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19 May 2014
Mississippi Man Pleads Guilty in Ricin Letter InvestigationRead the Press Release
James Everett Dutschke, 41, of Tupelo, Mississippi., was sentenced today by United States District Judge Sharion Aycock, in Aberdeen, Mississippi., to a 300 month prison sentence for developing and possessing the biological agent ricin and subsequently mailing ricin-laced, threatening letters including one that threatened bodily harm to the President of the United States. Dutschke was also sentenced to serve a term of 5 years supervised release.
The sentence was announced by John Carlin, Assistant Attorney General for the Justice Department’s National Security Division, Felicia Adams, U.S. Attorney for the Northern District of Mississippi, Daniel McMullen, Special Agent in Charge of the FBI’s Jackson Field Office, and Craig Caldwell, Special Agent in Charge of the Secret Service’s Birmingham, AL, District Field Office.
Following an investigation, Dutschke was arrested on April 27, 2013, and indicted by a federal grand jury on June 3, 2013. A superseding indictment was filed on Nov. 20, 2013. Dutschke pled guilty on Jan. 17, 2014 to one count of developing and possessing ricin, and three subsequent counts of mailing threatening letters laced with the substance to the President of the United States, U.S. Senator Roger Wicker, and Lee County, Mississippi, Justice Court Judge Sadie Holland. According to the plea agreement between Dutschke and the U.S. Attorney’s Office that was filed in U.S. District Court in Oxford, Dutschke had agreed to serve a 300 month prison sentence and had waived his right to appeal.
The investigation was conducted by the FBI’s Jackson and Memphis Joint Terrorism Task Forces, the U.S. Secret Service, the U. S. Postal Inspection Service, the U. S. Capitol Police and was assisted by the following state and local agencies: Mississippi National Guard 47th Civil Support, Mississippi Office of Homeland Security, Lee County Sheriff’s Office, Prentiss County Sheriff’s Office, Corinth Police Department, Tupelo Police Department and Booneville Police Department. The case is being prosecuted by Assistant U.S. Attorneys Chad Lamar, Clay Joyner and Clyde McGee of the Northern District of Mississippi, and Andrew Sigler of the Department of Justice, National Security Division.Mississippi Man Pleads Guilty in Ricin Letter InvestigationRead the Press Release
WASHINGTON— James Everett Dutschke, 41, of Tupelo, Mississippi, was sentenced today by United States District Judge Sharion Aycock, in Aberdeen, Mississippi, to a 300 month prison sentence for developing and possessing the biological agent ricin and subsequently mailing ricin-laced, threatening letters including one that threatened bodily harm to the President of the United States. Dutschke was also sentenced to serve a term of 5 years supervised release.
The sentence was announced by John Carlin, Assistant Attorney General for the Justice Department’s National Security Division, Felicia Adams, U.S. Attorney for the Northern District of Mississippi, Daniel McMullen, Special Agent in Charge of the FBI’s Jackson Field Office, and Craig Caldwell, Special Agent in Charge of the Secret Service’s Birmingham, Alabama, District Field Office.
Following an investigation, Dutschke was arrested on April 27, 2013, and indicted by a federal grand jury on June 3, 2013. A superseding indictment was filed on November 20, 2013. Dutschke pled guilty on January 17, 2014 to one count of developing and possessing ricin, and three subsequent counts of mailing threatening letters laced with the substance to the President of the United States, U.S. Senator Roger Wicker, and Lee County, Mississippi, Justice Court Judge Sadie Holland. According to the plea agreement between Dutschke and the U.S. Attorney’s Office that was filed in U.S. District Court in Oxford, Dutschke had agreed to serve a 300 month prison sentence and had waived his right to appeal.
The investigation was conducted by the FBI’s Jackson and Memphis Joint Terrorism Task Forces, the U.S. Secret Service, the U. S. Postal Inspection Service, the U. S. Capitol Police and was assisted by the following state and local agencies: Mississippi National Guard 47th Civil Support, Mississippi Office of Homeland Security, Lee County Sheriff’s Office, Prentiss County Sheriff’s Office, Corinth Police Department, Tupelo Police Department and Booneville Police Department. The case is being prosecuted by Assistant U.S. Attorneys Chad Lamar, Clay Joyner and Clyde McGee of the Northern District of Mississippi, and Andrew Sigler of the Department of Justice, National Security Division.
Mercer County Men Plead Guilty to Federal Drug ChargesRead the Press Release
Bluefield, W.Va. – United States Attorney Booth Goodwin announced today that three Mercer County men pled guilty in Bluefield to federal drug charges. Steven Eugene Champ, 41, of Matoaka, West Virginia, pled guilty to distribution of hydromorphone, admitting that on September 24, 2012, he distributed two hydromorphone pills to a person cooperating with law enforcement authorities. The transaction took place at or near Princeton. Champ further admitted that he distributed a total of 1,710 hydromorphone pills between July 2011 and February 2013.
Elijah Abdul Jones, 36, of Bluefield, pled guilty to distribution of cocaine base. He admitted that he sold .72 grams of cocaine base to a person cooperating with police on July 23, 2013, in Bluefield. He further admitted that he had also distributed a total of 14 grams of cocaine base and a small quantity of heroin.
Michael Devon Harmon, 37, of Princeton, pled guilty to distribution of hydromorphone, admitting that on July 24, 2013, he distributed two hydromorphone pills to a person cooperating with the police in Princeton. He also admitted that in addition to that transaction, in July 2013, he sold two more hydromorphone pills and small quantitites of cocaine base and cocaine.
Each of the defendants faces up to 20 years in prison and a one million dollar fine. Senior United States District Judge David A. Faber has set each defendant for sentencing on September 22, 2014.
The cases were investigated by the Southern Regional Drug and Violent Crime Task Force. Assistant United States Attorney John File is handling the prosecutions.
These cases are being prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers in communities across the Southern District.
Manhattan U.S. Attorney and FBI Assistant Director-In-Charge Announce Charges in Connection with Blackshades Malicious Software That Enabled Users Around the World to Secretly and Remotely Control Victims’ ComputersRead the Press Release
The Charges Are Part of the Largest-Ever Global Cyber Law Enforcement Operation, Involving More than 90 Arrests and Other Law Enforcement Actions in 19 Countries
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an indictment charging ALEX YÜCEL, the owner of an organization known as “Blackshades,” that since 2010, has sold and distributed to thousands of people in more than 100 countries a sophisticated and pernicious form of malicious software, or “malware,” known as the Blackshades Remote Access Tool, or “RAT.” The RAT was co-created by YÜCEL and has been used to infect computers throughout the world to spy on victims through their web cameras, steal files and account information, and log victims’ key strokes. Also unsealed today were criminal complaints against BRENDAN JOHNSTON, who was paid by Blackshades to help market and sell malware, including the RAT, and provide technical assistance to its users; KYLE FEDOREK, who purchased the RAT and used it to steal online account information from hundreds of victims; and MARLEN RAPPA, who purchased the RAT and used it to spy on dozens of victims and steal online account information. YÜCEL was arrested in Moldova in November 2013 and is pending extradition to the United States. JOHNSTON was arrested yesterday in Thousand Oaks, California, and will be presented today in the Central District of California. FEDOREK and RAPPA were arrested at their residences this morning and will be presented later today before United States Magistrate Judge James L. Cott in Manhattan federal court.
MICHAEL HOGUE, the co-creator of the RAT, was arrested in June 2012 as part of the Government’s investigation known as “Operation Cardshop” and subsequently pled guilty before U.S. District Judge Kevin Castel in January 2013. A transcript of his guilty plea was unsealed this morning.
In addition to the criminal charges, a domain name associated with the Blackshades website was seized pursuant to a seizure warrant obtained in Manhattan federal court.
Manhattan U.S. Attorney Preet Bharara said: “Blackshades’ flagship product was a sophisticated program known as the Remote Access Tool, or “RAT” for short. The RAT is inexpensive and simple to use, but its capabilities are sophisticated and its invasiveness breathtaking. As today’s case makes clear, we now live in a world where, for just $40, a cybercriminal halfway across the globe can – with just a click of a mouse – unleash a RAT that can spread a computer plague not only on someone’s property, but also on their privacy and most personal spaces.”
Assistant Director-in-Charge of the FBI George Venizelos said: “Armed with $40 and a computer, an individual could easily get the Blackshades Remote Access Tool and become a perpetrator. It required no sophisticated hacking experience or expensive equipment. This tool was purchased by thousands of people in more than 100 countries. The charges unsealed today showcase the top to bottom approach the FBI takes to its cases. We tackled this malware starting with those that put it in the hands of the users- the creators and those who helped make it readily available- the administrators. We will continue to work with our law enforcement partners to bring to justice anyone who used Blackshades maliciously.”
According to the allegations contained in the indictment and criminal complaints unsealed today in Manhattan federal court:
Overview
Since at least 2010, an organization known as “Blackshades” has sold and distributed malicious software to thousands of cybercriminals throughout the world. Blackshades’ flagship product was the Blackshades Remote Access Tool, or R.A.T. (the “RAT”), a sophisticated piece of malware that enabled cybercriminals to secretly and remotely gain control over a victim’s computer. After installing the RAT on a victim’s computer, a user of the RAT had free rein to, among other things, access and view documents, photographs and other files on the victim’s computer, record all of the keystrokes entered on the victim’s keyboard, steal the passwords to the victim’s online accounts, and even activate the victim’s web camera to spy on the victim – all of which could be done without the victim’s knowledge. The FBI’s investigation has shown that the RAT was purchased by at least several thousand users in more than 100 countries and used to infect more than half a million computers worldwide.
Purchasing and Installing the Blackshades RAT
The RAT was typically advertised on forums for computer hackers and marketed as a product that conveniently combined the features of several different types of hacking tools. Copies of the Blackshades RAT were available for sale, typically for $40 each, on a website maintained by Blackshades.
After purchasing a copy of the RAT, a user had to install the RAT on a victim’s computer – i.e., “infect” a victim’s computer. The infection of a victim’s computer could be accomplished in several ways, including by tricking victims into clicking on malicious links or by hiring others to install the RAT on victims’ computers.
The RAT contained tools known as “spreaders” that helped users of the RAT maximize the number of infections. The spreader tools generally worked by using computers that had already been infected to help spread the RAT further to other computers. For instance, in order to lure additional victims to click on malicious links that would install the RAT on their computers, the RAT allowed cybercriminals to send those malicious links to others via the initial victim’s social media service, making it appear as if the message had come from the initial victim. For example, a RAT user could send an instant message, or IM, to potential victims that appeared to come from the initial victim, inviting them to click on a link that appeared to lead to a legitimate website, but that in reality would install the RAT on the potential victim’s computer.
The Capabilities of the RAT
The RAT featured a graphical user interface, which allowed its users to easily view and navigate all of the victim computers that they had infected. Among other things, the user interface listed IP address information for each infected computer, the computer’s name, the computer’s operating system, the country in which the computer was located, and whether the computer had a web camera.
Once a computer was infected with the RAT, the user of the RAT had complete control over the computer. The user could, among other things, remotely activate the victim’s web camera. In this way, the user could spy on anyone within view of the victim’s webcam inside the victim’s home or in any other private spaces where the victim’s computer was used.
The RAT also contained a “keylogger” feature that allowed users to record each key that victims typed on their computer keyboards. To help users steal a victim’s passwords and other log-in credentials, the RAT also had a “form grabber” feature. The “form grabber” automatically captured log-in information that victims entered into “forms” on their infected computers (e.g., log-in screens or order purchase screens for online accounts).
The RAT also provided its users with complete access to all of the files contained on a victim’s computer. A RAT user could use such access to view or download photographs, documents, or other files on a victim’s computer. Further, using a tool known as “file hijacker,” the RAT enabled users to encrypt, or lock, a victim’s files and demand a “ransom” payment to unlock them. The RAT even came with a prepared script demanding such a ransom.
The RAT also allowed users to exploit victims’ computers to launch other cyber attacks. Infected computers could be gathered into a network and used to launch Distributed Denial of Service (“DDoS”) attacks against particular websites by repeatedly sending requests to the website in an effort to disable the website and deny service to legitimate customers.
YÜCEL and the Blackshades Organization
YÜCEL was the co-creator of the RAT, and owned and operated the Blackshades organization. YÜCEL employed several paid administrators, including a director of marketing, website developer, customer service manager, and a team of customer service representatives; he hired and fired employees, paid employees’ salaries, and updated the malicious software in response to customers’ comments and requests. Blackshades generated sales of more than $350,000 between September 2010 and April 2014.
The Other Defendants
JOHNSTON used Blackshades malware and was a paid employee of the Blackshades organization who, among other things, marketed and sold the RAT, and provided technical assistance to users of the RAT to assist them in infecting and remotely controlling victims’ computers with the RAT. In certain online postings, JOHNSTON described himself as an “authorized seller” and “admin,” or administrator, of Blackshades.
FEDOREK was a customer of Blackshades who purchased the RAT and used it to steal financial and other account information from more than 400 victims. A search of FEDOREK’s computer conducted by the FBI showed that FEDOREK was also deploying a variety of other types of malicious software against his victims.
RAPPA was a customer of Blackshades who purchased the RAT and used it to infect victims’ computers, spy on those victims using their web cameras, and steal personal files from their computers. A search of RAPPA’s computer by the FBI showed that RAPPA was also deploying a variety of other types of malicious software against his victims.
YÜCEL, 24, of Sweden, is charged with two counts of computer hacking, each of which carries a maximum sentence of 10 years in prison, one count of conspiring to commit access device fraud, which carries a maximum sentence of seven and a half years in prison, one count of access device fraud, which carries a maximum sentence of 15 years in prison, and one count of aggravated identity theft, which carries a mandatory term of two years in prison consecutive to any other sentence that is imposed.
JOHNSTON, 23, of Thousand Oaks, California, is charged with two counts of computer hacking, each of which carries a maximum sentence of 10 years in prison.
FEDOREK, 26, of Stony Point, New York, is charged with two counts of computer hacking, each of which carries a maximum sentence of 10 years in prison, and one count of access device fraud, which carries a maximum sentence of 10 years in prison.
RAPPA, 41, of Middletown Township, New Jersey, is charged with two counts of computer hacking, each of which carries a maximum sentence of 10 years in prison.
HOGUE, 23, of Maricopa, Arizona, pled guilty in January 2013 to two counts of computer hacking, each of which carries a maximum sentence of 10 years in prison. He is awaiting sentencing before the Honorable P. Kevin Castel.
The maximum potential sentences are prescribed by Congress, and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.
The charges unsealed today are part of an unprecedented global law enforcement operation involving the participation of 19 countries. As part of the operation, more than 90 arrests have been made and more than 300 searches have been conducted worldwide. Mr. Bharara noted that the investigation is ongoing.
Mr. Bharara praised the extraordinary investigative work of the FBI. Additionally, Mr. Bharara specially thanked all the international law enforcement agencies that assisted this investigation, including the Moldova National Investigation Inspectorate of General Police Inspectorate of Ministry of Interior; the International Relations Department of Prosecutor’s General Office of the Republic of Moldova; Eurojust; the U.S. Department of State’s Diplomatic Security Service and United States Embassy personnel in Chisinau, Moldova; the FBI's Office of the Legal Attaché to Romania and Moldova; the FBI’s Office of the Legal Attaché to the Netherlands. He also thanked the Department of Justice’s Office of International Affairs and Computer Crime and Intellectual Property Section for their support.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys James Pastore and Sarah Lai are charge of the prosecution. Assistant U.S. Attorney Paul Monteleoni with the Money Laundering and Asset Forfeiture Unit is in charge of forfeiture aspects of the case.
The charges contained in the Indictment and Complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
U.S. v. Alex Yucel Indictment S1 13 Cr 834
U.S. v. Kyle Fedorek Complaint 14 Mag. 1064
U.S. v. Michael Hogue Information 13 Cr. 12
U.S. v. Brendan Johnston Complaint 14 Mag 1086
U.S. v. Marlen Rappa Complaint 14 Mag. 1065Malvern Company Charged with Defrauding the City of PhiladelphiaRead the Press Release
An information was filed today charging Airmatic, Inc., a company located at 284 Three Tun Road, Malvern, PA, with one count of mail fraud for allegedly defrauding the City of Philadelphia of approximately $556,633.03. Airmatic allegedly supplied unapproved, off-contract products to various City departments in violation of its agreements with the City. The case was announced by United States Attorney Zane David Memeger and City of Philadelphia Inspector General Amy Kurland.
According to the information, Airmatic submitted false and fraudulent invoices to the City’s accounts payable department in order to conceal that it was providing off-contract products. Instead of reflecting the unapproved, off-contract products that were actually being provided, the invoices billed for items that were approved pursuant to the City’s agreements with defendant Airmatic. It is further alleged that Airmatic inflated the cost of the unapproved, off-contract items and products it provided to the City by an average of approximately 87% and profited from this scheme in the amount of approximately $556,633.03. For example, in one instance Airmatic falsely invoiced the City for a bearing assembly, an expensive industrial product and approved contract item, when, in fact, Airmatic delivered 12 asphalt rakes, items for which the defendant had no contract. To disguise the transaction, Airmatic manipulated the invoice and billed the City for the price of the bearing assembly, which the City never received, resulting in an extravagant profit margin on the sale of the rakes. Between January 2007 and August 2012, hundreds of similar transactions took place.
If convicted the defendant faces a maximum possible sentence of five years of probation, a $500,000 fine or twice the pecuniary gain/loss, a $400 special assessment, and restitution to the City of Philadelphia.
The case was investigated by the City of Philadelphia Office of Inspector General and the FBI. It is being prosecuted by Assistant United States Attorney Jennifer Chun Barry.
Click here to view the indictment
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Leader of Internet Gambling Operation Sentenced to PrisonRead the Press Release
HONOLULU – Felix Gee Wan Tom, age 40, of Honolulu, was sentenced today by Chief United States District Judge Susan Oki Mollway to six months of imprisonment for transmission of wagering information, money laundering and filing a false tax return. Tom also forfeited over $4 million in assets, including two condominiums in Honolulu and a house in Las Vegas, and was ordered to pay $118,601 in taxes owed. The sentencing is the last of 27 Oahu residents prosecuted for a variety of gambling and other offenses related to internet gambling. The other defendants received sentences ranging from probation to 10 months in prison.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said that starting in 2009, the Federal Bureau of Investigation, the Internal Revenue Service, Homeland Security Investigations and the Honolulu Police Department conducted a joint undercover investigation into a large-scale internet gambling operation established by Allen Yamada and led by Tom. According to information produced in court, the investigation revealed that, between 2005 and 2012, the illegal operation placed gross wagers totaling over approximately $670 million through internet websites based in Costa Rica.
U.S. Attorney Nakakuni said that according to law enforcement investigations, in the last several years, dozens of internet bookmakers have come into existence, many of whom are located in foreign countries where bookmaking activities are not illegal. These bookmakers direct their activities toward bettors in America, who are interested in gambling on American sporting events such as baseball, football, and basketball.
The prosecution identified Tom as the master agent for in excess of 20 agents located primarily on Oahu. As a master agent, Tom recruited, trained, and supervised the agents and provided agents with login credentials (username/password) for use by players to access his internet sports betting websites. Tom also collected gambling losses from and made payments on gambling winnings to his agents, and split profits with agents. The investigation also revealed that many agents also recruited sub-agents (lower-level bookies or runners), who also had their own client base.
The following defendants pled guilty to Transmission of Wagering Information, Money Laundering, and Filing False Tax Return, in addition to Tom:
Darin Fujimori, age 39 (Forfeiture $266,600, tax $127,395);
Jeffrey Ibara, age 36 (Forfeiture $217,666, tax $6,791);
Anh Phuong Lam, age 31 (Forfeiture $140,000 + house in Las Vegas $175,000, tax $19,226);
Vietanh J. Tran, age 33 (Forfeiture $607,423, tax $82,410);
Allen Yamada, age 41 (Forfeiture $793,136, tax $45,120);
Ponciano Erice, age 39 (Forfeiture $190,000, tax $64,779)
The following defendants pled guilty to Money Laundering:
Jason Chang, age 38 (Forfeiture $83,466)
Thomas Ky, age 47 (Forfeiture $1,336,500)
James Striker, age 56 (Forfeiture $145,600)
The following defendants pled guilty to Transmission of Wagering Information and Filing False Tax Return:
Chad Rees, age 41 (Forfeiture $20,000, tax $14,644);
Terrence Ching, age 41 (Forfeiture $636,115, tax $25,173);
Dane Amii, age 40 (Tax $3,113);
Harry Endo, age 46 (Forfeiture $253,536, tax $61,118);
Chad Fujiwara, age 44 (Forfeiture $310,000, tax $37,601);
Dean Horie, age 39 (Forfeiture $749,000, tax $25,753);
Dax Migita, age 34 (Forfeiture $102,773, tax $15,344);
Phalakone Oshiro, age 39 (Forfeiture $76,000, tax $19,338);
Jerome Romano, age 41 (Forfeiture $33,932, tax $29,515).
The following defendants pled guilty to Transmission of Wagering Information and Failing to File Monthly Tax Return for Wages:
Justyn Tabaniag, age 25 (Tax $14,045);
Troy Sakata, age 47 (Forfeiture $40,868, tax $6,113);
James Hayden, age 29 (Forfeiture $14,870, Tax $14,045);
Chad Iwamoto, age 41 (Forfeiture $104,850, tax $48,373);
Alvin Ngo, age 27 (Forfeiture $54,371, tax $58,059);
Jack Shizuru, age 65 (Forfeiture $3,794, tax $5,586);
Mathew Verdugo, age 30 (Forfeiture $8,155, tax $42,401).
The case was prosecuted by Assistant U.S. Attorney Larry Butrick.
Jasper Woman Pleads Guilty to Sending Hoax Anthrax LetterRead the Press Release
Jacksonville, FL – United States Attorney A. Lee Bentley, III announces that Kathryn Cohen Allen (47, Jasper) has pleaded guilty to sending letters to the offices of Senators Marco Rubio and Bill Nelson in June of 2011, threatening their lives. Allen faces a maximum penalty of ten years in federal prison and a fine of $500,000. A sentencing date has not yet been set.
According to court documents, on June 27, 2011, Allen mailed threatening letters containing a white powdery substance to the offices of United States Senators Marco Rubio and Bill Nelson. Both offices were evacuated as a result. Field and laboratory testing determined that the white powdery substance was not hazardous. Allen admitted that she sent the letters in an effort to frame her neighbor whom she believed was engaged in an interracial relationship. Allen was implicated in the scheme when her handwriting was identified in each of the letters.
This case was investigated by the Federal Bureau of Investigation and U.S. Customs and Border Protection. Numerous local agencies also participated in the investigation, including the Jacksonville Sheriff’s Office, Jacksonville Fire and Rescue, and the Hamilton County Sheriff’s Office. It is being prosecuted by Assistant United States Attorney Jay Taylor.
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Jackson Man Found Guilty of Bank Fraud, Wire Fraud, Aggravated Identity Theft, Money Laundering and ConspiracyRead the Press Release
Jackson, Miss – Following a three day trial in U.S. District Court last week, a jury found Gregory Bernard Griffin, 23, of Jackson, guilty of three counts of bank fraud, three counts of wire fraud, four counts of aggravated identity theft, six counts of money laundering and one count of conspiracy to commit money laundering, announced U.S. Attorney Gregory K. Davis.
Griffin was charged in a 17 count indictment with using a stolen identity to open a bank account at a Jackson area credit union, stealing $193,205.43 from a local Marriott hotel, and laundering some of the proceeds of his fraud with the help of his sisters, Tiffany Griffin, 30, and Erica Griffin, 27, both of Jackson.
According to the proof presented during the trial, Gregory Griffin caused the stolen money to be routed from the Courtyard Marriott hotel in Jackson, Mississippi to the fraudulent bank account he opened, by submitting a forged account change form to Bank of America Merchant Services. The forged form directed Bank of America Merchant Services to stop depositing the proceeds from all Visa and MasterCard transactions conducted at the Courtyard Marriott into the Marriott's bank account, and to begin depositing those funds into the account Gregory Griffin had established with a stolen identity. During the trial, the government introduced evidence that Gregory Griffin spent the stolen money at various places throughout Jackson, all while posing as the victim of the Aggravated Identity Theft. The evidence showed that Gregory Griffin laundered some of the stolen money by depositing a $57,900 check made payable to his sister, Tiffany Griffin, into a bank account that she had opened at a second Jackson area bank in her name, purchasing a vehicle from a salvage yard through an intermediary buyer and obtaining auto insurance on that vehicle in the name of his sister Erica Griffin, and by paying the premium with some of the stolen money.
Tiffany Griffin and Erica Griffin pled guilty last week to misprision of a felony for their role in the money laundering offenses.
All three defendants will be sentenced by U.S. District Judge Daniel P. Jordan on August 4, 2014 at 9:00 am. Gregory Griffin faces a maximum penalty of 30 years in prison and $1 million fine on each count of bank fraud, 20 years in prison and a $250,000 on each count of wire fraud, two years in prison and $250,000 fine on each count of aggravated identity theft, 20 years in prison and a $500,000 fine on each count of money laundering and conspiracy to commit money laundering. He also faces the forfeiture of two vehicles and other property he purchased with the proceeds of his fraud scheme. Tiffany Griffin and Erica Griffin each face a maximum penalty of three years in prison and a $250,000 fine.
This case was investigated by the U.S. Secret Service and prosecuted by Assistant United States Attorneys Scott Gilbert and Jay Golden.If you believe you have been a victim of fraud from a person or an organization soliciting relief funds on behalf of storm victims, contact the National Center for Disaster Fraud toll free at:
(866) 720-5721
You can also fax information to:
(225) 334-4707
or e-mail it to:
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Indictment Charges Lafayette Hills Man with Pirating Movies and TV ShowsRead the Press Release
Brian Bethman, of Lafayette Hill, Pennsylvania, was charged by indictment, filed on May 15, 2014, smuggling goods into the United States, trafficking in counterfeit labels, and criminal copyright infringement, announced United States Attorney Zane David Memeger.
According to the indictment, between April 2010 and April 2011, Bethman smuggled in more than 6,000 audiovisual copies of movies and television shows that were protected by copyright. The television shows included, but were not limited to, House, Criminal Minds, NCIS, Weeds, The Office, and Royal Pains; the movies included, but were not limited to, Justfied, The Pacific, Dead Like Me, and Bambi. Bethman is charged with seven counts of smuggling goods into the United States, one count of trafficking in counterfeit labels, and one count of criminal copyright infringement.
If convicted the defendant faces a maximum possible sentence of 30 years in prison.The case was investigated by U.S. Immigration and Customs Enforcement Homeland Security Investigations and is being prosecuted by Special Assistant United States Attorney Karen A. Fox.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Huntington Man Pleads Guilty to Gun Charge in Major Federal Drug InvestigationRead the Press Release
Huntington, W.Va. – William Isiah Petties, 33, of Huntington, West Virginia, pleaded guilty today in federal court to possessing a firearm as a convicted felon, United States Attorney Booth Goodwin announced. On January 20, 2014, the Drug Enforcement Administration conducted a search of 1130 28th Street in Huntington, pursuant to a search warrant. Petties was outside that residence when law enforcement arrived to execute the warrant. The address was the residence of Petties’ girlfriend and where Petties stayed on a regular basis.
During the search, agents located a loaded Springfield .40 caliber pistol, which was owned by Petties’ girlfriend but which he jointly possessed and over which he had joint control. In a statement taken after the search, Petties admitted that he possessed the firearm. In 2000, Petties was convicted in Cabell County circuit court of the felony offense of aggravated robbery, and, as a result, was prohibited from possessing the firearm.
Petties was named as one of 15 defendants indicted for various offenses connected with the drug trafficking activities of Kenneth Dewitt Newman, also known as “K-Kutta.” The Newman investigation revealed that Newman, along with others, distributed cocaine, heroin, MDMA, marijuana, and prescription pills in the Huntington area.
Petties faces up to 10 years’ imprisonment and up to a $250,000 fine when he is sentenced on August 18, 2014. Chief United States District Judge Robert C. Chambers is presiding over the case.
This case is being prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers in communities across the Southern District.
Humane Society Financial Advisor Sentenced to Prison for Embezzling and Money LaunderingRead the Press Release
ERIE, Pa. - A former resident of St. Marys, Pennsylvania, has been sentenced in federal court to 46 months in jail and ordered to make restitution in the amount of $414,649.39 on his conviction of wire fraud and money laundering, United States Attorney David J. Hickton announced today.
United States District Judge Maurice B. Cohill, Jr. imposed the sentence on Richard Danz, 49. According to information presented to the court, Danz was the financial advisor/accountant for the Elk County Humane Society. From in and around September 2008 to in and around June 2012, Danz embezzled $422,017.81 from the Elk County Humane Society and another individual. Danz spent the embezzled funds on luxury items including a Mercedes-Benz and a kitchen remodeling.
Prior to imposing sentence, Judge Cohill noted the significant harm caused by Danz, which included the loss of seven jobs at the Elk County Humane Society and the reduced ability to provide critical services to abandoned animals.
Assistant United States Attorney Christian A. Trabold prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Federal Bureau of Investigation and the City of St. Marys, Police Department for the investigation leading to the successful prosecution of Danz.
Guatamalan National Sentenced for $600,000 Tax Refund FraudRead the Press Release
Juan Castro-Castro, 37, formerly a resident of Shelbyville, Kentucky, was sentenced on May 13, 2014, to serve 37 months in prison for engaging in a fraudulent tax refund conspiracy, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Castro-Castro is an undocumented alien and citizen of Guatemala and acknowledged in court that he will likely be deported upon completion of his prison sentence.
Castro-Castro pleaded guilty to conspiring with others to bring fraudulently acquired tax refund checks to Nashville, and with stealing about $649,000 in tax refunds, between January 2012 and August 2013.
“Castro-Castro and others are using these tax fraud schemes to steal millions of dollars from honest United States taxpayers,” said U.S. Attorney David Rivera. “Our federal law enforcement agencies are actively and aggressively on the hunt for such violations. They are working together to identify and disrupt these schemes, arrest the participants, and bring thieves of public money like Mr. Castro-Castro to federal court where they will be held accountable.”Testimony at sentencing established that Castro-Castro and others had used false names to submit more than 100 fraudulent federal tax returns in Kentucky. These false returns claimed that tax refunds were owed, and most listed one of four Kentucky addresses to which, multiple refund checks were mailed by the IRS as a result of the scheme. These addresses included empty apartments on which Castro-Castro was the lease holder and paid rent, as well as his own residence.
Castro-Castro received these refund checks and brought them to Nashville several times each week to be cashed by an accomplice. Federal investigators discovered the scheme and identified the location where the checks were being cashed as Cash City on Nolensville Rd. Castro-Castro was arrested by federal agents in May 2013 and has been held in custody since that time. During the past year, 21 other individuals involved in the scheme have been charged in other indictments, 16 of which have pleaded guilty.
“The defendants who perpetrated this scheme systematically defrauded the government and the taxpaying public,” said Christopher A. Henry, Special Agent in Charge, IRS-Criminal Investigation. “At the IRS, protecting taxpayer money is a matter we take very seriously. IRS Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false claims for refunds.”
“Tax fraud is an outrage to honest citizens everywhere who fulfill their obligation to society by paying their fair share,” said Special Agent in Charge of HSI New Orleans Raymond R. Parmer Jr. “Criminals who attempt to cheat the system and steal from law-abiding Americans will continue to be a major priority for HSI investigators.” Parmer oversees a five-state area of operations to include Tennessee, Alabama, Arkansas, Louisiana and Mississippi.
The case was investigated by the Internal Revenue Service- Criminal Investigation, Homeland Security Investigations and the U.S. Postal Inspection Service. The case was prosecuted by Assistant U.S. Attorney Hilliard Hester.
An indictment is merely an accusation. With respect to the remaining defendants, all are presumed innocent until proven guilty.
Fresno Men Plead Guilty to Conspiring to Sell Fake DVDs and CDsRead the Press Release
FRESNO, Calif. — Jose Antonio Hernandez, 41, and Genaro Vela-Rodriguez, 28, both of Fresno, pleaded guilty today before Senior U.S. District Judge Anthony W. Ishii to one count each of conspiracy to commit criminal copyright infringement and traffic in counterfeit labels and counterfeit documentation and packaging, United States Attorney Benjamin B. Wagner announced.
According to court documents, Hernandez and Vela-Rodriguez admitted that from July to September 18, 2012, they were involved in an extensive scheme with others to store and distribute thousands of counterfeit DVD movies and audio CDs. Both men admitted to selling counterfeit movie DVDs and CDs, including some movies that had not yet been commercially distributed. Defendant Hernandez admitted to manufacturing counterfeit DVD movies.
This case is the product of an extensive investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorneys Henry Z. Carbajal III and Patrick R. Delahunty are prosecuting the case.
The defendants are scheduled to be sentenced by Judge Ishii on August 11, 2014, at 10:00 a.m. The maximum statutory penalty for conspiracy to commit criminal copyright infringement and traffic in counterfeit labels and counterfeit documentation and packaging is five years in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Four Southern Illinois Residents Charged with Methamphetamine ConspiracyRead the Press Release
Follow @SDILNewsOn May 19, 2014, Rusty J. Smith, 35, and Jonathan E. Merydith, 26, both of Cobden, Ruth D. Wiseman, a/k/a “Diane Wiseman,” 51, of Anna, and Shannon L. Connett, 36, of Marion, were charged by indictment with conspiracy to manufacture methamphetamine, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
The offense occurred between 2012 and March 2014, in Union, Williamson, and Jackson Counties. Wiseman made her initial appearance in federal court on May 12, 2014. Merydith and Connett made their initial appearances in federal court on May 19, 2014. Wiseman and Merydith are currently being held without bond pending a July 21, 2014, jury trial. Connett is currently being held without bond pending a May 20, 2014, detention hearing. Smith is currently a fugitive.
The methamphetamine offense carries a penalty of up to 20 years’ imprisonment, to be followed by 3 years’ supervised release, and a fine of $1,000,000.
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 ongoing investigation is being conducted by the Union County Sheriff’s Office, Jackson County Sheriff’s Office, Illinois State Police, Williamson County Sheriff’s Office, Marion Police Department, Carbondale Police Department, Illinois State Police Methamphetamine Response Team and Drug Enforcement Administration. The 19th Judicial District Drug Task Force (Tennessee) assisted in the investigation.
The case is assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
Four Individuals Charged in Multi-Million Dollar Mortgage Fraud SchemeRead 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 Drew J. Breakspear, Commissioner, Florida Office of Financial Regulation, announce that Karl Oreste, 56, of Miramar, Marie Lucie Tondreau, a/k/a “Lucie Tondreau”, 54, of North Miami, Okechukwu Josiah Odunna, a/k/a “O.J. Odunna”, 49, of Lauderdale Lakes, and Kelly Augustin, 57, of North Miami, have been charged with conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, and six counts of wire fraud, in violation of Title 18, United States Code, Section 1343. According to the allegations in the indictment, between December 2005 and May 2008, Oreste, president of KMC Mortgage Corporation of Florida, a mortgage lending business in North Miami Beach, identified residential properties in South Florida that were for sale. Oreste and Tondreau hosted several radio show programs in the South Florida area in which they advertised the services offered by KMC Mortgage. Oreste and Tondreau recruited and paid some of the listeners who responded to those advertisements, as well as other individuals, to pose as borrowers to purchase properties identified by Oreste. Augustin, an employee of KMC Mortgage, also recruited straw borrowers.
Thereafter, the indictment alleges that Oreste and Odunna, and other co-conspirators prepared or caused to be prepared loan applications on behalf of straw borrowers. Odunna was an attorney previously licensed to practice law in Florida, and president of O.J. Odunna, P.A. and Direct Title and Escrow Services. These loan applications included false information relating to employment, wages, assets and intent to make the property being purchased a primary residence. The loan applications and documents were submitted by co-conspirators to various mortgage lenders throughout the United States. Once the loan applications were approved, the lenders wired loan funds to O.J. Odunna, P.A., Direct Title or other title companies for closing.
The indictment alleges that in some instances Oreste, Odunna and other co-conspirators created and submitted duplicate HUD-1 Settlement Statement Forms, which grossly inflated the true purchase price of the properties. HUD-1 Settlement Statements also falsely and fraudulently represented to the mortgage lenders that the straw borrowers had met their down payment and cash to close obligations, when, in fact, the straw borrowers had never made any such payments.
At closing, a portion of loan proceeds were disbursed to Oreste through his corporation, JR Investment and Mortgage Corporation, or other bank accounts controlled by him. In some instances, a portion of the loan proceeds was diverted to O.J. Odunna, P.A. or Direct Title accounts. Oreste disbursed some of the proceeds he received to pay recruiters – such as Tondreau and Augustin – and straw borrowers. Oreste also transferred a substantial portion of the funds to bank accounts of LTO Investment Corporation, a corporation controlled by Tondreau. Tondreau used funds deposited in LTO Investment Corporation’s bank accounts to make payments on the falsely and fraudulently obtained mortgages in order to maintain the loans, and to conceal and further the fraud. She also used a portion of the funds deposited into LTO Investment Corporation’s bank accounts for her own personal use and benefit.
The indictment alleges that over the course of the conspiracy, the defendants fraudulently obtained loans on approximately 20 properties, for which the lenders have suffered losses in the amount of approximately $8,000,000.00. If convicted, each defendant faces a maximum term of 30 years in prison.
Mr. Ferrer commended the investigative efforts of the FBI and Florida’s Office of Financial Regulation. The case is being prosecuted by Assistance U.S. Attorney Lois Foster-Steers.
An indictment is only an accusation, and a defendant is presumed innocent until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Four Greenbrier County Residents Face Federal Heroin IndictmentsRead the Press Release
BECKLEY, W.Va. – United States Attorney Booth Goodwin announced today that four Greenbrier County residents have been indicted by a federal grand jury in connection with heroin trafficking. Those indicted and subsequently arrested are:
Tiffany Rose Arbogast, 24, of Lewisburg, West Virginia, charged with four counts of heroin distribution; Christopher Miller, 32, of Alderson, West Virginia, charged with two counts of heroin distribution; Joshua Osborne, 30, also of Alderson, West Virginia, charged with two counts of heroin distribution and one count of possession of heroin with intent to distribute; and
Amanda Nicole Canaday, 26, of White Sulphur Springs, West Virginia, charged with possession with intent to distribute heroin.Miller and Canaday have been remanded to the custody of the United States Marshals Service pending trial. Osborne and Arbogast face hearings this week to determine whether they will remain in Marshals Service custody.
These cases were investigated by the Greenbrier County Drug and Violent Crime Task Force. Assistant United States Attorney John File is handling the prosecutions.
Goodwin’s office is prosecuting these cases to fight heroin trafficking in Greenbrier County and as part of an ongoing battle against the illegal sale of prescription drugs and heroin throughout the Southern District of West Virginia. The United States Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illicit pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin.
Note: The charges contained in the indictments are merely accusations, and the defendants are presume innocent unless and until proven guilty.
Former Wellcare Chief Executive <br /> Sentenced for Health Care FraudRead the Press Release
Former WellCare Chief Executive Officer Todd S. Farha, 45, of Tampa, Florida, was sentenced today in the Middle District of Florida to serve 36 months in prison for defrauding the Florida Medicaid program.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and United States Attorney A. Lee Bentley III of the Middle District of Florida made the announcement after Farha was sentenced by U.S. District Judge James S. Moody Jr.
Farha was convicted by a federal jury in the Middle District of Florida on June 10, 2013, of two counts of health care fraud.
According to court records and evidence at trial, Farha and others orchestrated a scheme to defraud the Florida Medicaid program from the summer of 2003 through the fall of 2007 by making fraudulent statements relating to expenditures for behavioral health care services.
WellCare operates health maintenance organizations (HMOs) in several states providing services through government-sponsored health care benefit programs like Medicaid. Two WellCare HMOs operating in Florida, StayWell and Healthease, contracted with the Agency for Health Care Administration (AHCA), the Florida agency that administers the Medicaid program, to provide Florida Medicaid program recipients with an array of services, including behavioral health services.
In 2002, Florida enacted a statute that required Florida Medicaid HMOs to expend 80 percent of the Medicaid premium paid for certain behavioral health services upon the provision of those services. In the event that the HMO expended less than 80 percent of the premium, the difference was required to be returned to AHCA. As part of the scheme, Farha and others fraudulently submitted inflated expenditure information in the company’s annual reports to AHCA to reduce the WellCare HMOs’ contractual repayment obligations for behavioral health care services.
On May 5, 2009 the government filed related charges in an information and a deferred prosecution agreement (DPA) against WellCare. Pursuant to that DPA, WellCare was required to pay $40 million in restitution, forfeit another $40 million to the United States and cooperate with the government’s criminal investigation. The company complied with all of the requirements of the DPA. As a result, the information was later dismissed by the court following a government motion. In a related civil qui tam case, Wellcare agreed to pay $137.5 million in civil fines and penalties.
This case was investigated by the U.S. Department of Health and Human Services Office of Inspector General, the FBI, and the Florida Attorney General's Medicaid Fraud Control Unit. The case was prosecuted by Senior Trial Attorney John Michelich of the Criminal Division’s Fraud Section and Assistant United States Attorneys Jay Trezevant and Cherie Krigsman and Special Assistant United States Attorney John Bowers of the Middle District of Florida.Former WellCare Executives Sentenced for Health Care FraudRead the Press Release
Tampa – U.S. District Judge James S. Moody, Jr. today sentenced former WellCare Chief Executive Officer Todd S. Farha (45, Tampa) to 36 months in prison for defrauding the Florida Medicaid program. In addition, the Court also respectively sentenced Paul L. Behrens (52, Odessa) to 24 months’ imprisonment; William L. Kale (64, Oldsmar) to one year and a day in prison; and Peter E. Clay (57, Wellesley, Massachusetts) to five years’ probation.
All four were convicted by a federal jury on June 10, 2013. Specifically, Farha was convicted of two counts of health care fraud; former WellCare Chief Financial Officer Paul L. Behrens was convicted of two counts of making false statements relating to health care matters and two counts of health care fraud; William L. Kale, former Vice President of Harmony Behavioral Health, Inc. (a wholly-owned subsidiary of WellCare), was found guilty of two counts of health care fraud; and Peter E. Clay, former WellCare Vice President of Medical Economics, was found guilty of making false statements to a law enforcement officer.
“Today’s sentences are the culmination of a lengthy and comprehensive investigation and prosecution of egregious crimes of fraud and greed,” said U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “We hope that the sentences imposed will send a strong message that individuals engaging in health care fraud will be prosecuted to the full extent of the law.”
“The former WellCare executives chose to engage in corrosive and illegal conduct. Unsatisfied with the wealth and power they already had, they chose to steal from the American public,” said Acting Special Agent in Charge Omar Perez Aybar, HHS-OIG Miami Regional Office. “Today they are being held accountable for their actions. The sentences serve as a warning to other corporate executives who may contemplate such action and are a testament to Justice truly being blind to power, position, and status.”
According to court records and evidence at trial, Farha and others orchestrated a scheme to defraud the Florida Medicaid program from the summer of 2003 through the fall of 2007 by making fraudulent statements relating to expenditures for behavioral health care services.
WellCare operates health maintenance organizations (HMOs) in several states providing services through government-sponsored health care benefit programs like Medicaid. Two WellCare HMOs operating in Florida, StayWell and Healthease, contracted with the Agency for Health Care Administration (AHCA), the Florida agency that administers the Medicaid program, to provide Florida Medicaid program recipients with an array of services, including behavioral health services.
In 2002, Florida enacted a statute that required Florida Medicaid HMOs to expend 80 percent of the Medicaid premium paid for certain behavioral health services upon the provision of those services. In the event that the HMO expended less than 80 percent of the premium, the difference was required to be returned to AHCA. As part of the scheme, Farha and others fraudulently submitted inflated expenditure information in the company’s annual reports to AHCA to reduce the WellCare HMOs’ contractual repayment obligations for behavioral health care services.
On May 5, 2009 the government filed related charges in an information and a deferred prosecution agreement (DPA) against WellCare. Pursuant to that DPA, WellCare was required to pay $40 million in restitution, forfeit another $40 million to the United States and cooperate with the government’s criminal investigation. The company complied with all of the requirements of the DPA. As a result, the information was later dismissed by the court following a government motion. In a related civil qui tam case, Wellcare agreed to pay $137.5 million in civil fines and penalties.
This case was investigated by the U.S. Department of Health and Human Services Office of Inspector General, the FBI, and the Florida Attorney General's Medicaid Fraud Control Unit. The case was prosecuted by Senior Trial Attorney John Michelich of the Criminal Division’s Fraud Section and Senior Litigation Counsel Assistant United States Attorney Jay Trezevant, Assistant United States Attorney Cherie Krigsman, and Special Assistant United States Attorney John Bowers of the Middle District of Florida.
Former Sacramento Man Pleads Guilty to Mortgage FraudRead the Press Release
SACRAMENTO, Calif. —Joshua Clymer, 28, currently of San Francisco, pleaded guilty today to conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme, United States Attorney Benjamin B. Wagner announced.
According to court documents, from approximately October 2006 through August 2008, Clymer participated in a mortgage fraud scheme involving multiple properties in the Sacramento area. As a part of the scheme, Clymer and a business partner used several fraudulent tactics to help buyers secure home loans from lenders, including inflating the buyer’s income, providing false employment histories, falsifying gifts made to the buyers, and giving undisclosed cash back to some buyers outside of escrow. Buyers of the properties later defaulted on their loans, leading to foreclosure sales, and in one instance a loan modification. The estimated loss associated with Clymer as a result of these activities is approximately $352,000.
This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. Assistant United States Attorneys Christopher S. Hales and Audrey Hemesath are prosecuting the case.
Clymer is scheduled to be sentenced by Judge William B. Shubb on September 22, 2014. Clymer faces a maximum statutory penalty of 30 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Former Minnesota Attorney Pleads Guilty to Tax FraudRead the Press Release
Barry V. Voss of St. Paul, Minnesota, pleaded guilty today to failure to pay over employment taxes , announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division Justice, U.S. Attorney Andrew M. Luger for the District of Minnesota and Special Agent in Charge Kelly R. Jackson of the St. Paul Field Office of the Internal Revenue Service (IRS)- Criminal Investigation. Voss pleaded guilty to one count of failure to pay over employment taxes for the fourth quarter of 2008.
According to the plea agreement, Voss filed quarterly employment tax returns with the IRS from July 2007 through December 2010 which reflected taxes withheld from the salaries of the employees of his law firm, Barry V. Voss P.A., including Voss’ own salary. However, Voss failed to timely pay over to the IRS the full amount of the taxes due and owing. Voss admitted that he intentionally failed to pay these taxes to the IRS, which totaled approximately $160,000.
Voss faces a statutory maximum prison term of five years in prison, a fine of $250,000 and payment of back taxes owed to the IRS. A sentencing hearing has not yet been scheduled.
This case was investigated by special agents of IRS-Criminal Investigation. It is being prosecuted by Trial Attorneys Lori A. Hendrickson and Adam R. Smart of the Tax Division and Assistant U.S. Attorney Karen Schommer of the District of Minnesota.
Former Coca-Cola Employee Sentenced to Prison for Corporate FraudRead the Press Release
ATLANTA - Jeffrey David Shamp, a former Senior National Account Executive with The Coca-Cola Company, was sentenced to two years and three months in prison for siphoning over $400,000 in corporate American Express gift checks for his personal use.
“Corporate employees who steal hurt their employer, fellow colleagues, their customers, and the community,” said United States Attorney Sally Quillian Yates. “By putting his personal gain above all else, Shamp has earned this time in federal prison.”
“The United States Secret Service and our law enforcement partners will continue to take an aggressive approach to arresting individuals who violate the trust of businesses to further their personal financial gain,” said Reginald G. Moore, Special Agent in Charge of the United States Secret Service, Atlanta Field Office.
“This sentence is a message to others that there are consequences for taking what doesn’t belong to you,” stated Veronica F. Hyman-Pillot, IRS Criminal Investigation, Special Agent in Charge. “Individuals cannot fraudulently enrich their bank accounts and expect to go unpunished.”
According to United States Attorney Yates, the charges, and other information presented in court: Jeffrey Shamp worked for The Coca-Cola Company from approximately July 2002 to November 2011, most recently as a Senior National Account Executive based in Massachusetts. In his position, Shamp was authorized to order American Express (AMEX) gift checks to be used as part of a sales incentive program for Coca-Cola’s customers. From approximately November 2005 through September 2011, Shamp fraudulently obtained AMEX gift checks under the false pretense that the checks would be used as part of Coca-Cola’s sales incentive program, when in fact Shamp used them to pay for over $400,000 in personal expenses, including alimony and rent payments, and as gifts to friends and relatives.
Shamp, 40, of Cincinnati, Ohio, pleaded guilty to one count of wire fraud before United States District Court Steve C. Jones on February 27, 2014. In addition to his two year and three month sentence, Shamp was ordered to pay $411,550 in restitution to The Coca-Cola Company.
This case was investigated by the United States Secret Service and the Internal Revenue Service Criminal Investigation.
Assistant United States Attorney Steven D. Grimberg prosecuted the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.
First Rider Sentenced for Assaulting Federal Prison GuardsRead the Press Release
The United States Attorney's Office announced that during a federal court session in Great Falls, Montana, on May 12, 2014, before U.S. District Judge Brian M. Morris, JASHA LASHELL FIRST RIDER, 29, of Browning, was sentenced to a term of 20 months imprisonment, two years supervised release, and a special assessment of $200.
First Rider was sentenced because she assaulted two federal officers while in jail. In an Offer of Proof filed by Assistant U.S. Attorney Ryan G. Weldon, the government would have proven that First Rider appeared in Blackfeet Tribal Court and had her bond set higher than she wanted. First Rider became enraged when at the Blackfeet Tribal Jail. Federal officers at the jail approached First Rider, but she punched one in the face and scratched another repeatedly.
First Rider pleaded guilty to two counts of Assault on a Federal Officer. In a sentencing memorandum, Weldon told the Court, "First Rider assaulted two correctional officers because she disagreed with a judicial decision. She disrupted the jail facility, and officers were required to shuffle inmates-a dangerous endeavor by itself-in order to ensure that First Rider did not hurt herself or others. Despite federal officers' best efforts, First Rider punched one in the face and scratched another. . . . First Rider has a pattern of assaultive conduct, including assaulting officers. Not only must the Court consider how it will deter First Rider from assaulting officers, but others must realize that such decisions will be met with severe consequences. Federal officers demand this protection and so do their families."
The Court sentenced First Rider to 20 months of imprisonment, with two years of supervised release to follow. Because there is no parole in the federal system, the truth in sentencing guidelines mandate that First Rider will likely serve all of the time imposed by the court. In the federal system, First Rider does have the opportunity to shorten the term of custody by earning credit for good behavior. However, this reduction will not exceed 15% of the overall sentence.
This investigation was conducted by the Federal Bureau of Investigation.
Federal Grand Jury Indicts President of Discovery Sales, Inc.Read the Press Release
OAKLAND – An Indictment by a federal grand jury, unsealed here today, charges Ayman Shahid with conspiracy to commit bank fraud and seventeen individual counts of bank fraud, announced United States Attorney Melinda Haag, FBI Special Agent in Charge David J. Johnson, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the indictment, Shahid, 38, of Danville, Calif., is alleged to have masterminded a scheme to cause banks to approve mortgage loans for unqualified buyers at the height of the financial crisis. Shahid managed Discovery Sales, Inc., which was the sales arm of affiliated residential construction companies, including Discovery Home Builders and Albert D. Seeno Construction Co. According to the indictment, Shahid devised and managed a scheme to provide undisclosed incentives to unqualified home buyers, which allowed Discovery to continue selling houses during the financial crisis. Shahid intentionally hid the scheme from appraisers and bank underwriters so that loans to unqualified buyers would be approved. According to the Indictment, the aggregate sales price of the homes affected by the scheme was almost $230 million and loans having a value of $150 million went into foreclosure or short sale proceedings.
Shahid was arrested in Concord, Calif., this morning at approximately 8:45 a.m. and his initial appearance is scheduled for today at 11:30 a.m. in federal court before the Honorable Donna M. Ryu, United States Magistrate Court Judge in Oakland.
An Indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant could face a maximum sentence of 30 years in prison, and a fine of $1,000,000, plus restitution if appropriate, for each of the eighteen violations of 18 U.S.C. § 1344 alleged in the indictment. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being prosecuted by Assistant United States Attorneys John Hemann and Randy Luskey and was investigated by the FBI, IRS – Criminal Investigative Division, and Federal Housing Finance Agency, Office of Inspector General.
(Shahid indictment )
Elkville Man Sentenced for Methamphetamine ConspiracyRead the Press Release
Follow @SDILNewsOn May 15, 2014, Charles E. Witherspoon, a/k/a “Spoon,” 62, of Elkville, Ill., was sentenced in United States District Court in Benton on a one-count indictment charging conspiracy to manufacture methamphetamine, announced Stephen R. Wigginton, United States Attorney for the Southern District of Illinois.
Witherspoon, who had previously pled guilty to the methamphetamine offense, was sentenced to 108 months’ imprisonment, 3 years’ supervised release, and was fined $300. The offense occurred between March 2012 and March 2013 in Jackson and Perry Counties. Evidence at the plea and sentencing hearings established that Witherspoon was involved with co-defendant Charles Scott and others in the manufacture of methamphetamine. On March 13, 2013, Scott received severe burns while manufacturing methamphetamine inside Witherspoon’s Elkville residence. Witherspoon’s sentence was enhanced based on the substantial risk of harm created by his criminal conduct. Scott was previously sentenced to 70 months’ imprisonment for his role in the methamphetamine conspiracy.
The investigation was conducted by the Jackson County Sheriff’s Office, Perry County Sheriff’s Office, Murphysboro Police Department, Pinckneyville Police Department, DuQuoin Police Department, and Illinois State Police Methamphetamine Response Team.
The case was assigned to Assistant United States Attorney Amanda A. Robertson for prosecution.
EOIR System UpdateRead the Press Release
At midnight on April 12, 2014, the Executive Office for Immigration Review experienced a catastrophic hardware failure that rendered inaccessible many of its applications. Immediately after identifying the problem, our staff began around-the-clock efforts to recover the hardware. We soon began working with data recovery service experts to preserve our data and restore our applications. Included in the inaccessible information were our backup systems.
We are happy to announce that the data recovery team was able to recover the data and create new drives for those which had failed. To date, we have not lost any data, and we are continuing to finalize restoration of those applications most critical to our internal and external stakeholders. As of 9:00 a.m. on May 19, 2014, our electronic databases are again functional. Although the case information hotline (800-898-7180) is also functional, the hotline is limited to providing information recorded in the electronic database, which our staff will continue to update until all case information is current. We are continuing recovery efforts on other applications, including eRegistration.
We appreciate the patience of our stakeholders through this frustrating time. Please know that our information technology staff has worked very hard to make sure that our system has been rebuilt, but we have also worked smart. Our system was reconstructed in a way that provides more and better redundancies and monitoring that will result in a greater assurance such issues will not again present.
Drug Traffickers Sentenced to Federal Prison in Operation Broken BoneRead the Press Release
KANSAS CITY, KAN. - Six defendants have been sentenced to prison as a result of a federal drug investigation in metropolitan Kansas City dubbed Operation Broken Bone, U.S. Attorney Barry Grissom said.
The investigation targeted a drug trafficking organization that operated from January 2006 to November 2011 to distribute cocaine, crack cocaine and marijuana in the Kansas City metropolitan area. The FBI, the Kansas City, Kan., Police Department and the Kansas City, Mo., Police Department worked with the U.S. Attorney’s Office for the District of Kansas and other members of an Organized Crime Drug Enforcement Task Force (OCDEFT) on the case.The following defendants were sentenced May 16:
Damian Mays, 24, Kansas City, Kan., 235 months in federal prison.
Verdell Mays, 37, Kansas City, Kan., 225 months.
Christopher Holliday, 26, 114 months.
Frank Sharron Piper, III, 35, Kansas City, Kan., 135 months.
Brenton Bassett, 38, Kansas City, Kan., 84 months.
Cynthia Hatfield, 32, Kansas City, Kan. 3 months.
At the sentencing, prosecutors told the judge the defendants conspired together to distribute drugs and to maintain multiple Kansas City area residences where the drugs were stored, consumed or distributed. The investigators arranged to buy drugs from the defendants and served search warrants in which drugs, money and firearms were seized.Other defendants include: Gregory T. Moore, 37, Kansas City, Kan., who is awaiting sentencing.
Daniel Bryant, 34, Kansas City, Mo., who is awaiting sentencing.
Johnie Mitchell, 60, Kansas City, Kan., sentenced to 35 months.
Marcus M. Williams, 35, Overland Park, Kan., who is awaiting sentencing.
Michael D. Davis, 33, Kansas City, Kan., sentenced to 40 months.
Ondre Durham, 40, Kansas City, Kan., sentenced to 30 months.
Rahmann Easley, 35, Kansas City, Kan., who is set for sentencing July 17.
Charles Easley, 38, Kansas City, Kan., who is awaiting sentencing.
Joshua Jones, 28, Kansas City, Kan., who is awaiting sentencing.
Raymond Cornejo, 53, Kansas City, Kan., who is awaiting sentencing.
Lamar Brooks, 38, Kansas City, Mo., who is set for sentencing Oct. 21.
Christopher Craig, 31, Kansas City, Mo., who is set for sentencing July 15.
Jacquel Cunningham, 22, Kansas City, Kan., who is set for sentencing Aug. 5.
Anthony Smith, 41, Kansas City, Mo., who is awaiting sentencing.Grissom commended the FBI, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Kansas Bureau of Investigation, the Kansas City, Kan., Police Department, the Kansas City, Mo., Police Department, Immigration and Customs Enforcement, Homeland Security Investigations, the Kansas Highway Patrol, the Kansas City, Mo., Career Criminal Division, the Riverside Police Department, Assistant U.S. Attorney Sheri McCracken and Special Assistant U.S. Attorney Trent Krug for their work on the case.
District Man Pleads Guilty to Fraud Charges in $3 Million Embezzlement Scheme-Defendant Bought House and Trips to Las Vegas, Atlantic City, Miami, and Hawaii-Read the Press Release
WASHINGTON – Howard E. Person, Jr., 36, of Washington, D.C., pled guilty today to fraud charges stemming from his embezzlement of $3 million from a small business in the District of Columbia, using his employer’s money for the purchase of a house, trips to casinos in Las Vegas and Atlantic City, and other personal expenses.
The guilty plea was announced by U.S. Attorney Ronald C. Machen Jr., Cathy L. Lanier, Chief of the Metropolitan Police Department (MPD), and Kathy A. Michalko, Special Agent in Charge, Washington Field Office, U.S. Secret Service.
Person pled guilty in the U.S. District Court for the District of Columbia to Interstate Transportation of Money Taken by Fraud. The Honorable Reggie B. Walton scheduled sentencing for August 8, 2014. Under federal sentencing guidelines, Person faces a likely range of 46 to 57 months in prison. As part of his plea, person must pay $3.2 million in restitution.
According to the government’s factual proffer, Person was hired to be the Finance Director of a small business in the District of Columbia. As the Finance Director, Person managed and maintained all of the financial accounts and records for the company. He was responsible for and oversaw the company’s payroll, accounts receivable, accounts payable, invoices, bank accounts, loans, and expense payments. From March 2008 to September 2011, Person diverted money from the company to another account which he exclusively controlled in order to embezzle money from the company. He accomplished the theft by opening a bank account in the name of the company but with himself as the sole person with authority to conduct financial transactions on the account. The owner of the company was not aware of this account and did not authorize Person to maintain a company account solely in his exclusive control.
Person then obtained payment checks which had been mailed or delivered from the company’s clients for payment of work performed; instead of depositing the checks into the authorized company bank account, Person caused them to be deposited into the secret account over which he had exclusive control. Person arranged for clients to make electronic payments to the secret account instead of the authorized account for work performed by the company.
Person also arranged for a finance company to send money to the secret account through its system of financing Accounts Receivable for expected payments for work performed by the company, without the knowledge and permission of the owner.
Through this method of depositing checks, diverting client payments, and financing loans, Person obtained in the secret account approximately $6,545,000, which was due and owing the company.
In order to conceal the theft, Person transferred approximately $3,336,000 from the secret account to the company-authorized account and at times paid legitimate company expenses. He also used fake invoices substantially underreporting the amounts of money due and owing to the company. In this way, Person was able to trick the owner into believing that the amounts of deposits into the authorized account matched the incoming money as reflected on the fake invoices.
Person also obtained debit cards on the secret account enabling him to charge goods and services to be paid by the money in the secret account which was funded by money he stole from the company. Person spent the $3,209,000 in stolen money for his own personal business and enjoyment, including: purchasing his home in the District of Columbia, in an amount in excess of $340,000; paying for trips to Las Vegas, Atlantic City, Miami, the Dominican Republic, and Hawaii; transferring money into his personal bank account and into his side-line business account; funding parties and shows; and causing withdrawals of over $55,000 in cash from ATMs and over $35,000 in debit card purchases at casinos in Las Vegas and Atlantic City.
In announcing the plea, U.S. Attorney Machen, Chief Lanier, and Special Agent in Charge Michalko expressed appreciation for the work performed by MPD detectives from the Financial Crimes and Fraud Unit as well as by the Special Agents and financial analysts from the U.S. Secret Service. They also acknowledged the efforts of those who are working on the case from the U.S. Attorney’s Office, including Criminal Investigator Juan Juarez, Paralegal Specialists Donna Galindo and Corinne Kleinman, Assistant U.S. Attorneys Christopher Kavanaugh and Anthony Saler, former Assistant U.S. Attorney Mary Chris Dobbie, and Assistant U.S. Attorneys Virginia Cheatham and Bryan Seeley, who are prosecuting the case.
14-116David Wayne Grigsby Sentenced for Making False Declarations Before A Federal Grand JuryRead the Press Release
GREENEVILLE, Tenn. – David Wayne Grigsby, 48, of Wise, Va., was sentenced on May 12, 2014, by the Honorable J. Ronnie Greer, U. S. District Judge, after being convicted by a jury for three counts of making false declarations before a federal grand jury. Grigsby was sentenced to serve 12 months and one day in federal prison, to be followed by three years of supervised release under the supervision of a federal probation officer. A fine of $4,000 was also imposed. There is no parole in the federal system.
Evidence presented during the jury trial demonstrated that Grigsby falsely testified before a federal grand jury that he had no knowledge of a fraud scheme involving Eastman Chemical Company and denied any involvement in the collection of false samples of coal that were submitted to an independent testing service to defraud Eastman Chemical Company. However, audio recordings played during the jury trial demonstrated that Grigsby had in fact been directly involved in the fraud scheme by directing employees of the independent testing service to submit false samples of coal for testing. Employees of the testing service also testified that Grigsby had directed the collection of false samples of coal for testing for the purpose of defrauding Eastman Chemical Company.
This investigation was conducted by the FBI. Assistant U. S. Attorneys Neil Smith and Suzanne Kerney-Quillen represented the United States.
Credit Suisse Pleads Guilty to Conspiracy to Aid and Assist U.S. Taxpayers in Filing False ReturnsRead the Press Release
Credit Suisse AG pleaded guilty today to conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS). The guilty plea by the Swiss corporation is the result of a years-long investigation by U.S. law enforcement authorities that has also produced indictments of eight Credit Suisse executives since 2011; two of those individuals have pleaded guilty so far.
The plea agreement, along with agreements made with state and federal partners, provides that Credit Suisse will pay a total of $2.6 billion - $1.8 billion to the Department of Justice for the U.S. Treasury, $100 million to the Federal Reserve, and $715 million to the New York State Department of Financial Services. The plea agreement was filed in the Eastern District of Virginia today. Earlier this year, Credit Suisse paid approximately $196 million in disgorgement, interest and penalties to the Securities and Exchange Commission (SEC) for violating the federal securities laws by providing cross-border brokerage and investment advisory services to U.S. clients without first registering with the SEC. That settlement with the SEC is also reflected in today’s plea agreement. Together, these actions by U.S. law enforcement and state and federal partners appropriately punish Credit Suisse for its past behavior in these matters.
The announcement was made by Attorney General Eric H. Holder, Deputy Attorney General James M. Cole, Assistant Attorney General Kathryn Keneally for the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia, and Commissioner John Koskinen of the IRS.
“This case shows that no financial institution, no matter its size or global reach, is above the law,” said Attorney General Holder. “Credit Suisse conspired to help U.S. citizens hide assets in offshore accounts in order to evade paying taxes. When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here.”
As part of the plea agreement, Credit Suisse acknowledged that, for decades prior to and through 2009, it operated an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and maintaining undeclared accounts and concealing their offshore assets and income from the IRS.
“Credit Suisse’s guilty plea is just the latest effort by the department to slam the door shut on undeclared bank accounts, phony trusts and other foreign schemes used by U.S. taxpayers to evade taxes,” said Deputy Attorney General Cole. “We will continue to hold to account the bankers, the brokers and other professionals in Switzerland and around the world as well as the institutions that trained and directed them to use bank secrecy laws to protect U.S. tax cheats.”
According to the statement of facts filed with the plea agreement, Credit Suisse employed a variety of means to assist U.S. clients in concealing their undeclared accounts, including by:
• assisting clients in using sham entities to hide undeclared accounts;
• soliciting IRS forms that falsely stated, under penalties of perjury, that the sham entities were the beneficial owners of the assets in the accounts;
• failing to maintain in the United States records related to the accounts;
• destroying account records sent to the United States for client review;
• using Credit Suisse managers and employees as unregistered investment advisors on undeclared accounts;
• facilitating withdrawals of funds from the undeclared accounts by either providing hand-delivered cash in the United States or using Credit Suisse’s correspondent bank accounts in the United States;
• structuring transfers of funds to evade currency transaction reporting requirements; and
• providing offshore credit and debit cards to repatriate funds in the undeclared accounts.
As part of the plea agreement, Credit Suisse further agreed to make a complete disclosure of its cross-border activities, cooperate in treaty requests for account information, provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed, and to close accounts of account holders who fail to come into compliance with U.S. reporting obligations. Credit Suisse has also agreed to implement programs to ensure its compliance with U.S. laws, including its reporting obligations under the Foreign Account Tax Compliance Act and relevant tax treaties, in all its current and future dealings with U.S. customers.
“Today’s plea by Credit Suisse is a significant step in our global enforcement against those who would avoid their tax obligations by hiding their assets in foreign bank accounts, and those financial institutions, bankers, and other professionals who facilitate this conduct,” said Assistant Attorney General Keneally for the Tax Division. “Credit Suisse has also changed its business operations to ensure that U.S. taxpayers will no longer be able to hide their assets at Credit Suisse, and provided the government with valuable information that will further our investigations.”
“This prosecution and plea should serve notice that secret accounts and assisting the evasion of income taxes has a high cost,” said U.S. Attorney Boente. “Concealing financial accounts from the U.S. government is not a legitimate part of wealth management or private banking services.”
“Pursuing international tax evasion is a priority area for IRS Criminal Investigation, and we will continue to follow the money here in the United States and around the world” said IRS Commissioner Koskinen. “I want to commend the special agents in IRS-Criminal Investigation for all of their hard work in this area and the close cooperation with the Department of Justice. Today's guilty plea is another important milestone in ongoing law enforcement efforts to investigate the use of offshore accounts to evade taxes. People should no longer feel comfortable hiding their assets and income from the IRS.”
The Board of Governors of the Federal Reserve System is also announcing today that it has reached a resolution with Credit Suisse, by which Credit Suisse has agreed to a cease and desist order, certain remedial steps to ensure its compliance with U.S. law in its ongoing operations, and a civil monetary penalty of $100 million. Additionally, the New York State Department of Financial Services is announcing a similar resolution by which Credit Suisse has agreed to a cease and desist order and a monetary penalty of $715 million.
On Feb. 23, 2011, a grand jury in the Eastern District of Virginia returned an indictment charging four Credit Suisse employees - Marco Parenti Adami, a former Credit Suisse manager; Emanuel Agustino, a former Credit Suisse banker; Michele Bergantino. a former Credit Suisse banker; and Roger Schaerer, Credit Suisse’s former Representative Officer in its Representative Office in New York - with conspiring with other Swiss bankers and U.S. taxpayers to defraud the United States. On July 21, 2011, the grand jury returned a superseding indictment adding four additional defendants charged with the conspiracy to defraud the United States. The four new defendants were: Markus Walder, the former head of North America Offshore Banking at Credit Suisse; Süsanne D. Rüegg Meier, a former Credit Suisse manager; Andreas Bachmann, a former banker at Credit Suisse Fides, a subsidiary of Credit Suisse; and Josef Dörig, a former Credit Suisse Fides employee and owner/operator of a trust company. On March 12, 2014, Bachmann pleaded guilty to the superseding indictment in connection with his work as a banker at Credit Suisse Fides. On April 30, 2014, Dörig pleaded guilty to conspiring to defraud the IRS in connection with his role managing offshore entities used by U.S. taxpayers to conceal their accounts at Credit Suisse. Those pleas were accepted by U.S. District Judge Gerald Bruce Lee. Bachmann and Dörig each face maximum penalties of five years in prison when they are sentenced on Aug. 8, 2014.
This case was prosecuted by Assistant U.S. Attorney Mark D. Lytle and Trial Attorneys Mark F. Daly and Nanette L. Davis of the Tax Division. The case was investigated by IRS-Criminal Investigation.
The Department of Justice expressed gratitude to the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, the U.S. Securities and Exchange Commission, and the New York State Department of Financial Services for their significant and valuable assistance.
Related Materials:
Plea Agreement
Statement of Facts
Waiver of Indictment
Criminal InformationCredit Suisse Pleads Guilty to Conspiracy to Aid and Assist U.S. Taxpayers in Filing False ReturnsRead the Press Release
Bank Admits to Helping U.S. Taxpayers Hide Offshore Accounts from IRS; Agrees to Pay $2.6 Billion, Highest Ever Payment in a Criminal Tax Case
Investigation Has Also Led To Indictment of Eight Credit Suisse Employees Since 2011WASHINGTON – Credit Suisse AG pleaded guilty today to conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS). The guilty plea by the Swiss corporation is the result of a years-long investigation by U.S. law enforcement authorities that has also produced indictments of eight Credit Suisse executives since 2011; two of those individuals have pleaded guilty so far.
The plea agreement, along with agreements made with state and federal partners, provides that Credit Suisse will pay a total of $2.6 billion - $1.8 billion to the Department of Justice for the U.S. Treasury, $100 million to the Federal Reserve, and $715 million to the New York State Department of Financial Services. The plea agreement was filed in the Eastern District of Virginia today. Earlier this year, Credit Suisse paid approximately $196 million in disgorgement, interest and penalties to the Securities and Exchange Commission (SEC) for violating the federal securities laws by providing cross-border brokerage and investment advisory services to U.S. clients without first registering with the SEC. That settlement with the SEC is also reflected in today’s plea agreement. Together, these actions by U.S. law enforcement and state and federal partners appropriately punish Credit Suisse for its past behavior in these matters.
The announcement was made by Attorney General Eric H. Holder, Deputy Attorney General James M. Cole, Assistant Attorney General Kathryn Keneally for the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia, and Commissioner John Koskinen of the IRS.
“This case shows that no financial institution, no matter its size or global reach, is above the law,” said Attorney General Holder. “Credit Suisse conspired to help U.S. citizens hide assets in offshore accounts in order to evade paying taxes. When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here.”
As part of the plea agreement, Credit Suisse acknowledged that, for decades prior to and through 2009, it operated an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and maintaining undeclared accounts and concealing their offshore assets and income from the IRS.
“Credit Suisse’s guilty plea is just the latest effort by the department to slam the door shut on undeclared bank accounts, phony trusts and other foreign schemes used by U.S. taxpayers to evade taxes,” said Deputy Attorney General Cole. “We will continue to hold to account the bankers, the brokers and other professionals in Switzerland and around the world as well as the institutions that trained and directed them to use bank secrecy laws to protect U.S. tax cheats.”
According to the statement of facts filed with the plea agreement, Credit Suisse employed a variety of means to assist U.S. clients in concealing their undeclared accounts, including by:
- assisting clients in using sham entities to hide undeclared accounts;
- soliciting IRS forms that falsely stated, under penalties of perjury, that the sham entities were the beneficial owners of the assets in the accounts;
- failing to maintain in the United States records related to the accounts;
- destroying account records sent to the United States for client review;
- using Credit Suisse managers and employees as unregistered investment advisors on undeclared accounts;
- facilitating withdrawals of funds from the undeclared accounts by either providing hand-delivered cash in the United States or using Credit Suisse’s correspondent bank accounts in the United States;
- structuring transfers of funds to evade currency transaction reporting requirements; and
- providing offshore credit and debit cards to repatriate funds in the undeclared accounts.
As part of the plea agreement, Credit Suisse further agreed to make a complete disclosure of its cross-border activities, cooperate in treaty requests for account information, provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed, and to close accounts of account holders who fail to come into compliance with U.S. reporting obligations. Credit Suisse has also agreed to implement programs to ensure its compliance with U.S. laws, including its reporting obligations under the Foreign Account Tax Compliance Act and relevant tax treaties, in all its current and future dealings with U.S. customers.
“Today’s plea by Credit Suisse is a significant step in our global enforcement against those who would avoid their tax obligations by hiding their assets in foreign bank accounts, and those financial institutions, bankers, and other professionals who facilitate this conduct,” said Assistant Attorney General Keneally for the Tax Division. “Credit Suisse has also changed its business operations to ensure that U.S. taxpayers will no longer be able to hide their assets at Credit Suisse, and provided the government with valuable information that will further our investigations.”
“This prosecution and plea should serve notice that secret accounts and assisting the evasion of income taxes has a high cost,” said U.S. Attorney Boente. “Concealing financial accounts from the U.S. government is not a legitimate part of wealth management or private banking services.”
“Pursuing international tax evasion is a priority area for IRS Criminal Investigation, and we will continue to follow the money here in the United States and around the world” said IRS Commissioner Koskinen. “I want to commend the special agents in IRS-Criminal Investigation for all of their hard work in this area and the close cooperation with the Department of Justice. Today's guilty plea is another important milestone in ongoing law enforcement efforts to investigate the use of offshore accounts to evade taxes. People should no longer feel comfortable hiding their assets and income from the IRS.”
The Board of Governors of the Federal Reserve System is also announcing today that it has reached a resolution with Credit Suisse, by which Credit Suisse has agreed to a cease and desist order, certain remedial steps to ensure its compliance with U.S. law in its ongoing operations, and a civil monetary penalty of $100 million. Additionally, the New York State Department of Financial Services is announcing a similar resolution by which Credit Suisse has agreed to a cease and desist order and a monetary penalty of $715 million.
On Feb. 23, 2011, a grand jury in the Eastern District of Virginia returned an indictment charging four Credit Suisse employees - Marco Parenti Adami, a former Credit Suisse manager; Emanuel Agustino, a former Credit Suisse banker; Michele Bergantino. a former Credit Suisse banker; and Roger Schaerer, Credit Suisse’s former Representative Officer in its Representative Office in New York - with conspiring with other Swiss bankers and U.S. taxpayers to defraud the United States. On July 21, 2011, the grand jury returned a superseding indictment adding four additional defendants charged with the conspiracy to defraud the United States. The four new defendants were: Markus Walder, the former head of North America Offshore Banking at Credit Suisse; Süsanne D. Rüegg Meier, a former Credit Suisse manager; Andreas Bachmann, a former banker at Credit Suisse Fides, a subsidiary of Credit Suisse; and Josef Dörig, a former Credit Suisse Fides employee and owner/operator of a trust company. On March 12, 2014, Bachmann pleaded guilty to the superseding indictment in connection with his work as a banker at Credit Suisse Fides. On April 30, 2014, Dörig pleaded guilty to conspiring to defraud the IRS in connection with his role managing offshore entities used by U.S. taxpayers to conceal their accounts at Credit Suisse. Those pleas were accepted by U.S. District Judge Gerald Bruce Lee. Bachmann and Dörig each face maximum penalties of five years in prison when they are sentenced on Aug. 8, 2014.
This case was prosecuted by Assistant U.S. Attorney Mark D. Lytle and Trial Attorneys Mark F. Daly and Nanette L. Davis of the Tax Division. The case was investigated by IRS-Criminal Investigation.
The Department of Justice expressed gratitude to the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, the U.S. Securities and Exchange Commission, and the New York State Department of Financial Services for their significant and valuable assistance.Council Man Pleads Guilty to Violating Sex Offender Registration and Notification ActRead the Press Release
BOISE - Larry Grant Dana, 41, of Council, Idaho, pleaded guilty today to violating the Sex Offender Registration and Notification Act, U.S. Attorney Wendy J. Olson announced. Dana was indicted by a federal grand Jury in Boise on March 11, 2014.
According to the plea agreement, Dana was convicted in Canyon County in 1996 of Battery with Intent to Commit Rape, which requires him to register as a sex offender. He had registered off and on since May 2001, most recently on October 5, 2013, when he reported that he was residing in Council, Idaho. According to his Idaho State parole officer, Dana absconded from supervision in November 2013. Dana was apprehended in Albuquerque, New Mexico on February 16, 2014. The investigation showed Dana had been in Wyoming, Colorado, Texas, Louisiana, Florida and Oklahoma prior to his arrest. He failed to register as a sex offender in any of those states, and did not notify the Idaho Sex Offender Registry that he had changed his address or left the state, as required by state and federal law.
The charge of failure to register as a sex offender is a violation of the Sex Offender Registration and Notification Act and is punishable by up to ten years in prison, a maximum fine of $250,000.00, and five years up to lifetime supervised release.
Sentencing is set for July 28, 2014, before U.S. District Judge Edward J. Lodge at the federal courthouse in Boise.
The case was investigated by U.S. Marshals Service (USMS), a member of the Idaho Internet Crimes Against Children (ICAC) Task Force, a statewide coalition of local, state and federal law enforcement and prosecution agencies, focused on apprehending and prosecuting individuals who use the Internet to criminally exploit children. For more information about the Idaho ICAC Task Force and a list of all the participating agencies, visit www.icacidaho.org.
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.”
Correction: Charges Against Indian Citizen Were Dismissed Prior to Unsealing of Federal Indictment Charging Export License ViolationRead the Press Release
The United States Attorney’s Office for Middle District of Pennsylvania announced a correction today in a press release issued on April 23, 2014 concerning an indictment presented by the grand jury in December 2012.
The indictment was sealed until the filing of a criminal information on April 23, 2014 against Hetran Inc., an engineering and manufacturing plant in Orwigsburg, Pennsylvania and its Chief Executive, Helmut Oertmann, relating to the same charges.
When the indictment was unsealed the press release incorrectly stated that Suniel Malhotra, an Indian citizen, was one of the defendants. In fact, the charges against Mr. Malhorta were dismissed in 2013 at the request of the government.
Three Iranian citizens and two Iranian firms are defendant in the indictment. The charges involve the shipment of industrial equipment to Iran in 2012 in violation of U.S. export license requirements.
Blackshades Case Related Charging DocumentsRead the Press Release
U.S. v. Alex Yucel Indictment S1 13 Cr 834
U.S. v. Michael Hogue Information 13 Cr. 12
U.S. v. Kyle Fedorek Complaint 14 Mag. 1064
U.S. v. Marlen Rappa Complaint 14 Mag. 1065
U.S. v. Brendan Johnston Complaint 14 Mag 1086Bismarck Man Sentenced for Child Pornography ChargeRead the Press Release
BISMARCK – U.S. Attorney Timothy Q. Purdon announced that onMay 19, 2014, Preston Bushard, 33, Bismarck, N.D., was sentenced by U.S. District Judge Daniel L. Hovland on a charge of receipt of materials involving the sexual exploitation of minors. Bushard pleaded guilty to the charge on Feb. 3, 2014.
Judge Hovland sentenced Bushard to serve 15 years in federal prison, to be followed by 10 years of supervised release. Bushard was ordered to pay a $100 special assessment to the Crime Victim’s Fund.
In August 2012 law enforcement officials found Bushard to be in possession of child pornography, which he had downloaded from the Internet onto his computer from January 2012 until August 2012. Bushard has a previous conviction for possession of materials involving the sexual exploitation of minors.
The case was investigated by Homeland Security Investigations, North Dakota Bureau of Criminal Investigation, and U.S Probation & Pretrial Services.
This case was brought as a 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.
Assistant U.S. Attorney Gary Delorme prosecuted the case.
Big Timber Woman Sentenced in Bakken Drug Trafficking CaseRead the Press Release
The United States Attorney's Office announced that KERA EVANS, 30, of Big Timber, was sentenced to a term of 96 months imprisonment, five years supervised release, and a special assessment of $100 during a federal court hearing in Billings, Montana, on May 14, 2014, before U.S. District Judge Susan Watters.
EVANS was sentenced in connection with her November 22, 2013, guilty plea to the crime of possession with intent to distribute methamphetamine. The prosecution was part of "Project Safe Bakken," an effort by led by the United States Attorneys for Montana and North Dakota, the Attorneys General for Montana and North Dakota, and a host of federal, state, local, and tribal law enforcement agencies to provide a systematic response to serious crime, including drug trafficking, in the Bakken Region. In EVANS' case the investigation was led by the Montana Division of Criminal Investigations (MDCI), the United States Drug Enforcement Administration (DEA), the Sidney Police Department, and the Sweet Grass County Sheriff's Department as part of a long term investigation.
In an offer of proof, Assistant U.S. Attorney Joseph Thaggard stated the government would have proved that EVANS was a significant player in a methamphetamine distribution ring that transported large amounts of almost completely pure methamphetamine from the State of Washington to Montana. Thaggard further stated that much of the methamphetamine was then primarily distributed in the Bakken Region of Northeastern Montana and Western North Dakota, including Sidney and Fairview.
The District Court sentenced Evans to 96 months of imprisonment, with five years of supervised release to follow. Because there is no parole in the federal system, the truth in sentencing guidelines mandate that EVANS will likely serve all of the time imposed by the court. In the federal system, EVANS does have the opportunity to shorten the term of custody by earning credit for good behavior. However, this reduction will not exceed 15% of the overall sentence.
U.S. Attorney Mike Cotter said the sentence reflects the seriousness of the crime and underscores the need to protect Montanans from methamphetamine trafficking and organized crime. "Methamphetamine trafficking presents a serious threat to the health and safety of our community, particularly the Bakken Region. The investigation and prosecution in this case demonstrate that all levels of law enforcement in Montana and North Dakota take that threat seriously and will seek to ensure those who engage in drug trafficking are held accountable for their crimes."
Attorney General Holder, Deputy Attorney General Cole and IRS Officials to Hold Press Conference Announcing Major Law Enforcement ActionRead the Press Release
Attorney General Eric Holder, Deputy Attorney General James Cole, Assistant Attorney General for the Tax Division Kathryn Keneally and IRS Commissioner John Koskinen will hold a press conference TODAY, MONDAY, MAY 19, 2014 at 6:00 p.m. to announce a major law enforcement action.
WHO: Attorney General Eric Holder
Deputy Attorney General James Cole
Assistant Attorney General for the Tax Division Kathryn Keneally
IRS Commissioner John Koskinen
U.S. Attorney for the Eastern District of Virginia Dana Boente
IRS Criminal Investigation Chief Richard Weber
WHAT: Press conference to announce law enforcement action
WHEN: TODAY, 6:00 p.m. EDT, MAY 19, 2014
WHERE: Department of Justice
7th Floor Conference Room
950 Pennsylvania Ave., N.W.
Washington, D.C.
OPEN PRESS
NOTE: All media must present government-issued photo I.D. (such as driver’s license) as well as valid media credentials. Media must enter the department at the visitor’s entrance on Constitution Avenue between 9th and 10th Streets. Media may begin arriving at 5:00 p.m. EDT and cameras must be pre-set by 5:45 p.m. EDT. Press inquiries regarding logistics should be directed to the Office of Public Affairs at 202-514-2007.
Assistant Attorney General for National Security John Carlin Speaks at the Press Conference Announcing U.S. Charges Against Five Chinese Military Hackers for Cyber EspionageRead the Press Release
WASHINGTON - The National Security Division’s mission is to protect our nation’s security by using every legal tool available to confront and defeat threats to our country.Today, that tool is an indictment backed by the independence and credibility of our criminal justice system.
The threat is from members of unit 61398 of the Chinese military, who have targeted the U.S. private sector for commercial advantage.
We allege that members of unit 61398 conspired to hack into computers of six U.S. victims to steal information that would provide an economic advantage to the victims’ competitors, including Chinese state-owned enterprises.
In the past, when we brought concerns such as these to Chinese government officials, they responded by publicly challenging us to provide hard evidence of their hacking that could stand up in court.
Well today, we are.
For the first time, we are exposing the faces and names behind the keyboards in Shanghai used to steal from American businesses.
This indictment describes, with particularity, specific actions on specific days by specific actors to use their computers to steal information from across our economy.
It describes how they targeted information in industries ranging from nuclear, to steel, to renewable energy.
It shows 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 our labor.
And it shows that the business information these individuals stole, including trade secrets, would have been particularly beneficial to Chinese companies.
Let me give you some examples of allegations from the indictment:
Right about the time SolarWorld was rapidly losing its market share to Chinese competitors that were pricing exports well below costs, these hackers were stealing cost, pricing, and strategy information from SolarWorld’s computers.
And while Westinghouse was negotiating with a Chinese state-owned enterprise over the construction of nuclear power plants, the hackers stole trade secret designs for components of those plants.
To be clear, this conduct is criminal.
And it is not conduct that most responsible nations within the global economic community would tolerate.
At the Department of Justice, we have repeatedly pledged that we would do more to hold accountable those that engage in these actions.
Today, we begin to fulfill that pledge.
And we will continue using all of the tools at our disposal to pursue those who steal our intellectual property, no matter who they are or where they reside.
Now I’d like to turn it over to David Hickton, the U.S. Attorney for the Western District of Pennsylvania, whose office has been a crucial partner in this investigation. David?
Anchorage Woman Arraigned on Identity Theft, Passport, PFD and Benefits FraudRead the Press Release
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that Maualuga Leaana, 43, of Anchorage was arraigned on federal charges that she committed identity theft and falsely claimed U.S. citizenship to obtain various federal and state benefits. The Indictment, which was returned by the federal grand jury in April, charges Leaana with one count of passport fraud, nine counts of making false claims of U.S. citizenship, and one count of aggravated identity theft. The Indictment alleges that Leaana is a citizen of Samoa, formerly known as Western Samoa. Citizens of Samoa are not U.S. citizens, in comparison to those born in American Samoa, who do hold U.S. nationality by birth.
Leaana is charged with applying for and obtaining a U.S. passport in the name of her sister. She is also charged with falsely claiming U.S. citizenship on various applications for benefits, including Alaska Permanent Fund Dividends, unemployment compensation, and subsidized housing, as well as obtaining identification from the Alaska Division of Motor Vehicles. The Indictment alleges that she obtained over $14,000 in PFDs between 2003 and 2013, and that she also unlawfully obtained over $17,000 in unemployment benefits. The defendant faces a maximum prison term of ten years for passport fraud, with an additional two years consecutive for identity theft. Each of the false claims of citizenship charges carries a maximum term of five years of imprisonment. Each of the 12 counts carries a maximum fine of $250,000. Restitution to the State of Alaska can be ordered by the court in addition to any fines or other penalties.
The case was investigated by the U.S. Department of State, Diplomatic Security Service; the Social Security Administration, Office of the Inspector General, Office of Investigations; the Department of Homeland Security, Homeland Security Investigations, Immigration and Customs Enforcement; the Alaska Department of Revenue, Criminal Investigations Unit, and the Alaska Department of Labor and Workforce Development.
*******MEDIA ADVISORY******* Pills to Needles -- The Pathway to Rising Heroin DeathsRead the Press Release
The U.S. Attorney's Office for the Northern District of Alabama, the University of Alabama at Birmingham School of Public Health, and the Jefferson County Department of Public Health will present a community awareness summit on the rising abuse of prescription opiates and heroin, and the epidemic of heroin deaths in our community on Tuesday, June 10, from 8:30 a.m. to 4:30 p.m., at the UAB National Alumni Society House, 1301 1st Ave. South, Birmingham. U.S. Deputy Attorney General James M. Cole will deliver the day's keynote address. Speakers and panel discussions will address topics including the link between a growing dependency on prescription painkillers and heroin addiction and overdose deaths; law enforcement efforts to combat the problem; challenges and availability of prevention and treatment resources; and school intervention and education efforts to combat use and addiction. The summit will conclude with a discussion and audience input on developing and implementing a community action plan to address the dangerous and deadly epidemic.
Attached is an information sheet on the summit, which includes the registration form and a draft agenda. A few spots on the agenda remained to be confirmed, but it reflects the day's solid lineup of officials and experts from the fields of public health, education, law enforcement and addiction who are participating, as well as family members willing to speak out about their loss and their desire to help other families avoid that tragedy and heartbreak.
Help from the media in advancing news of this summit to encourage attendance by parents, teachers, faith and other community leaders would be extremely valuable. Attendance is free, but seating is limited, so advance registration is required. Again, the registration form is included in the attached document.
Click HERE for Information Sheet
Click HERE for the Registration Form
Click HERE for the Agenda
For more information contact:
Peggy Sanford
Public Information Officer
United States Attorney's Office
Northern District of Alabama
Office: 205-244-2020
Cell: 205-903-1697
[email protected]
OrLyndon J. Laster
Law Enforcement Coordination Manager
United States Attorney's Office
Northern District of Alabama
Office: (205) 244-2092
Cell: (205) 527-1645
Fax: (205) 244-2180
[email protected]
16 May 2014
“Ten-Percenter” Sentenced to One Year and One Day in Federal Prison on Tax and Tax Fraud Convictions Involving Winnings at Lone Star Park Horse-Racing TrackRead the Press Release
DALLAS — Willie L. Loveless was sentenced today by U.S. District Judge Barbara M. G. Lynn to one year and one day in federal prison and ordered to pay $25,826 in restitution, following his guilty plea last year to felony offenses stemming from his operation as a “ten-percenter” at the Lone Star Park horseracing track in Grand Prairie, Texas. Judge Lynn ordered Loveless to surrender to the Bureau of Prisons on July 1, 2014. The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Loveless pleaded guilty in May 2013 to 20 of the 21 counts of the indictment — one count of corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws and 19 counts of fraud and false statements on Forms W-2G.
According to the Internal Revenue Code, gambling winnings, including those from horseracing bets, are taxable and must be reported on a gambler’s income tax return. A payer, such as Lone Star Park, is required to issue a Form W-2G, “Certain Gambling Winnings,” to a gambler if the gambler receives, among other types of winnings, $600 or more in gambling winnings, provided the payout is at least 300 times the amount of the wager. A winning ticket that would trigger the issuance of a Form W-2G is informally referred to by gamblers as an “IRS ticket.” The indictment also states that if an IRS ticket is for winnings greater than $5,000, a payer, such as Lone Star Park, is required to withhold and pay over to the IRS taxes in the amount of 25% of the winning ticket value. At Lone Star Park, there are special windows, known as “IRS Windows,” where an individual must cash an IRS ticket and complete and sign a Form W-2G.
“Ten-percenting,” according to the indictment filed in the case, is a practice that occurs at some gambling establishments in which a gambler arranges for another individual to cash the gambler’s IRS ticket, so that the gambler can avoid paying taxes on the winnings. The person cashing the ticket, often called a “ten-percenter,” completes the Form W2-G, falsely representing that he/she is the owner of the IRS ticket and the proper recipient of the winnings. Usually, according to the indictment, the person who cashes the ticket charges approximately ten percent of the winnings for the service.
Loveless admitted, according to the factual resume filed in the case, that in calendar years 2008, 2009 and 2010, he signed approximately 1445 Forms W2-G at Lone Star Park representing more than $1.76 million in winnings. On those forms, Loveless falsely attested that he was the only person entitled to any part of the winnings and each form signed by Loveless reflected his correct name, address and social security number.
The case was investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney J. Nicholas Bunch.
Week in Review – South BendRead the Press Release
South Bend, Indiana — The United States Attorney’s Office announced the following activity in Federal Court:
DISPOSITION (before District Judge Jon E. DeGuilio)
Larry Jones, 54, of South Bend, Indiana was sentenced to 151 months imprisonment with 4 years of supervised release after pleading guilty to the felony offense of possession of a stolen firearm.According to documents filed in this case, on June 21, 2013, Jones possessed a stolen Taurus handgun. This case was the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives.This case was prosecuted by Assistant United States Attorney Frank Schaffer.
Week in Review – Fort WayneRead the Press Release
Fort Wayne, Indiana —The United States Attorney’s Office announced the following activity in Federal Court:
PLEAS (before Magistrate Judge Roger B. Cosbey:)
Brandon Sizemore, 23, of Indianapolis, Indiana pled guilty to the felony offense of armed bank robbery. The magistrate is recommending that the district court accept the tendered guilty plea.Parties have 14 days in which to object to the magistrate judge’s recommendation. This charge was filed as a result of an investigation by the Federal Bureau of Investigation Bank Robbery Task Force.Sentencing has not been set. This case is being prosecuted by Assistant United States Attorney Anthony Geller.
Phillip Biddle, 36, of Kendallville, Indiana pled guilty to the felony offense of possession of materials depicting minor engaging in sexually explicit conduct. The magistrate is recommending that the district court accept the tendered guilty plea.Parties have 14 days in which to object to the magistrate judge’s recommendation. This charge was filed as a result of an investigation by Internet Crimes against Children Task Force.Sentencing has not been set. This case is being prosecuted by Assistant United States Attorney Lesley Miller-Lowery.
Billy Gonzalez, 26, of Fort Wayne, Indiana pled guilty to the felony offense of knowingly conspiring to distribute and possess with the intent to distribute 5 kilograms or more of cocaine. The magistrate is recommending that the district court accept the tendered guilty plea.Parties have 14 days in which to object to the magistrate judge’s recommendation. This charge was filed as a result of an investigation by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, Fort Wayne Safe Streets Task Force, Indiana State Police, Fort Wayne Police Department, Allen County Police Department, Allen County Drug Task Force and the New Haven Police Department.Sentencing has not been set.This case is being prosecuted by Assistant United States Attorney Anthony Geller.
Alejandro Luna, 26, of Fort Wayne, Indiana pled guilty to the felony offense of knowingly conspiring to distribute and possess with the intent to distribute 5 kilograms or more of cocaine. The magistrate is recommending that the district court accept the tendered guilty plea.Parties have 14 days in which to object to the magistrate judge’s recommendation. This charge was filed as a result of an investigation by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, Fort Wayne Safe Streets Task Force, Indiana State Police, Fort Wayne Police Department, Allen County Police Department, Allen County Drug Task Force and the New Haven Police Department.Sentencing has not been set.This case is being prosecuted by Assistant United States Attorney Anthony Geller.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
DISPOSITION (before District Judge Theresa L. Springmann:)
Luis Tapia, 52, of Fort Wayne, Indiana was sentenced to 27 months imprisonment after pleading guilty to the felony offense of conspiracy to distribute and possess with intent to distribute cocaine.According to documents filed in this case, Tapia, did knowingly open, lease, rent, use, and maintain a place in Fort Wayne for the purpose of distributing cocaine. This case was the result of an investigation by the Federal Bureau of Investigation and the Fort Wayne Police Department.This case was prosecuted by Assistant United States Attorney Lesley Miller-Lowery.
Baldemar Robles, 43, of Phoenix, Arizona was sentenced to 240 months, 2 years supervised release and to pay $18,240 in restitution after pleading guilty to the felony offense of knowingly maintaining drug-involved premises and with being a felon in possession of a firearm.According to documents filed in this case, from August 2011 to September 2011, Robles did knowingly open, lease, rent, use, and maintain a place in Warsaw, Indiana for the purpose of distributing cocaine and marijuana. This case was the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives, Kosciusko County Drug Task Force, Kosciusko County Prosecuting Attorney’s Office.This case was prosecuted by Assistant United States Attorney Anthony Geller.
Week in Review - HammondRead the Press Release
Hammond, Indiana - The United States Attorney’s Office announced the following activity in Federal Court:
PLEAS:
Keith Cloudy, 37, of Gary, Indiana, pled guilty before Senior District Judge James Moody to the felony offense of possession with the intent to distribute crack cocaine.This charge was filed as a result of an investigation by the Federal Bureau of Investigation GRIT Task Force.This case is being prosecuted by Assistant United States Attorney Jennifer Chang-Adiga.
Richard Dickus, 71, of Hebron, Indiana, pled guilty before Chief Judge Philip Simon to the felony offense of theft of government property.This charge was filed as a result of an investigation by the Social Security Administration.This case is being prosecuted by Assistant United States Attorney Dean Lanter.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
DISPOSITIONS:
Karen Stone, 57, of Hammond, Indiana, was sentenced by District Judge Joseph Van Bokkelen to 12 months of probation and restitution of $9,169.59 after pleading guilty to the felony offense of embezzlement from the International Brotherhood of Boilermakers, a labor organization.This case was a result of an investigation by the U.S. Department of Labor – Office of the Inspector General and the U.S. Department of Labor – Office of Labor Management Standards.This case was prosecuted by Assistant United States Attorney Toi Houston.
Christopher Bour, 40, of Gary, Indiana, was sentenced by Senior District Judge Rudy Lozano to life plus 85 years imprisonment and lifetime supervised release after pleading guilty to the felony offenses of the purchase of a child for production of child pornography, production of child pornography and possession of child pornography featuring a minor under the age of 12.According to documents filed in this case, Bour admitted that, for a period of over a year, he repeatedly purchased and obtained custody and control of a female child aged four to eighteen months with knowledge that she would be videotaped engaging in sexually explicit conduct.Bour also admitted to producing child pornography featuring a six to nine-month-old victim on at least two occasions, producing child pornography of another child aged three to five, and possessing pornography featuring these and many other prepubescent minor children being caused to engage in sexually explicit conduct. This case resulted from an investigation by members of the Indiana Internet Crimes Against Children Task Force, including the Federal Bureau of Investigation, the Indiana State Police, the Gary Police Department and the Michigan City Police Department.This case was prosecuted by Assistant United States Attorney Jill Koster.
Stewart Roth, 48, of Griffith, Indiana, was sentenced by Chief Judge Philip Simon to 2 years’ probation and to pay $4000 in fines after pleading guilty to the felony offense of violation of the Clean Water Act, a national pretreatment standard.According to documents filed in this case, Roth, along with defendant NH Environmental Group, Inc. (“Tierra”) a waste water transporter and centralized waste water treatment facility, knowingly discharged, trucked or hauled liquid wastes, including industrial, sanitary, and food industry-related wastes, into the Hammond Sanitary District’s publicly-owned treatment works (“POTW”) at location that had not been designated, approved, or otherwise permitted by the POTW. This case was a result of an investigation by the Environmental Protection Agency.This case was prosecuted by Assistant United States Attorney Toi Houston.
Unlicensed Commodities Trader Sentenced to 36 Months in Connection with $300,000 Ponzi SchemeRead the Press Release
Earlier today at the federal courthouse in Brooklyn, NY, Jeffrey Shalhoub was sentenced to 36 months’ imprisonment in connection with his operation of a $300,000 Ponzi scheme. Shalhoub solicited investors to invest money into his company, The 9 Group, Ltd., by telling them they would receive profits of up to 10% of their principal every week through investments in the commodity market. However, Shalhoub never held the required license to operate a commodities trading pool and, after receiving $300,000 from investors, Shalhoub embezzled over $150,000 and lost the remainder through bad investments. He concealed the theft and losses with fraudulent account statements showing that his investors’ accounts were earning returns of up to 5.2% each week. To perpetuate the fraud, Shalhoub used the money of new investors to pay off earlier investors.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Inspector in Charge, United States Postal Inspection Service, New York.
“Shalhoub lured his victims in with promises of high returns from a business investment. All they got, however, were false promises and phony documents, as he used lies and deception to steal the money entrusted to him,” Ms. Lynch said. “While there may be no risk-free investment, all investors are entitled to honesty and fidelity.”
The sentence was imposed by the Hon. Sterling Johnson, Jr. As part of the sentence, Judge Johnson ordered Shalhoub to pay restitution of over $240,000.
This prosecution was the result of efforts by President Obama's Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit http://www.StopFraud.gov.
The government’s case is being prosecuted by Assistant United States Attorney Tyler Smith.
The Defendant:
JEFFREY SHALHOUB
Age: 38
Residence: Staten Island, New York
E.D.N.Y. Docket No. 13-CR-434 (SJ)
USA Lynch Highlighted in Gotham Magazine's "the 50 Women Who Run New York"Read the Press Release
http://gotham-magazine.com/personalities/articles/50-most-powerful-women-in-new-york
TweetU.s. Attorney's Office, Fbi, and Nopd, Hold Joint Training Session on Investigating Police CorruptionRead the Press Release
U.S. Attorney Kenneth Allen Polite, Jr. announced that on May 13, 2014, the United States Attorney’s Office, the Federal Bureau of Investigation, and the New Orleans Police Department held a joint seminar on the subject of “Investigating and Prosecuting Police Misconduct and Corruption.” The event, held at U.S. Attorney Polite’s office, included attorneys from the U.S. Attorney’s Office Public Integrity Unit, Special Agents from the FBI Civil Rights and Public Corruption Squads, and the entire staff of the New Orleans Police Department’s Public Integrity Unit.
The purpose of the seminar was to foster cooperation and encourage the prosecutors and investigators to work joint investigations. The trainers were members of the “Tarnished Badge” Law Enforcement Task Force from Memphis, Tennessee. This Task Force is comprised of members from the United States Attorney’s Office, the FBI, the Memphis Police Department, and the Shelby County Sheriff’s Department. This is a full-time task force that exclusively work police corruption and civil rights violations. In the past seven years the Tarnished Badge Task Force has convicted in excess of 65 law enforcement officers in federal court.
Speakers included:
- U.S. Attorney Polite;
- Federal Bureau of Investigation Special Agent in Charge Michael Anderson;
- New Orleans Police Superintendent Ronal Serpas;
- Memphis Police Lt. Matthew Whittington and FBI Special Agent Anthony Householder, who provided specific training on investigative techniques, working with informants, and interview techniques. They also presented several case studies on specific investigations conducted by the Task Force; and
- Assistant United States Attorney Steve Parker, the former Chief of the Civil Rights and Law Enforcement Corruption Unit in the U. S. Attorney’s Office in Memphis. Mr. Parker is now on special assignment to the U.S. Attorney’s Office in New Orleans working on the NOPD Consent Decree. Mr. Parker presentation focused on the federal statutes used to prosecute police misconduct and the use of the Federal Grand Jury in these investigations.
U.S. Attorney Polite stated, “This seminar is the first of its kind in our District. We can and must do better in addressing police misconduct, and this seminar represents our renewed commitment to increasing collaboration and coordination amongst those involved in investigating and prosecuting these cases. Our shared expertise, intelligence, and investigative methodologies will help deter police misconduct more effectively and strengthen public confidence in the great work done by our law enforcement officers.”
U.S. Attorney Polite particularly acknowledged FBI Special Agent in Charge Anderson for participating in and providing financial support for the event.
U.S. Attorney Booth Goodwon and State and Local Officials Announce Federal Indictments Targeting Heroin Trafficking in Greenbrier CountyRead the Press Release
CHARLESTON, W.Va. – U.S. Attorney Booth Goodwin, Greenbrier County Sheriff Jan Cahill, and members of the West Virginia State Police will announce recent federal indictments and the subsequent arrests of four Greenbrier County residents in connection with heroin trafficking on Monday, May 19, 2014 at 11:00 a.m. at the Greenbrier County Courthouse located at 200 North Court Street in Lewisburg, West Virginia.
WHO: United States Attorney Booth Goodwin
Sheriff Jan Cahill, Greenbrier County Sheriff’s Department
Members of the West Virginia State PoliceWHAT: U.S. Attorney Booth Goodwin, Greenbrier County Sheriff Jan Cahill and members of the West Virginia State Police to announce recent federal indictments against four Greenbrier County residents relating to heroin distribution.
WHERE: Greenbrier County Courthouse (Lobby)
200 North Court Street
Lewisburg, WV
WHEN: Monday, May 19, 2014 at 11:00 a.m.Two Members of Burglary Crew Plead Guilty to Bank Larceny, Admitting to 13 Bank BurglariesRead the Press Release
Caused Losses of at least $250,000
Baltimore, Maryland – Kenneth Manns, age 47, of Baltimore, Maryland pleaded guilty today to bank burglary and his co-defendant, Aaron Davis, age 39, of Baltimore, pleaded guilty on May 13, 2014, to bank larceny, in connection with a two year scheme to burglarize banks, credit unions and retail stores.
The guilty pleas were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Assistant Director in Charge Valerie Parlave of the Federal Bureau of Investigation’s Washington Field Office; Colonel Marcus L. Brown, Superintendent of the Maryland State Police; Chief James W. Johnson of the Baltimore County Police Department; Baltimore County State’s Attorney Scott Shellenberger; and Chief Cathy L. Lanier of the Metropolitan Police Department.
According to their plea agreements, from May 2011 through May 2013, Manns and Davis participated in a conspiracy that involved a group of associates, including Donald Taylor and others, to obtain money and property from thirteen banks, credit unions and retail stores by breaking into and entering buildings used in whole or in part as banks and credit unions.In order to avoid apprehension, the burglary crew would case the target location and assess the likelihood of obtaining valuables. One or more members of the conspiracy would stand look-out while others went inside the targeted bank or business. The burglary crew broke into gas stations, convenience stores, credit unions and other commercial establishments in Maryland and Washington D.C. wearing either white paper suits or dark outfits and masks and gloves, while communicating with handheld radios. The burglary crew would cut power lines, telephone lines, cables and other wires and destroy, reposition or disconnect surveillance video cameras. They stole cash, safes, cash-register drawers and lock boxes. On several occasions, the burglary crew gained entry to the ATM room of the target location by carving a hole with a power saw from an adjacent retail space. They also used tools to break into ATMs and safes at the target locations. The burglary crew transported the stolen goods back to locations to include the homes and businesses of the defendants in Maryland.
For example, on August 17, 2012, Manns and Davis put on white paper Tyvek suits, black masks and gloves, and got into the ATM room of a Bank of America in Washington, D.C. by carving a hole with a power saw from an adjacent retail space. The Metropolitan Police responded to alarms, causing Manns and his co-conspirator to flee before gaining access to cash drawer of the ATM machine.
On March 9, 2013, Manns and Davis broke into a Chinese restaurant adjacent to a credit union in Owings Mills, Maryland. They cut the communication network power cables to the credit union. Using industrial cutting tools, they removed a portion of the wall separating the banquet room of the restaurant from the ATM room inside the credit union. They entered the credit union, destroyed the motion sensor and then left the ATM room for approximately an hour in order to gauge whether there was a police response. They then re-entered the ATM room via the restaurant and shifted the direction of the security camera. They attempted unsuccessfully to cut through the ATM vault and gain access to the cash drawer.On March 31, 2013, at approximately 9:45 p.m., Manns and Davis, wearing white masks and black gloves, broke into the Shoe City store in Parkville, Maryland by carving a hole with a power saw from an adjacent unoccupied retail space. Before entering, Manns and his co-conspirators also cut the telephone lines to the retail store which disabled the alarm system. Manns and his co-conspirators removed a safe containing $400 and stole 23 pairs of shoes.
On April 28, 2013, shortly before midnight, Manns and Davis broke a side glass window to the Edmondson Sunoco station in Catonsville, Maryland, entered the store and severed phone, cable and alarm power lines inside. Meanwhile, Taylor served as a lookout from inside a van rented by Manns and parked nearby. After going behind the cashier area, Davis and Manns left the Sunoco and drove away from the gas station in a stolen U-Haul Ford van. More than an hour later, they returned to the Sunoco, re-entered the gas station, attempted to gain entry into the manager’s office and then left the store again. At approximately 3:15 a.m., Manns and Davis returned to the Sunoco gas station a third time and stole $200 from the cash register drawer and removed 2 store safes containing $10,080, using a handcart, while Taylor again served as look-out. They loaded the safes into the stolen U-Haul van and drove away, while Taylor followed them in the rented van.
Donald Taylor, age 59, also of Baltimore, pleaded guilty to his role in the scheme on April 3, 2014.
As part of their plea agreements, Manns, Davis and Taylor will be required to pay restitution in the full amount of the victims' losses, which is at least $250,000.
Manns and Davis each face a maximum sentence of 20 years in prison. U.S. District Judge Richard D. Bennett has scheduled sentencing for Davis on July 22, 2014 at 3:00 p.m. and for Manns on July 30, 2014 at 3:00 p.m. Judge Bennett also ordered that Manns be detained pending sentencing and he was taken into custody.
United States Attorney Rod J. Rosenstein praised the FBI, Maryland State Police, Baltimore County Police Department, Baltimore County State’s Attorney’s Office and the Metropolitan Police Department for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Mark W. Crooks, who is prosecuting the case.Two Gulfport Men Indicted for Theft of Postal Service EquipmentRead the Press Release
Gulfport, Miss – John Wendell Boyles, 51, of Gulfport, and his son, Nicholas Alan Boyles, 24, also of Gulfport, were arraigned in federal court on May 15th pursuant to an indictment charging them with conspiracy to convert Postal Service property to their own use and unlawfully sell the property over a two-year period, announced U.S. Attorney Gregory K. Davis, and Inspector-in-Charge Robert B. Wemyss, of the U.S. Postal Inspection Service.
The indictment alleges that, from approximately February, 2011, to February, 2013, John Wendell Boyles and Nicholas Boyles devised a scheme to convert Postal Service equipment to their own use and sell the equipment for scrap metal. As a part of their scheme, the Boyles stole Over-The-Road (OTR) Containers, which are made primarily of aluminum, cut them apart and sold the pieces as scrap. OTR containers are used by the Postal Service to organize and carry mail on freight trucks between Post Offices and Postal Distribution Centers.
In addition to the conspiracy charges, John Wendell Boyles is charged with 10 counts of unlawfully selling Postal Service property from approximately February, 2011, to March, 2012, and Nicholas Alan Boyles is charged with 11 counts of unlawfully selling Postal Service property from approximately June, 2011, to February, 2013.
This case is scheduled for trial before U.S. District Judge Sul Ozerden on July 7, 2014. The maximum penalty for conspiracy is five years in federal prison and a $250,000 fine on each count followed by three years of supervised release. The maximum penalty for theft of government property is ten years in federal prison and a $250,000 fine on each count followed by three years of supervised release. A general criminal forfeiture count is also included in the indictment.
The investigation in this case was conducted by the United States Postal Inspection Service. Postal Inspector Doug Wilson was the lead investigator and Assistant U.S. Attorney Stan Harris is the prosecutor for the case. U.S. Attorney Davis commended the Postal Inspection Service for its diligent work in the investigation of this matter.
The public is reminded that an indictment is a formal charge that a defendant has committed a violation of the federal criminal laws. All defendants are presumed innocent unless and until proven guilty.If you believe you have been a victim of fraud from a person or an organization soliciting relief funds on behalf of storm victims, contact the National Center for Disaster Fraud toll free at:
(866) 720-5721
You can also fax information to:
(225) 334-4707
or e-mail it to:
Making sure that victims of federal crimes are treated with compassion, fairness and respect.
Training and seminars for Federal, State, and Local Law Enforcement Agencies.
Help us combat the proliferation of sexual exploitation crimes against children.
Tampa Man Pleads Guilty to Violations of Federal Meat Inspection ActRead the Press Release
Tampa, Florida – United States Attorney A. Lee Bentley, III announces that Jorge F. Ortega (27, Tampa) yesterday pleaded guilty to three violations of the Federal Meat Inspection Act. The violations include selling adulterated or misbranded meat, selling uninspected meat, and the improper slaughter of swine. Ortega faces a maximum penalty of 3 years in federal prison for each violation.
According to court documents, Ortega was the operator of Jorge’s Farm. He was responsible for the oversight of its activities, including the slaughtering, processing, handling, storing, and selling of swine in commerce, for human consumption. On October 27, 2011, Ortega slaughtered a swine in an inhumane manner. That swine was contaminated with insects and other filth. Ortega then sold the swine carcass to an undercover agent without labeling it properly and without the required federal meat inspection.
This case was investigated by the U.S. Department of Agriculture (USDA), Food Safety and Investigative Service (FSIS) and the Hillsborough County Sheriff’s Office. It is being prosecuted by Assistant United States Attorney Jennifer L. Peresie.