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Tuesday 11 March 2014
Software Company Ceo Pleads Guilty in Manhattan Federal Court to $2 Million Securities Fraud SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that ROBERT KELLY, the Chief Executive Officer of Wwebnet, Inc. (“Wwebnet”), a software development company, pled guilty today in Manhattan federal court to securities and wire fraud charges. KELLY diverted for his own personal use over $2 million in investor proceeds that was intended for the development of a software program capable of transmitting music, videos, and movies over the Internet. He used the money to trade options, to pay his personal income taxes, and for other purposes unrelated to software development or other legitimate business expenses. KELLY was originally charged in September 2012, and he pled guilty today before United States District Judge Paul A. Crotty.
Manhattan U.S. Attorney Preet Bharara stated: “Robert Kelly took more than $2 million of investor money, obtained through promises that it would be invested in his company’s new technology and in growing the business, and instead, used it to make unsuccessful options trades and to pay for his own personal income taxes. With today’s plea, Kelly has admitted to stealing and spending innocent investors’ money.”
According to the charging documents and related court proceedings:
From 2004 through November 2008, KELLY solicited investors to send money to Wwebnet, Inc., and related companies by misrepresenting that the funds would be used to develop software for transmitting music, videos, and movies over the Internet. Instead of using the millions of dollars in investor proceeds that he obtained for legitimate business purposes, KELLY diverted a substantial portion of the money that he raised for his own financial benefit. For example, KELLY transferred at least $2 million in investor funds into his personal trading account in the Cayman Islands, which he used to make a series of unsuccessful options trades. KELLY also used nearly $100,000 that he received from investors to pay his federal and state personal income taxes. At the same time that he was using investors’ money for his own personal benefit, KELLY falsely told his software development team that he was unable to allocate adequate resources for software development and could do so only when he was able to raise money from investors. As a result, Wwebnet lacked the necessary funds to develop its core product and the company ultimately failed.
KELLY, 57, formerly of New York, New York, resides in Raleigh, North Carolina. He pled guilty to one count of securities fraud and one count of wire fraud, which together carry a total maximum term of 40 years in prison. KELLY also agreed to forfeit $2,111,600 and, separately, pay $2,111,600 in restitution. The sentencing before U.S. District Judge Paul A. Crotty is scheduled for July 17, 2014, at 3:00 p.m. The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation and also thanked the Securities and Exchange Commission for its assistance.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established 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 nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Benjamin Naftalis and Zachary Feingold are in charge of the prosecution.
U.S. v. Robert Kelly Indictment
Shasta County Investment Scheme Defendants Sentenced to 5 Years in PrisonRead the Press Release
SACRAMENTO, Calif. — Barbara Eberle, 66, and Robert Eberle, 75, both of Oxford, Ga. but formerly of Chico, Calif. were sentenced today by United States District Judge Garland E. Burrell Jr. to five years in prison and ordered to pay more than $13.2 million in restitution, United States Attorney Benjamin B. Wagner announced. The Eberles pleaded guilty to securities fraud on July 20, 2012.
The defendants were indicted on August 22, 2007, for a fraud scheme that involved life settlement insurance contracts or viaticals. A “life settlement” or “viatical settlement” was a transaction in which a person sold the death benefit of his or her life insurance policy to a third party in return for a lump sum cash payment, which represented a discounted percentage of the policy’s face value. The insured was usually ill or elderly and would sell his or her interest in the insurance policy to a company. That company would resell the interest to investors, in whole, or as fractional interests. The return on the investment depended on the length of time the ill or elderly person lived, with a greater return the sooner the insured person died. If the insured person did not die, there was no return on the investment. The life expectancy of the insured person was to be estimated by a medical doctor, after a review of the insured person’s medical records.
According to court documents, Donald Neuhaus operated a number of businesses for the purpose of acquiring viaticals and life settlements from insured people and marketing these viaticals and life settlements to investors. He had sales people working on his behalf, including Robert and Barbara Eberle, who sold fractionalized interests in these viaticals.
Robert Eberle owned Lexus Financial and later Eagle Investments in Chico with his wife Barbara Eberle. Robert and Barbara Eberle were the primary sales force for Donald Neuhaus. They created marketing materials and sold viaticals and life settlements to investors on behalf of Donald Neuhaus. Robert Eberle also recruited salespeople, such as co-defendant Robert Koppel, to work as independent contractors selling Neuhaus’s policies.
According to court documents, from 2001 until 2006, the Eberles made material misrepresentations and omissions when selling the life settlement insurance contracts to investors. For example, they told investors that the investments were safe, secure, and risk free and that investors were guaranteed high rates of return. As a result of their fraud, investors lost at least $13.2 million.
In February 2003, the California Department of Corporations issued a desist and refrain (D&R) order prohibiting Robert Eberle and Barbara Eberle and Lexus Financial Group from selling viaticals and life settlements in the State of California. The Eberles continued to sell life settlements in the States of California until 2006.
According to court documents, Donald Neuhaus died in November 27, 2007. Other defendants were previously sentenced: Mark Wolok to five years in prison, Kimberly Snowden to nine months in prison, Clifford Palm to one year in prison, and Robert Koppel to three years’ probation.
This case is the product of an investigation by the IRS-Criminal Investigation with assistance from the U.S. Postal Inspection Service. Assistant United States Attorney Lee Bickley prosecuted the case. The defendants were remanded into custody on March 7, 2014.Scranton Physician and Wife Charged with $431,500 Currency Transaction ConspiracyRead the Press Release
The United States Attorney’s Office for Middle District of Pennsylvania announced that today a federal grand jury in Scranton indicted Leroy J. Pelicci and his wife, Ann Pelicci, for an alleged conspiracy to evade federal currency transaction reporting requirements by structuring a series of specific cash transactions at several Northeast Pennsylvania banks between 2011 and 2013.
According to United States Attorney Peter Smith, Pelicci, a physician and owner/operator of the “Pelicci Pain Relief Center” in Scranton and his wife Ann Pelicci, an alleged employee of the Pain Relief Center, conspired to violate the federal law that requires reporting of suspicious currency transactions. The indictment alleges that the Peliccis withdrew approximately $431,500 in cash from accounts at four Scranton area banks, Fidelity Bank, Citizens Bank, Penn Security Bank and FNCB, in 49 separate transactions, totaling $431,500, most of which were in $9,000 amounts, “just below” the amount that would trigger the reporting requirement, between January and July 2012.
According to the United States Attorney’s Office, the alleged crime is “structuring,” the conducting of transactions in currency at one or more financial institutions for the purpose of evading federal currency transaction reporting requirements. Banking institutions are required to file currency transaction reports (CTRs) with the Internal Revenue Service for each deposit, withdrawal or exchange of currency or other payment that involves currency of more than $10,000. The law also prohibits evading or attempting to evade the reporting requirements or attempting to cause banks to fail to file CTRs.
For more information on structuring and currency transaction reporting requirements, see attachment.
The indictment alleges that the Peliccis began transferring funds from a Fidelity Investment account after the patient and billing records of the Pelicci Pain Relief Center became the subject of an inquiry by agencies of the Commonwealth of Pennsylvania. The defendants allegedly opened multiple bank accounts individually in the name of Ann Pelicci and moved large amounts of cash from the investment account into those individual accounts. Beginning in January 2012, the defendants allegedly began withdrawing cash, mostly in amounts of $9,000, from the individual accounts at the four banks listed above.
In addition to the conspiracy charge, the indictment charges the Peliccis with 49 counts based on each of the alleged cash withdrawal transaction and an additional 49 counts alleging that the defendants’ activities “knowingly caused and attempted to cause, the banks to fail to file the required CTRs.”
The maximum criminal penalty provided for structuring transactions to evade CTR reporting requirements is imprisonment of not more than five years and a fine of $250,000. If the structuring involves more than $100,000 in a 12 month period, as is alleged in this case, the penalty is increased to a maximum of 10 years imprisonment and a fine of $500,000. The indictment also includes a count alleging that the $431,500 total amount of the currency involved in the structuring is subject to forfeiture to the United States plus “all property real or personal, involved in the offense, and all property traceable to such property.”
The investigation is being conducted by the Scranton office of the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Michelle Olshefski with the assistance of the United States Attorney’s Office’s Victim Rights and Asset Recovery Unit.
****Sanostee, N.M., Man Sentenced to Prison for Aggravated Burglary ConvictionRead the Press Release
ALBUQUERQUE – Donovan Isiah Sisco, 19, an enrolled member of the Navajo Nation who resides in Sanostee, N.M., was sentenced this afternoon to 18 months in federal prison followed by two years of supervised release for his aggravated burglary conviction. Sisco also was ordered to pay $9,214.31 in restitution to the victim of his crime.
Sisco was arrested on March 1, 2013, on a criminal complaint charging him with unlawfully entering into a dwelling for the purpose of committing a felony and with committing a battery. He subsequently was indicted and charged with aggravated burglary and assault with intent to commit aggravated burglary in a residence located on the Navajo Indian Reservation on Feb. 8, 2013.
On Sept. 18, 2013, Sisco entered his guilty plea to assault with the intention to commit an aggravated burglary. In his plea agreement, Sisco admitted entering the victim’s home without consent and assaulting the victim by grabbing her by the hair and throwing her to the ground causing her to sustain injuries. Sisco also admitted breaking the windows at the victim’s residence as well as the windows of her vehicle.
This case was investigated by the Farmington office of the FBI and the Shiprock office of the Navajo Nation Division of Public Safety, and was prosecuted by Assistant U.S. Attorney Elaine Y. Ramirez.
Rosebud Man Charged with Sexual Abuse of A MinorRead the Press Release
United States Attorney Brendan V. Johnson announced that a Rosebud, South Dakota, man has been indicted by a federal grand jury for Sexual Abuse of a Minor.
Gerald Duane Iron Shooter, age 21, was indicted on February 12, 2014. He appeared before U.S. Magistrate Judge Mark A. Moreno on March 7, 2014, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 15 years in custody and/or a $250,000 fine, up to life of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The Indictment alleges that between January 1, 2012, and January 31, 2012, Iron Shooter engaged in, and attempted to engage in, a sexual act with the victim who had not attained the age of 16 years.
The charge is merely an accusation and Iron Shooter is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Bureau of Indian Affairs. Assistant U.S. Attorney Meghan N. Dilges is prosecuting the case.
Iron Shooter was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set.
Rockford Man Sentenced to 80 Months in Federal Prison for the Robbery of Associated Bank in RockfordRead the Press Release
ROCKFORD — A Rockford man was sentenced today in federal court for bank robbery. TONY WALKER, 56, was sentenced by U.S. District Judge Frederick J. Kapala to 80 months in federal prison, to be followed by 3 years of supervised release, for the robbery of Associated Bank, 600 North Main St., in Rockford, on July 12, 2013. Walker was also ordered to pay restitution to the bank.
Walker pleaded guilty to the charge on Dec. 2, 2013. According to the written plea agreement, Walker admitted that on July 12, 2013, at approximately 3:50 p.m., he entered Associated Bank and approached a bank teller. Walker was carrying a black bag with one of his hands inside the bag. Walker placed the bag on the counter and moved it toward the teller who believed that there was a dangerous weapon in the bag. Walker handed the teller a note which stated “Give me 1,000 dollars and won’t nobody get hurt.” The teller then gave Walker $1,330 in U.S. currency. Walker was arrested on July 15, 2013, and has since been in federal custody.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; and Chet Epperson, Chief of the Rockford Police Department.
The government is represented by Assistant U.S. Attorney Joseph C. Pedersen.
Pine Hill Man Pleads Guilty to Federal Child Abuse ChargeRead the Press Release
ALBUQUERQUE – Harold Martinez, 32, an enrolled member of the Navajo Nation who resides in Pine Hill, N.M., pleaded guilty this morning to a felony information charging him with abuse of a child not resulting in death or serious bodily injury.
Martinez was arrested on Nov. 26, 2013, on a criminal complaint alleging assault charges. According to the criminal complaint, on June 11, 2013, Martinez initiated a physical confrontation with another Navajo man during which Martinez stabbed the victim. After the victim got into his vehicle in an effort to get away from Martinez, Martinez rammed his own vehicle into the victim’s vehicle several times. Two young boys were in Martinez’s vehicle when he rammed it into the victim’s vehicle.
During this morning’s hearing, Martinez admitted that on June 11, 2013, he deliberately drove his vehicle into another vehicle without justification. Martinez also admitted that two unrestrained children were in the vehicle he was driving and that by ramming into another vehicle he placed the children in a situation that endangered their lives or health. The children however were not injured.
Martinez has been in federal custody since his arrest and remains detained pending his sentencing hearing, which has yet to be scheduled. At sentencing, Martinez faces a maximum penalty of three years in prison.
This case was investigated by the Ramah Navajo Police Department and is being prosecuted by Assistant U.S. Attorney Jacob A. Wishard.
Pharmaceutical Company to Pay $27.6 Million to Settle Allegations <br /> Involving False Billings to Federal Health Care ProgramsRead the Press Release
Pharmaceutical manufacturer Teva Pharmaceuticals USA Inc. and a subsidiary, IVAX LLC, have agreed to pay the government and the state of Illinois $27.6 million for allegedly violating the False Claims Act by making payments to induce prescriptions of an anti-psychotic drug for Medicare and Medicaid beneficiaries . Teva Pharmaceuticals USA is located in North Wales, Pa., and IVAX LLC is a Florida company.
“The Department of Justice is committed to ensuring that pharmaceutical manufacturers who make payments to doctors to influence prescribing decisions are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Schemes such as the one alleged in this case undermine the health care system and take advantage of vulnerable patients.”
“ Pharmaceutical companies must not be allowed to improperly influence physicians’ decisions in prescribing medication for their patients,” said U.S. Attorney Zachary T. Fardon for the Northern District of Illinois. “Instead, those decisions must be made solely on the basis of the patient’s best medical interests.”
The settlement resolves allegations that Teva and IVAX made payments to an Illinois physician, Dr. Michael J. Reinstein, to induce the prescription of generic clozapine, an anti-psychotic medication. Clozapine has serious potential side effects and is generally considered a drug of last resort, particularly for elderly patients. While clozapine has been approved for treatment-resistant forms of schizophrenia, it is also reported to cause numerous side effects, including a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle and increased mortality in elderly patients. The United States alleged that the payment scheme involving Reinstein began in August 2003, when Reinstein agreed to switch his patients to generic clozapine if IVAX, which was subsequently acquired by Teva Pharmaceuticals’ parent corporation, agreed to pay Reinstein $50,000 under a one-year “consulting agreement” and to provide other benefits to Reinstein , in violation of the federal Medicare and Medicaid Anti-Kickback Statute In addition to direct payments to Reinstein, IVAX allegedly also provided all-expenses paid trips to Miami for Reinstein, his wife and several of his employees. Reinstein quickly became the largest prescriber of generic clozapine in the country, and prescribed the drug for many elderly patients. Allegedly, the payments and other forms of remuneration from IVAX and later Teva Pharmaceuticals continued for many years, and resulted in the submission of thousands of false claims to the Medicare Part D and Illinois Medicaid programs.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
On Nov. 15, 2012, the United States filed a civil action against Reinstein in United States v. Reinstein , alleging that he violated the False Claims Act as a result of his involvement in the payment scheme with Teva and IVAX. The civil action against Reinstein remains pending in the Northern District of Illinois.The government’s settlement of these allegations illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement with Teva Pharmaceuticals and IVAX was the result of a coordinated effort by the U.S. Attorney’s Office for the Northern District of Illinois, the Commercial Litigation Branch of the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.
The claims resolved by this settlement are allegations only, and there has been no determination of liability.
Pharmaceutical Company to Pay $27.6 Million to Settle Claims of False Billings to Federal and State Health Care ProgramsRead the Press Release
CHICAGO — Pharmaceutical manufacturer Teva Pharmaceuticals USA, Inc. and a subsidiary, IVAX LLC, will pay the United States and the state of Illinois more than $27.6 million to resolve false billing allegations, under the terms of a settlement agreement announced today. The agreement settles claims that Teva and IVAX violated the federal False Claims Act by making payments to Dr. Michael J. Reinstein, a Chicago physician, in return for Reinstein prescribing an anti-psychotic medication to thousands of Medicare and Medicaid patients at dozens of area nursing homes and hospitals.
Within 10 days, Teva will pay the United States nearly $15.5 million and the State of Illinois more than $12.1 million, plus interest from September 2013. The settlement was reached without civil litigation by the Justice Department, the U.S. Attorney’s Office for the Northern District of Illinois, and the Illinois Attorney General’s Office on behalf of the U.S. Department of Health and Human Services and the Illinois Department of Healthcare and Family Services. Teva Pharmaceuticals USA, located in North Wales, Pa., and IVAX LLC, a Florida company, are both subsidiaries of Teva Pharmaceuticals Industries, Ltd., headquartered in Israel.
“Pharmaceutical companies must not be allowed to improperly influence physicians’ decisions in prescribing medication for their patients,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. “Instead, those decisions must be made solely on the basis of the patient’s best medical interests,” he said.
“The Department of Justice is committed to ensuring that pharmaceutical manufacturers who pay kickbacks to doctors to influence prescribing decisions are held accountable,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division. “Schemes such as the one alleged in this case undermine the health care system and take advantage of vulnerable patients.”
Illinois Attorney General Lisa Madigan said: “Teva Pharmaceuticals pushed its drug onto thousands of vulnerable patients without regard to their health and at the expense of the state Medicaid program and Illinois taxpayers.”
The settlement involves the promotion of generic clozapine, a rarely used anti-psychotic medication that has serious potential side effects and is generally considered a drug of last resort, particularly for elderly patients. While clozapine has been shown to be effective for treatmentresistant forms of schizophrenia, it is also known to cause numerous side effects, including a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle, and increased mortality in elderly patients.
In November 2012, the United States filed a civil False Claims Act lawsuit in U.S. District Court in Chicago against Reinstein, alleging that, since at least August 2003, he schemed to switch his patients to generic clozapine if IVAX agreed to pay him $50,000 under a one-year “consulting agreement” and provide other benefits to him, in violation of the federal Medicare and Medicaid Anti-Kickback Statute.
Reinstein, a psychiatrist in the Chicago area since 1973 with an office in Chicago’s Uptown neighborhood since at least 1999, quickly became the largest prescriber of generic clozapine in the country. The payments and other forms of remuneration from Ivax, and later Teva Pharmaceuticals, including annual renewal of the consulting agreement, travel, meals and entertainment expenses, and tickets to sporting events, continued through at least November 2009. In addition to direct payments to Reinstein, Ivax also provided an all-expenses-paid trip to Miami for Reinstein, his wife, and various employees of Reinstein.
The alleged scheme resulted in the submission of thousands of false claims to Medicare Part D and Illinois Medicaid. The civil case against Reinstein remains pending in Federal Court in Chicago.
Federal law prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The law is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
The settlement with Teva Pharmaceuticals and Ivax was the result of a coordinated effort by the U.S. Attorney’s Office for the Northern District of Illinois, the Civil Fraud Section of the Commercial Litigation Branch of the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General, the Chicago Office of the Federal Bureau of Investigation, and the Illinois Attorney General’s Office.
The settlement agreement is neither an admission of liability by Teva or IVAX, nor a concession by the United States or the State of Illinois that their claims were not well-founded.
Assistant U.S. Attorney Eric S. Pruitt represented the U.S. Attorney’s Office in the settlement negotiations. Assistant Illinois Attorney General Robert Barba represented the Illinois Attorney General’s office.
Settlement Agreement
Parkersburg Woman Enters Federal Guilty Plea to Heroin DistributionRead the Press Release
CHARLESTON, W.Va. – A Parkersburg woman has pleaded guilty today to a federal heroin charge, U.S. Attorney Booth Goodwin announced today. During her plea hearing before United States District Judge Thomas E. Johnston, Daquarri Coats, 21, admitted that on September 30, 2013, she sold $1,950.00 worth of heroin to an informant working with the Parkersburg Police Department. The drug deal took place near the intersection of 30th Street and Dudley Avenue in Parkersburg.
Coats faces up to 20 years in federal prison when she is sentenced on June 5, 2014.
The Parkersburg Police Department along with the Parkersburg Narcotics and Violent Crimes Task Force conducted the investigation. Assistant United States Attorney Joshua Hanks is in charge of the prosecution.
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 and heroin. 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 and heroin in communities across the Southern District.
Owner of Roofing Company Sentenced to One Year in Prison for Filing False Income Tax ReturnsRead the Press Release
TRENTON, N.J. - The owner of Kenal Enterprises LLC was sentenced today to one year and one day in prison for filing false income tax returns for several years, U.S. Attorney Paul J. Fishman, District of New Jersey, and Assistant Attorney General Kathryn Keneally of the U.S. Department of Justice, announced.
Kenneth Morton of Pitman, N.J., owner of Kenal (d/b/a) Ken Morton Roofing and Siding, a residential roofing company located in Pitman, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an information charging him with filing false income tax returns for tax years 2007 through 2009. Judge Sheridan imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
From early 2007 through late 2009, Morton cashed $3,946,046 of Kenal’s gross receipts at a check cashing agency, the majority of which he did not deposit into his business bank account and did not report on his individual income tax returns. For the 2007, 2008, and 2009 tax years, Morton had unreported gross receipts of $1,343,348; $1,471,430; and $1,131,268, respectively, causing a loss to the IRS of $241,412.
In addition to the prison term, Judge Sheridan sentenced Morton to one year of supervised release and ordered him to pay $241,412 in restitution.
U.S. Attorney Fishman and Assistant Attorney General Keneally credited special agents of IRS – Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, for the investigation leading to today’s sentence.
The government is represented by Trial Attorneys Jessica Moran and Tino Lisella of the Justice Department’s Tax Division. Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
14-081
Defense counsel: Rocco Cipparone Jr. Esq., Haddon Heights, N.J.Owner and Operator of Crime Infested Tukwila Motel SentencedRead the Press Release
The owner and manager of one of three crime infested motels in Tukwila, Washington was sentenced today to one year in prison and three years of supervised release for conspiracy to maintain drug involved premises, announced U.S. Attorney Jenny A. Durkan. KULWINDER SAROYA, 42, of SeaTac, Washington, admitted he and his brother, co-defendant Jaspal Singh, knowingly operated drug involved premises at the Travelers Choice Motel and Great Bear Motor Inn and profited from the drug activity there. SAROYA and his brother have forfeited the two motels, the family home in SeaTac, more than $265,000 seized from their home and bank accounts and a 2007 Mercedes Benz. At sentencing U.S. District Judge John C. Coughenour noted that SAROYA was being punished with a substantial economic loss, “wiping out 20 years of work.”
“Since we shut these motels, the violent crime rate in the area was cut nearly in half. This case shows we will use all tools to protect the public and hold people accountable. This operation shut down a major spawning ground for crime in the community of Tukwila, stripped the defendant of the profits of his crime, and will reunite a neighborhood,” said U.S. Attorney Jenny A. Durkan. “I applaud the comprehensive work of law enforcement and look forward to a future for these properties that will benefit the community.”
“It’s a new day for Tukwila,” said City Administrator David Cline. “We‘ve made a commitment to work towards providing a solid foundation and sense of safety in our community. We are now another step closer to revitalization and redevelopment of the heart of the neighborhood along Tukwila International Boulevard.”
A third defendant, Lakhvir Pawar, 41, the manager of the Boulevard Motel on Tukwila International Boulevard has pleaded guilty and agreed to forfeit any interest in that motel as well as more than $90,000 he accumulated from the criminal activity. Pawar and Singh will be sentenced in April.
In total the defendants in this case are forfeiting cash and property valued at about $4.5 million.
“Just over six months ago, the collaboration of a number of agencies resulted in the seizure of three motels, arrests and resulting prosecution of defendants, and most importantly, the dramatic improvement of safety along Tukwila International Boulevard,” said Tukwila Police Chief Mike Villa.
According to records filed in the case, the Tukwila Police Department and Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) jointly-led investigation used undercover officers and people working with law enforcement to document criminal activity at the motels and the role the owners and managers played in that activity. SAROYA and Singh admitted they would collect or would direct their staff to collect a $10 entry fee for those coming on the property seeking drugs or sexual services. The owners and/or managers would take the money and direct the customer to rooms to purchase drugs or sex. In some instances the person taking the “fee” would call the motel room to inform the dealer or sex worker that a customer was on the way. SAROYA and Singh admitted that they collected additional rental fees from the dealer or sex worker based on how many customers were sent to the room over the course of the day.The investigation, search and seizure operation was led by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) and the Tukwila Police Department. Many additional agencies assisted the investigation including the U.S. Marshals Service; Department of Homeland Security; Drug Enforcement Administration; Federal Bureau of Investigation; Internal Revenue Service Criminal Investigation; U.S. Department of Agriculture Office of Inspector General; Washington State Patrol; Seattle, Auburn, Kent, Renton, Federal Way, and Port of Seattle Police Departments; Valley SWAT Team; King County Sheriff’s Office; Washington State Department of Corrections; and Washington State Department of Social and Health Services (DSHS).
The case is being handled by Assistant United States Attorneys Justin Arnold, Jill Otake and Richard Cohen.
One Hallandale Resident and Two Palm Beach Residents Sentenced to Lengthy Prison Terms for Robbing Treasure Coast PNC Banks at GunpointRead 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, John A. Bolduc, Chief, Port St. Lucie Police Department, Ken J. Mascara, St. Lucie County Sheriff’s Office, Sean Baldwin Chief, Ft. Pierce Police Department, J. Michelle Morris, Chief, Sebastian Police Department, and Deryl Loar, Sheriff, Indian River Sheriff’s Office, announce the sentencing of Raven Simone Sayers, 23, of Hallandale, by U.S. District Judge Jose E. Martinez. Sayers was sentenced to 162 months in prison, followed by three years supervised release.
Also previously sentenced in this case were defendants Ivory Lee Robinson, III, 22, and Tomaleesha Jeffie Laqua McKeliver, 22, both of West Palm Beach, by U.S. District Judge Donald L. Graham. Robinson, a career offender, was sentenced to 262 months in prison, followed by five years of supervised release on February 27, 2014; and, McKeliver was sentenced to 102 months in prison, followed by three years of supervised release on December 16, 2013.
Each of the defendants previously pled guilty to interference with commerce by robbery (Hobbs Act), in violation of Title 18, United States Code, Section 1951, and using and carrying a firearm in furtherance of a crime of violence, in violation of Title 18, United States Code, Section 924(c).
According to court documents, during the night of July 7, 2013, into the early morning hours of July 8, 2013, Sayers, Robinson, McKeliver, Paul Edward Moore, Joe JR Desilien, Herbert Lenorris Smith, Jr., Anthony Isaac Johnson, and Allan Demetrius Bradford, planned and agreed to rob two St. Lucie County PNC banks at gun point. In order to carry out the two robberies, the group separated into two teams. The plan was for each team to have a female as a getaway driver and three males. Sayers and McKeliver agreed to be the robbery getaway drivers. Each team would steal a van, rob each of the banks at gunpoint, with their faces covered, leave the bank in the van, and transfer into the getaway vehicles, in order to flee the area. Sayers and McKeliver drove rental cars. The two teams travelled from Palm Beach County to St. Lucie County in the two rented cars. While en route, the two teams remained in cellular phone contact with one another. Once in St. Lucie County, the teams scouted PNC Banks and escape routes and stole two vans in Ft. Pierce for use in the two bank robberies.
Later on July 8, 2013, between 9:00 and 9:30 a.m. two St Lucie County PNC Banks were robbed at gunpoint, almost simultaneously. Law enforcement eventually identified, located, arrested and charged Sayers, Robinson, McKeliver, and their co-conspirators.
A jury trial for Paul Edward Moore, Anthony Isaac Johnson, and Joe JR Desilien is set for May 19, 2014 before U.S. District Judge Jose E. Martinez in Ft. Pierce.
Mr. Ferrer commended the investigative efforts of the FBI, Port St. Lucie Police Department, Ft. Pierce Police Department, Sebastian Police Department, St. Lucie County Sheriff’s Office, Indian River Sheriff’s Office, Palm Beach County Sheriff’s Office, Port Orange Police Department, and Hillsborough County Sheriff’s Office for their work on this case. The case is being prosecuted by Assistant U.S. Attorney Carmen Lineberger.
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.
Ocean County, N.J., Attorney Sentenced to Six Months in Prison, Six Months of Home Confinement, for Income Tax Evasion and Failing to Pay Payroll TaxesRead the Press Release
TRENTON, N.J. - An Ocean County, N.J., attorney was sentenced today to six months in prison and six months of home confinement for evading federal income taxes after hiding assets in an attorney trust account in his wife’s name when he was already in debt to the IRS, U.S. Attorney Paul J. Fishman announced.
Lee Gottesman, 58, of Toms River, N.J., previously pleaded guilty before U.S. District Judge Freda L. Wolfson an indictment charging him with one count of federal income tax evasion and one count of failing to pay payroll taxes for the employees of his law firm. Judge Wolfson imposed the sentence today in Trenton federal court.
According to documents filed in the case and statements made in court:
Gottesman operated a law firm in Toms River. In 2002, the IRS filed a levy on Gottesman’s assets because of unpaid taxes. Gottesman then opened a sub-account, within his attorney trust account, in the name of his wife. His wife had never been a legal client of his.
Gottesman ran nearly all of his personal and business expenses through the account, closing all other business and personal accounts in his name. His payments from the account included more than $90,000 in mortgage payments for his home; more than $17,000 in household expenses, including maintenance on his pool, landscaping services and construction costs; and thousands of dollars in other personal expenses, such as life insurance premiums, auto body repair work and personal credit card payments. The scheme allowed Gottesman to avoid paying personal income taxes on the hidden income.
Gottesman also withheld payroll and other taxes from his employees’ pay, but never filed the required forms or turned the withheld payments over to the IRS. Gottesman specifically admitted he did not pay all his personal income taxes owed for 2006 or payroll taxes for 2009.
In addition to the prison term, Judge Wolfson sentenced Gottesman to three years of supervised release. He will also be responsible for paying all taxes owed from 2006 to the present, $27,384.99.U.S. Attorney Fishman credited special agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
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Defense counsel: Salvatore Alfano Esq., Bloomfield, N.J.Niles Man Faces Drug ChargesRead the Press Release
Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, today announced that a grand jury returned a one-count indictment charging Clint A. Hood, 49, of Niles, Ohio, with growing marijuana, and possessing marijuana with the intent to distribute.
The indictment alleges that on October 2, 2012, Hood grew and possessed more than 100 marijuana plants.
The case is being prosecuted by Assistant U.S. Attorney Justin Seabury Gould, following investigation by agents of the Drug Enforcement Administration.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
New York Man Charged Federally with Identity TheftRead the Press Release
Peter J. Smith, United States Attorney for the Middle District of Pennsylvania, announced today that an Indictment has been returned against Omari Lowery, age 27, Bronx, New York.
A Grand Jury convened in Scranton returned the 10 Count Indictment charging Lowery with Conspiracy, Aggravated Identity Theft, Access Device Fraud, and Fraud in Connection with Identification Documents. The Indictment alleges that beginning in August 2013 and continuing through February 2014, the defendant conspired to obtain and use multiple means of identification belonging to others for the purpose of fraudulently obtaining goods, services, cash, and other things of value in the Middle District of Pennsylvania and elsewhere.
Lowery faces a statutory maximum 78 years imprisonment and fines in the amount of $2,500,000. Lowery is currently in custody at the Lackawanna County Prison.
This case is being investigated by the Pocono Mountain Regional Police and the United States Secret Service. Prosecution is assigned to Assistant United States Attorney Michelle Olshefski.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
Nevada Man Charged with Sexual Exploitation of ChildrenRead the Press Release
Project Safe Childhood
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that Nevada, Mo., man was charged in federal court today with the sexual exploitation of a child after he assumed a false online identity as a woman and persuaded a teenage girl in Georgia to provide pornographic images of herself and to engage in illicit sexual activities.
Curtis Bowman, 42, of Nevada, was charged in a criminal complaint that was filed in the U.S. District Court in Springfield, Mo. Bowman remains in federal custody pending a detention hearing on Friday, March 14, 2014.
According to an affidavit filed in support of the federal criminal complaint, law enforcement officers in Cobb County, Ga., were contacted by the victim’s mother. She told officers that her 16-year-old daughter, identified as ”AS,” was involved in prostitution and had been communicating over the Internet and via cell phone texting with a person who scheduled “dates” for “AS” to have sex with adult males. This person requested “AS” to send nude images of herself, which she did, for the purpose of sending these images to the potential “dates.”
Georgia law enforcement officers identified Bowman and on Friday, March 7, 2014, local law enforcement officers executed a search warrant at Bowman’s residence, where he was arrested.
Bowman told officers that he portrayed himself as a female on the Internet and had met “AS” online. They later exchanged e-mail addresses and cell phone numbers so they could continue to communicate. While speaking to each other, the conversation turned sexual and at Bowman’s request, “AS” sent him several pornographic images of herself. Bowman also requested webcam sessions of “AS” where she would masturbate for him. Bowman never actually spoke with “AS” by phone or on webcam, he told officers, because then she would know he was not female. He told her his webcam was broken. Bowman stated he also sent “AS” nude images of his ex-wife that he portrayed as himself.
Bowman told officers that he decided to set up “dates” for “AS” and would live vicariously through her. Bowman admitted to sending both non-nude as well as nude images of “AS” to these individuals. They sent Bowman nude images of themselves, which Bowman sent to “AS.” Bowman set up four “dates” for “AS,” one approximately every two weeks. He admitted to watching one of those “dates” via “AS’s” webcam. He said “AS” snuck the male subject into her bedroom while her mother and brother were asleep.
Dickinson cautioned that the charge contained in this complaint is simply an accusation, and not evidence of guilt. Evidence supporting the charge must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney James Kelleher. It was investigated by the Southwest Missouri Cyber Crimes Task Force, the Cobb County, Ga., Police Department and the FBI.
Project Safe Childhood
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."Navajo Man Sentenced to Seven Years for Brandishing Firearm During a Home Invasion on the Navajo Indian ReservationRead the Press Release
ALBUQUERQUE – Donovan F. Muskett, 22, an enrolled member of the Navajo Nation who resides in Navajo, N.M., was sentenced this afternoon to seven years in federal prison for brandishing a firearm during a crime of violence. Muskett will be on supervised release for three years after completing his prison sentence. He also was ordered to pay $668.40 to the victim of his crime.
The sentence was announced by Acting U.S. Attorney Steven C. Yarbrough and Director John Billison of the Navajo Nation Division of Public Safety.
Muskett was arrested on March 1, 2013, based on a criminal complaint charging him with assault with a dangerous weapon, using a firearm during a crime of violence and aggravated burglary. He subsequently was indicted and charged with committing the following offenses in Navajo, N.M., on Feb. 10, 2013: (1) assault with a dangerous weapon; (2) aggravated burglary; (3) brandishing a firearm during a crime of violence; and (4) negligent child abuse.
According to court records, on Feb. 10, 2013, Muskett forced his way at gunpoint into a Navajo residence occupied by a woman and a young child. Muskett pointed his firearm at the adult victim, demanded money from her, and threatened to shoot her. While Muskett was rummaging in the kitchen, the victim managed to push Muskett out of the residence and lock him out. After ensuring the child victim’s safety, the adult victim called the police and reported the break-in and assault. Officers were able to locate Muskett by following footsteps in the snow. Muskett was arrested on tribal charges and remained in tribal custody until his arrest on federal charges.
On Nov. 6, 2013, Muskett pled guilty to brandishing a firearm during a crime of violence. In entering his guilty plea, Muskett admitted brandishing a .22 caliber revolver at the adult victim with the intention of committing the felony offenses of assault with a dangerous weapon and aggravated battery.
This case was investigated by the Window Rock office of the Navajo Division of Public Safety with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives and was prosecuted by Assistant U.S. Attorneys Novaline D. Wilson and Kyle T. Nayback.
Mission Man Sentenced for First Degree Burglary and Sexual Abuse of A MinorRead the Press Release
United States Attorney Brendan V. Johnson announced that a Mission, South Dakota, man convicted of First Degree Burglary and Sexual Abuse of a Minor was sentenced on March 11, 2014, by U.S. District Judge Roberto A. Lange.
John Joseph Menard, age 27, was sentenced to 15 years in custody, 10 years supervised release, and a $200 special assessment to the Federal Crime Victims Fund.
Menard was indicted for First Degree Burglary and Sexual Abuse of a Minor by a federal grand jury on March 13, 2013. He pled guilty on December 18, 2013.
On November 5, 2012, Menard entered a residence in the early morning hours without permission, and entered the bedroom where a 7-year-old child was sleeping. Menard got into the bed with the child and attempted to engage in a sexual act with the child.
Between February 12, 2009, and February 18, 2009, Menard had sexual intercourse with a 13-year-old minor while the minor was staying at Menard’s home.
This case was investigated by the Federal Bureau of Investigation and the Rosebud Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Tim Maher prosecuted the case.
Menard was immediately turned over to the custody of the U.S. Marshals Service.
Michigan Man Indicted for Assaulting Federal EmployeeRead the Press Release
A federal grand jury in the Eastern District of Michigan today returned an indictment charging Ronnie Edward Duke, age 46, of Fenton, Michigan, with assaulting, resisting, or impeding
certain officers or employees, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.The indictment alleges that on February 24, 2014, in the Eastern District of Michigan, Duke forcibly assaulted, resisted, opposed, impeded, intimidated, and interfered with an Assistant United States Attorney in the Eastern District of Michigan.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases, it will be less than the maximum.
Because of the recusal of the U.S. Attorney’s Office for the Eastern District of Michigan, this investigation is being handled by the U.S. Attorney’s Office for the Northern District of Ohio. The case is being prosecuted by Assistant United States Attorneys Matthew B. Kall and Thomas P. Weldon, following investigation by the Federal Bureau of Investigation and U.S. Marshals Service.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
Mexican Native Charged with Illegal ReentryRead the Press Release
Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, today announced an Indictment was filed against Alejandro Morillo-Bedolla, age 36, of Mexico.
The indictment charges Morillo-Bedolla with unlawful reentry with an aggravated felony into the United States on March 29, 2010 and February 7, 2014.
If convicted, the defendant’s sentence will be determined by the Court after reviewing factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The investigating agency in this case is the Department of Homeland Security, Immigration and Customs Enforcement, Cleveland, Ohio. The case is being handled by Assistant United States Attorney Ava R. Dustin.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Massachusetts Man Sentenced for Drug TraffickingRead the Press Release
Contact: Daniel J. Perry
Assistant United States Attorney
Tel: (207) 780-3257
Portland, Maine: United States Attorney Thomas E. Delahanty II announced today that Efrain
Urena, a/k/a “Cheech”, of Lawrence, Massachusetts, was sentenced by United States District Judge
George Z. Singal to 12 years in prison to be followed by 5 years of supervised release for conspiracy
to distribute heroin. Urena pleaded guilty to the offense on October 9, 2013.
In late 2012 and early 2013, law enforcement agents learned that Urena supervised a family
drug trafficking operation in Lawrence that, from 2011 until Urena’s arrest in February 2013,
distributed heroin to customers in Maine and New Hampshire. On April 24, 2013, a superseding
indictment was returned charging Urena and thirteen other people with conspiracy to distribute
heroin. The investigation revealed that numerous home burglaries and shoplifting crimes were
committed by Urena’s heroin customers in order to pay for the heroin Urena was supplying.
This case results from a joint investigation conducted by agents with the United States Drug
Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Maine
Drug Enforcement Agency; New Hampshire and Maine State Police; the York County Sheriff’s
Office; the Rochester, New Hampshire Police Department; and the ongoing effort of the Organized
Crime Drug Enforcement Task Forces (OCDETF), a partnership between federal, state and local law
enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt and
dismantle the most serious drug trafficking, weapons trafficking and money laundering
organizations, and those primarily responsible for the nation’s illegal drug supply.
U.S. Attorney Delahanty praised the cooperation among these law enforcement agencies
noting that “this heroin trafficking operation was brought to justice because federal, state, county and
local law enforcement agencies across two states worked closely together.”Multi-Agency Gang (Mag) Unit Investigation Leads to Federal Indictment of Fnd Gang Members, Including Two Who Are Charged with the Mother’s Day ShootingRead the Press Release
U.S. Attorney Kenneth Allen Polite, Jr., announced the recent unsealing of a superseding indictment charging members of the Frenchmen/Derbigny gang, or “FnD,” with violating federal drug and firearm laws. A federal grand jury returned the superseding indictment on February 27, 2014, charging TRAVIS SCOTT, a/k/a “Trap” or “Slim,” age 29; STANLEY SCOTT, a/k/a “Stizzle,” age 23; SHAWN SCOTT, a/k/a “Shizzle,” age 25; AKEIN SCOTT, a/k/a “Keemy,” age 20; JEREMIAH JACKSON, a/k/a “Rocky,” age 23; GRALEN BENSON, a/k/a “Dooley,” age 26; BRIAN BENSON, a/k/a “Dub” or “Dubba,” age 24; CRYSTAL SCOTT, a/k/a “Chris,” age 32; and RICHMOND SMITH, a/k/a “Ace,” age 25, with various violations of the Federal Controlled Substances Act and the Federal Gun Control Act.
According to the superseding indictment, the Frenchmen/Derbigny gang conspired from 2006 through 2013 to violate federal drug distribution laws. The superseding indictment also alleges that some of the members, TRAVIS SCOTT, STANLEY SCOTT, SHAWN SCOTT, AKEIN SCOTT, JEREMIAH JACKSON, GRALEN BENSON, and RICHMOND SMITH, conspired to possess and use firearms in furtherance of the drug distribution operation. The superseding indictment specifically alleges that AKEIN SCOTT and his brother, SHAWN SCOTT, discharged firearms into a Mother’s Day second-line parade on May 12, 2013, in furtherance of that drug conspiracy. As part of this overall federal gang indictment and with the full cooperation of the Orleans Parish District Attorney’s Office, the United States Attorney’s Office will be adopting the firearms and drug charges that are currently pending in state court on the individual gang members in an effort to avoid a duplication of resources.
If convicted for violating federal drug conspiracy laws, the charged individuals face a maximum penalty of life imprisonment, a $10,000,000 fine, and at least five years of supervised release. Those individuals charged with conspiring to possess firearms in furtherance of the drug distribution conspiracy face a maximum twenty years in prison, a $250,000 fine, and up to three years of supervised release.
This superseding indictment represents a coordinated effort of federal and state law enforcement authorities within the Multi-Agency Gang (“MAG”) Unit. Federal agents and New Orleans Police Department officers assigned to the MAG Unit arrested GRALEN BENSON and JEREMIAH JACKSON on March 7, 2014. BRIAN BENSON was arrested by the MAG Unit on March 10, 2014. TRAVIS SCOTT is presently in federal custody, while STANLEY SCOTT, SHAWN SCOTT, and AKEIN SCOTT are currently in state custody. RICHMOND SMITH and CRYSTAL SCOTT are still at large.
U. S. Attorney Polite thanked all members of the MAG Unit for their contributions to this investigation and prosecution.
“Following one of the most despicable shootings in our city’s recent history, our federal, state and local law enforcement partners collaborated in an unprecedented fashion to identify the allegedly responsible individuals,” stated U.S. Attorney Polite. “This superseding indictment reflects the results of the MAG Unit’s outstanding work. Let this be a signal to the entire community: those who terrorize our streets through drug trafficking and gun violence will be brought to justice.”
ATF Special Agent in Charge Phil Durham stated, “Since the day of this horrendous crime where 19 people were shot while attending a parade celebrating Mother’s Day, ATF Special Agents assigned to the MAG Unit have worked around the clock with investigators and prosecutors to see that those involved are held accountable for their actions. ATF will continue to dedicate our resources to targeting and reducing violent crime in the City of New Orleans.”
“This indictment is another clear signal that the rules have changed -- there are real consequences for violence in our city. Since the fall of 2012, the Multi-Agency Gang Unit has led to the indictments of 83 individuals associated with 8 groups,” said Mayor Landrieu. “Through NOLA FOR LIFE, we will continue to focus on keeping our citizens safe, reclaiming our neighborhoods, and offering opportunities to those who want to make better choices.”
NOPD Superintendent Ronal Serpas said, “The collaboration of all partners in the Multi-Agency Gang (MAG) Unit has proven to be undeniably effective in getting some of the city’s most violent criminals out of our neighborhoods. In some cases, innocent people felt they were being held hostage by fear of illegal activities that were prevalent in their communities. These indictments are proof that the game has changed. As a team - we are focused and we are unrelenting.”
U. S. Attorney Polite reiterated that the superseding indictment is merely a charge and that the guilt of the defendants must be proven beyond a reasonable doubt.
ATF Special Agents assigned to the MAG Unit are the lead case agents. The prosecution is being handled by Assistant United States Attorney Matthew Payne and Special Assistant United States Attorney Brian Ebarb, who is assigned from the Orleans Parish District Attorney’s Office.
(Download Superseding Indictment )
Lincoln County Man Indicted on Tax ChargesRead the Press Release
St. Louis, MO – PETER GIAMBALVO was indicted on tax charges for allegedly filing false tax returns from 2003-2010.
According to the indictment, Giambalvo was an employee of The Boeing Company. The indictment alleges that for eight years beginning in 2003 through 2010, Giambalvo claimed zero earnings, when in fact he had earned wages, salaries, tips, etc. of approximately $498,540 for those years.
"Those Americans who file accurate, honest and timely returns can be assured that the government will hold accountable those who don't," said Sybil Smith, Special Agent in Charge of IRS Criminal Investigation.
Giambalvo, Hawk Point, MO, was indicted by a federal grand jury on one felony count of interfering with the administration of the Internal Revenue Laws, and eight felony counts of filing false tax returns. The indictment was returned March 5, but remained sealed until the arrest of the defendant earlier today.If convicted, each count of the indictment carries a maximum penalty of three years in prison and/or fines up to $250,000. In determining the actual sentences, a Judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by IRS Criminal Investigation. Assistant United States Attorney Steven Muchnick is handling the case for the U.S. Attorney's Office.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Kodiak Fish Processor Pleads Guilty to Illegal Dumping of Ammonia and Ordered to Pay $205,000 in Criminal PenaltiesRead the Press Release
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced today that North Pacific Seafoods pled guilty in U.S. District Court in Anchorage to a charge of illegal dumping of ammonia into the Kodiak city sewer.
North Pacific Seafoods is a Seattle, Washington corporation, which is a subsidiary of Marubeni, a Japanese corporation. North Pacific Seafoods owns five seafood processing facilities throughout Alaska, including Alaska Pacific Seafoods, located in Kodiak, Alaska. North Pacific Seafoods pled guilty to one count of violating the Clean Water Act for illegal dumping of ammonia from its facility, Alaska Pacific Seafoods, into the Kodiak city sewer.
North Pacific Seafoods was sentenced today by Chief United States District Court Judge Ralph R. Beistline, to three years of probation, and $205,000 in criminal penalties, $55,000 of which is to be directed to the City of Kodiak for hazardous waste response training and equipment for sewer and fire department employees. The terms of probation ordered by Judge Beistline also require that North Pacific Seafoods comply with an Environmental Compliance Plan that includes, among other things, training for all employees at all five facilities in Alaska regarding proper handling of hazardous wastes and specifically ammonia.
According to Assistant U.S. Attorney Andrea “Aunnie” Steward, on November 29, 2011, North Pacific Seafoods’ employees at its Alaska Pacific Seafoods facility dumped approximately 40 pounds of ammonia waste from its refrigeration system into the Kodiak city sewer. The ammonia odor was detected by employees at the sewage plant for Kodiak. The Kodiak Fire Department was asked to help locate the source of the ammonia. The chief engineer for the Alaska Pacific Seafoods facility at first denied discharging the ammonia when asked about the ammonia odor. Sewer employees then traced the discharge back to the Alaska Pacific Seafoods facility, at which time the chief engineer admitted to the discharge. The discharge of the ammonia by the Alaska Pacific Seafoods facility wiped out the secondary treatment at the sewer system and caused the sewer system to violate its Clean Water Act permit.
A joint investigation by the federal Environmental Protection Agency and the Alaska Department of Environmental Conservation determined that the facility had been discharging ammonia into the St. Paul Harbor before and after the sewer incident in violation of its Clean Water Act permit. North Pacific Seafoods disputes the illegality of the ammonia discharges into St. Paul Harbor that occurred prior to the entry of its guilty plea but agrees that in the future such discharges will be prohibited.
The chief engineer that directed the discharge at the Alaska Pacific Seafoods facility, Bill Long, is scheduled to be arraigned in state court on Friday, March 14, 2014, at 9:30 a.m., on a charge of violating the permit regulated by the Alaska Department of Environmental Conservation.
“This result demonstrates how the longstanding federal-state partnership works to protect the public health, safety and environment of Alaska. It further sends a message that fish processors and other companies that handle hazardous wastes must be vigilant in their efforts to meet regulatory requirements,” said U.S. Attorney Karen Loeffler.
“By the company’s own admission, North Pacific Seafoods’ employees negligently discharged enough anhydrous ammonia – a potentially lethal chemical – to knock out Kodiak’s wastewater treatment plant, forcing it to violate its federal Clean Water Act permit and potentially endangering plant workers. Seafood processors should know that cutting corners and illegally discharging ammonia puts their facility, their workers, and the community at risk,” said Tyler Amon, Special Agent-in-Charge of EPA Criminal Investigation Division in the Pacific Northwest.
“The State, in partnership with its federal counterparts, takes seriously the enforcement and protection of Alaska’s waters and lands. Corporations like North Pacific Seafoods and their employees must be held accountable for their actions when they violate state and federal law. The State will criminally prosecute those who endanger the health of Alaska’s citizens and pollute our environment,” said Carole A. Holley, Assistant Attorney General, Alaska Office of Special Prosecutions and Appeals.
Ms. Loeffler commends the United States Environmental Protection Agency Criminal Investigation Division and the Alaska Department of Environmental Conservation for the investigation of this case.
Justice Department Reaches Settlement with Blair County, Pa., over Polling Place Access for Voters with DisabilitiesRead the Press Release
The Justice Department today announced a settlement under Title II of the Americans with Disabilities Act (ADA) with Blair County, Pa., to greatly improve physical accessibility at the county’s polling places for individuals who use wheelchairs and other mobility aids and for individuals who are blind or have vision impairments. Title II prohibits discrimination on the basis of disability by a state or local government in any of its programs or services, including its voting program.
Under the terms of the settlement, accessibility will be a major criterion in the county’s selection of polling places. To make that assessment, the county will use an evaluation form for each prospective polling place based on ADA architectural standards. The settlement requires the county to either relocate inaccessible polling places to accessible facilities or to use temporary measures such as portable ramps, signs, traffic cones and doorbells where appropriate to ensure accessibility on Election Day. The settlement will provide individuals with disabilities the opportunity to vote at the polls throughout Blair County, rather than solely through the use of an absentee ballot.
“The right to vote is the cornerstone of our democracy,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels. “This agreement will ensure that persons with mobility disabilities and vision impairments have equal opportunities to exercise their right to vote in person at their assigned polling place, just like their neighbors. The Justice Department is committed to continued, vigorous enforcement of the panoply of federal civil rights laws aimed at securing the right to vote for all Americans, including the Americans with Disabilities Act.”
More information about this settlement and the ADA is available at the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY), and via its ADA website.
Information Charges Bala Cynwyd Man with Financial CrimesRead the Press Release
Jerold J. Cohen, 78, of Bala Cynwyd, PA, was charged today by Information with conspiracy, aggravated structuring of financial transactions, and filing false tax returns, announced United States Attorney Zane David Memeger. The Information charges that Cohen operated a sports bookmaking operation and accepted payment from his bettors in the form of checks. According to the information, between May 2009 and January 2011, Cohen cashed and caused to be cashed over 170 such checks, each made out for just under $10,000, for a total of over $1.5 million, which was income he received in connection with his bookmaking operation. It is further alleged that in 2009 and 2010, Cohen underreported income from his bookmaking operation by at least $450,000 in each year.
If convicted, the defendant faces a maximum possible sentence of 21 years in prison, threeyears of supervised release, a $950,000 fine, a $400 special assessment, and forfeiture of $1.5 million.
The case was investigated by the Internal Revenue Service Criminal Investigations and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Nancy E. Potts.
Click here to view the indictment
1An Indictment/ Information/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, 215-861-8525INTERPOL Stolen/Lost Travel Document DatabaseRead the Press Release
USDOJ: INTERPOL Washington: Updates
Department of Justice
INTERPOL Washington FOR IMMEDIATE RELEASE Monday, March 11, 2014INTERPOL Stolen/Lost Travel Document Database
INTERPOL's Stolen/Lost Travel Document database (SLTD) is a searchable repository of information on passports, visas, and identity documents that have been reported stolen or lost, helping prevent the illicit international travel of criminals and terrorists. Currently containing over 40 million records, SLTD is available to police and border security authorities in 190 INTERPOL member countries through their respective National Central Bureaus (NCBs). INTERPOL's General Secretariat administers the database, which became operational in July 2002.
Designed as an investigative tool for law enforcement and border protection entities, SLTD allows authorized users to query specific passport numbers. The database returns information on suspect documents that includes the issuing country, document type, document number, date of theft/loss, and certain information related to the circumstances of the theft or loss.
A country's passport issuing authority, through its corresponding NCB, is the only entity authorized to enter and modify records in SLTD pertaining to the loss or theft of its national travel documents. The United States is one of the largest contributors to SLTD, with over 3 million records currently on file and updates occurring on a daily basis.
INTERPOL Washington, the U.S. National Central Bureau, manages U.S. participation in the SLTD program. Its related responsibilities include ensuring the timely and accurate entry of stolen/lost U.S. passport data into SLTD upon receipt from the U.S. Department of State, establishing and maintaining SLTD query access by U.S. law enforcement and border inspection authorities, and performing verification and resolution in cases involving foreign passports recorded in SLTD presented to U.S. Customs and Border Protection officers at all U.S. ports of entry. INTERPOL Washington also coordinates with its foreign counterparts to resolve any cases involving lost, stolen, and fraudulent U.S. passports presented at foreign border control points.
In May 2007, Congress, the Department of Homeland Security, and the Department of State formally recognized the importance of SLTD as a screening tool for all travelers seeking to enter the United States. International organizations such as the G8, the European Union, the Organization for Security and Co-operation in Europe and the United Nations Security Council have also endorsed the program. Presently all countries participating in the U.S. Visa Waiver Program report their stolen/lost passport data to INTERPOL for entry into SLTD, as set forth in the Implementing Recommendations for the 9/11 Commission Act of 2007, Pub. L. No. 110-53.
The United States currently screens the passports of all persons entering the country against SLTD. Additionally, the U.S. Department of State queries all U.S. visa applicants' passports against the database. In 2013, U.S. authorities conducted over 238 million SLTD queries, the majority of which came from the U.S. Department of Homeland Security.
Home Health Care Provider Pleads Guilty to FailingTo Pay Employment TaxesRead the Press Release
A Detroit resident pleaded guilty to willfully failing to pay employment taxes to the Internal Revenue Service, United States Attorney Barbara L. McQuade announced today. Ms. McQuade was joined in the announcement by Detroit Field Office Acting Special Agent in Charge Carolyn Weber, Internal Revenue Service Criminal Investigation.
Joann Braggs entered the guilty plea in United States District Court before Judge David M. Lawson.
According to court records, during April 2003 through January 2006, Braggs was the president and owner of Bethharold Home Health Care, Incorporated (BHHC) and Bethharold Private Duty Care (BPDC). During this time period, BHHS and BPDC withheld employment taxes from the employees’ paychecks, including federal income taxes, Medicare and Social Security taxes. It was Braggs’ responsibility to pay the payroll taxes for both companies. Braggs collected approximately $1,228,832 in employment taxes that she failed to send to the Internal Revenue Service (IRS). Instead, Braggs used this money for personal expenses.
The investigation of this case was conducted by special agents of the Internal Revenue Service, and prosecuted by Assistant U.S. Attorney Christopher Graveline.
"Business owners have a responsibility to withhold income taxes for their employees and then remit those taxes to the Internal Revenue Service," said Acting Special Agent in Charge Carolyn Weber. "Instead, Braggs decided to spend the funds on herself and now faces serious consequences for her actions."
A sentencing hearing will be set by Judge Lawson where Braggs faces a statutory maximum penalty of not more than five years and a $250,000 fine per each count.Hogsett Announces Perjury Charges as Child Sexual Exploitation Case ExpandsRead the Press Release
Henry County DCS employee arrested for perjury and lying to federal agents
INDIANAPOLIS– Joseph H. Hogsett, the United States Attorney, announced today that the former local director of the Indiana Department of Child Services (“DCS”) and member of the New Castle Community School Corporation’s school board has been charged by criminal complaint with one count of perjury and one count of making a materially false statement.
Michael Fleming, 58, of New Castle, has been charged for his role in allegedly lying in front of a federal grand jury and to federal agents who were following up on a criminal complaint previously filed against Darrell Hughes by the U.S. Attorney’s Office. Specifically, Hughes is charged with three counts of sexual exploitation of a child and attempted exploitation of a child. It is alleged that Hughes made contact with boys who he would have met at an alternative school operated by the New Castle School system. The alternative school is commonly referred to as North Campus.
As part of its mission, DCS receives and investigates allegations of inappropriate behavior victimizing children. Also it normally maintains records of such investigations. It was, therefore, predictable for investigators to seek to determine if DCS had records of any such allegations of inappropriate behavior by Hughes.
The criminal complaint pertaining to Fleming unsealed this morning alleges that on February 4, 2014, agents from the U.S. Immigration and Customs Enforcement, Homeland Security Investigations (“HSI”) went to Fleming’s office in New Castle to further the investigation of Hughes. Agents served Fleming with a subpoena to testify in front of the grand jury. At that time, the agents asked Fleming whether he knew that Hughes had been arrested. He acknowledged that he did. When asked if he had ever heard complaints of alleged misconduct or inappropriate behavior by Hughes, Fleming said no. The agents soon left the DCS office and asked Fleming to call with any follow-up information.
The complaint further alleges that on February 18, 2014, Fleming testified in front of the federal grand jury for the Southern District of Indiana. During that testimony Fleming stated that he was familiar with Hughes because of counseling services that Hughes provided to children but was not aware of any complaints related to Hughes before his arrest.
On February 24, 2014, federal agents were contacted by legal counsel for DCS and informed that Fleming had been terminated from his position as local DCS director for encouraging a DCS subordinate employee to make false statements in the Hughes investigation. The DCS subordinate employee reported to supervisors that a complaint has been made against Hughes on at least one occasion and Fleming, indeed, knew of this complaint. Fleming then encouraged that subordinate employee to make untruthful statements in the Hughes investigation. After his grand jury testimony, Fleming told the same employee that he gave inaccurate or incomplete information to the grand jury stating, “I didn’t tell them anything, I guess I told a little white lie, if anyone asks, don’t say anything.”
“Interfering with an investigation will not be tolerated by this office,” said U.S. Attorney Hogsett. “But when the crime involves the exploitation of Hoosier children and lying by a public official, it is even more egregious.”
"These charges allege that Mr. Fleming chose to lie rather than assist authorities as they investigated allegations of child sexual exploitation that took place under his watch,” said Gary Hartwig, special agent-in-charge of HSI Chicago. “The defendant betrayed the public trust by placing his own self-interest above the needs of the young victims in this case. HSI works tirelessly to protect innocent children from sexual predators, and we will hold those who attempt to interfere with a criminal investigation accountable for their actions.”
According to U.S. Attorney’s Office Senior Litigation Counsel Steven DeBrota, Fleming could face up to 13 years’ in federal prison if convicted on both charges and be fined up to $500,000.
This case has been jointly investigated by HSI and the Hamilton County Child Exploitation Task Force.
A complaint is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
Highland Man Sentenced to 17 ½ Years in PrisonFor Receipt Child of PornographyRead the Press Release
A Highland man was sentenced today to 17 ½ years in federal prison after having pleaded guilty to receipt and possession of child pornography, U.S. Attorney Barbara L. McQuade announced.
McQuade was joined in the announcement by Special Agent in Charge Marlon Miller, Department of Homeland Security, Detroit Division.
Michael Mazel, 38, was sentenced by U.S. District Judge George Caram Steeh in Detroit.
Evidence established that Mazel used a peer-to-peer file sharing program to download images and videos of children being forced to engage in sexually explicit activities with adults. He also exchanged emails with several individuals who appeared to be pre-teenage girls, asking them to engage in graphic sexual activities with him, and sending them child pornography.
Agents from the Department of Homeland Security identified more than 400 images and videos, some portraying sadistic or masochistic conduct.
Just before his sentencing date, Mazel fled the state and tried to cross the border into Mexico. The U.S. Marshals Fugitive Apprehension Team captured him in Casa Grande, Arizona. Upon arrest, law enforcement discovered that Mazel had survival gear, camping equipment, two loaded firearms, and laptop computer and hard drives that contained child pornography. He is separately indicted on those charges.
In announcing the sentence, McQuade stated, “We appreciate the work of the U.S. Marshals Service to locate and capture this defendant, a child predator who solicited sexual acts from pre-teen girls.”
"Today's sentencing clearly reflects HSI's aggressive efforts to combat child exploitation in all forms," said Miller. "Mazel's capture and ultimate sentencing should send a strong message to child predators that HSI and our law enforcement partners will hunt them down and hold them accountable before the law."
This case was investigated by the Department of Homeland Security. It was prosecuted by Assistant United States Attorney Maggie Smith, of the General Crimes Unit. "
Highland Man Sentenced to 17 ½ Years in PrisonFor Receipt Child of PornographyRead the Press Release
A Highland man was sentenced today to 17 ½ years in federal prison after having pleaded guilty to receipt and possession of child pornography, U.S. Attorney Barbara L. McQuade announced.
McQuade was joined in the announcement by Special Agent in Charge Marlon Miller, Department of Homeland Security, Detroit Division.
Michael Mazel, 38, was sentenced by U.S. District Judge George Caram Steeh in Detroit.
Evidence established that Mazel used a peer-to-peer file sharing program to download images and videos of children being forced to engage in sexually explicit activities with adults. He also exchanged emails with several individuals who appeared to be pre-teenage girls, asking them to engage in graphic sexual activities with him, and sending them child pornography.
Agents from the Department of Homeland Security identified more than 400 images and videos, some portraying sadistic or masochistic conduct.
Just before his sentencing date, Mazel fled the state and tried to cross the border into Mexico. The U.S. Marshals Fugitive Apprehension Team captured him in Casa Grande, Arizona. Upon arrest, law enforcement discovered that Mazel had survival gear, camping equipment, two loaded firearms, and laptop computer and hard drives that contained child pornography. He is separately indicted on those charges.
In announcing the sentence, McQuade stated, “We appreciate the work of the U.S. Marshals Service to locate and capture this defendant, a child predator who solicited sexual acts from pre-teen girls.”
"Today's sentencing clearly reflects HSI's aggressive efforts to combat child exploitation in all forms," said Miller. "Mazel's capture and ultimate sentencing should send a strong message to child predators that HSI and our law enforcement partners will hunt them down and hold them accountable before the law."
This case was investigated by the Department of Homeland Security. It was prosecuted by Assistant United States Attorney Maggie Smith, of the General Crimes Unit. "
Grand Jury Returns IndictmentsRead the Press Release
MINNEAPOLIS—A federal grand jury in the District of Minnesota, sitting in Minneapolis, recently returned the following indictments. You are advised that a charge is merely an accusation, and that a defendant is presumed innocent until and unless proven guilty. Any sentence is determined by a federal district judge.Minneapolis felon charged with possessing shotgun
James Reedus Berry, age 53, of Minneapolis, is charged with one count of being a felon in possession of a firearm and one count of possession of an unregistered firearm. Because he is a felon and three or more of his prior convictions were for violent or drug crimes, Berry is subject to the federal armed career criminal statute, which mandates a minimum sentence of 15 years in federal prison upon conviction.
If convicted, Berry faces a potential maximum penalty of ten years in prison on the unregistered firearm count. This case is the result of an investigation by the Minneapolis Police Department, and United States Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”). It is being prosecuted by Assistant U.S. Attorney Julie E. Allyn.Former postal employee charged with theft of mail
Debra Sue Morrow, age 60, of Faribault, was charged with one count of theft of mail by postal employee.
If convicted, Morrow faces a potential maximum penalty of five years in prison. This case is the result of an investigation by the U.S. Postal Service-Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney Sarah E. Hudleston.Minneapolis felon charged with possessing five firearms
James Herman Pegues, age 48, of Minneapolis, was charged via a superseding indictment with one count of being a felon in possession of a firearm. Because he is a felon and three or more of his prior convictions were for violent or drug crimes, Pegues is subject to the federal armed career criminal statute, which mandates a minimum sentence of 15 years in federal prison upon conviction.
If convicted, Pegues faces a potential maximum penalty of life in prison. This case is the result of an investigation by the Fridley Police Department, and ATF. It is being prosecuted by Assistant U.S. Attorney LeeAnn K. Bell.Minneapolis man charged with receiving, distributing and possessing child pornography
Michael Thomas Schnapp, age 30, of Minneapolis, was charged with one count of receipt of child pornography, one count of distribution of child pornography, one count of attempted distribution of child pornography, and one count of possession of child pornography.
If convicted, Schnapp faces a potential maximum penalty of 40 years in prison on the receipt, distribution and attempted distribution counts, and 20 years on the possession count. This case is the result of an investigation by the Minneapolis Police Department and the Minnesota Internet Crimes Against Children Task Force. It is being prosecuted by Assistant U.S. Attorney Manda M. Sertich.
Distribution, receipt and possession of child pornography is against the law. In addition to prosecuting these cases, the Justice Department is presently funding a study focused on the correlation between involvement in child pornography and hands-on sexual abuse of children. A 2008 study (The Butner Study) published in the Journal of Family Violence found that up to 80 percent of federal inmates incarcerated for possession, receipt, or distribution of child pornography also admitted to hands-on sexual abuse of children, ranging from touching to rape.This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, PSC marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children and identify and rescue victims. For more information about PSC, please visit http://www.justice.gov/psc/ For more information about internet safety education, please visit http://www.justice.gov/psc/resources.html and click on the tab “resources.”
Grand Jury Returns IndictmentsRead the Press Release
MINNEAPOLIS—A federal grand jury in the District of Minnesota, sitting in Minneapolis, recently returned the following indictments. You are advised that a charge is merely an accusation, and that a defendant is presumed innocent until and unless proven guilty. Any sentence is determined by a federal district judge.Felon charged with possessing a .45-caliber pistol
Trevor James Beckman, age 30, unknown address, is charged with one count of being a felon in possession of a firearm. Because he is a felon and three or more of his prior convictions were for violent crimes, Beckman is subject to the federal armed career criminal statute, which mandates a minimum sentence of 15 years in federal prison upon conviction.
If convicted, Beckman faces a potential maximum penalty of life in prison. This case is the result of an investigation by the Rochester Police Department, and United States Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”). It is being prosecuted by Assistant U.S. Attorney Carol M. Kayser.Minneapolis felon charged with possessing a nine-millimeter pistol
Andre Maurice Cox, age 41, of Minneapolis, was charged with one count of being a felon in possession of a firearm.
If convicted, Cox, also known as Anthony White, faces a potential maximum penalty of ten years in prison. This case is the result of an investigation by the Minneapolis Police Department, and the ATF. It is being prosecuted by Assistant U.S. Attorney Surya Saxena.St. Paul felon charged with possessing a nine-millimeter pistol
Michael Anthony Vargas, age 31, of St. Paul, was charged with one count of being a felon in possession of a firearm. Because he is a felon and three or more of his prior convictions were for violent crimes and/or drug trafficking, Vargas is subject to the federal armed career criminal statute, which mandates a minimum sentence of 15 years in federal prison upon conviction.
If convicted, Vargas faces a potential maximum penalty of life in prison. This case is the result of an investigation by the St. Paul Police Department, and ATF. It is being prosecuted by Assistant U.S. Attorney LeeAnn K. Bell.Four Indicted for Operating Food Stamp Fraud from Cleveland StoreRead the Press Release
Four men from Northeast Ohio were charged in a five-count indictment with engaging in a conspiracy to defraud the food stamp and Women, Infants and Children programs from a store on Detroit Avenue in Cleveland, law enforcement officials said.
Indicted are: Bashir Mohamed, age 31, of Cleveland; Yusuf Maalin, 45, of Cleveland; Ali Shire Ahmed, 54, of North Olmsted, Ohio; and Farah Hasan Warsame, 27, of Cleveland.
The indictment alleges that Mohamed, Maalin, Ahmed, and Warsame conspired to illegally allow customers to redeem food stamp and WIC benefits at Bashir Market, 8401 Detroit Avenue, in exchange for cash, ineligible items, and credit towards overseas wire transfers.
Mohamed, Maalin, and Warsame allegedly worked at the market and redeemed the food stamp and WIC benefits for the cash, unauthorized items, or credit towards overseas funds transfers. The credit for overseas funds transfers was tracked on a ledger kept at the market, according to the indictment.
Mohamed or Maalin would then provide Ahmed with cash or a check that Ahmed would take to Columbus, Ohio, to send overseas by wire transfer. The indictment alleges that the conspiracy involved the attempted redemption of approximately $670,612 in food stamp and WIC benefits, according to the indictment.
The conspiracy took place between 2008 and last year, according to the indictment.
In addition to the conspiracy charge, Mohamed, Maalin, Ahmed, and Warsame are also charged with counts of food stamp fraud, unlawful food stamp redemptions, and WIC fraud. Ahmed is charged with one count of money laundering.
The indictment results from an investigation conducted by the United States Department of Agriculture, Office of the Inspector General; the Federal Bureau of Investigation; and Department of Homeland Security, Homeland Security Investigations.
The case is being handled by Assistant United States Attorneys Matthew W. Shepherd and M. Kendra Klump.
If convicted, the defendants’ sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Four from Buffalo Indicted for Buying Gift Cards with Fraudulent Credit CardsRead the Press Release
Four people from Buffalo, New York, were indicted on charges that they used fraudulent credit cards to buy $19,500 worth of gift cards from a Walmart and Rite Aid in Cleveland, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Indicted are Ricky Butler, 37, Cherise Luper, age 22, Brianna Davis, age 20, and Larry Cross, age 22. They face charges of access device fraud, aggravated identity theft, unlawful possession of a document-making implement, and conspiracy to commit the same.
The indictment alleges that the four individuals fraudulently obtained credit cards that they later used to purchase gift cards valued at approximately $19,500 from the Walmart stores at 3400 Steelyard Drive and 10000 Brookpark Road and the RiteAid store at 10502 St. Clair Avenue, all in Cleveland, as well as two stores in New York.
It further alleges that the defendants acquired and produced counterfeit identification cards that they used in the identity-theft and access-device scheme.
In all, they obtained 39 gift cards, each worth $500, according to the indictment.
If convicted, the defendants’ sentences will be determined by the Court after review of factors unique to this case, including the defendants’ prior criminal record, if any, the defendants’ role in the offense, and the characteristics of the violation. In all cases, the sentences will not exceed the statutory maximum and in most cases they will be less than the maximum.
The case is being prosecuted by Assistant U.S. Attorneys M. Kendra Klump, Robert W. Kern, and James L. Morford following an investigation by the United States Secret Service and the Bedford Police Department.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Former Wisconsin Resident Sentenced in Federal Court for Defrauding Charity Based in Union Grove, WIRead the Press Release
United States Attorney James L. Santelle, of the Eastern District of Wisconsin, announced that on March 11, 2014, Michael Wayne Lowstetter (age: 35) of Xenia, Ohio (formerly of Union Grove, Wisconsin) was sentenced to 30 months in a federal prison by United States District Judge Charles N. Clevert, Jr. Lowstetter had previously pleaded guilty to two counts of mail fraud, in violation of Title 18, United States Code, Section 1341. The District Judge also imposed a term of three years’ supervised release, to follow the term of imprisonment, and a special assessment of $200.
According to the plea agreement and other documents filed with the court, Lowstetter defrauded Shepherds Baptist Ministries of more than $400,000 during the 2009-2012 time frame by using his position as Vice President for Finance to divert funds to himself. Shepherds Baptist Ministries is a faith-based organization headquartered in Union Grove, Wisconsin. It provides vocational training and other services to individuals with intellectual disabilities.
In addition to the above term of imprisonment, Lowstetter will be required to pay restitution in the amount of $453,737.12 to Sheperds and its insurer. In sentencing the defendant, Judge Clevert noted that the “ripple effects” of his crime, which involved a betrayal of trust, would continue to be felt by Sheperds Ministries and its clients and donors, and by Lowstetter’s family. He also noted that, even in a case where the defendant accepts responsibility and has suffered on account of his actions, it is important that others be deterred from engaging in financial fraud by the imposition of a sentence of imprisonment.
The case was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Jonathan H. Koenig.
Former Teacher Sentenced to 25 Years in Prison for Production of Child Pornography and Other ChargesEric Justin Toth Left Washington, D.C. Area Upon Discovery of Crimes; Former FBI Ten Most Wanted Fugitive Was Captured in NicaraguaRead the Press Release
WASHINGTON – Eric Justin Toth, 32, a former private school teacher and camp counselor, was sentenced today to 25 years in prison on child pornography and other charges.
Toth left the Washington, D.C. area in 2008, amid an investigation that began with the discovery of pornographic images on a school camera that had been in his possession. After charges were filed against him, he became the subject of an international search and later was placed on the FBI’s list of Ten Most Wanted Fugitives. He was apprehended in Nicaragua last year and pled guilty in December 2013 in the U.S. District Court for the District of Columbia.
The sentence was announced by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; Rod J. Rosenstein, U.S. Attorney for the District of Maryland; John W. Vaudreuil, U.S. Attorney for the Western District of Wisconsin; Robert L. Pitman, U.S. Attorney for the Western District of Texas; Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; John S. Leonardo, U.S. Attorney for the District of Arizona; Andrew M. Luger, U.S. Attorney for the District of Minnesota; John McCarthy, State’s Attorney for Montgomery, County, Md.; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; Cathy L. Lanier, Chief of the Metropolitan Police Department (MPD), and J. Thomas Manger, Chief of the Montgomery County, Md. Police Department.
Toth pled guilty on Dec. 12, 2013, to three counts of production of child pornography and one count each of misuse of a Social Security number and identity theft. He was sentenced by the Honorable Rudolph Contreras, who today accepted a plea agreement signed by the parties.
Following completion of the prison term, Toth will be placed on supervised release for the rest of his life. Upon his release, Toth also must register as a sex offender, receive sex offender treatment, and observe limits on his use of the Internet and his contacts with minors.
The guilty plea resolved charges and potential charges in several jurisdictions, including the District of Columbia, Maryland, Wisconsin, Texas, Minnesota, Arizona, and Florida.
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“For the next 25 years, Eric Toth will be where he deserves to be – in a federal prison where he cannot harm any more children,” said U.S. Attorney Machen. “Behind bars, Toth will no longer be able to manipulate and sexually exploit our most vulnerable victims. The FBI deserves tremendous credit for tracking Toth to Nicaragua and bringing him to the District of Columbia to face justice. The five-year manhunt that led to his capture demonstrates the depth of our commitment to defending children from sexual predators.”
“Eric Toth spent five years on the run from justice, but today he learned his fate and will spend a substantial time behind bars where he will not be able to harm our children or the community,” said Assistant Director in Charge Parlave. “I want to thank the dedicated agents, analysts and prosecutors who spent countless hours vetting tips from the public, chasing leads and eventually tracking down Toth. Their work is representative of the high priority the FBI places on finding those who perpetrate crimes against children.”
“This defendant’s crimes must be answered for,” said State’s Attorney McCarthy. “Thanks to the work of law enforcement forces around the world, Toth will be punished for his reprehensible actions, and his victims will be spared further trauma. Today, justice takes its course.”
“This defendant used his position to exploit vulnerable youth in various communities,” said Chief Lanier. “I am pleased that the efforts of the Metropolitan Police Department, along with our local and federal law enforcement partners, led to this fugitive being captured and ultimately sentenced.”
The investigation of Toth began in June 2008 with the discovery of images depicting child pornography on a camera at a private school in the District of Columbia, where he had been teaching. School administrators called the police, and security officers immediately escorted Toth from the school campus. Toth left the area soon thereafter, while the law enforcement investigation was continuing. Federal charges were filed against him in 2008 in the District of Columbia and Maryland. Toth, meanwhile, remained at large, traveling to multiple places.
Toth was placed on the FBI’s Ten Most Wanted Fugitives list in April 2012 and finally apprehended in Nicaragua in April 2013.
The three child pornography charges included in the guilty plea stem from photographs and videos that Toth took of children while working in 2005 as a camp counselor in northwest Wisconsin; as a teacher in 2006 at the private school in the District of Columbia; and at a private home in Maryland in 2007. These photographs and videos were located on a camera and media card found at the school in June 2008 and on a thumb drive found in Toth’s car when it was located at the Minneapolis-St. Paul International Airport in August 2008. Additionally, Toth pled guilty to misuse of a Social Security number for using someone else’s identifying information while working in Texas from 2009 until 2012. The identity theft charge stems from Toth’s use, in Texas, Florida, and elsewhere, of yet another person’s identifying information on a fraudulently obtained passport.
As part of the plea agreement, Toth will not face charges for additional images of child pornography that were found on computers that Toth used. In June 2009, after law enforcement learned that Toth had been living and working at a homeless shelter in Phoenix, authorities discovered a laptop computer that Toth had been using that contained images depicting child pornography. Toth had already left Phoenix at the time of this discovery. In addition, after Toth’s arrest, law enforcement discovered images and videos depicting child pornography on a laptop computer that Toth used when he lived in Texas and Nicaragua.
This case was investigated by the FBI’s Washington Field Office; the Metropolitan Police Department; the Montgomery County, Md., Police Department, and other agencies.
This case was prosecuted by Assistant U.S. Attorney Cassidy Kesler Pinegar of the U.S. Attorney’s Office for the District of Columbia, Special Assistant U.S. Attorney LisaMarie Freitas of the U.S. Attorney’s Office for the District of Maryland, and Assistant State’s Attorney Donna Fenton of the Montgomery County, Md. State’s Attorney’s Office.
Assistance during the investigation was provided by the U.S. Attorney’s Offices from the Western District of Wisconsin; the Western District of Texas; the Southern District of Florida; the District of Arizona, and the District of Minnesota; the Montgomery County, Md. State’s Attorney’s Office; the U.S. Embassy Managua Regional Security Office; the Diplomatic Security Service Criminal Investigative Liaison Branch; U.S. Customs and Border Protection; the U.S. Marshals Service's National Sex Offender Targeting Center; and the National Center for Missing and Exploited Children - Sex Offender Tracking Team.
The Nicaraguan National Police (NNP) Commissioner's Office, the NNP Trafficking in Persons Unit, and the Nicaraguan Immigration Service performed crucial work in securing Toth’s apprehension.
Those assisting from the U.S. Attorney’s Office for the District of Columbia include Assistant U.S. Attorneys Julieanne Himelstein, Catherine K. Connelly, David Johnson and Virginia Cheatham, and former Assistant U.S. Attorneys Angela Schmidt and Michelle Zamarin. Paralegal Specialist Toni Donato also provided assistance.
14-061Former Nissan Employee and Two Others Plead Guilty in Scheme to Defraud NissanRead the Press Release
Kenneth Carter, 45, of Corona, Calif., Wendell Young, 34, of Inglewood, Calif., and Bruce Young, 50, of Compton, Calif., pleaded guilty on March 7, 2014, to participating in a scheme to defraud Nissan North America, announced United States Attorney David Rivera. They will be sentenced by Judge William J. Haynes, Jr. on May 30, 2014.
Kenneth Carter pleaded guilty to all counts in the indictment, including conspiracy to commit mail fraud, three counts of mail fraud, and conspiracy to commit money laundering. Carter faces up to 20 years in prison and a fine of $500,000 on the conspiracy to commit money laundering count, up to 20 years in prison and a fine of $250,000 on each of the mail fraud counts, and up to five years in prison and a fine of $250,000 on the conspiracy to commit mail fraud count.
Wendall Young and Bruce Young entered into plea agreements with the government whereby each pleaded guilty to one count of conspiracy to commit money laundering.
According to the indictment, from March 2007 through April 2008 Kenneth Carter was employed at Nissan’s Franklin, Tennessee headquarters as an “Arbitration Specialist.” In that role, his duties were to negotiate with attorneys who brought claims on behalf of Nissan owners, alleging that Nissan had violated “Lemon Laws” or the Federal Warranty Act.
The indictment alleged that the defendants engaged in a scheme to defraud Nissan. Bruce Young and Wendell Young, among others, would approach individuals who owned Nissan vehicles to obtain information such as the owner’s name, address, and vehicle identification numbers. Carter then used this information to file false and fraudulent claims at Nissan, requesting settlement checks. Once the checks were issued, Bruce Young, Wendell Young, and others directed the Nissan owners to deposit the checks into their bank accounts or to cash the checks.
Bruce Young and Wendell Young then told the Nissan owners to pay them a portion of the funds the owners received from Nissan. A portion of those funds were then paid to Carter and Bruce Young and Wendell Young kept a portion of those proceeds for themselves. During the course of the scheme, Carter filed approximately 80 false claims, totaling approximately $571,500.
A total of six defendants were charged in the indictment and these guilty pleas represent the final 3 defendants. The three other defendants previously entered guilty pleas, including Adrian Franklin, 40, of Chandler, Arizona, who pleaded guilty to one count of conspiracy to commit money laundering on November 18, 2013, and Francisco DeLaRosa, 40, of West Covina, Calif., and Tracey Young, 45, of Los Angeles, Calif., each pleaded guilty to one count of conspiracy to commit money laundering on February 21, 2014.
The case was investigated by the IRSB Criminal Investigation and the Tennessee Bureau of Investigation. Assistant United States Attorney Kathryn Ward Booth represents the government.
Former Lancaster, Pa., Man Facing Federal Gun and Drug ChargesRead the Press Release
ERIE, Pa. - A former resident of Lancaster, Pennsylvania has been indicted by a federal grand jury in Erie on charges of violating federal gun and drug laws, United States Attorney David J. Hickton announced today.
The two-count indictment named Nicholas Alexander Reynolds, 22, as the sole defendant.
According to the indictment presented to the court, on or about December 19, 2013, Reynolds possessed a firearm while being a convicted felon and also possessed with intent to distribute less than fifty kilograms of marijuana.
The law provides for a maximum total sentence of 15 years in prison, a fine of $500,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Marshall J. Piccinini is prosecuting this case on behalf of the government.
The United States Marshal’s Service and the Titusville Police Department conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former Childersburg City Councilwoman Sentenced to Three Years in Prison for Bank Fraud and Money LaunderingRead the Press Release
BIRMINGHAM -- A federal judge today sentenced a former Childersburg City Councilwoman to nearly three years in prison for bank fraud and laundering nearly $1 million from SouthFirst Bank, announced U.S. Attorney Joyce White Vance, U.S. Secret Service Special Agent in Charge Craig Caldwell, and IRS Criminal Investigation Special Agent in Charge Veronica Hyman-Pillot.
U.S. District Judge Inge P. Johnson sentenced BONNY JEAN CARTER, 61, to two years and nine months in prison and ordered her to repay $37,200 to SouthFirst Bank, and $949,287 to its insurance company, Zurich Financial and Security. Carter pleaded guilty in December to one count each of bank fraud and money laundering. She is to report to prison May 13.
"This defendant used her position of trust with the bank she worked for to steal nearly $1 million from the bank over 10 years," Vance said. "Stealing from a financial institution will not go unpunished, and the prison sentence Ms. Carter received today is justice finally being served."
"IRS Criminal Investigation, along with our law enforcement partners, will vigorously pursue corporate officers who violate the public trust," Hyman-Pillot said. "We are committed to investigating complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of their money. This sentence should serve as a deterrent to those who might contemplate similar fraudulent actions."
Carter had worked as an account clerk at the Sylacauga branch of SouthFirst Bank. In that position, between June 2004 and March 2013, she embezzled from the bank by converting money to personal savings accounts. Carter recorded journal entries to transfer money from various SouthFirst Bank general ledger accounts into personal accounts held in her daughter's name. She also skimmed amounts from checks made payable to SouthFirst Bank by depositing the funds into those personal accounts. Additionally, Carter issued debit transactions from SouthFirst Bank’s operating expense account to pay personal debts she owed.
The U.S. Secret Service and Internal Revenue Service investigated the case, which Assistant U.S. Attorney Robin Beardsley Mark prosecuted.
Former CEO of Miami Lakes Tax Preparation Business Sentenced for Structuring SchemeRead the Press Release
Wifredo A Ferrer, United States Attorney for the Southern District of Florida, and José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announce that Carlos Rodriguez, 40, of Miami Lakes, was sentenced today to 22 months in prison, followed by two years of supervised release.
Rodriguez previously pled guilty to one count of structuring financial transactions with the intent to evade currency reporting requirements, in violation of Title 31, United States Code, Sections 5324(a)(3) and 5324(d)(2). Rodriguez is the former Chief Executive Officer of Rodri Rodri & Associates (Rodri), formerly located in Miami Lakes.
According to court documents and statements, financial institutions are required to report cash transactions in amounts over $10,000.00 to the IRS. From on or about January 4, 2012 through on or about March 22, 2012, Rodriguez was the Chief Executive Officer of Rodri, a tax preparation business. During that time, the defendant cashed or had cashed Rodri business checks in amounts under $10,000.00 at JPMorgan Chase Bank with the intent to evade the currency transaction reporting requirements of Title 31, United States Code, Section 5313(a). Pursuant to the terms of the plea agreement, the amount of money involved in the structuring violations was between $400,000 and $1 million.
According to the evidence, the tax return preparation part of the business was supervised by the defendant’s late wife Jennifer Rodriguez. The defendant was primarily responsible for the day-to-day operations of the business such as paying employees, collecting fees for the preparation of tax returns, paying business expenses, and handling customers with questions, concerns, or complaints. Nonetheless, many of the tax returns prepared by Rodri were fraudulent and contained false credits, such as education and fuel credits that the taxpayers otherwise were not entitled to have. The structured cash was used to provide cash, for a fee, to taxpayer clients in exchange for their inflated tax refunds.
As further stated in court and in court documents, the proceeds generated by the tax preparation business are traceable to the purchase of the properties listed in the indictment, including a couple of parcels of real property. According to the plea agreement, Rodriguez agreed to forfeit said properties to the United States.
As further stated in the plea agreement, Rodriguez agreed to cooperate with the IRS in its civil examination, determination, assessment, and collection of income taxes related to the defendant’s 2009 through 2012 income tax returns and any related corporate tax returns, and further agreed not to conceal, transfer, or dissipate funds or property that could be used to satisfy such taxes, penalties, and interest.
Mr. Ferrer commended the investigative efforts of IRS-CI. This case is being prosecuted by Assistant U.S. Attorney Elijah A. Levitt.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Former Banker Sentenced for Fraud SchemeRead the Press Release
Daniel Mumbower, 35, a former banker, of Glassboro, NJ, was sentenced today to 41 months in prison for two counts of bank fraud and one count of receiving bribes by a bank employee for his role in a scheme that defrauded lenders of nearly $3 million. U.S. District Court Judge C. Darnell Jones, II, also ordered three years of supervised release, a $300 special assessment, restitution of $2,718,758, and forfeiture of $2,516,317. Mumbower must surrender to the Bureau of Prisons on May 14, 2014.
Mumbower worked as a financial specialist at Wachovia Bank in Sicklerville, New Jersey, from April 2005 through April 2008. In mid-2006, Mumbower met a corrupt loan broker, Gerald Cathie (charged elsewhere), who began bringing clients’ applications for lines of credit to Mumbower for submission to Wachovia. Through Cathie, Mumbower met Simon Aouad (charged elsewhere). Aouad also brought others’ loan applications to Mumbower. Mumbower realized that the applications Cathie and Aouad brought him contained false income and employment information and were supported by false documentation, such as false tax returns, but he processed the applications anyway. Mumbower earned a commission from Wachovia Bank for each loan that closed. Mumbower paid Cathie and Aouad a commission out of the proceeds of the loan, which was against bank policy, and Cathie paid Mumbower a cash kickback of approximately $200 per approved loan. Aouad, also, paid Mumbower kickbacks totaling approximately $10,000. The defendant processed a regular, weekly stream of fraudulent loan applications brought to him by Cathie and Aouad. Most applications were for lines of credit totaling between $50,000 and $100,000.
Mumbower received several thousand dollars in kickbacks from both Cathie and Aouad for assisting them in obtaining lines of credit for others. Most of the loans were unsecured business lines of credit. The borrowers defaulted. The total intended loss for the fraudulent lines of credit was approximately $765,000. During the same time frame, Mumbower met John Lucidi, charged elsewhere, a corrupt mortgage broker working in West Chester and Newtown Square. Lucidi was orchestrating a mortgage fraud scheme in which he and others, including Aouad, found buyers to apply for mortgages to purchase real estate located mostly in North Wildwood, New Jersey. With the knowledge of Lucidi, Aouad, and others, but unbeknownst to the lenders, the buyers applied for the mortgages using false and fraudulent income and asset information and received tens of thousands of dollars in undisclosed kickback payments for purchasing the properties. At the request of Aouad and Lucidi, Mumbower provided false verifications of deposit (VODs) purporting to show that the mortgage applicants had tens of thousands of dollars in Wachovia Bank accounts. These false VODs were provided to the mortgage lenders, including Wells Fargo Bank, PNC Bank, and others, in support of mortgage applications to purchase real estate located in West Chester, Pennsylvania; North Wildwood, New Jersey; and Boston, Massachusetts. In exchange for providing the false VODs, Aouad paid Mumbower $5,000 cash. Many of the properties purchased using the false verifications of deposits supplied by Mumbower went into default, and the lenders lost approximately $2 million.
The defendant faces a maximum possible sentence of 90 years of imprisonment, five years of supervised release, a $3 million fine, and a $300 special assessment.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigations, and the United States Secret Service. It is being prosecuted by Assistant United States Attorney Nancy E. Potts.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Former Arkansas State Treasurer Martha Ann Shoffner Guilty on Federal Charges of Extortion and Receipt of BribesRead the Press Release
Little Rock - Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and David Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation, announced today that a federal jury found former Arkansas State Treasurer Martha Ann Shoffner, age 68, of Newport, guilty on six counts of extortion under color of official right, one count of attempted extortion under color of official right, and seven counts of receipt of a bribe by an agent of a state government receiving federal funds. A forfeiture allegation of $4,020 is also included in the indictment.
Martha Shoffner was elected as Treasurer for the State of Arkansas in 2006 and 2009. The United States presented testimony that historically, the Treasurer’s Office had used between 10 and 15 bond brokers throughout the state to purchase federal agency bonds for investment. During Shoffner’s first term in office, the bond inventory levels between the brokers was relatively comparable. In mid-2010, Shoffner approached Steele Stephens, a broker with St. Bernard Financial, and requested that he purchase a house in Little Rock for her to stay in free of charge, but Stephens feared such an arrangement would be discovered. As an alternative, Shoffner suggested that Stephens make payments of $1,000 per month to her. Ultimately, it was agreed that he would pay Shoffner $6,000 every six months.
In mid-2010, Stephens made the first $6,000 payment to Shoffner at the Capitol, resulting in Stephens’ bond inventory increasing above that of other brokers for the State of Arkansas, ultimately reaching over $600 million in bond inventory in August 2012. In total, Stephens received approximately $2 billion in bond business, earning approximately $2.5 million in commissions. Stephens made a total of six payments of $6,000 from mid-2010 through December 2012. Two payments were made at the Capitol, two payments were made at Shoffner’s Little Rock residence, and two payments were made at Shoffner’s home in Newport, Arkansas. Stephens testified that he concealed the $6,000 payments in a pie box when he delivered money to Shoffner in Newport, Arkansas.
In January 2013, Stephens began cooperating with the Federal Bureau of Investigation. As part of his cooperation, he recorded a meeting with Shoffner at her home in Newport, Arkansas, wherein Shoffner acknowledged the agreement regarding the $6,000 payments and receipt of payments. Shoffner also admitted to lying during the September and December 2012 legislative audit hearings about receiving money from Stephens and would take it to her grave. In May 2013, Stephens delivered an apple pie to Shoffner with $6,000 in FBI funds in the pie box. After the broker left Shoffner’s house, Special Agents with the FBI executed a search warrant at Shoffner’s house. Shoffner had taken the cash out of the pie box and placed it in a cigarette box in a kitchen drawer. She also told the FBI that she still had $4,020 from the December 2012 payment hidden in a cigarette box. Shoffner was arrested.
Testimony also presented that in September 2009 and November 2010, Stephens provided cash for campaign events, which was not reported by Shoffner on her campaign finance reports. According to testimony, Shoffner kept the cash and never deposited it into her campaign account.
The statutory penalty for extortion and attempted extortion under color of official right, in violation of 18 U.S.C. § 1951(a), is not more than 20 years’ incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 3 years supervised release.
The statutory penalty for receipt of a bribe by an agent of a state government receiving federal funds, in violation of 18 U.S.C. § 666(a)(1)(B), is not more than 10 years’ incarceration in the Bureau of Prisons with a possible fine of up to $250,000, and not more than 3 years supervised release.
The investigation was conducted by the Federal Bureau of Investigation.
Florida Hospital System Agrees to Pay the Government $85 Million <br /> to Settle Allegations of Improper Financial Relationships <br /> with Referring PhysiciansRead the Press Release
Halifax Hospital Medical Center and Halifax Staffing Inc. (Halifax), a hospital system based in the Daytona Beach, Fla., area, have agreed to pay $85 million to resolve allegations that they violated the False Claims Act by submitting claims to the Medicare program that violated the Physician Self-Referral Law, commonly known as the Stark Law, the Justice Department announced today.The Stark Law forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital. In this case, the government alleged that Halifax knowingly violated the Stark Law by executing contracts with six medical oncologists that provided an incentive bonus that improperly included the value of prescription drugs and tests that the oncologists ordered and Halifax billed to Medicare. The government also alleged that Halifax knowingly violated the Stark Law by paying three neurosurgeons more than the fair market value of their work.
“Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”
In a Nov. 13, 2013, ruling, the U.S. District Court for the Middle District of Florida ruled that Halifax’s contracts with its medical oncologists violated the Stark Law. The case was set for trial on March 3, 2014, on the government’s remaining claims against Halifax when the parties reached this settlement.
“This settlement illustrates our firm commitment to pursue health care fraud," said U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “Medical service providers should be motivated, first and foremost, by what is best for their patients, not their pocketbooks. Where necessary, we will continue to investigate and pursue these violations in our district.”
As part of the settlement announced today, Halifax also has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates Halifax to undertake substantial internal compliance reforms and to submit its federal health care program claims to independent review for the next five years.
“Patients deserve to know that recommendations are based on sound medical practice, not illegal financial relationships between providers,” said Inspector General for the U.S. Department of Health and Human Services Daniel R. Levinson. “Halifax now also is required to hire a legal reviewer to monitor provider arrangements and an additional compliance expert to assist the board in fulfilling its oversight obligations. Both of these independent reviewers will submit regular reports to my agency.”
The settlement announced today stems from a whistleblower complaint filed by an employee of Halifax Hospital, Elin Baklid-Kunz, pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit. The Act also permits the government to intervene and take over the lawsuit, as it did in this case as to some of Baklid-Kunz’s allegations. Baklid-Kunz will receive $20.8 million of the settlement.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.
The investigation and litigation was conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida and HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability, except as determined by the court’s Nov. 13, 2013, ruling.
The lawsuit is captioned United States ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, et al., No. 09-cv-1002 (M.D. Fla.).
Final Defendant in Foreclosure Rescue Fraud Scheme SentencedRead the Press Release
PHILADELPHIA - John Bariana, 41, of Mullica Hill, NJ, was sentenced today to 18 months in prison for his role in a massive mortgage fraud scheme that resulted in at least 35 fraudulent mortgage loans worth more than $10 million. Bariana pleaded guilty on August 26, 2010 to 12 counts. In addition to the prison term, U.S. District Court Judge Mary McLaughlin ordered a $7,500 fine, a $1,200 special assessment, and forfeiture of $400,000 joint and several with co-defendants Edward and Jacqueline McCusker. The McCuskers were sentenced on March 6, 2014. Edward McCusker was sentenced to five years in prison, his wife Jacqueline was sentenced to one year of home confinement followed by three years of probation.
The McCuskers operated Axxium Mortgage, Inc. with Bariana. Co-defendants Jeffrey A. Bennett and Stephen G. Doherty, owners of the Doylestown law firm Bennett & Doherty, P.C., were also involved in the scheme and pleaded guilty.
The defendants targeted financially distressed homeowners facing foreclosure, falsely promised them help in saving their homes, engaged in real estate transactions with straw purchasers, and obtained dozens of fraudulent mortgages. The defendants took whatever equity the homeowner had left, funneled it through shell corporations they controlled, used some of it to pay the new mortgages, and put the rest of the equity into their own bank accounts.
The defendants promised financially distressed homeowners that they would find an “investor” who would help them save their home. The defendants would then either purchase the home themselves or arrange for a straw purchaser to obtain a fraudulent mortgage and then transfer of the title of the homeowner?s residence to the straw purchaser. The McCuskers, along with Bariana, obtained the fraudulent mortgages by submitting false documents to mortgage lenders and making false claims about the purchasers’ finances. The defendants also concealed from the lender the fact that the homeowner was going to continue to reside in the home and that the mortgage payments were going to continue to be made, in part, by the distressed homeowner and funneled through the straw purchaser. Bariana and Jacqueline McCusker each acted as straw purchasers for ten homes. The defendants also recruited at least seven other persons to act as straw owners in order to obtain additional fraudulent mortgages.
Doherty solicited and referred distressed homeowners to Edward McCusker, and used fraudulent bankruptcy filings for some of the distressed homeowners to delay foreclosure until McCusker had obtained an investor and a mortgage. Bennett handled the closings for the real estate transfers, falsifying the settlement statements and manipulating the information provided to the lender in order to hide the nature of the scheme until after the loan was funded.
Doherty was sentenced to one year and one day in prison and ordered to forfeit $202,644.33; Bennett was sentenced to 18 months in prison, a $7,500 fine, a $400 special assessment and forfeiture joint and several with Doherty. A federal jury convicted the McCuskers on June 22, 2011 of conspiracy to commit mail and wire fraud, conspiracy to commit money laundering, wire fraud and mail fraud. In addition to their prison terms, the McCuskers were ordered to forfeit $400,000; Edward McCusker was ordered to pay a fine of $12,500, a special assessment of $1,000, and was ordered to complete three years of supervised release; Jacqueline McCusker was ordered to pay a special assessment of $900.
This case was investigated by the Federal Bureau of Investigation and the Pennsylvania Department of Banking. It is being prosecuted by Assistant United States Attorney Nancy Rue.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Final 2 Defendants Sentenced in Stolen Identity and Tax Fraud SchemeRead the Press Release
STATESBORO, GA -- TIDAESHA V. TAYLOR, 27, and GREGORY F. SMITH, JR., 21, were sentenced last week before United States District Court Judge B. Avant Edenfield in Statesboro, Georgia for their roles in a stolen identity and tax fraud scheme centered in Statesboro, Georgia. In total, 13 individuals were charged, convicted, and sentenced in a scheme to steal identities and submit false tax returns that cost the American taxpayers over $1 million in bogus tax refunds.
United States Attorney Edward J. Tarver said, “In the midst of another tax season, cases like these demonstrate the substantial risks to the millions of honest tax filers of having their personal information stolen and fraudulently used. The United States Attorney’s Office will continue its efforts to protect the integrity of the federal income tax filing system and to prosecute those responsible for stealing the identities of legitimate taxpayers in order to deny them the refunds to which they are entitled.”
J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated, “This case involved numerous individuals working together to defraud the government, as well as taxpayers, in a systematic manner. The law enforcement response, similarly, consisted of various law enforcement groups working together in a systematic manner to stem the tide of this organized criminal enterprise. The FBI will continue to dedicate significant resources and personnel toward the investigation of such groups that would do so much harm to so many.”
IRS Special Agent in Charge Veronica F. Hyman-Pillot stated, “The sentences these defendants received will not replace the losses that were incurred or the harm endured by the victims. However, they do illustrate that IRS Criminal Investigation, along with our law enforcement partners, are committed to pursuing individuals who commit these types of crimes. We will continue to unite and utilize every tool available to investigate those who conspire with each other to victimize members of our community for their own personal gain.”
In 2013, Taylor and Smith, along with 11 others, were indicted on charges ranging from a conspiracy to defraud the IRS to identity theft. According to evidence presented during guilty plea and sentencing hearings, these schemers stole personal identifiers, such as names, dates of birth, and Social Security numbers, from medical records and other sources, which they then used to submit fraudulent tax returns in order to obtain tax refunds to which they were not entitled.
Taylor and Smith were the last to be sentenced of the 13 defendants originally charged. Each of the 13 defendants and their sentences are as follows:
ERICA BALDWIN, 31, of Statesboro, Georgia, was sentenced on January 7, 2014, to 81 months in prison.
TRACY DENSON, 44, of Statesboro, Georgia, was sentenced on February 13, 2014, to 100 months in prison.
SHAKITA EASON, 30, of Statesboro, Georgia, was sentenced on January 7, 2014, to 104 months in prison.
YOLANDA EDMOND, 36, of Statesboro, Georgia, was sentenced on October 8, 2013, to 32 months in prison.
GLORIA EVANS, 44, of Statesboro, Georgia, was sentenced on October 8, 2013, to 39 months in prison.
JOSHUA MINCEY, 20, of Statesboro, Georgia, was sentenced on January 7, 2014, to 48 months in prison.
PORSCHE S. PINKNEY, 19, of Augusta, Georgia, was sentenced on January 14, 2014, to 65 months in prison.
DWAN SCOTT, 32, of Statesboro, Georgia, was sentenced on January 14, 2014, to 72 months in prison.
JENNA SCOTT, 28, of Jacksonville, Florida, was sentenced on January 23, 2014, to 75 months in prison.
GREGORY F. SMITH, JR., 21, of Stone Mountain, Georgia, was sentenced on March 5, 2014, to 95 months in prison.
ASHA K. SPAULDING, 37, of Claxton, Georgia, was sentenced on October 8, 2013, to 154 months in prison.
TIDAESHA V. TAYLOR, 27, of College Park, Georgia, was sentenced on March 5, 2014, to 75 months in prison.
ANDREA WEBB, 31, of Register, Georgia, was sentenced on January 7, 2014, to 51 months in prison.
FBI Special Agent Marcus Kirkland and IRS-CI Special Agent Gwen Weston led the investigation in this case. They were assisted by the Statesboro Police Department, the Bulloch County Sheriff’s Office, and Region 5 of the Georgia Bureau of Investigation. Assistant United States Attorney Lamont A. Belk prosecuted the case on behalf of the United States. For additional information, please contact First Assistant United States Attorney James D. Durham at (912) 201-2547.
Federal Jury Convicts Dallas Man on Child Pornography ChargesRead the Press Release
Defendant Faces Up to 70 Years in Federal Prison
DALLAS — Following a two-day trial before U.S. District Judge Barbara M. G. Lynn, and less than one hour of deliberation, a federal jury has convicted a 43-year-old Dallas man on various child pornography offenses, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Ted Lynn Snider was convicted on two counts of transporting and shipping child pornography, one count of receipt of child pornography and one count of possession of child pornography. Each of the transporting and shipping child pornography counts, as well as the receipt of child pornography count, carries a statutory penalty of not less than five years or more than 20 years in federal prison and a $250,000 fine. The possession count carries a maximum statutory sentence of 10 years in federal prison and a $250,000 fine. Sentencing is set for June 27, 2014.
The government presented evidence that in May 2013, the FBI discovered a particular individual, later identified as Snider, was online sharing images and videos of young children engaged in vile and graphic sexual acts. On May 29, 2013, the FBI executed a search warrant at Snider’s residence, and while at the residence, agents spoke with him. Snider admitted he had been using a file sharing program to trade files depicting child pornography and that he maintained a categorized, child pornography collection on his computer and external hard drives. The FBI seized electronic evidence that contained hundreds of images and videos of child pornography.
The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 2006 by the Department of Justice, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/. For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”
The FBI investigated. Assistant U.S. Attorney Camille Sparks and Deputy Criminal Chief Assistant U.S. Attorney Gary Tromblay prosecuted.
Federal Inmate Pleads Guilty to Murder of United States Correctional OfficerRead the Press Release
WASHINGTON—A federal inmate pleaded guilty today for the murder of United States Correctional Officer Jose Rivera, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Benjamin Wagner for the Eastern District of California.
James Ninete Leon Guerrero, 48, of Guam, pleaded guilty before U.S. District Judge Phillip Pro to one count of murder by a federal prisoner serving a life sentence. According to court documents, Guerrero aided and abetted co-defendant Jose Cabrera Sablan in the stabbing death of Officer Rivera.
Court documents allege that on June 20, 2008, as Officer Rivera was on duty conducting his daily count in the United States Penitentiary in Atwater, Calif., Sablan attacked him with an eight-inch homemade shank. Officer Rivera tried to flee, but he was knocked backwards by Sablan and tackled by Guerrero. Guerrero held Officer Rivera down as Sablan stabbed him with the shank more than 20 times. Officer Rivera was 22 years old at the time of his death and was a United States Navy veteran.
Sablan and Guerrero were indicted for murder on Aug. 14, 2008. As a result of Guerrero’s plea, he faces a mandatory sentence of life in prison. His sentencing has been scheduled for May 30, 2014, at 2:00 p.m. in the Eastern District of California.
Sablan’s case is set for trial on April 6, 2015. He is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The investigation was conducted by the Bureau of Prisons and the FBI. This case is being prosecuted by Trial Attorney Bonnie Hannan of the Criminal Division’s Capital Case Section and Assistant U.S. Attorney Duce Rice of the Eastern District of California.
Federal Inmate Pleads Guilty <br /> to Murder of United States Correctional OfficerRead the Press Release
A federal inmate pleaded guilty today for the murder of United States Correctional Officer Jose Rivera, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Benjamin Wagner for the Eastern District of California.
James Ninete Leon Guerrero, 48, of Guam, pleaded guilty before U.S. District Judge Phillip Pro to one count of murder by a federal prisoner serving a life sentence. According to court documents, Guerrero aided and abetted co-defendant Jose Cabrera Sablan in the stabbing death of Officer Rivera.
Court documents allege that on June 20, 2008, as Officer Rivera was on duty, conducting his daily count in the United States Penitentiary in Atwater, Calif., Sablan attacked him with an eight-inch homemade shank. Officer Rivera tried to flee, but he was knocked backwards by Sablan and tackled by Guerrero. Guerrero held Officer Rivera down as Sablan stabbed him with the shank more than 20 times. Officer Rivera was 22 years old at the time of his death and was a United States Navy veteran.
Sablan and Guerrero were indicted for murder on Aug. 14, 2008. As a result of Guerrero’s plea, he faces a mandatory sentence of life in prison. His sentencing has been scheduled for May 30, 2014, in the Eastern District of California.
Sablan’s case is set for trial on April 6, 2015. He is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The investigation was conducted by the Bureau of Prisons and the FBI. This case is being prosecuted by Trial Attorney Bonnie Hannan of the Criminal Division’s Capital Case Section and Assistant U.S. Attorney Duce Rice of the Eastern District of California.