and is used by United States Attorney Wigginton’s office as a way to combat armed robbery in the Southern District of Illinois.
Ramone C. Cunningham, 30, was sentenced to a term of 170 months in federal prison, to be followed by a term of supervised release of 3 years, fined $750, and ordered to pay a $100 special assessment. Cunningham has been held without bond since his initial appearance on December 3, 2013.
The offense occurred on July 18, 2013, when Cunningham and his co-defendant, Harkey, were at her residence discussing ways in which to get “quick money.” At Cunningham’s suggestion, Harkey and Cunningham devised a plan to rob a cab driver by using another individual’s cellular telephone to call Comfort Cab to have a cab sent to a vacant residence in Alton. The two parked in an alley near the vacant house. Prior to committing the robbery, Cunningham provided Harkey with a small black CO2 .177 caliber BB gun which appeared to be a real firearm.
While Harkey got out of the car and approached the cab, the cab driver, having noticed that the residence was vacant, notified his dispatcher who told him to wait while they tried to contact the original caller. Harkey reached through the open rear driver’s side window and pointed the gun at the cab driver’s head, stating “Give me your money or I’ll blow your brains out.” Harkey also reached inside the cab and grabbed the cab driver’s company cellular telephone. The driver threw $36.00, consisting of cab fares, out of the window. As Harkey bent down to pick up the money, the cab driver drove away. He was able to contact Comfort Cab to report that he had just been robbed. Comfort Cab subsequently called the Alton Police Department. Using the original number that was used to call the cab, the officers were able to identify Harkey. Both Harkey and Cunningham were arrested Harkey’s residence. The BB gun given to Harkey to use during the robbery was recovered from under the mattress of one of her children. Both Cunningham and Harkey admitted their role in the robbery of the Comfort Cab driver.
Prior to imposing sentence, Judge Michael J. Reagan noted that Cunningham was a repeat robber, as well as having additional criminal history. Judge Reagan also noted that robberies of cab drivers and pizza delivery drivers are crimes of opportunities because, due to their occupations, they are available at night almost anywhere. He remarked upon some of the security measures that have been implemented in cabs in order to protect cab drivers, such as the installation of bullet-proof plexi-glass windows between the cab driver and passenger, because of the prevalence of these types of robberies.
The case was investigated by the Alton, Illinois, Police Department. The case was assigned to Assistant United States Attorney Angela Scott.
Albany Man Pleads Guilty to Distribution of Child PornographyRead the Press Release
ALBANY, NEW YORK – PAUL SCROM, age 63, of Albany, New York, pled guilty today in Albany before Senior United States District Judge Thomas J. McAvoy to one count of distribution of child pornography, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent-in-Charge of the Albany Division of the Federal Bureau of Investigation.
SCROM faces a statutory mandatory minimum sentence of five years and a maximum sentence of twenty years, as well as a lifetime term of supervised release, a maximum fine of $250,000, and mandatory registration as a sex offender. SCROM will be sentenced in Albany, New York on October 14, 2014.
As part of his guilty plea, SCROM admitted that he distributed images and movies of child pornography through a peer-to-peer file sharing program. On September 12, 2013, investigators searched SCROM’s residence and recovered numerous images and videos depicting child pornography.
This case was investigated by the Federal Bureau of Investigation, Albany Division and is being prosecuted by Assistant United States Attorney Wayne A. Myers.
Administrator of Student Health Insurance for Virginia Tech SentencedRead the Press Release
ABINGDON, VIRGINIA – GM-Southwest Inc., and the company’s CEO and former owner, have been sentenced in the United States District Court for the Western District of Virginia in Abingdon after previously pleading guilty to charges of racketeering and money laundering.
Last year, John Paul Gutschlag, 73, of Aubrey, Texas pled guilty to one count of conspiracy to violate the Racketeering Act and two counts of money laundering by engaging in monetary transactions involving property derived from wire and mail fraud. In addition, GM-Southwest, through its corporate counsel, pled guilty to the same three charges. Yesterday in District Court, Gutschlag was sentenced to 18 months of federal incarceration. The defendant was also ordered to pay $1.2 million in restitution.
“The students and parents of thousands of Virginia Tech students were bilked out of more than $1 million due to the criminal actions of Mr. Gutschlag and GM-Southwest,” United States Attorney Timothy J. Heaphy said today. “This conspiracy caused significant harm to its victims. In a time where health care costs are rising for every American, the United States Attorney’s Office will continue to do everything possible to identify and prosecute waste, fraud and abuse in the health care delivery system.”
“John Paul Gutschlag and GM-Southwest’s conspiracy treated the Virginia Tech community as a pawn in a scheme motivated by pure greed. Through false and fraudulent business practices, Gutschlag not only personally enriched himself, but victimized the Virginia Tech community and cheated them out of more than $1 million in the process, ” said Thomas J. Kelly, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office. “IRS-CI is committed to working closely with the US Attorney’s Office to investigate corporate fraud and to hold corporations and executives accountable for complying with the law.”
According to evidence presented at previous hearings by First Assistant United States Attorney Anthony Giorno, GM-Southwest was in the business of collecting health insurance premiums from students and universities, paying claims and providing reports related to the premium collection and claims payment both to the university and the carriers. The carriers, in turn, paid GM-Southwest a set commission or fee, typically a percentage of the gross premium collected. From August 2003 through the end of the 2010-2011 school year, GM-Southwest, under the direction of Gutschlag, provided student health insurance for Virginia Tech’s undergraduate and graduate students.
Previously, the defendants admitted that beginning in 2005, Gutschlag, and others, devised a scheme to defraud colleges and universities by providing false and fraudulent claims reports and other misrepresentations designed to increase the income of GM-Southwest and to personally enrich Gutschlag. They did this by devising and utilizing a “claims modifier” to alter the claims numbers to produce an inflated dollar amount which overstated the claims paid and loss ratios, causing students andVirginia Tech to pay significantly higher premium costs.
Gutschlag and GM-Southwest admitted to overstating the amount of claims paid on behalf of Virginia Tech by over $1 million from 2003-2004 through the 2009-2010 academic years. The plea agreement provides for restitution to Virginia Tech and the students in the amount of $1.2 million and forfeiture of an additional $1.2 million to the government. The defendants agreed that the restitution figure agreed to by the government would not prevent Virginia Tech or the students from seeking additional restitution through the civil courts.
In a related matter, in July 2013, James Lane, of Botetourt, Va., reached an agreement with the United States for his role in the fraud. He has paid $250,000 to Virginia Tech as restitution for his conduct. This is in addition to the restitution to be paid the Gutschlag and GMS. Lane also pled guilty to one-count of filing a false tax return for tax year 2008 and one count of filing a false tax return for tax year 2009.
In addition, Carolyn Beck, Gutschlag Sr.’s administrative assistant, has previously pled guilty to one count of conspiracy to commit wire fraud, mail fraud and money laundering. Beck had access to the false premiums and claims data on the GM-Southwest computer system at the company’s office in Texas. At Gutschlag’s direction, she provided false claims reports to Lane, who in turn provided the false reports to Virginia Tech
The investigation of the case was conducted by the Bristol Virginia Office of the Internal Revenue Service Criminal Investigation Assistant United States Attorneys Anthony Giorno and Randy Ramseyer prosecuted the case for the United States.
$20 Million Stolen Identity Refund Fraud Ring IndictedRead the Press Release
Tracy Mitchell, Dameisha Mitchell, Latasha Mitchell, Keisha Lanier, Tameka Hoskins, Sharondra Johnson, Cynthia Johnson, Mequetta Snell-Quick, Talarious Paige and Patrice Taylor were indicted for their roles in a $20 million stolen identity refund fraud (SIRF) conspiracy, 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 announced today following the unsealing of the superseding indictment yesterday.
According to the superseding indictment, between January 2011 and December 2013, the defendants ran a large-scale identity theft ring in which they filed over 7,000 false tax returns that claimed in excess of $20 million in fraudulent claims. The defendants obtained stolen identities from various sources to be used in filing false returns. Tracy Mitchell worked at the hospital on Fort Benning in Columbus, Georgia, where she had access to the identification data of military personnel, including soldiers who were deployed to Afghanistan. Tracy Mitchell and her daughter, Latasha Mitchell, also obtained stolen identities from an Alabama state agency. Keisha Lanier obtained stolen identities from the Alabama Department of Corrections. Talarious Paige and Patrice Taylor worked in a call center for a Columbus company and stole identities.
According to the superseding indictment, in order to file tax returns, the defendants obtained Electronic Filing Numbers in the names of several tax preparation businesses. On behalf of those tax preparation businesses, the defendants applied for bank products from various financial institutions, which mailed blank check stock to the defendants’ homes. The defendants directed anticipated tax refunds to prepaid debit cards, to U.S. Treasury checks and to financial institutions, which in turn issued the refunds via checks or prepaid debit cards. The defendants directed U.S. Treasury checks to be mailed to several addresses in Alabama and then obtained those checks from the mail. The defendants coordinated the cashing of the refund checks by sending various text messages among themselves. The defendants cashed the fraudulent checks at several businesses located in Alabama, Georgia and Kentucky. In addition to the conspiracy charge, the defendants are also charged with mail and wire fraud, access device fraud and aggravated identity theft.
An indictment merely alleges that crimes have been committed and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, each defendant faces a statutory maximum potential sentence of 10 years in prison for the conspiracy charge, a statutory maximum potential sentence of 20 years in prison for each wire and mail fraud count, a statutory maximum potential sentence of 15 years in prison for each access device fraud count, and a mandatory two year sentence in prison for each aggravated identity theft count. The defendants are also subject to fines, forfeiture and mandatory restitution if convicted.
The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation and the U.S. Army – Criminal Investigation Division. Trial Attorney Michael Boteler of the Tax Division and Assistant U.S. Attorney Todd Brown for the Middle District of Alabama are prosecuting the case. The U.S. Attorney’s Office for the Middle District of Georgia provided assistance in this matter.
21 May 2014
Weston Man Sentenced to Fifteen Years in Prison for Child Pornography CrimesRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Alysa D. Erichs, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), and Scott Israel, Sheriff, Broward Sheriff’s Office (BSO), announce that Thomas Edler, 49, of Weston, was sentenced yesterday to serve fifteen years in prison after pleading guilty to charges of transportation and possession of child pornography. Following his release from prison, Edler will be on supervised release for the remainder of his life and will also be required to register as a sex offender.
According to plea documents, in February 2013, the National Center for Missing and Exploited Children (NCMEC) requested the assistance of the South Florida Internet Crimes Against Children (ICAC) Task Force in attempting to identify a child who appeared in numerous images of child pornography that had been recovered across the county. The images of this child had been previously identified and categorized by NCMEC as the “Dave” series, and had been recovered in numerous prior child pornography investigations. According to the data provided by NCMEC, the images had been produced between the approximate dates of June 16, 2001 and September 14, 2002. The South Florida ICAC detectives determined, through the utilization of various investigative techniques, that several of the “Dave” series images had been taken in the backyard of a residence located in Weston. Detectives then determined that the current owners of that residence were the defendant, Thomas Edler, and his wife, who also owned and occupied that residence during the time period when the “Dave” series images were taken (2001-2002). In addition, detectives learned that the Edlers have two minor children. Further investigation revealed that the child portrayed in the “Dave” series, who was between the ages of five and six when the images were taken, had been friendly with Edler’s son.
On April 9, 2013, HSI Fort Lauderdale Special Agents and South Florida ICAC Task Force members executed a federal search warrant at the Edler residence. Pursuant to the search warrant, several items of electronic media were seized including a Dell laptop computer belonging to the defendant. HSI Forensic Examiners conducted a complete forensic analysis of the computer and media devices taken during the search warrant. Results of the forensic examination resulted in the discovery of numerous images that had been taken by Edler depicting child pornography.
Subsequently, it was determined that Edler was responsible for producing another known series of child pornography referred to as the “Lil Charlie” series. The images depicted in the “Lil Charlie” series, a friend of the Edler family, were taken in July 2002 when the Edlers were visiting the child’s family in Rhode Island. After taking the images, the defendant knowingly transported the images to Broward County. The images depicted in the “Lil Charlie” series were later recovered in other child pornography investigations across the world.
Also pursuant to the investigation, it was determined that Edler had taken pictures of another minor while the Edler family was visiting that child’s family in Winter Springs in January 2002. The child depicted in those images was present at the sentencing hearing. In imposing the 15 year sentence, U.S. District Judge Robin S. Rosenbaum took into account what she deemed a credible allegation by this minor that, in addition to taking the pictures, Edler had touched him inappropriately.
Mr. Ferrer commended the investigative efforts of ICE-HSI and the South Florida ICAC. The case is being prosecuted by Assistant U.S. Attorneys Corey Steinberg and Francis Viamontes.
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.