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Friday 21 February 2014
Muskogee Man Pleads Guilty to Methamphetamine DistributionRead the Press Release
Muskogee, Oklahoma - The United States Attorney’s Office for the Eastern District of Oklahoma, announced that JOSHUA RAY HIGGINS, age 27, of Muskogee, Oklahoma, pled guilty to Possession with Intent to Distribute Methamphetamine, in violation of Title 21, United States Code, Sections 841(a)(1) and 841(b)(1)(B).
Charges arose from an investigation by the Muskogee Police Department and the Drug Enforcement Administration. The defendant was indicted in December, 2013.
The Indictment alleged that on or about November 15, 2013, within the Eastern District of Oklahoma, the defendant did knowingly and intentionally possess with intent to distribute 50 grams or more of a mixture or substance containing a detectable amount of methamphetamine, a Schedule II Controlled Substance.
The Honorable Kimberly E. West, Magistrate Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, accepted the guilty plea and ordered the completion of a presentence report. Sentencing will be scheduled following its completion. The defendant will remain in the custody of the United States Marshal Service pending sentencing.
The statutory range of punishment is not less than 5 and not more than 40 years imprisonment and/or up to a $5,000,000 fine.
Assistant United States Attorney Shannon Henson represented the United States.
Montville Man Who Illegally Received Social Security Benefits Is SentencedRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that JOHN FRANCIS WILLIAMS, 58, of Montville, was sentenced today by U.S. District Judge Janet Bond Arterton in New Haven to three years of probation for illegally receiving Social Security benefits. As part of his sentence, WILLIAMS was ordered to pay restitution in the amount of $42,156.20.
According to court documents and statements made in court, the defendant’s birth name was Russell Fithian. Sometime prior to 1993, the defendant obtained the Social Security card and birth certificate of a John Francis Williams. In 1993, the defendant applied for and received a replacement Social Security card in the name of John Francis Williams. Thereafter, he used the name John Francis Williams.
In August 2009, the defendant applied for Social Security retirement income benefits under the name of John Francis Williams, who would have turned 62 that year and had reached eligible retirement age. The defendant was 54 at the time of his application and was not eligible for retirement benefits under his true identity. The defendant thereafter received monthly benefits, totaling $42,156.20, until February 2013.
In 2013, the defendant legally changed his name to John Francis Williams.
On October 8, 2013, WILLIAMS pleaded guilty to one count of theft of government property.
This matter was investigated by the Office of the Inspector General for the Social Security Administration and was prosecuted by Assistant U.S. Attorney Felice Duffy.
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[email protected]Meth Dealer Sentenced in Federal CourtRead the Press Release
MOBILE, Ala. – Haley Nicole Jordan, 33, of Creola, was sentenced today in federal court for her involvement in the possession with intent to distribute methamphetamine ice. Jordan was originally indicted in two counts, conspiracy to possess with intent to distribute methamphetamine, and possession with intent to distribute methamphetamine ice. She took her case to trial in federal court in November of 2013, which resulted in a mistrial. Jordan entered into a guilty plea to the charge of possession with intent to distribute just before the second trial commenced in December of 2013.
At the sentencing hearing today, United States District Court Judge Kristi K. Dubose found the advisory guideline range to be 78 to 97 months. The judge imposed a sentence of 24 months imprisonment, to be followed by a three-year term of supervised release. The judge ordered that Jordan undergo a period of six months’ drug counseling and treatment at the Home of Grace as a condition of her supervised release, to commence when she is released from prison. Jordan was not ordered to pay a fine, but the judge ordered that Jordan pay the mandatory $100 special assessment.
The case was investigated by the Mobile County Sheriff’s Office. It was prosecuted in the United States Attorney=s Office by Assistant United States Attorney Gloria Bedwell.
McLaughlin Man Charged with Assault with A Dangerous Weapon and Assault Resulting in Serious Bodily InjuryRead the Press Release
United States Attorney Brendan V. Johnson announced that a McLaughlin, South Dakota, man has been indicted by a federal grand jury for Assault with a Dangerous Weapon and Assault Resulting in Serious Bodily Injury.
River Grey Bull, age 19, was indicted on February 12, 2014. He appeared before U.S. Magistrate Judge William D. Gerdes on February 18, 2014, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 10 years in custody and/or a $250,000 fine, 3 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
Grey Bull is alleged to have assaulted a man with a knife in January 2014. The charge is merely an accusation and Grey Bull is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney Troy Morley is prosecuting the case.
Grey Bull was released on bond. A trial date has not been set.
Maryland Man Sentenced to 49 Years in Prison for First-Degree Murder While Armed in 2012 Shooting in Southeast Washington-Victim and Defendant Were Close Family Friends-Read the Press Release
WASHINGTON – Grant Johnson, 39, of Bladensburg, Md., was sentenced today to 49 years in prison on charges of first-degree premeditated murder while armed and other offenses for the May 2012 slaying of a Maryland man, U.S. Attorney Ronald C. Machen Jr. announced.
Johnson was found guilty by a jury in October 2013, following a trial in the Superior Court of the District of Columbia. In addition to the first-degree murder charge, the jury found Johnson guilty of second-degree murder while armed, armed robbery, and several firearms offenses. Johnson was sentenced by the Honorable Herbert B. Dixon, Jr. Upon completion of his prison term, Johnson will be placed on five years of supervised release.
According to the government’s evidence, the victim, Ricardo Lancaster, 32, drove his company truck to the 800 block of Burns Street SE on May 30, 2012. He arrived at 11:22 p.m. with several hundred dollars to purchase a quantity of marijuana from Johnson. Johnson and Mr. Lancaster were old family friends, having grown up together in the 700 block of Adrian Street SE. Since childhood, Johnson was widely known as the best friend of Mr. Lancaster’s brother.
Sitting in the passenger seat of Mr. Lancaster’s company truck, Johnson shot Mr. Lancaster once in the right cheek at close range. He then went to the driver’s side of the vehicle, where Mr. Lancaster was still seated, and through the open window, shot him, again at close range, in the neck. Mr. Lancaster was found dead the next morning, still seated in the driver’s seat of his company vehicle on Burns Street. His personal cell phone was missing and he had $3 on his person. No marijuana was in the car. Hours after the murder, Johnson provided his girlfriend with several hundred dollars in cash for his share of the rent.
When asked by his best friend – Mr. Lancaster’s brother – whether he had seen or spoken to Mr. Lancaster prior to the murder, Johnson lied, claiming that he had not. The government’s evidence included cell phone records that showed that Mr. Lancaster and Johnson were in repeated contact the night of the murder, and Johnson’s DNA was found on a Doritos bag discarded on the passenger side floor of Mr. Lancaster’s company vehicle.
In announcing the sentence, U.S. Attorney Machen praised the work of the detectives, officers, and crime scene technicians who investigated the case for the Metropolitan Police Department. He also expressed appreciation to the FBI’s Cellular Analysis Survey Team. He commended the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Marian Russell, Sandra Lane, Kendra Johnson, and Fern Rhedrick; Lead Paralegal Specialist Sharon Newman; Victim/Witness Advocates Marcia Rinker and Jennifer Clark; Victim Witness Security Specialist Katina Adams-Washington; Former Intelligence Specialist Lawrence Grasso and Intelligence Specialist Zachary McMenamin, and Litigation Technology Specialist Thomas “Ron” Royal. Finally, he recognized the work of Assistant U.S. Attorneys Kimberley Nielsen and Robert Feitel, who investigated the case and prosecuted the case at trial.
14-046Manhattan U.S. Attorney Announces Extension of Claims Process for Madoff Victim Fund to Give Victims Additional Time to File ClaimsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the claims deadline for petitions for remission of forfeiture to the Madoff Victim Fund (the “MVF”) will be extended to April 30, 2014. This extension was recommended by Special Master Richard C. Breeden, who is administering the MVF on behalf of the Department of Justice.
To date, the MVF has received approximately 9,000 claims from victims of the crimes committed in connection with the fraud at Madoff Securities. Approximately 94% of claims come from individuals who either did not file a bankruptcy claim or whose claim was denied as an indirect investor. Roughly 75% of claimants have recovered nothing, or less than 10% of their losses, since Madoff Securities collapsed. Approximately 60% of claims have come from residents of the United States, with the remaining 40% of claims coming from victims of the fraud in more than 75 countries.
In announcing the extension, Manhattan U.S. Attorney Bharara said: “We are very pleased at the response the Madoff Victim Fund has received from thousands of victims of this historic fraud. The MVF is reaching a much broader universe of victims than previous efforts, including many indirect investors who have not yet recovered anything in the five years since Madoff’s arrest. The theft of these victims’ savings was every bit as real as for direct investors, and we are determined to help every genuine victim who lost money as a result of the Madoff fraud.”
Special Master Breeden noted: “Claims are pouring in to MVF from all over the world. Many of these claims are proving quite complex, often with investments that flowed through three or more intermediaries. The average claim we have received to date includes more than 75 pages of transactions and financial records. Therefore, we believe that thousands of additional claimants will benefit from having a bit more time to complete and file properly documented claims.”
Information concerning MVF and its claim process is published at www.madoffvictimfund.com. Eligibility is open to all persons who invested their own money in Madoff Securities either directly, or indirectly through feeder funds, family trusts or other pooled investment vehicles, and who lost their funds as a direct result of the collapse of the firm. Claimants must be the “ultimate investors” who lost their own funds in the collapse of the firm, not intermediaries who managed money on behalf of others or claims purchasers after the fact. Thus, banks, insurance companies, feeder funds, trust companies, hedge funds and similar entities are generally not eligible to recover from MVF, while the actual individuals whose money was lost by investing through such firms are eligible to seek a recovery. Frequently Asked Questions on the MVF’s website outline the specific criteria for eligibility and measurement of net losses. Claim forms are available for download at www.madoffvictimfund.com. All final decisions concerning claims will be made by the Department of Justice.
After reading the materials published on the website, potential claimants can email additional questions to [email protected], or call MVF’s hotline at 001 (866) 624-3670.
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. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The Madoff Securities cases are being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Matthew L. Schwartz, Randall W. Jackson, John T. Zach, Arlo Devlin-Brown, Christopher Frey, and Paul M. Monteleoni are in charge of the cases.
Manhattan U.S. Attorney and FBI Assistant Director-In-Charge Announce Insider Trading Charges Against Former Senior Managing Director of Investment BankRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a criminal Complaint charging FRANK PERKINS HIXON, JR., a former Senior Managing Director of Evercore Group, LLC, a subsidiary of Evercore Partners Inc. (“Evercore”), with insider trading offenses. Specifically, HIXON is alleged to have used inside information to trade and cause others to trade in the securities of Evercore, Westway Group Inc. (“Westway”), and Titanium Metals Corporation (“Titanium”). HIXON is also charged with making false statements to FBI agents. The defendant was arrested on these charges this morning at his apartment in New York, New York, and presented this afternoon in Manhattan federal court.
Manhattan U.S. Attorney Preet Bharara said: “As we have often said, those like Frank Perkins Hixon, Jr., who illegally manipulate the market by allegedly trading on material non-public information exploit law-abiding investors and traders. In this case, the alleged wrongdoing was compounded, when Hixon tried to evade detection by lying to investigators and to his company.”
Assistant Director-in-Charge George Venizelos said: “This is the same old song: Another high-ranking finance official allegedly broke the law and abused his position in a thinly veiled attempt to make illegal trades. The alleged use of material information gleaned through confidential meetings at Evercore was deceptive and more importantly illegal. When Hixon was confronted about his back door trades, he allegedly doubled down and lied to the FBI agents who interviewed him. The integrity of our markets remains a paramount concern of the FBI. We’ll continue to pursue these cases until that message is crystal clear.”
According to the allegations contained in the Complaint unsealed today in Manhattan federal court:
Between April 2010 and January 2014, HIXON was a Senior Managing Director with the Mining and Metals Group of Evercore Group, LLC. HIXON used material non-public information that he acquired as part of his employment with Evercore to trade and cause trades in brokerage accounts belonging to the mother of his young child (“Individual A”), who lived in Austin, Texas, and to HIXON’s close relative (“Individual B”), who lived in Johns Creek, Georgia.
In 2011, HIXON led an Evercore team in advising Westway about a non-public offer from another company (“Company A”) to purchase some of its business components and, more generally, in connection with potential transactions concerning Westway’s other business components. Company A’s offer was made in early September 2011, and a Special Committee was formed around that time to consider the offer and other strategic alternatives. Those developments were not announced publicly until December 15, 2011. Meanwhile, between October 21 and December 15, 2011, HIXON purchased, and caused to be purchased, 229,000 shares of Westway for Individual A’s brokerage account by logging into Individual A’s account from various locations, including Evercore’s Manhattan office. As the negotiations for the contemplated Westway transactions became protracted, HIXON sold and caused to be sold about 140,000 of the Westway shares that had accumulated in Individual A’s account, for a profit of approximately $260,000.
In October 2012, HIXON was invited, along with other Evercore personnel, to meet with a Special Committee of Titanium’s board of directors to discuss a potential engagement in connection with an unspecified $3 billion transaction. At the October 23, 2012, pitch meeting, which HIXON attended by teleconference from London, England, HIXON and the rest of the Evercore team learned that the transaction being considered was an acquisition of Titanium by Precision Castparts Corp. (“PCP”), a manufacturer of complex metal components and products. HIXON also learned the approximate offer price, and that the transaction was likely to close before year’s end.
Within approximately one hour of the meeting with the Special Committee, HIXON began buying 20,000 Titanium shares for Individual A’s account from a mobile device traced back to London, England. Eight days later, 20,000 more shares of Titanium were purchased for Individual A’s account. Most of the logins to the account corresponding with these purchases traced back to Evercore’s Manhattan office. That same day, 15,000 shares were purchased for Individual B’s account. After market close on November 9, 2012, Titanium announced PCP’s tender offer for its shares. The next trading day, November 12, 2012, all 40,000 of Individual A’s shares of Titanium were sold for a profit of approximately $180,000. Later that month, Individual B’s Titanium shares were sold for a profit of approximately $72,350.
On January 14, 2013, HIXON attended an Evercore partnership meeting at which he learned that Evercore would be announcing record financial results for the fourth quarter of 2012. After the partnership meeting that day, HIXON spoke to Individual B by phone. During the two days preceding the bank’s January 30, 2013, announcement, HIXON, logging into Individual A’s account from Evercore’s Manhattan offices and from his home in Manhattan, bought 27,000 shares of Evercore for the account. Meanwhile, the day before the announcement, 10,000 shares of Evercore were purchased for Individual B’s account. After Evercore’s earnings release, Individual A and Individual B sold all of the Evercore shares the next day, and reaped a combined profit of approximately $94,700.
In February 2013, Evercore asked HIXON to respond to a request from the Financial Industry Regulatory Authority (“FINRA”) and to identify any known names from a list of people and entities who had traded in Titanium stock prior to PCP’s tender offer. Although Individual A and B were both on the FINRA list, HIXON responded by email: “No known relationships.”
When Evercore confronted HIXON about his failure to identify Individual A – who, as noted above, is the mother of his young child – HIXON claimed not to know Individual A by her legal name, which was what appeared on the FINRA list, and to know her only by a different name she uses. Documents produced by Evercore, including text messages and emails between HIXON and Individual A, make clear that HIXON had, in fact, long been aware of Individual A’s legal name. And bank records show that he wrote numerous large checks to Individual A, in her legal name, from 2009 to 2010. On January 28, 2014, HIXON met with two FBI agents and told them, among other things, that he had never traded in or even accessed Individual A’s brokerage account.
When Evercore confronted HIXON about his failure to identify Individual B, his close relative, HIXON responded that the associated location given for Individual B on the FINRA list—Duluth, Georgia—was inaccurate, because Individual B lives in Johns Creek, Georgia. Johns Creek shares a zip code with portions of Duluth, and was only incorporated as its own city in December 2006. The city reflected on the brokerage account statements for Individual B’s account is Duluth.
HIXON, 55, of New York, New York, has been charged in the Complaint with five counts of securities fraud (Counts One through Three, Five, and Six), two counts of securities fraud in connection with a tender offer (Counts Four and Seven), and one count of making a false statement (Count Eight). The securities fraud and fraud in connection with a tender offer charges each carry a maximum term of 20 years in prison, and the false statement charge carries a maximum term of five years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the investigative work of the FBI and thanked the Securities and Exchange Commission, which has filed civil charges in a separate action. Mr. Bharara also thanked Evercore for its cooperation in this matter.
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.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Sarah E. McCallum is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
U.S. v. Frank Perkins Hixon, Jr., Complaint
Man Sentenced for Assault Resulting in Serious Bodily InjuryRead the Press Release
U.S. Attorney Christopher A. Crofts announced that on February 20, 2014, thirty year old Ronan Whiteplume, an enrolled Northern Arapaho Tribal member, was sentenced by United States District Court Judge Scott Skavdahl for assault resulting in serious bodily injury, to 51 months imprisonment, three years of supervised release, a $100.00 special assessment, and $21,230.43 in restitution. Mr. Whiteplume had previously pled guilty to this offense, which stemmed from an assault during the summer of 2013. This case was investigated by Bureau of Indian Affairs Law Enforcement with the assistance of the Federal Bureau of Investigation.
Local Doctor Sentenced for Making False Statement to AgentRead the Press Release
St. Louis, MO – DR. ERICK FALCONER was sentenced to five months in prison, followed by five months of home confinement, on charges of making a false statement to federal agents regarding his purchases of misbranded Botox® from a foreign unlicensed drug wholesaler, some of which had counterfeit exterior packaging. Additionally, as part of his plea agreement, Dr. Falconer previously forfeited $20,000 to the Government.
According to court documents, during the summer of 2009, Dr. Falconer received a facsimile transmission from an unlicensed drug wholesaler that offered low prices for assorted prescription drugs, including "Botox (Turkish)" for $354.99 a vial, listing a 1-800 telephone number and an individual’s "g-mail" address for contact purposes. The facsimile was sent to his medical practice, The Youthful Body, Inc., in Florissant, MO. During this same time frame, the FDA-approved version of Botox® was sold through licensed drug wholesales at higher prices in the United States, typically $525 a vial. From August 2009 through February 2013, Dr. Falconer and his corporation made over fifty separate purchases of these counterfeit drugs, which he provided to his patients without informing them of the source of the drugs. During an interview in February 2013 with special agents of the U.S. Food and Drug Administration ("FDA"), Dr. Falconer told the agents he had only made three purchases of the illegal drugs from this unlicensed foreign wholesaler. On April 26, 2013, FDA issued a public safety alert regarding "fraudulent versions of Botox found in the United States" with counterfeit exterior cartons.
Falconer, of St. Louis, Missouri, pled guilty last November to one felony charge of making a false statement. He appeared today for sentencing before United States District Judge Carol E. Jackson.
"Healthcare professionals who buy medicines outside of the supply chain that FDA oversees jeopardize their patients’ safety," said Special Agent in Charge Patrick J. Holland of FDA’s Office of Criminal Investigations, Kansas City Field Office. "FDA will not hesitate to bring to justice all those who put the public’s health at risk by violating federal law."
This case was investigated by the U.S. Food and Drug Administration, with assistance from the Office of Inspector General for the U.S. Department of Health and Human Services.
Local Biotech Firm Fined $250,000 for Concealing Toxic Nature of Product from the FDARead the Press Release
San Diego biomedical device manufacturer Valor Medical, Inc. was fined $250,000 today by U.S. District Judge Dana M. Sabraw for intentionally withholding unfavorable test results from the Food and Drug Administration about products under development for the treatment of aneurysms.
Valor had been seeking FDA approval to proceed with clinical trials of the devices in question, including one intended for use in blood vessels in the brain, known as Neucrylate AN, and one intended for use in blood vessels near the heart, called Neucrylate AVM. But the actual preclinical test results would have cast doubt on the safety of Neucrylate, so the company concealed the results.
No Americans were harmed because the FDA never permitted clinical trials to proceed in the United States. However, one death and two strokes occurred as part of clinical trials of the product in Europe, where the European authorities were also unaware of the undisclosed test reports.
Former Valor CEO and current member of the Board of Directors H. Clark Adams and Valor Regulatory and Clinical Affairs Manager Cathy Bacquet pleaded guilty to misdemeanors, and Valor founder Dr. Charles Kerber and Chief Scientist Peter Friedman entered into Deferred Prosecution Agreements, for their roles in the matter.
Because Neucrylate is considered be a Class III medical device under the Food, Drug and Cosmetic Act (“FDCA”), premarket approval from the FDA is required before it can be sold in the United States. In order to perform clinical trials on humans to obtain the data needed to support an application for premarket approval, Valor needed to obtain an investigational device exemption (“IDE”) from the FDA. The regulations relating to investigational device exemptions require the applicant to submit “reports of all prior clinical, animal and laboratory testing of the device.”
As the device is intended to be permanently implanted in the body, biocompatibility is very important. The FDA evaluates the biocompatibility of medical devices pursuant to international standards, which require a series of at least three tests. Two of the three tests typically performed to satisfy these requirements are the mouse lymphoma assay (MLA) and the chromosomal assay (CAA) tests.
According to sentencing documents filed with the court, Valor sent samples of Neucrylate to a laboratory to perform the CAA and MLA tests in early 2007. Shortly thereafter, the lab reported to Alan Donald, a consultant hired by Valor, that all the chromosomes in the CAA test had been destroyed by initial contact with the Neucrylate, indicating toxicity.
The lab asked if Valor wanted the lab to dilute the samples of Neucrylate and try the test again, which is the standard protocol. Donald requested that no further testing be performed. The final report, dated April 25, 2007, indicated that “no chromosomes were present to be scored.” While the destruction of all chromosomes indicated that the Neucrylate was cytotoxic, the official conclusion to the report stated that no conclusion could be drawn from the testing because the testing had not been completed pursuant to the testing protocol.1
At about the same time, the laboratory sent an email to Friedman, with the preliminary results of the MLA test attached, advising that “all testing has been completed and the test article is considered to be mutagenic.” Friedman forwarded the email, with the attached preliminary results, to Donald, Adams, and Kerber later that same day. Adams replied to all, saying “Let’s huddle and determine how we overcome this obstacle. I have confidence that we can find an answer.”
Neither the CAA test results nor the MLA test results were ever provided to the FDA by Valor, which filed two separate investigational device exemption applications and responded to several additional requests for information from the FDA (virtually all of which specifically requested that the CAA and/or MLA tests be performed).
The FDA rejected all of Valor’s IDEs for Neucrylate.
After a December 2010 inspection of Valor uncovered the CAA test, the FDA sent a warning letter to Adams at Valor. The letter referenced the failure to disclose the CAA testing as a violation of the regulations requiring an applicant to submit all preclinical testing to the FDA.
When responding to the FDA on behalf of Valor, Defendant Bacquet claimed that Valor “inadvertently” left out the CAA and MLA tests in the application for the IDE. Valor blamed this “unintentional violation” on Valor’s reliance on the work of consultant Alan Donald, who had separated from the company nearly a year before that IDE was filed. The letter falsely stated that “Prior to February 10, 2011, the existence of this report [the MLA] was not known to VM management or Quality/Regulatory staff.” This statement was contradicted by a series of emails between Friedman, Kerber, Adams, and Donald from the time period when the MLA results were received by Valor in 2007, as well as by presence of the MLA report on the computers of Friedman and Bacquet.
The American people depend on the FDA to determine that there is sufficient scientific basis to believe that a proffered medical device is safe and effective before permitting clinical trials on human beings. The FDA, in turn, depends on the full and truthful disclosure of all pre-clinical testing by device manufacturers to make an educated determination. When information is withheld from the FDA, as in the instant case, the decision-making process is corrupted.
____________________
1The lab’s internal Quality Event Details Form noted that the samples for the CAA test were “cytotoxic,” and the results were valid, but the sponsor was “choosing to cancel the study rather than perform dilutions” so a “full conclusion as to the genotoxicity of the sample will not be made.”
DEFENDANT Criminal Case No. 14cr0196-DMSValor Medical, Inc. San Diego, California
Date of Incorporation: 2007 SUMMARY OF CHARGESFailure to Provide Required Information, a felony, in violation of Title 21, United States Code, Section 331(q)(1)(B) and 333(a)(2)
INVESTIGATING AGENCY
Maximum Penalty for a corporation: 5 years of probation, a $500,000 fine, $400 special assessmentU.S Food and Drug Administration, Office of Criminal Investigations
Leesburg Man Sentenced for Role in Procurement Fraud Scheme Affecting over $33 Million in Federal ContractsRead the Press Release
ALEXANDRIA, Va. – Anthony R. Bilby, 40, of Leesburg, Va., was sentenced today to 16 months in prison, followed by two years of supervised release, for conspiracy to commit wire fraud and major government fraud. Bilby also was ordered to forfeit $1,065,103.90, representing his personal proceeds from the conspiracy.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Carlton Mann, Chief Operating Officer, Department of Homeland Security (DHS), Office of Inspector General; Brian D. Miller, General Services Administration (GSA) Inspector General; Peggy E. Gustafson, Small Business Administration (SBA) Inspector General; and Richard J. Griffin, Acting Inspector General, Department of Veterans Affairs, Office of Inspector General, made the announcement after sentencing by United States District Judge Anthony J. Trenga.
Bilby pleaded guiltyon December 2, 2013. According to court documents, from April 2007 through November 2012, while Bilby was employed by two service-disabled veteran-owned small businesses, he participated in a conspiracy to obtain government contracts through fraud and misrepresentation. During this time period, Bilby caused employees at a nominal competitor to submit inflated bids on the same procurements for which Bilby submitted bids on behalf of his employers. Bilby also gained improper access to the procurement process through co-conspirators working within the government. These co-conspirators provided Bilby and others with internal government cost estimates, so that Bilby knew how much the government was willing to pay before he drafted his and his competitor’s bids. Bilby also drafted portions of internal procurement documents in a manner that increased his odds of winning contracts without facing actual competition.
One of Bilby’s employers, with Bilby’s knowlege and assent, agreed to pay ten percent of its profits on a contract worth more than $24 million to co-conspirators within the government. These co-conspirators, in turn, provided Bilby and his employer with improper access to documents and a competitive advantage in obtaining the contract. In total, the conduct of Bilby and others resulted in the award of more than $33 million in federal contracts through fraudulent procurement practices.
This case was investigated by the Offices of the Inspector General for DHS, GSA, SBA, and the VA, with assistance from DHS’s Office of the Chief Security Officer, Cyber Forensic Branch. Assistant United States Attorney Kosta S. Stojilkovic is prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Leader of Interstate Methamphetamine and Oxycodone Ring SentencedRead the Press Release
PITTSBURGH - The leader of a drug ring that brought kilograms of methamphetamine and 10,000 narcotic pills into the Western District of Pennsylvania for sale has been sentenced in federal court to 10 years’ incarceration.
United States District Judge Davis S. Cercone imposed the sentence on Joshua Shaffer, 36, of Hiawatha, Iowa.
Judge Cercone also imposed a two-year period of incarceration on co-conspirator Joe Cesa, 26, of Kersey, Pa., and accepted a guilty plea from a third conspirator, Keith Alfred Hayes, 48, of Sykesville, Pa.
According to evidence presented to the Court, between February 2010 and September 2011, a conspiracy to distribute oxycodone tablets and methamphetamine existed in Jefferson County in Northwestern Pennsylvania and surrounding counties. Shaffer was the source-of-supply for the conspiracy, sending methamphetamine and oxycodone to Pennsylvania from his Florida home, utilizing couriers traveling by car and mailed packages.
Shaffer generally sold the oxycodone tablets for up to $25 each, and the methamphetamine wholesaled for $5,600 an ounce. The pills would then be sold to drug addicts for $35 or $40 apiece, and the methamphetamine would be packaged for individual use and sold. Oxycodone is a highly-addictive narcotic drug that is frequently abused in Western Pennsylvania.
Cesa was a street seller of oxycodone provided to him by Shaffer or one of the other seven co-defendants. Hayes drove shipments of drugs from Florida to Pennsylvania at Shaffer’s direction. All nine defendants charged in the indictment have now pleaded guilty.
Judge Cercone scheduled sentencing for July 11, 2014 at 10:00 am for Hayes. The law provides for a total sentence of up to 20 years in prison and a fine not to exceed $1,000,000 for Hayes. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.
Assistant United States Attorney Gregory J. Nescott is prosecuting this case on behalf of the government.
The United States Postal Inspection Service and the Pennsylvania State Police conducted the investigation that led to the prosecution of Joshua Shaffer, Joe Cesa, and Keith Hayes. The Jefferson County District Attorney's Office also assisted in a related investigation targeting other oxycodone distributors.
Kidada Savage Sentenced for Deadly FirebombingsRead the Press Release
PHILADELPHIA – Kidada Savage, 30, of Philadelphia, was sentenced today to life in prison for her role in the October 9, 2004, firebombing that killed six members of a federal witness’s family. Savage is the sister of Kaboni Savage who ordered the firebombing and who was sentenced to death for 12 counts of murder in aid of racketeering. Kidada Savage was convicted, on May 13, 2013, of six counts of murder in-aid-of racketeering, all related to the firebombing of Eugene Coleman’s family home. Kaboni and Kidada Savage were also convicted of conspiracy to commit murder in aid of racketeering, retaliating against a witness by murder, and of using fire to commit a felony (the Coleman murders). Coleman was a federal witness at the time. Six people, including four children, were killed in the arson.
Today’s penalty verdict was announced by United States Attorney Zane David Memeger, Acting Assistant Attorney General Mythili Raman for the Justice Department’s Criminal Division, and Special Agent-in-Charge Edward J. Hanko of the FBI’s Philadelphia Division.
Kidada Savage acted as a go-between for her brother, who was in federal custody awaiting a drug trial, and Lamont Lewis, who committed the firebombing. Lewis pleaded guilty and is awaiting sentencing. Robert Merritt and Steven Northington were also convicted in the case. Northington was sentenced to life; Merritt is awaiting sentencing.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, the Philadelphia Police Department, the Philadelphia District Attorney’s Office, and the Maple Shade, New Jersey Police Department. The United States Bureau of Prisons, the United States Marshals Service, and HIDTA (High Intensity Drug Trafficking Area) also assisted in the investigation. The case was prosecuted by Assistant United States Attorneys David E. Troyer and John M. Gallagher and Trial Attorney Steve Mellin, of the Criminal Division’s Capital Case Unit at the U.S. Department of Justice.
Click here to view the indictment
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Kidada Savage Sentenced for Deadly FirebombingsRead the Press Release
PHILADELPHIA – Kidada Savage, 31, of Philadelphia, was sentenced today to life in prison, and a consecutive ten-year sentence, for her role in the October 9, 2004, firebombing that killed six members of a federal witness’s family. Savage is the sister of Kaboni Savage who ordered the firebombing and who was sentenced to death for 12 counts of murder in aid of racketeering. Kidada Savage was convicted, on May 13, 2013, of six counts of murder in aid of racketeering, all related to the firebombing of Eugene Coleman’s family home. Kidada Savage was also convicted of retaliating against a witness by murder, and of using fire to commit a felony (the Coleman murders). Coleman was a federal witness at the time. Six people, including four children, were killed in the arson.
Today’s sentence was announced by United States Attorney Zane David Memeger, Acting Assistant Attorney General Mythili Raman for the Justice Department’s Criminal Division, and Special Agent-in-Charge Edward J. Hanko of the FBI’s Philadelphia Division.
Kidada Savage acted at the behest of her brother, who was in federal custody awaiting a drug trial, and recruited Lamont Lewis to commit the firebombing. Lewis pleaded guilty and is awaiting sentencing. Robert Merritt and Steven Northington were also convicted in the case. Northington was sentenced to life; Merritt is awaiting sentencing.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, the Philadelphia Police Department, the Philadelphia District Attorney’s Office, and the Maple Shade, New Jersey Police Department. The United States Bureau of Prisons, the United States Marshals Service, and HIDTA (High Intensity Drug Trafficking Area) also assisted in the investigation. The case was prosecuted by Assistant United States Attorneys David E. Troyer and John M. Gallagher and Trial Attorney Steve Mellin, of the Criminal Division’s Capital Case Unit at the U.S. Department of Justice.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Kevin W. Techau Sworn in as New United States AttorneyRead the Press Release
Kevin W. Techau today took the United States Attorney’s oath of office as the newest United States Attorney for the Northern District of Iowa. Techau succeeds Stephanie M. Rose as the District’s presidentially appointed United States Attorney and Sean R. Berry as the District’s court appointed United States Attorney. He was nominated by President Barack Obama on November 7, 2013, and was confirmed by the full Senate on February 12, 2014.
A public investiture ceremony for Mr. Techau is planned for the future but no date or details have yet been determined.
“I am honored and excited to serve as United States Attorney for the Northern District of Iowa. This is a great office, full of smart and passionate people. I look forward to working with other members of the District’s exceptional legal and law enforcement communities. I thank President Obama for nominating me and Senator Harkin for his recommendation and unwavering support through this process,” Techau said.
Techau most recently served as Associate General Counsel at American Equity Investment Life Insurance Company, where he worked since 2007. Prior to that, Techau served as a Commissioner of the Iowa Department of Public Safety from 2002 to 2007 and as Director of the Iowa Department of Inspections and Appeals from 1999 to 2002. He was an Assistant Federal Public Defender with the Iowa Federal Defender’s Office from 1996 to 1999 and worked in private practice at the law firm of Grefe & Sidney from 1992 to 1996.
From 1985 to 1992, Techau served as a Judge Advocate with the United States Air Force. After leaving active duty, he served with the Iowa Air National Guard from 1993 to 2011. In 2011, he retired from the Iowa Air National Guard as a Colonel with 27 years of military service.
Mr. Techau was born in Iowa City and graduated from Marion High School. He received his law degree in 1984 from the University of Iowa College of Law and his undergraduate degree in 1981 from the University of Iowa.
For a photograph, go to http://www.justice.gov/usao/ian/meetattorney.html.
Justice Department Sues to Shut Down Detroit Tax PreparerRead the Press Release
The United States filed a lawsuit today to bar Margaret Brown, a Detroit tax return preparer, from preparing federal tax returns for others, the Justice Depart ment announced.
According to the complaint, Brown prepared tax returns that falsely clai med business inco me, business expenses and education credits. For exa mple, the co mplaint states that Brown prepared a tax return in 2011 that reported that the custo mer had a barber business with inco me of $9,673 and expenses of $124. The custo mer did not have a barber business in 2011, according to the co mplaint, and had no idea where Brown obtained such infor mation. In another exa mple listed in the co mplaint, Brown allegedly reported $4,000 in qualified education expenses on a custo mer’s 2011 tax return. The co mplaint alleges that neither the custo mer nor her dependents attended college in 2011.
The complaint also alleges that for tax years 2010 and 2011, Brown failed to co mply with due-diligence require ments i mposed by federal law on tax preparers who claim the Earned Inco me Tax Credit on their custo mers’ tax returns.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2013. The IRS has some tips on their website for choosing a tax preparer. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found at this website. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Related Materials:
United States v. Margaret Brown
Complaint for Permanent Injunction and Other Relief
Jackson Man Sentenced for Aggravated Identity Theft and Wire FraudRead the Press Release
Jackson, Miss. – Mark C. Hooten, 44, of Jackson, a local minister and a former subcontractor for DIRECTV, was sentenced on February 20, 2014, to serve a total of 54 months in federal prison for aggravated identity theft and wire fraud, announced U.S. Attorney Gregory K. Davis. Hooten was also ordered to pay restitution totaling $384,651.26 to DIRECTV, the victim of his fraudulent activity. He pled guilty to the charges on November 13, 2014 before Senior U.S. District Judge Tom S. Lee.
Hooten admitted unlawfully using the social security numbers of existing DIRECTV customers without their permission to fabricate additional DIRECTV customer accounts under the pretext of establishing additional satellite service. He fraudulently obtained commission payments for fictitious satellite TV installations from DIRECTV and Dixon Security, a Mississippi company with whom Hooten subcontracted as a satellite TV service installer.
This case was investigated by the U.S. Secret Service and prosecuted by Assistant United States Attorney Carla J. Clark.If you believe you have been a victim of fraud from a person or an organization soliciting relief funds on behalf of storm victims, contact the National Center for Disaster Fraud toll free at:
(866) 720-5721
You can also fax information to:
(225) 334-4707
or e-mail it to:
Making sure that victims of federal crimes are treated with compassion, fairness and respect.
Training and seminars for Federal, State, and Local Law Enforcement Agencies.
Help us combat the proliferation of sexual exploitation crimes against children.
Our nation-wide commitment to reducing gun crime in America.
Jackson Man Sentenced for Aggravated Identity Theft and Wire FraudRead the Press Release
Jackson, Miss. – Mark C. Hooten, 44, of Jackson, a local minister and a former subcontractor for DIRECTV, was sentenced on February 20, 2014, to serve a total of 54 months in federal prison for aggravated identity theft and wire fraud, announced U.S. Attorney Gregory K. Davis. Hooten was also ordered to pay restitution totaling $384,651.26 to DIRECTV, the victim of his fraudulent activity. He pled guilty to the charges on November 13, 2014 before Senior U.S. District Judge Tom S. Lee.
Hooten admitted unlawfully using the social security numbers of existing DIRECTV customers without their permission to fabricate additional DIRECTV customer accounts under the pretext of establishing additional satellite service. He fraudulently obtained commission payments for fictitious satellite TV installations from DIRECTV and Dixon Security, a Mississippi company with whom Hooten subcontracted as a satellite TV service installer.
This case was investigated by the U.S. Secret Service and prosecuted by Assistant United States Attorney Carla J. Clark.If you believe you have been a victim of fraud from a person or an organization soliciting relief funds on behalf of storm victims, contact the National Center for Disaster Fraud toll free at:
(866) 720-5721
You can also fax information to:
(225) 334-4707
or e-mail it to:
Making sure that victims of federal crimes are treated with compassion, fairness and respect.
Training and seminars for Federal, State, and Local Law Enforcement Agencies.
Help us combat the proliferation of sexual exploitation crimes against children.
Our nation-wide commitment to reducing gun crime in America.
Indictment Charges Pair with Arson That Destroyed Factory in BridesburgRead the Press Release
PHILADELPHIA – James Pickup, 30, and Shawn Workman, 20, both of Philadelphia, Pennsylvania, were charged today by indictment in an arson conspiracy that caused damage to company that does business with the United States Navy, announced United States Attorney Zane David Memeger. According to the indictment, on December 16, 2012, the defendants set a fire inside a factory owned by Arco Sales Company, located at 2211 Wakeling Street, in Philadelphia. Arco manufactured and sold renewable and non‑renewable aircraft, missile components, and Naval items to federal government agencies throughout the United States.
The indictment alleges that the defendants committed a burglary at the factory earlier in the day, stealing liquor and computer equipment. They allegedly set the fire to destroy any evidence they left behind. The arson resulted in a four-alarm fire that completely destroyed the factory.
If convicted the defendants face a mandatory minimum sentence of five years in prison up to a maximum of 20 years, a $250,000 fine, and up to three years of supervised release.
The case was investigated by Bureau of Alcohol, Tobacco, Firearms and Explosives and is being prosecuted by Assistant United States Attorney Jeanine Linehan.
Click here to view the indictment
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Idaho Falls Man Sentenced to 96 Months for Meth TraffickingRead the Press Release
POCATELLO – Sammy Joe Aguirre, 27, of Idaho Falls, Idaho, was sentenced today in United States District Court to 96 months in prison for possession with intent to distribute methamphetamine, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill also ordered Aguirre to serve three years of supervised release and perform 100 hours of community service following his release from prison. Aguirre pleaded guilty to the charge on November 19, 2013.
According to the plea agreement, on March 21, 2013, law enforcement officers observed Aguirre traveling from Idaho Falls to Rupert, Idaho, where he obtained approximately one pound of methamphetamine. While transporting the methamphetamine back to eastern Idaho, Aguirre’s vehicle was stopped, he was arrested and law enforcement seized the methamphetamine. Aguirre admitted in court that he obtained the methamphetamine with the intention of distributing it to others.
Aguirre’s co-defendant, Emilio Raymond Martinez, of Rigby, Idaho, was sentenced in January 2014 to 80 months in prison for possession with intent to distribute methamphetamine. According to court documents, on February 26, 2013, during execution of a search warrant at a residence in Bonneville County, officers found Martinez in possession of methamphetamine, which he intended to distribute, and paraphernalia.
The case is the result of a joint investigation of the Organized Crime and Drug Enforcement Task Force (OCDETF), led by the Idaho State Police, with assistance from the Idaho Falls Police Department and Bonneville County Sheriff’s Office. Other federal agencies participating in the OCEDTF program include the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Drug Enforcement Administration (DEA), Federal Bureau of Investigation (FBI), Internal Revenue Service-Criminal Investigation (IRS-CI), U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and U.S. Marshals Service.
The OCDETF program is a federal, multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
Gaines County Man Sentenced to 121 Months in Federal Prison for Possessing Prepubescent Child PornographyRead the Press Release
LUBBOCK, Texas — Jose Fidencio Perez, 40, of Seagraves, Texas, was sentenced this morning by U.S. District Judge Sam R. Cummings to 121 months in federal prison, following his guilty plea in October 2013 to one count of possession of prepubescent child pornography and aiding and abetting, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
According to documents filed in the case, Perez used a file sharing program on his computer to download child pornography. In the course of searching for depictions of sexually explicit conduct, Perez downloaded and viewed numerous videos depicting minors engaged in sexually explicit conduct.
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 investigation was conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Office of the Attorney General of New Mexico Investigations Division. Assistant U.S. Attorney Steven M. Sucsy prosecuted.
Four Philadelphia Men Charged in $4.4 Million Dollar Jewelry HeistRead the Press Release
WILMINGTON, Del. – Charles M. Oberly, III, United States Attorney for the District of Delaware, and Stephen E. Vogt, Special Agent in Charge of the Baltimore Field Office of the Federal Bureau of Investigation, announced today that defendants, DARRELL WILLIAMS, a/k/a “Blue,” age 43 of Philadelphia, DAVID STORY, a/k/a “Dawoo,” age 46 of Philadelphia, RUFUS LAWSON, a/k/a “Ru,” “Alonzo Nowell,” age 48 of Philadelphia, and WILLIE HAWKINS SMITH, age 22 of Philadelphia, have been charged with one count of conspiracy to commit Hobbs Act Robbery, in violation of Title 18, United States Code, Section 1951; one count of committing Hobbs Act Robbery; and one count of possessing and using a firearm in furtherance of a crime of violence, in violation of Title 18, United States Code, Section 924(c), for their roles in the November 1, 2011, armed robbery of Stuart Kingston Jewelers, located in Wilmington, Delaware. Jackie Howard, an unindicted co-conspirator in this robbery, was separately indicted in the Eastern District of Pennsylvania.
If convicted, Darrell Williams, David Story, Rufus Lawson, and Willie Hawkins Smith each face a maximum sentence of life in prison. Darrell Williams, David Story, Rufus Lawson, and Willie Hawkins Smith also face a mandatory minimum sentence of 7 years. All defendants also face possible fines, supervised release and special assessments.
According to the Indictment, which was unsealed yesterday in Delaware’s District Court, in the weeks leading up to the robbery, the defendants targeted Stuart Kingston Jewelers. Prior to the robbery, the defendants cased the jewelry store so that they would be familiar with the store’s lay-out. On November 1, 2011, the defendants drove to Stuart Kingston Jewelers in two separate vehicles. One car was a rented white U-Haul cargo van, which displayed a stolen New York State license plate to conceal the U-Haul van’s true license plate. The other car was a rented Nissan Sentra, which was used to conduct counter-surveillance during the armed robbery. Upon arriving at the store, four of the defendants, armed with a handgun, hammers, zip-ties, and duct tape, conducted a take-over style robbery of Stuart Kingston Jewelers. A fifth defendant remained outside the store in the Nissan Sentra acting as a look-out.
At the time of the robbery, surveillance cameras were operating throughout Stuart Kingston Jewelers, and the front door to the store was locked. One of the defendants, however, was able to gain entry by showing his face to the security camera, which caused an employee to unwittingly and remotely unlock the door. Once the front door was unlocked, all of the defendants entered the jewelry store. The remaining defendants wore coats, gloves, and masks to conceal their identities.
Two of the defendants immediately tied up three store employees with zip-ties and duct tape, while the remaining defendants smashed the display cases, removed the jewelry, and placed the jewelry into bags. The defendants robbed the store of hundreds of pieces of jewelry, including valuable earrings, brooches, necklaces, and rings, all of which possessed an estimated retail value of approximately $2,427,216.50. The defendants also forced an employee to open and empty the jewelry store’s vault, which was located in the back of the store. The defendants took possession of, among other items, a piece of jewelry known as the “Liberty Bell Ruby.” The “Liberty Bell Ruby is the largest mined ruby in the world, found in east Africa in the 1950s. It weighs approximately four pounds, is approximately eight and a half thousand carats, and is sculpted into the Liberty Bell. It has approximately fifty diamonds set in it and possessed an estimated retail value of approximately $2,000,000.00.
This case was investigated by the FBI, Wilmington Resident Agency. Assistant United States Attorney Jamie M. McCall is prosecuting this case.
For further information, contact Assistant United States Attorney Jamie M. McCall or United States Attorney Charles M. Oberly, III.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former Owner of Long Beach Hospital Charged in Health Care Fraud Scheme That Paid Tens of Millions of Dollars in Kickbacks for Referrals for Spinal Surgeries Billed to Workers’ Comp ProgramsRead the Press Release
Santa Ana, California – The former owner of Pacific Hospital in Long Beach was charged today in a long-running health care fraud scheme that involved tens of millions of dollars in illegal kickbacks in exchange for referrals of thousands of patients who received spinal surgeries. The referrals to the hospital led to more than $500 million in bills being fraudulently submitted during last five years of the scheme, much of which was paid by the California worker’s compensation system.
Michael D. Drobot, 69, of Corona Del Mar, was charged this morning in a criminal information with orchestrating a wide-ranging conspiracy and with paying illegal kickbacks.
In a plea agreement also filed this morning, Drobot agreed to plead guilty to the two counts which could send him to federal prison for as long as 10 years.
From 1997 to 2013, Drobot, who owned Pacific Hospital until late last year, ran a scheme in which he billed workers’ compensation insurers hundreds of millions of dollars for spinal surgeries performed on patients who had been referred by dozens of doctors, chiropractors and others who were paid illegal kickbacks. For referrals for spinal surgeries, Drobot typically paid a kickback of $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery. Some of the patients lived as much as hundreds of miles away from Pacific Hospital, and closer to other qualified medical facilities. The patients were not informed that the medical professionals had been offered kickbacks to induce them to refer the surgeries to Pacific Hospital.
Drobot and his co-conspirators concealed the kickback payments by entering into bogus contracts with the doctors, chiropractors, and others who received kickbacks. In reality, the contracts merely provided a cover story for the kickback payments.
The kickbacks were financed largely by money generated from inflated prices for medical devices implanted into state workers’ comp patients during spinal surgeries. Drobot set up a scheme that exploited a now-repealed California law known as the spinal “pass-through” legislation, which permitted hospitals to pass on to workers’ comp insurers the full cost of medical devices implanted in spinal surgery patients. Specifically, Drobot used shell companies to inflate the costs of those devices and then billed the insurers at the inflated rates.
“The spinal pass-through, the provision of California law that allowed Pacific Hospital to fraudulently inflate the cost of the medical hardware used during spinal surgeries, was a vital component of defendant Drobot’s ability to pay kickbacks to the doctors, chiropractors, marketers, and others who had referred patients to Pacific Hospital for surgeries and other medical services,” according to the charging document filed today.
As part of the health care fraud scheme, Drobot admitted in his plea agreement that he paid bribes to California State Senator Ronald Calderon in exchange for Calderon performing official acts to keep the spinal pass-through law on the books. Calderon was indicted on federal charges yesterday for allegedly accepting bribes from Drobot, as well as undercover FBI agents seeking official acts in relation to other matters.
As part of his plea agreement, Drobot has agreed to cooperate in the government’s ongoing investigation of the health care fraud scheme, which has been dubbed Operation “Spinal Cap.” Drobot has also agreed to cooperate in the government’s prosecution of Ronald Calderon and his brother, who was also indicted yesterday.
“Drobot has agreed to plead guilty in the health care fraud scheme, and as part of this agreement, he admits paying bribes to Ron Calderon in exchange for the senator’s help in keeping alive a law that brought massive profits to Drobot’s companies,” said United States Attorney André Birotte Jr. “Drobot also paid kickbacks, which are illegal under both California and federal law because they corrupt the doctor-patient relationship and may encourage medical professionals to recommend procedures that are not necessary, not in the patients’ best interest or actually harmful to the patient.”
Drobot has agreed to surrender and be arraigned in this case in United States District Court in Santa Ana on March 31.
“The charges allege that the defendant used kickbacks and other tactics to ensure the system worked to his advantage,” said Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The insurance scheme victimized multiple sectors of society, including insurance companies, the taxpayers and spinal patients.”
California Insurance Commissioner Dave Jones said: “Insurance fraud is a multi-billion dollar drain on California’s economy, which results in higher insurance premiums for California businesses and consumers. The co-conspirators lined their pockets by ripping off insurance companies to the tune of hundreds of millions of dollars. This is one of the largest workers’ compensation fraud cases in the history of the Department of Insurance – our successful investigation of this complex criminal scheme underscores our commitment to bring law breakers to justice regardless of who they are.”
Tom Frost, Special Agent in Charge with the Postal Service Office of Inspector General, stated: “We are committed to preserving Postal Service resources by vigorously investigating allegations of fraud and corruption. We are grateful for the efforts of the U.S. Attorney’s Office and our State and Federal partners in this investigation.”
The ongoing investigation into abuses involving the spinal pass-through law and kickbacks paid for spinal surgery patients is being conducted by the Federal Bureau of Investigation; IRS – Criminal Investigation; the California Department of Insurance; and the United States Postal Service, Office of Inspector General.
Release No. 14-025
Former Newton, Iowa Doctor Pleads Guilty of Health Care Fraud and Illegal Distribution of Controlled SubstanceRead the Press Release
DES MOINES, IA - The United States Attorney for the Southern District of Iowa, Nicholas A. Klinefeldt, announces that Lafayette James Twyner, Jr., age 64, a former doctor in Newton, Iowa, pleaded guilty in United States District Court on February 21, 2014, to one count of health care fraud and one count of illegal distribution of a schedule III controlled substance resulting in death, announced United States Attorney Nicholas A. Klinefeldt. If approved by the district court at sentencing, the plea agreement calls for Twyner to serve a total of 8 years of incarceration, which will include 5 years in prison and 3 years of home and/or community confinement.
“The illegal distribution and abuse of prescription drugs is a significant problem,” explained Klinefeldt. “Our office, and the federal, state, and local law enforcement agencies that assisted with this prosecution, take seriously our duty to protect the public from such practices,” he added.
Federal law permits doctors, pharmacists, and other health care professionals with U.S. Drug Enforcement Administration registrations to lawfully dispense controlled substances if they are doing so in the usual course of their professional practices and for a legitimate medical purpose, but makes it illegal for them to knowingly issue a prescription to someone who is abusing or diverting a drug.
The indictment, filed October 23, 2012, charges Twyner with prescribing controlled substances in a manner likely to cause, and that did cause, dependence, addiction, and in one case, death, as well as failing to change his prescribing practices, even after being made aware of obvious signs of patient drug abuse and diversion. Additionally, the indictment alleges he caused various insurance companies to be billed for prescriptions and services that were not for a legitimate medical purpose.
Twyner surrendered his registration to prescribe controlled substances to the U.S. Drug Enforcement Administration in April 2011, shortly after a federal search warrant was executed at the location of now-defunct Urgent Care Clinic in Newton, where he then practiced medicine. According to public records from the Iowa Board of Medicine, Twyner, who was first licensed in Iowa in 1976, surrendered his license to practice medicine in 2012, and agreed to pay a $10,000 fine. Twyner was cited by the Iowa Board of Medicine for “engaging in a pattern of willful and repeated violation of the laws and rules governing the practice of medicine in Iowa, placing patients at risk of serious harm, when he prescribed excessive controlled substances to numerous patients, including patients with known drug histories.”
The investigation was a joint local, state, and federal effort, spearheaded by the U.S. Department of Health and Human Service, Office of Inspector General, the U.S. Drug Enforcement Administration-Office of Diversion Control, and the Jasper County Sheriff’s Office. Other assisting agencies were the Mid-Iowa Narcotics Enforcement (MINE)-East Task Force, Federal Bureau of Investigation (FBI), Jasper County Attorney’s Office, and Iowa Board of Medicine. This case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
(Download Press Release )
Former Miami Securities Professional Sentenced to 37 Months for Securities Fraud in Connection with Multi-State Investment SchemeRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Drew J. Breakspear, Commissioner, State of Florida, Office of Financial Regulation, Bureau of Financial Investigations, announce that Daniel Paez, 27, of Miami, was sentenced today before U.S. District Judge William P. Dimitrouleas to 37 months in prison in connection with a scheme to defraud investors in Florida and several states.
According to court documents, Paez was the President of Fly High Investments, Inc., a Miami-Dade investment fund. From in or around September 2010, through in or around April 2012, Paez obtained more than $500,000 in funds from investors via telephone solicitations and through the Internet. Paez told investors that Fly High Investments was a hedge fund that managed more than $50 million, and he promised investors that their money would be invested in safe and secure investments. Paez also promised a fixed rate of return and that investors could withdraw their money whenever they wished. Instead, according to the Information, Paez spent the bulk of the money raised from investors at casinos, and also withdrew large amounts of cash for his personal benefit. Paez did invest certain investor monies in stocks and other securities, but often in high risk investments or penny stocks that were materially different than the specific investments promised to investors during their sales pitch.
When investors contacted Fly High Investments and Paez to inquire about the status of their funds, Paez misled investors into believing their money was safe and had been invested profitably. Paez ultimately stopped returning calls and ignored requests for the return of investor funds. According to the Information, there were approximately 17 victim investors who were located in Florida and other states, including California, South Dakota, New Jersey and Minnesota. None of these investors received any return on their investment and they lost all of the money they invested with Fly High Investments and Paez.
Mr. Ferrer commended the investigative efforts of the FBI and the State of Florida, Office of Financial Regulation, Bureau of Financial Investigations. The matter is being prosecuted by Assistant U.S. Attorney Jerrob Duffy.
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 Integrity Bank Branch Manager Charged with Bank LarcenyRead the Press Release
The U.S. Attorney's Office for the Middle District of Pennsylvania announced today that Sandra R. Powers, 57, Harrisburg, Pennsylvania, was charged in a criminal Information with bank larceny involving $125,815.00. A plea agreement was also filed indicating that Powers intends to plead guilty when she appears in federal court for her arraignment. She faces up to ten years' imprisonment and $250,000 in fines as a result of the charges.
According to U.S. Attorney Peter J. Smith, Powers was employed as a branch manager for Integrity Bank's Allentown Boulevard and Colonial Road branches located in Harrisburg, Pennsylvania. The charges filed today indicate that Powers stole $125,815.00 from a customer's account between May 2012 and March 2013. Powers was terminated by Integrity Bank in March 2013 and subsequently made full restitution to the bank.
The case was investigated by the FDIC Office of Inspector General and the FBI and is assigned to Senior Litigation Counsel Bruce Brandler for prosecution.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is 10 years’ imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
* * * *Former Clayton County Police Officer Assigned to U.S. Marshals Service Fugitive Task Force Sentenced to Ten Years in Prison for Drug TraffickingRead the Press Release
ATLANTA – Dwayne Penn, formerly a police officer with the Clayton County Police Department assigned to the U.S. Marshals Service Fugitive Task Force, was sentenced today to ten years in prison for conspiring to distribute cocaine.
“The public rightfully expects police officers to protect them from drug dealers, not go into business with them,” said United States Attorney Sally Quillian Yates. “The defendant crossed over to become one of the bad guys, and now he will suffer their fate.”
Ricky Maxwell, Acting Special Agent in Charge, FBI Atlanta Field Office, stated: “The FBI, as the lead investigative agency and coordinating body for the Atlanta Public Corruption Task Force consisting of numerous local, state, and other federal agencies, regards all public corruption matters, in particular those involving law enforcement officials, to be a priority investigative matter. As such, the FBI asks that anyone with information regarding such activity to contact their nearest FBI field office.”
Harry S. Sommers, the Special Agent in Charge of the DEA Atlanta Field Division commented, “It is always disturbing when someone in a position of trust such as a law enforcement officer tarnishes the badge by violating his or her oath. Law enforcement officers are held to a higher standard and any misconduct that they engage in will not be tolerated. Penn’s actions were deplorable and he is deserving of the sentencing handed down today.”
According to United States Attorney Yates, the charges, and other information presented in court: In August 2013, Penn, who was employed with the Clayton County Police Department at the time, conspired with Adrian Austin, an Atlanta-based drug dealer, to use Penn’s official position as a police officer to stage a fake traffic stop of a car that he and Austin believed would contain six kilograms of cocaine, conduct a fake arrest of the car’s occupant, seize the cocaine for themselves, and then sell the cocaine, sharing their ill-gotten gains. Fortunately, the person whom Penn and Austin sought to recruit for this corrupt endeavor was cooperating with federal law enforcement and agreed to record his/her meetings with Penn and Austin.
In the lead up to the fake arrest and seizure, Penn and Austin met face-to-face with the confidential informant on two separate occasions to plan their operation. Penn drove his police car to the planning meetings. While together, Penn, Austin, and the confidential informant discussed the confidential informant obtaining cocaine from his/her drug source of supply. Penn would then conduct a fake traffic stop and arrest of the confidential informant in front of the source, using Penn’s police vehicle and lights, and seize the cocaine, leading the source to mistakenly believe the drugs had been seized by law enforcement. They would divide up the seized cocaine among themselves according to the plan. As part of the charade, Penn agreed to handcuff the confidential informant, put the drugs in the trunk of his police car, and drive the confidential informant to a second location. During one of the meetings, Penn even drove Austin and the confidential informant around the parking lot, scouting out possible spots for various events the next day. Penn reassured the confidential informant that they could cover his/her tracks with the source of supply to deflect suspicion.
As planned, on the morning of August 28, 2013, Penn and Austin arrived at the appointed Decatur parking lot. Penn drove his police car and parked it in view of where the drug deal was to occur. While waiting, Penn ran the tags of a number of vehicles in the area through law enforcement databases. Penn also called task force officers with the DeKalb County Police Department and DeKalb County Sheriff’s Office and asked if DeKalb County had any surveillance vehicles that fit the description of vehicles Penn saw in the parking lot that morning. Penn rebuffed offers of assistance from his fellow officers, claiming he was just doing surveillance.
Before the deal’s consummation, the confidential informant met with Austin in Austin’s car in the parking lot. Austin relayed information between the confidential informant and Penn over his cellphone. The confidential informant and Austin discussed the imminent deal, with the confidential informant’s describing where s/he would put the drugs after receiving them.
The confidential informant exited Austin’s car and shortly thereafter met with the supposed drug dealer (also a law enforcement source) in the parking lot in view of Penn. The confidential informant received a shopping bag containing six kilogram-size bricks of fake cocaine, walked back to his/her vehicle, and placed the bag inside, placing two kilogram bricks in the back seat and leaving the remaining four kilogram bricks in the shopping bag in the front seat.After the confidential informant emerged from his/her vehicle, Penn sped over in his police car with the lights on and blocked the confidential informant from leaving. Penn jumped out of his car with his firearm drawn and pointed it at the confidential informant. Penn was wearing a bulletproof vest, which read “Police,” and a black baseball hat. Penn ordered the confidential informant to get on the ground and to keep his/her “hands behind your back,” which the confidential informant did. Penn holstered his firearm, picked up the confidential informant from the ground, and patted him/her down. Penn then ushered the confidential informant into Penn’s police car. The confidential informant told Penn that s/he had already taken his/her two and that there were four in the bag. Penn walked over to the confidential informant’s vehicle and removed the shopping bag with the four kilogram bricks from the front seat, leaving the confidential informant’s share (two kilograms) in the car. Penn placed the shopping bag in the trunk of his police car, told the confidential informant to “get out of here,” and drove away with the cocaine-like substance, leaving the confidential informant and the two kilogram bricks behind at the parking lot.
Penn and Austin were arrested shortly afterward in the vicinity of the Decatur parking lot. Each had a loaded firearm with a round in the chamber. The shopping bag with substituted cocaine was recovered from Penn’s vehicle.
On August 28, 2013, Penn was terminated from the Clayton County Police Department and the Marshals Service Task Force.
Penn pleaded guilty to conspiring to distribute over five kilograms of cocaine, pursuant to a negotiated plea agreement, on January 21, 2014. His codefendant, Adrian Austin, pleaded guilty to the same charge on January 14, 2014.
In addition to the ten-year term of imprisonment, Penn was also sentenced by United States District Judge Amy Totenberg to five years of supervised release, 120 hours of community service following his release from prison, and ordered to pay a $100 special assessment.
Sentencing for Austin is scheduled for April 10, 2014, at 2:00 p.m. also before United States District Judge Totenberg.
The case is being investigated by Special Agents of the Federal Bureau of Investigation and Drug Enforcement Administration.
Assistant United States Attorney Scott Ferber is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.
Former Broadlands Loan Officer Sentenced for Mortgage FraudRead the Press Release
Straw buyers, false applications used to buy 36 homes with $20 million in loans
ALEXANDRIA, Va. – Ging-Hwang “Felicia” Tsoa, 59, of Broadlands, Va., was sentenced today to 30 months in prison, followed by three years of supervised release, for her role in a mortgage fraud conspiracy that involved approximately 36 properties in northern Virginia and nearly $20 million in fraudulently obtained loans. Tsoa also was ordered to pay approximately $1.4 million in restitution to lenders and to forfeit to the government $45,738 in proceeds of her crimes.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia, and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by United States District Judge James C. Cacheris.
A federal jury convicted Tsoa of conspiracy and bank fraud charges on Nov. 15, 2013.
According to court records and evidence at trial, Tsoa used her position as a loan officer at First Empire Mortgage in Fairfax, Va., and Lifetime Financial Services in Herndon, Va., to defraud mortgage lenders as part of a scheme to profit from fraudulently obtained mortgage loans and the purchase of residential real estate in northern Virginia. As part of the scheme, co-conspirator Robert Mikail recruited five individuals, known as “straw buyers,” to serve as nominal purchasers in these transactions. Tsoa worked with Mikail and co-conspirator Bing-Sing “Cindy” Wang, the owner of Lifetime Financial Services, to falsify critical information on the straw buyers’ loan applications in order to get the loans approved, the transactions closed, and her commissions paid. In particular, virtually all of the fraudulent loan applications falsely identified Mikail’s Ashburn, Va. jewelry store, Opus Jewelry, as the borrower’s employer, which the conspirators would then falsely verify to the lenders as part of the loan approval process.
In total, the conspiracy involved the purchase of approximately 36 homes in and around Ashburn, Va. from 2005 through 2007, and approximately $19.9 million in loan proceeds disbursed on the basis of fraudulent loan applications. According to the evidence at trial, Tsoa served as the loan officer on at least nine of these transactions, which resulted in approximately $1.4 million in losses to lenders.
Co-conspirator Wang pleaded guilty to a conspiracy charge on Nov. 20, 2012, and was sentenced to 24 months in prison on Feb. 26, 2013. Co-conspirator Mikail pleaded guilty to a conspiracy charge on July 17, 2013, and was sentenced to 52 months in prison on Jan. 10, 2014.
This case was investigated by the FBI’s Washington Field Office. Assistant United States Attorneys Paul J. Nathanson and Jasmine H. Yoon prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.First Two Retailers Sentenced for Food Stamp FraudRead the Press Release
In Less Than Two Years, Defendants Obtained Over $1.4 Million in Payments for Food Sales That Never Occurred; To Date, Eight Retailers Have Pleaded Guilty in Food Stamp Fraud Schemes
Baltimore, Maryland – U.S. District Judge George L. Russell, III sentenced Hyung Cho, age 40, to 38 months in prison followed by three years of supervised release, and his mother Dae Cho, age 67, to 18 months in prison for food stamp and wire fraud in connection with a scheme to illegally redeem food stamp benefits in exchange for cash. Judge Russell also entered an order that the defendants forfeit $371,439.21 and pay restitution of $1.4 million. Both defendants resided in Catonsville, Maryland and are Korean citizens who are illegally present in the United States. The defendants have further agreed not to object to any proceedings that may be brought to remove them from the United States upon completion of their sentence.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William G. Squires, Jr. of the U.S. Department of Agriculture’s Office of Inspector General, Northeast Region; and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.
Dae Cho co-owned K&S Market, a convenience store located at 3910 West Belvedere Avenue in Baltimore. Dae and Hyung Cho operated the store. According to their plea agreements and court documents, the store participated in the Supplemental Nutrition Assistance Program (SNAP), previously known as the Food Stamp Program. In Maryland, the program provides eligible individuals with an electronic benefit transfer (EBT) card called the Independence Card, which operates like a debit card. Recipients obtain EBT cards through the state Department of Human Resources, then use the EBT card to purchase approved food items from participating retailers.
Dae Cho completed the required government form in March of 2004 to become an authorized retailer in the program. Dae and Hyung received training and instruction regarding the requirements of the food stamp program, including that it was a violation of SNAP regulations to trade cash for SNAP benefits. Nevertheless, from June 2011 through May 2013, Dae and Hyung Cho exchanged SNAP benefits for cash at less than face value of the EBT benefits, in violation of the food stamp program rules, and kept up to 50 percent of the benefits for themselves, using the cash to pay rent and other bills. Dae Cho has estimated that about $25,000 to $30,000 worth of food stamp benefits were exchanged in this manner per month and that this occurred approximately 50 times a day.
As a result of these unlawful cash transactions, Dae and Hyung Cho obtained more than $1,400,000 in payments for food sales that never occurred.
Eight of the 10 convenience store owners or operators who were indicted in September 2013 in connection with schemes to illegally redeem food stamp benefits in exchange for cash have pleaded guilty to food stamp fraud and/or wire fraud. Yesterday, Jung Kim, age 52, of Ellicott City, Maryland, pleaded guilty to food stamp fraud and wire fraud. Kim owned and operated C&C Market, located at 4752 Park Heights Avenue in Baltimore. From November 2010 to April 2013, Kim obtained over $400,000 in payments for food sales that never occurred. Judge Russell scheduled Kim’s sentencing for June 20, 2014.
John Cunningham, age 54, of Baltimore, pleaded guilty on February 18, 2014 to wire fraud. Cunningham co-owned a corporation that owned Cunningham’s Amoco, a BP gas station and convenience store located at 4419 Park Heights Avenue in Baltimore. U.S. District Judge Richard D. Bennett scheduled his sentencing for May 21, 2014.
Amara Cisse, age 50, who owned Simbo Food Mart, located at 2103 West Pratt Street in Baltimore, and his wife Fanta Keita, age 45, who worked at the store, both of Windsor Mill, Maryland, pleaded guilty on December 3, 2013 to food stamp fraud and are scheduled to be sentenced on March 6, 2014.
Abdullah Aljaradi, age 52, and Ahmed Ayedh Al-Jabrati, age 58, both citizens of Yemen residing in Baltimore, have each pleaded guilty to wire fraud. Aljaradi and Al-Jabrati operated two convenience stores, Second Obama Express and D&M Deli and Grocery, located next door to each other at 901 Harlem Avenue in Baltimore. From October 2010 to July 2013, the defendants obtained over $2 million in payments for food sales that never occurred. U.S. District Judge William D. Quarles, Jr. scheduled sentencing for Aljaradi on April 30, and Al-Jabrati for March 25, 2014.
Dae and Hyung Cho are the first to be sentenced. Two more retailers were indicted in January 2014.
United States Attorney Rod J. Rosenstein praised USDA’s Office of Inspector General and FBI for their work in the investigation. U.S. Attorney Rosenstein expressed appreciation to Secretary Ted Dallas and the Maryland Department of Human Resources, as well as U.S. Citizenship and Immigration Services - Office of Fraud Detection and National Security for their assistance in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Judson T. Mihok, Kathleen O. Gavin, Leo J. Wise and Peter M. Nothstein, who are prosecuting the cases.
Federal Prison Sentences Handed Down to San Antonio Businessmen for Roles in $133 Million Real Dollar Loss Fraud and Tax SchemeRead the Press Release
In San Antonio today, United States Chief District Judge Fred Biery handed down prison sentences to three individuals for their roles in what is believed to be the largest real dollar loss fraud and tax related case ever prosecuted in the Western District of Texas announced United States Attorney Robert Pitman, Acting FBI Special Agent in Charge Aaron C. Rouse and IRS-Criminal Investigation Special Agent in Charge Steve McCollough.
John Bean, owner of Synergy Personnel, a Professional Employer Organization (PEO) based in San Antonio, as well as an agent, representative, officer, license holder and accountant of several San Antonio and Austin based PEOs, including Service Professionals, was sentenced to six years in federal prison followed by three years of supervised release and ordered to pay over $120 million in restitution after pleading guilty to a money laundering charge and a mail fraud conspiracy charge in March 2013.
Pat Mire, owner and manager of several San Antonio-based PEOs, including Service Professionals, was sentenced to three years in federal prison followed by three years of supervised release and ordered to pay $10 million in restitution after pleading guilty to a money laundering charge and a mail fraud conspiracy charge in November 2011.
Mike Solis, an executive assistant at several San Antonio based PEOs, including Service Professionals, was sentenced to two years in federal prison followed by three years of supervised release after pleading guilty to a mail fraud conspiracy charge in December 2012.
A fourth defendant, John D. Walker, II, owner and manager of several San Antonio-based PEOs, including AK of Nevada, Inc., United Focus, Inc. and Safe Staff, Inc., was sentenced to five years probation and ordered to pay $450,000 restitution after pleading guilty to a Klein tax fraud conspiracy charge and a false statements charge in May 2012.
“This was a multi-faceted fraud scheme that victimized companies who relied on the defendants for payroll services, honest workers who relied on insurance coverage, and the taxpayers. At heart, the defendants were clever bandits who covered their tracks with layers of shell corporations and bank accounts, and siphoned off monies for their own luxury. The hard work of the investigators and the prosecutor untangled their devious scheme and brought the defendants to justice,” stated United States Attorney Robert Pitman.
Today’s sentencing hearings for Larry Kimes, the manager of AccounTex Financial Services, LLC, and Charles Pircher, manager of a series of PEOs based in San Antonio, including Service Professionals, were continued. This morning, Judge Biery revoked Kimes’ bond and remanded him into federal custody. Kimes, who pleaded guilty to a Klein tax fraud conspiracy charge and a mail fraud conspiracy charge last month, will be sentenced in approximately 30 days. Pircher, who pleaded guilty to the same two charges in November 2013, will be sentenced in approximately 60 days.
By pleading guilty, the defendants admitted that between 2002 and 2008, they participated in a scheme in which they stole more than $133 Million from the clients of a series of PEOs operated by the defendants. The PEOs entered into staff leasing agreements with various client companies to manage the companies’ payroll and insurance programs. Kimes, Pircher and the other co-conspirators diverted to their own use and benefit clients’ monies that should have been paid for payroll taxes and insurance premiums.
“Motivated by greed, the defendant perpetrated an extensive fraud scheme, designed to steal money from their clients and taxpayers over a number of years. The FBI will continue to work with our partners to identify, investigate and prosecute others, like the defendant, who seek unjust enrichment by victimizing others,” stated Acting FBI Special Agent in Charge Aaron C. Rouse.
“The defendants involved in this, the largest ever single criminal tax case in San Antonio's history, knowingly violated our country's Tax laws. They chose to ignore their responsibilities and live a lavish lifestyle on money belonging to their employees and to the U.S. Government. IRS Special Agents will continue to aggressively pursue these types of very serious tax crimes,” stated IRS-Criminal Investigation Special Agent in Charge Steve McCollough.
This case was investigated by agents with the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant United States Attorney Thomas J. McHugh prosecuted this case on behalf of the Government.
Federal Jury in San Antonio Convicts Los Zetas Associate in Drug Distribution and Kidnapping SchemeRead the Press Release
Los Zetas associate and Eagle Pass, TX, resident Jose Luis Rodriguez (a.k.a. “Pollo”), age 36, faces up to life in federal prison after a jury in San Antonio convicted him this afternoon of federal kidnapping and drug charges announced United States Attorney Robert Pitman, Acting FBI Special Agent in Charge Aaron C. Rouse, San Antonio Division, and Acting Drug Enforcement Administration Special Agent in Charge Steven S. Whipple, Houston Division.
The jury convicted Rodriguez of one count of conspiracy to possess with intent to distribute cocaine, three substantive counts of possession with intent to distribute cocaine and one count of conspiracy to kidnap. Evidence presented during trial revealed that from September 2006 until April 2007, Rodriguez and others conspired to distribute more than 1,600 kilograms of cocaine from Mexico through Eagle Pass and transported it to San Antonio then ultimately to Cleveland, OH; Memphis, TN; Saginaw, MI; and, New York, NY. During the course of the investigation, authorities seized a total of approximately 113 kilograms of cocaine and in excess of $2 million in drug proceeds attributed to Rodriguez and his co-conspirators.
Evidence also revealed that Rodriguez and others conspired in early 2007 to unlawfully kidnap an Eagle Pass resident and hold him hostage in Piedras Negras, Mexico, for the purpose of collecting money and property in order to satisfy an illegal drug debt owed by the Eagle Pass resident.
Rodriguez, who was arrested in Mexico on a provisional arrest warrant and extradited to the U.S. last year, remains in federal custody. Sentencing is scheduled for May 21, 2014, before United States District Judge Royce C. Lamberth.
This case was investigated by agents with the Federal Bureau of Investigation and the Drug Enforcement Administration.Federal Jury Finds Non-Indian Man Guilty on Assault and Firearms Charges Arising out of Shooting at Isleta Pueblo ResidenceRead the Press Release
ALBUQUERQUE – A federal jury sitting in Santa Fe, N.M., returned a verdict late this afternoon finding Federico Lujan, 26, of Serafina, N.M., guilty on assault and firearms charges after a four-day trial, announced Acting U.S. Attorney Steven C. Yarbrough, Special Agent in Charge DuWayne W. Honahni, Sr., of District IV of BIA’s Office of Justice Services, and Chief Kevin Mariano of the Isleta Pueblo Tribal Police Department.
Lujan, a non-Indian man, was arrested on July 5, 2012, on a criminal complaint alleging aggravated assault charges arising out of the discharging of a rifle while threatening and menacing two Isleta Pueblo women and ten children in an Isleta Pueblo residence. Lujan subsequently was indicted and charged with two counts of aggravated assault and one count of discharging a firearm in relation to a crime of violence.
Trial of this case began on Feb. 18, 2014, and concluded late this afternoon when the jury returned a verdict of guilty on all three counts of the indictment. The trial evidence established that on the morning of July 5, 2012, Lujan drove to the victims’ residence armed with a .22 caliber rifle loaded with a high-capacity magazine carrying almost 50 rounds of ammunition. After Lujan got out of his vehicle with the loaded rifle, one of the two adult victims peered out the window to see a stranger with a rifle standing in her yard. The adult victim heard shots fired as she ran to get the children who were in the residence to safety.
While one adult victim stayed in the home to protect the ten children who were present, the other adult victim went outside to try to defuse the situation. While speaking to Lujan, she learned that Lujan was shooting outside the residence because he believed that someone had taken his baseball cap from him the night before and that the cap was inside the residence. When the victim denied knowing about the baseball cap, Lujan pointed the rifle at her, threatened to kill her, and fired his rifle again but did not hit the victim. As Lujan drove away, the victim got the license plate number for Lujan’s vehicle. Lujan was arrested shortly thereafter by tribal police officers who were responding to a call from the victims. Following the arrest, the officers found a rifle in Lujan’s vehicle.
The jury deliberated approximately four and a half hours before returning its guilty verdict.
Lujan was remanded into custody after the jury returned the guilty verdict and will remain detained pending his sentencing hearing, which has yet to be scheduled. At sentencing, Lujan faces up to 18 months in prison on each of the two aggravated assault charges. Lujan also faces a mandatory ten years in prison for discharging a firearm which must be served consecutive to any prison sentence imposed on the assault charges.
This case was investigated by the Southern Pueblos Agency of the BIA’s Office of Justice Services and the Isleta Pueblo Tribal Police Department, with assistance from the Albuquerque office of the Bureau of Alcohol, Tobacco, Firearms and Explosives and the FBI’s crime lab in Quantico, Va., and is being prosecuted by Assistant U.S. Attorneys Mark T. Baker and Holland S. Kastrin.
Fairbanks Man Sentenced to 18 Years Imprisonment for His Role in Large Scale Drug Trafficking ConspiracyRead the Press Release
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that a man from Anchorage, Alaska, was sentenced in federal court in Anchorage for his role in an Anchorage and Fairbanks drug conspiracy.
Donnel Johnson, a/k/a, “Creep,” age 31, from Fairbanks, Alaska, was sentenced on Friday, February 21, 2014, by United States District Court Chief Judge Ralph R. Beistline. Johnson received a sentence of 216 months in prison and 5 years of supervised release on charges related to a drug conspiracy. Johnson was also ordered to forfeit vehicles and jewelry derived from drug trafficking.
Johnson was a key member of a drug trafficking conspiracy in which he and his accomplices attempted to conceal their drug trafficking by claiming they were involved in legitimate businesses, specifically that they were “artists,” employees, or promoters of an Anchorage recording label and rap and hip hop performance group known as “Out Da Cutt” or “ODC” Entertainment and “UNDB” (Up North ‘D’ or Dope Boys). Members of this conspiracy would record rap and hip hop songs, post videos on Youtube.com, and perform local shows in Anchorage and Fairbanks. Much of their music glorified the lifestyle of selling illegal narcotics and committing other crimes. The lavish and extravagant lifestyle portrayed in their music and videos was supported by their sales of illegal narcotics. Johnson held himself out as a record producer for the record label and recording group.
Johnson was the Fairbanks supervisor of the distribution of cocaine during the conspiracy. In fact, according to sources, Johnson was the largest distributor of cocaine in Fairbanks during the course of the conspiracy. Johnson would obtain cocaine from other members of the conspiracy in Anchorage, then he or others would deliver the cocaine to Fairbanks for distribution. According to court filings, in November 2012, the United States Postal Service intercepted ten kilograms of cocaine bound for two different Anchorage addresses. During the delivery of one of the packages, Johnson was observed in a vehicle conducting counter-surveillance in the area. In January 2012, while on a routine personal errand, an APD detective assigned to the DEA Task Force noticed the same vehicle at a Fred Meyer’s parking lot. As he watched the vehicle, Johnson arrived and placed a large duffel bag in the vehicle. The vehicle was then pulled over by Anchorage Police officers, and 12 kilograms of cocaine was found in the duffel bag. This cocaine was bound for Fairbanks, to be distributed by Johnson and his accomplices. The seizures resulted in numerous search warrants in Fairbanks and Anchorage. To date, 23 people have been charged in connection with the investigation.
Before imposing a sentence, Chief Judge Beistline told Johnson that a serious sentence was warranted, because “for at least the last three to five years, you were pouring cocaine into the Fairbanks community.”
Johnson was the latest to be sentenced in connection with the investigation. Previously, on November 2, 2012, Chief Judge Beistline sentenced Christopher Anderson to 14 months imprisonment. DeMarr Moultrie was sentenced to 40 months imprisonment on May 1, 2013. Jeraelyn Hill was sentenced to 66 months imprisonment on May 28, 2013. Jerry Wormley was sentenced to 36 months imprisonment on May 31, 2013. Rock Phelps II was sentenced to 18 months imprisonment on June 14, 2013. Brent Gunnels was sentenced to 6 months imprisonment on August 2, 2013. Mihla Hall was sentenced to 28 months imprisonment on August 21, 2013. Joshua Mustovich was sentenced to 87 months imprisonment on September 6, 2013. Dalon Johnson was sentenced to 92 months imprisonment on September 24, 2013. Antonio Fleming was sentenced to 70 months imprisonment on January 14, 2014. Tevoris Carter, Emma Shine, and Terrance Fleming have plead guilty for their roles in connection with the conspiracy and await sentencing.
Ms. Loeffler commended the Federal Bureau of Investigation, the Drug Enforcement Administration, the United States Postal Inspection Service, the Internal Revenue Service Criminal Investigation Division, and the Anchorage Police Department for the investigation leading to the successful prosecution of Mr. Johnson.
Endo Pharmaceuticals and Endo Health Solutions to Pay $192.7 Million to Resolve Criminal and Civil Liability Relating to Marketing of Prescription Drug Lidoderm for Unapproved UsesRead the Press Release
Pharmaceutical company Endo Health Solutions Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo) have agreed to pay $192.7 million to resolve criminal and civil liability arising from Endo’s marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration (FDA), the Justice Department announced today. The resolution includes a deferred prosecution agreement and forfeiture totaling $20.8 million and civil false claims settlements with the federal government and the states and the District of Columbia totaling $171.9 million. Endo Pharmaceuticals Inc. is a Delaware corporation headquartered in Malvern, Pa.
“FDA’s drug approval process is designed to ensure that companies market their products for uses that are proven to be safe and effective,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “We will hold accountable those who circumvent that process in pursuit of financial gain.”In a criminal information filed today in the Northern District of New York, the government charged that, between 2002 and 2006, Endo Pharmaceuticals Inc. introduced into interstate commerce Lidoderm that was misbranded under the Federal Food, Drug and Cosmetic Act (FDCA). The FDCA requires a company, such as Endo Pharmaceuticals Inc., to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses. During the period of 2002 to 2006, Lidoderm was approved by the FDA only for the relief of pain associated with post-herpetic neuralgia (PHN), a complication of shingles. The information alleges that, during the relevant time period, the Lidoderm distributed nationwide by Endo Pharmaceuticals Inc. was misbranded because its labeling lacked adequate directions for use in the treatment of non-PHN related pain, including low back pain, diabetic neuropathy and carpal tunnel syndrome. These uses were intended by Endo Pharmaceuticals Inc. but never approved by the FDA. The information further alleges that certain Endo Pharmaceuticals Inc. sales managers provided instruction to certain sales representatives concerning how to expand sales conversations with doctors beyond PHN and encouraged promotion of Lidoderm in workers’ compensation clinics.
In a deferred prosecution agreement to resolve the charge, Endo Pharmaceuticals Inc. admitted that it intended that Lidoderm be used for unapproved indications and that it promoted Lidoderm to health care providers for those unapproved indications. Under the terms of the deferred prosecution agreement, Endo Pharmaceuticals Inc. will pay a total of $20.8 million in monetary penalties and forfeiture. Endo Pharmaceuticals Inc. further agreed to implement and maintain a number of enhanced compliance measures, including making publicly available the results of certain clinical trials and requiring an annual review and certification of its compliance efforts by the Chief Executive Officer of its parent company, Endo Health Solutions. The deferred prosecution agreement will not be final until accepted by the U.S. District Court for the Northern District of New York.
“The safety and efficacy of drugs must be shown by science, not sales pitches,” said U.S. Attorney for the Northern District of New York Richard S. Hartunian. “Drugs marketed for intended uses not approved by the FDA are misbranded because their labeling lacks adequate directions for those uses. This settlement emphasizes that public health is protected by labeling based on product performance, rather than profitability, and promotes enhanced efforts to ensure compliance with all requirements.”
In addition, Endo agreed to settle its potential civil liability in connection with its marketing of Lidoderm. The government alleged that, from March 1999 through December 2007, Endo caused false claims to be submitted to federal health care programs, including Medicaid, a jointly funded federal and state program, by promoting Lidoderm for unapproved uses, some of which were not medically accepted indications and, therefore, were not covered by the federal health care programs. Of the $171.9 million Endo has agreed to pay to resolve these civil claims, Endo will pay $137.7 million to the federal government and $34.2 million to the states and the District of Columbia.
“Off-label marketing can undermine the doctor-patient relationship and adversely influence the clear and honest judgment of doctors that their patients rely on and trust,” said U.S. Attorney for the Eastern District of Pennsylvania Zane D. Memeger. “Pharmaceutical companies have a legal obligation to promote their drugs for only FDA-approved uses. This obligation takes precedence over the company’s bottom line.”
“The settlement announced today demonstrates the government’s continued scrutiny of pharmaceutical companies that interfere with FDA’s mission of ensuring that drugs are safe and effective for the American public,” said Special Agent in Charge of the FDA’s Office of Criminal Investigations’ New York Field Office Mark Dragonetti. “We will continue to work with our law enforcement partners to investigate and prosecute pharmaceutical companies that disregard the drug approval process and jeopardize the public health by engaging in the nationwide distribution of misbranded products.”
“Endo Pharmaceutical enriched themselves at the expense of the public,” said Special Agent in Charge Andrew W. Vale of the Albany Division of the Federal Bureau of Investigation. “Patients will search for drug therapies to assist in pain management, and they deserve the right to drugs approved for such use. The FBI will continue to work with our federal partners to investigate companies such as Endo Pharmaceuticals to ensure patients are safe.”
Also as part of the settlement, Endo Pharmaceuticals Inc. has agreed to enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General that requires Endo to implement measures designed to avoid or promptly detect conduct similar to that which gave rise to this resolution. Among other things, the CIA requires Endo to implement an internal risk assessment and mitigation program and requires numerous internal and external reviews of promotional and other practices. The CIA also requires key executives and individual board members to sign certifications about compliance, and it requires the company to publicly report information about its financial arrangements with physicians.
“By marketing Lidoderm for uses not covered by federal health care programs, Endo profited at the expense of taxpayers and could have put patients at risk,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson. “Under our CIA, Endo agrees to promote its products legally, while board members and top executives are specifically held accountable for compliance.”
The civil settlement resolves three lawsuits pending in federal court in the Eastern District of Pennsylvania under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and to share in any recovery. The actions were filed by Peggy Ryan, a former Lidoderm sales representative, Max Weathersby, another former Lidoderm sales representative and Gursheel S. Dhillon, a physician. The whistleblowers’ share of the settlement has not been determined.
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 civil settlement was handled by the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Civil Division’s Commercial Litigation Branch. The criminal case was handled by the U.S. Attorney’s Office for the Northern District of New York and the Civil Division’s Consumer Protection Branch. These matters were investigated by the Federal Bureau of Investigation, the Food and Drug Administration Office of Criminal Investigation, the Department of Health and Human Services Office of Inspector General Office of Investigations, the Defense Criminal Investigative Service of the Department of Defense, the U.S. Postal Service Office of Inspector General and the Office of Personnel Management Office of Inspector General with assistance from the Department of Health and Human Services Office of Counsel to the Inspector General and Office of General Counsel and Center for Medicare and Medicaid Services, the Food and Drug Administration’s Office of Chief Counsel and the National Association of Medicaid Fraud Control Units.
Except as to conduct admitted in connection with the deferred prosecution agreement, the claims settled by the civil agreement are allegations only, and there has been no determination of civil liability. The civil lawsuits are captioned United States ex rel. Ryan v. Endo Pharmaceuticals Inc., Civil Action No. 05-cv-3450, United States ex rel. Weathersby, et al. v. Endo Pharmaceuticals Inc., et al, Civil Action No. 10-cv-2039 and United States ex rel. Dhillon v. Endo Pharmaceuticals, Civil Action No. 11-cv-7767, all docketed in the Eastern District of Pennsylvania.
Endo Pharmaceuticals and Endo Health Solutions to Pay $192.7 Million to Resolve Criminal and Civil Liability Relating to Marketing of Prescription Drug Lidoderm for Unapproved UsesRead the Press Release
WASHINGTON – Pharmaceutical company Endo Health Solutions Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo) have agreed to pay $192.7 million to resolve criminal and civil liability arising from Endo’s marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration (FDA), the Justice Department announced today. The resolution includes a deferred prosecution agreement and forfeiture totaling $20.8 million and civil false claims settlements with the federal government and the states and the District of Columbia totaling $171.9 million. Endo Pharmaceuticals Inc. is a Delaware corporation headquartered in Malvern, Pa.
“FDA’s drug approval process is designed to ensure that companies market their products for uses that are proven to be safe and effective,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “We will hold accountable those who circumvent that process in pursuit of financial gain.”
In a criminal information filed today in the Northern District of New York, the government charged that, between 2002 and 2006, Endo Pharmaceuticals Inc. introduced into interstate commerce Lidoderm that was misbranded under the Federal Food, Drug and Cosmetic Act (FDCA). The FDCA requires a company, such as Endo Pharmaceuticals Inc., to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses. During the period of 2002 to 2006, Lidoderm was approved by the FDA only for the relief of pain associated with post-herpetic neuralgia (PHN), a complication of shingles. The information alleges that, during the relevant time period, the Lidoderm distributed nationwide by Endo Pharmaceuticals Inc. was misbranded because its labeling lacked adequate directions for use in the treatment of non-PHN related pain, including low back pain, diabetic neuropathy and carpal tunnel syndrome. These uses were intended by Endo Pharmaceuticals Inc. but never approved by the FDA. The information further alleges that certain Endo Pharmaceuticals Inc. sales managers provided instruction to certain sales representatives concerning how to expand sales conversations with doctors beyond PHN and encouraged promotion of Lidoderm in workers’ compensation clinics.
In a deferred prosecution agreement to resolve the charge, Endo Pharmaceuticals Inc. admitted that it intended that Lidoderm be used for unapproved indications and that it promoted Lidoderm to health care providers for those unapproved indications. Under the terms of the deferred prosecution agreement, Endo Pharmaceuticals Inc. will pay a total of $20.8 million in monetary penalties and forfeiture. Endo Pharmaceuticals Inc. further agreed to implement and maintain a number of enhanced compliance measures, including making publicly available the results of certain clinical trials and requiring an annual review and certification of its compliance efforts by the Chief Executive Officer of its parent company, Endo Health Solutions. The deferred prosecution agreement will not be final until accepted by the U.S. District Court for the Northern District of New York.
“The safety and efficacy of drugs must be shown by science, not sales pitches,” said U.S. Attorney for the Northern District of New York Richard S. Hartunian. “Drugs marketed for intended uses not approved by the FDA are misbranded because their labeling lacks adequate directions for those uses. This settlement emphasizes that public health is protected by labeling based on product performance, rather than profitability, and promotes enhanced efforts to ensure compliance with all requirements.”
In addition, Endo agreed to settle its potential civil liability in connection with its marketing of Lidoderm. The government alleged that, from March 1999 through December 2007, Endo caused false claims to be submitted to federal health care programs, including Medicaid, a jointly funded federal and state program, by promoting Lidoderm for unapproved uses, some of which were not medically accepted indications and, therefore, were not covered by the federal health care programs. Of the $171.9 million Endo has agreed to pay to resolve these civil claims, Endo will pay $137.7 million to the federal government and $34.2 million to the states and the District of Columbia.
“Off-label marketing can undermine the doctor-patient relationship and adversely influence the clear and honest judgment of doctors that their patients rely on and trust,” said U.S. Attorney for the Eastern District of Pennsylvania Zane D. Memeger. “Pharmaceutical companies have a legal obligation to promote their drugs for only FDA-approved uses. This obligation takes precedence over the company’s bottom line.”
“The settlement announced today demonstrates the government’s continued scrutiny of pharmaceutical companies that interfere with FDA’s mission of ensuring that drugs are safe and effective for the American public,” said Special Agent in Charge of the FDA’s Office of Criminal Investigations’ New York Field Office Mark Dragonetti. “We will continue to work with our law enforcement partners to investigate and prosecute pharmaceutical companies that disregard the drug approval process and jeopardize the public health by engaging in the nationwide distribution of misbranded products.”
“Endo Pharmaceutical enriched themselves at the expense of the public,” said Special Agent in Charge Andrew W. Vale of the Albany Division of the Federal Bureau of Investigation. “Patients will search for drug therapies to assist in pain management, and they deserve the right to drugs approved for such use. The FBI will continue to work with our federal partners to investigate companies such as Endo Pharmaceuticals to ensure patients are safe.”
Also as part of the settlement, Endo Pharmaceuticals Inc. has agreed to enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General that requires Endo to implement measures designed to avoid or promptly detect conduct similar to that which gave rise to this resolution. Among other things, the CIA requires Endo to implement an internal risk assessment and mitigation program and requires numerous internal and external reviews of promotional and other practices. The CIA also requires key executives and individual board members to sign certifications about compliance, and it requires the company to publicly report information about its financial arrangements with physicians.
“By marketing Lidoderm for uses not covered by federal health care programs, Endo profited at the expense of taxpayers and could have put patients at risk,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson. “Under our CIA, Endo agrees to promote its products legally, while board members and top executives are specifically held accountable for compliance.”
The civil settlement resolves three lawsuits pending in federal court in the Eastern District of Pennsylvania under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and to share in any recovery. The actions were filed by Peggy Ryan, a former Lidoderm sales representative, Max Weathersby, another former Lidoderm sales representative and Gursheel S. Dhillon, a physician. The whistleblowers’ share of the settlement has not been determined.
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 civil settlement was handled by the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Civil Division’s Commercial Litigation Branch. The criminal case was handled by the U.S. Attorney’s Office for the Northern District of New York and the Civil Division’s Consumer Protection Branch. These matters were investigated by the Federal Bureau of Investigation, the Food and Drug Administration Office of Criminal Investigation, the Department of Health and Human Services Office of Inspector General Office of Investigations, the Defense Criminal Investigative Service of the Department of Defense, the U.S. Postal Service Office of Inspector General and the Office of Personnel Management Office of Inspector General with assistance from the Department of Health and Human Services Office of Counsel to the Inspector General and Office of General Counsel and Center for Medicare and Medicaid Services, the Food and Drug Administration’s Office of Chief Counsel and the National Association of Medicaid Fraud Control Units.
Except as to conduct admitted in connection with the deferred prosecution agreement, the claims settled by the civil agreement are allegations only, and there has been no determination of civil liability. The civil lawsuits are captioned United States ex rel. Ryan v. Endo Pharmaceuticals Inc., Civil Action No. 05-cv-3450, United States ex rel. Weathersby, et al. v. Endo Pharmaceuticals Inc., et al, Civil Action No. 10-cv-2039 and United States ex rel. Dhillon v. Endo Pharmaceuticals, Civil Action No. 11-cv-7767, all docketed in the Eastern District of Pennsylvania.
Endo Health Solutions and Endo Pharmaceuticals of Malvern, Pa to Pay $171.9 Million to Resolve Civil False Claims AllegationsRead the Press Release
PHILADELPHIA -- Specialty pharmaceuticals company Endo Health Solutions, Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo), which is headquartered in Malvern, Pennsylvania, have agreed to pay $171.9 million to resolve civil allegations of off-label marketing of their adhesive pain patch Lidoderm. The civil resolution is the result of whistleblower allegations filed in the Eastern District of Pennsylvania and was announced today by the Department of Justice and United States Attorney Zane David Memeger. Separately handled and announced today by the Department of Justice and the Office of the United States Attorney for the Northern District of New York is Endo Pharmaceuticals Inc.’s additional deferred prosecution agreement to pay $20.8 million in criminal forfeiture and fines to resolve related criminal liability. The criminal resolution is discussed at http://www.justice.gov/opa/pr/2014/February/14-civ-187.html.
Civil Settlement in Eastern District of Pennsylvania. Lidoderm was FDA approved only for relief of pain associated with post-herpetic neuralgia (“PHN”), a painful condition that affects some individuals with a history of shingles. The civil settlement resolves allegations under the False Claims Act that, between March 1999 and December 2007: (1) Endo knowingly promoted Lidoderm for treatment of non-FDA-approved (off-label) conditions, including lower back pain and chronic pain; (2) because uses of the product for those conditions were not medically accepted indications, federal health care programs did not cover such uses; and (3) Endo’s off-label promotion caused providers to submit false reimbursement claims for such non-covered uses to Medicare, Medicaid, and other federal health care programs. Of the $171.9 million that Endo has agreed to pay to resolve these civil claims, the company will pay $137,700,172 to the United States and $34,209,981 to various States and the District of Columbia.
Under qui tam (whistleblower) provisions of the federal False Claims Act, certain private citizens may bring civil actions on behalf of the United States and may share in any recovery. The settled Lidoderm civil allegations include those originally brought by whistleblower Peggy Ryan in the first of three qui tam lawsuits now pending in federal court in the Eastern District of Pennsylvania. Ms. Ryan is a former Endo sales representative whose sales territory included upstate New York. The whistleblower share of the settlement has not yet been determined.
“Off-label marketing can undermine the doctor-patient relationship and adversely influence the clear and honest judgment of doctors that their patients rely on and trust. Pharmaceutical companies have a legal obligation to promote their drugs for only FDA-approved uses. This obligation takes precedence over the company’s bottom line,” said Memeger.
“FDA’s drug approval process is designed to ensure that companies market their products for uses that are proven to be safe and effective,” said Stuart F. Delery, Assistant Attorney General for the Civil Division of the United States Department of Justice. “We will hold accountable those who circumvent that process in pursuit of financial gain.”
Corporate Integrity Agreement. As part of the settlement, Endo Pharmaceuticals Inc. agrees to enter into a Corporate Integrity Agreement (“CIA”) with the Office of Inspector General of the U.S. Department of Health and Human Services (“HHS”). The CIA requires Endo to implement measures designed to avoid or promptly detect conduct similar to that which allegedly gave rise to this matter, including measures requiring: (1) an internal risk assessment and mitigation program; (2) numerous internal and external reviews of promotional and other practices; (3) key executives and individual Board members to sign compliance certifications; and (4) public reporting of information about Endo’s financial arrangements with physicians.
“By marketing Lidoderm for uses not covered by Federal health care programs, Endo profited at the expense of taxpayers and could have put patients at risk,” said Daniel R. Levinson, the HHS Inspector General. “Under our CIA Endo agrees to promote its products legally, while board members and top executives are specifically held accountable for compliance.”
Investigating these matters were the Federal Bureau of Investigation; the FDA’s Office of Criminal Investigations; the Defense Criminal Investigative Service of the Department of Defense; and the respective Inspector Generals’ Offices for HHS, the U.S. Postal Service, and the U.S. Office of Personnel Management.
The civil settlement was jointly handled: in the Eastern District of Pennsylvania, by Civil Chief Margaret L. Hutchinson, Deputy Chief Mary Catherine Frye, and Assistant U.S. Attorney Gerald B. Sullivan, with analysis by Auditors Denis J. Cooke and Dawn Wiggins; and at the Commercial Litigation Branch of the U.S. Department of Justice’s Civil Division, by Trial Attorney Brian McCabe. Assistance was provided by the HHS Office of Counsel to the Inspector General; the FDA’s Office of Chief Counsel; and the National Association of Medicaid Fraud Units.
The settled civil claims are allegations only. There has been no determination of civil liability. The civil lawsuits are docketed in the Eastern District of Pennsylvania as U.S.A. et al. ex rel. Ryan v. Endo Pharmaceuticals Inc., No. 05-cv-3450; U.S.A., et al. ex rel. Weathersby, et al., No. 10-cv-2039; and U.S.A. ex rel. Dhillon v. Endo Pharmaceuticals, No. 11-cv-7767.Release.pdf
Libodem Fully Executed Settlement Agreement.pdf
Coporate Intgerity Agreement - HHS.pdfUNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525El Paso Man Arrested and Charged in Alleged Laser Strike IncidentRead the Press Release
In El Paso today, FBI agents arrested 28–year-old Don Ray Dorsett for allegedly pointing a laser at an aircraft flying overhead announced United States Attorney Robert Pitman and FBI Special Agent in Charge Douglas E. Lindquist, El Paso Division.
In February 2012, President Barrack Obama signed the “FAA Modernization and Reform Act of 2012” and added a new provision that makes it a federal crime to aim a laser pointer at an aircraft. This week, the federal grand jury in El Paso returned a one-count indictment charging Dorsett with violating that provision (Title 18 United States Code Section 39A—Aiming a Laser Pointer at an Aircraft). The indictment alleges that on January 4, 2014, Dorsett knowingly aimed the beam of a laser pointer at a helicopter flying overhead. The aircraft belonged to the Texas Department of Public Safety.
“Although no one was injured during this incident, laser strikes can pose serious risks to flight crews, passengers, and even individuals on the ground. Laser strikes are a serious public safety hazard and will be treated as such by law enforcement officials,” stated United States Attorney Robert Pitman.
Upon conviction, the defendant faces up to five years in federal prison and a maximum $250,000 fine.
“Today’s arrest of Don Dorsett is a prime example of the cooperative and collaborative relationship between the FBI and our local partners. The FBI, in tandem with the Texas Department of Public Safety and our other local law enforcement partners, take aircraft safety seriously. The FBI will continue to vigorously investigate and seek prosecution for those engaged in laser strikes on aircrafts and other criminal activity involving aircrafts and innocent bystanders,” stated FBI Special Agent in Charge Douglas E. Lindquist, El Paso Division.
This indictment resulted from an investigation conducted by agents with the Federal Bureau of Investigation together with the Texas Department of Public Safety and the El Paso Police Department. Assistant United States Attorney Stanley Serwatka is prosecuting this case on behalf of the Government.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendant is presumed innocent until proven guilty in a court of law.
Reported incidents of laser strikes are on the rise. Since the FBI and the Federal Aviation Administration (FAA) began tracking laser strikes in 2005, statistics reflect a more than 1,100% increase in the deliberate targeting of aircraft by people with handheld lasers. In 2013, there were a total of 3,960 laser strikes reported – an average of almost 11 incidents per day.
Earlier this month, the FBI announced the inception of the Laser Threat Awareness Campaign, a nationwide effort led by the FBI in collaboration with the Air Line Pilots Association, Int’l (ALPA) and the FAA to raise awareness of aircraft laser illumination threats. If you have information about a lasing incident, contact the El Paso FBI at 915-832-5000. If you see someone pointing a laser at an aircraft, call the nearest local law enforcement agency immediately by dialing 911. Tips can also be submitted online at https://tips.fbi.gov.
Eight Miami Men Charged in Drug Trafficking Conspiracy and Distribution ChargesRead the Press Release
Indictment Stems from USAO’s Liberty City/Little Haiti Violence Reduction PartnershipWifredo A. Ferrer, United States Attorney for the Southern District of Florida, Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Hugo Barrera, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Miami Field Office, and José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CID), Miami Field Office, announce the return of an indictment charging eight defendants with participating in a narcotics-trafficking conspiracy, in violation of Title 21, United States Code, Section 846, as well as charging several defendants individually with associated firearms offenses, including possession of a firearm in furtherance of a drug trafficking crime, in violation of Title 18, United States Code, Section 924(c)(1)(A)(i), and possession of a firearm and ammunition by a convicted felon, in violation of Title 18, United States Code, Sections 922(g)(1) and 924(e).
The defendants charged are: Espere Desmond Pierre, 32; Markentz Blanc, 32; Meluin Jermaine Braynen, 19; Willis Maxi, 33; Wisvelt Voltaire, 32; Alex Bermudez, 24; Sanders Bermudez, 22; and Kervens Lalanne, 22, all of Miami.
According to the indictment, the defendants participated in the large-scale distribution of crack cocaine through multiple retail sale locations operated by the conspirators in the Little Haiti area of Miami.
In addition, Pierre and Blanc also conspired to use compromised personal identifying information to file numerous false and fraudulent tax returns in order to claim tax refunds to which they were not entitled. The defendants possessed the identity information (including names, dates of birth, and Social Security numbers) of over 1,000 persons. Pierre and Blanc were charged with conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349; and aggravated identity theft, in violation of Title 18, United States Code, Section 1028A(a)(1). Blanc was additionally charged with possession of fifteen or more unauthorized access devices, in violation of Title 18, United States Code, Section 1029(a)(3).
This case is, in large part, the result of the Violence Reduction Partnership, launched by the U.S. Attorney’s Office. Through this Partnership, the U.S. Attorney’s Office and its federal and local law enforcement allies have sought to dismantle the most violent criminal networks in various neighborhoods, while simultaneously working with community leaders and concerned citizens to mentor at-risk youths, provide jobs and job training to young families, and help probationers and parolees successfully re-enter society.
Mr. Ferrer thanked FBI, ATF, IRS-CI, the MDPD, and the City of Miami Police Department for their work on the case. The case is being prosecuted by Assistant U.S. Attorney Seth M. Schlessinger.
An indictment is only an accusation and the defendant is presumed innocent until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Eagle Butte Man Charged with Assaulting, Resisting and Impeding A Federal OfficerRead the Press Release
United States Attorney Brendan V. Johnson announced that an Eagle Butte, South Dakota, man has been indicted by a federal grand jury for Assaulting, Resisting and Impeding two federal contract officers.
William Pay Pay, age 51, was indicted on February 12, 2014. He appeared before U.S. Magistrate Judge Veronica L. Duffy on February 18, 2014, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 20 years in custody and/or a $250,000 fine, 3 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
Pay Pay is alleged to have forcibly assaulted, resisted, opposed, impeded, intimidated, and interfered with two different Cheyenne River Sioux tribal law enforcement officers in December 2013 in Eagle Butte. The incident resulted in bodily injury to and physical contact with the law enforcement officers.
The charges are merely an accusation and Pay Pay is presumed innocent until and unless proven guilty.The investigation is being conducted by the Cheyenne River Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Mikal Hanson is prosecuting the case.
Pay Pay was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set.
Eagle Butte Man Charged with Aggravated Sexual Abuse by ForceRead the Press Release
United States Attorney Brendan V. Johnson announced that an Eagle Butte, South Dakota, man has been indicted by a federal grand jury for Aggravated Sexual Abuse by Force.
Brad Lee Red Bear, age 23, was indicted on February 12, 2014. He appeared before U.S. Magistrate Judge Veronica L. Duffy on February 18, 2014, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to life in custody and/or a $250,000 fine, 5 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
Red Bear is alleged to have forcibly sexually assaulted a woman in December 2013 in Eagle Butte, South Dakota. The charge is merely an accusation and Red Bear is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Federal Bureau of Investigation and the Cheyenne River Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Mikal Hanson is prosecuting the case.
Red Bear was released on bond. A trial date has not been set.
District Woman Sentenced to Three-Year Prison Term for Involuntary Manslaughter in Traffic Fatality-Impaired Driver Lost Control of Car, Leading to Passenger’s Death-Read the Press Release
WASHINGTON – Corrine M. Johnson, 27, of Washington, D.C, was sentenced today to three years in prison on charges of involuntary manslaughter and driving under the influence of alcohol stemming from a traffic fatality that took place in 2012 in Northeast Washington, U.S. Attorney Ronald C. Machen Jr. announced.
Johnson pled guilty to the charges in November 2013 in the Superior Court of the District of Columbia. She was sentenced by the Honorable Robert E. Morin. Upon completion of her prison term, Johnson will be placed on five years of supervised release.
According to the government’s evidence, at approximately 1:35 a.m. on Saturday, Aug. 4, 2012, Johnson was driving her Hyundai Accent at a high rate of speed southwest bound on Division Avenue NE. The victim, Cierra Wilson, 25, was Johnson’s front seat passenger.
Witnesses saw Johnson driving at approximately twice the speed limit in the residential area, and failing to stop at the stop sign controlling the intersection of Division Avenue and Blaine Street NE. After running that stop sign, Johnson continued along Division Avenue and failed to stop at the stop sign controlling the next intersection at Division Avenue and Ames Street. As she ran the stop sign at that intersection, Johnson lost control of her car and crashed, wedging her car between a lamp post and the retaining wall of the corner house at the intersection. The crash instantly killed Ms. Wilson.
Almost immediately, area residents arrived on the scene and saw that the car was on fire. A resident put out the fire with a kitchen fire extinguisher. Officers from the Metropolitan Police Department (MPD), who were patrolling the area, were flagged down and immediately came to the scene. They found that Ms. Wilson, the front seat passenger, appeared to be already dead, and Johnson, still in the driver’s seat, was badly injured. Johnson was taken to a hospital and treated for her injuries. While at the hospital, Johnson’s blood was drawn and later analyzed to determine that her blood alcohol content was nearly twice the legal limit.
Crash analysis conducted by detectives from the MPD’s Major Crash Investigations Unit determined that Johnson’s Hyundai did not experience any mechanical malfunction, and that Johnson did not apply her brakes to avoid the crash. Further, the crash reconstruction evidence indicated that when she struck the retaining wall, killing Ms. Wilson, Johnson was travelling at approximately 55 mph in the 25 mph zone. Also, an opened bottle of vodka was found on the floorboard of the car.
In announcing the sentence, U.S. Attorney Machen praised those who investigated the case for the Metropolitan Police Department, including members of the Major Crash Investigations Unit and the Sixth District. He also expressed appreciation for those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Sandra Lane and Phil Aronson, and Victim/Witness Program Specialist Tamara Ince.
Finally, he commended the work of Assistant U.S. Attorney Edward A. O’Connell, who prosecuted the matter.
14-045District Man Sentenced to 18 Years in Prison for Beating Man to Death with BarbellAttack Took Place on Weekend Afternoon, on Busy Public SidewalkRead the Press Release
WASHINGTON – Jeffrey Mills, 52, of Washington, D.C., was sentenced today to 18 years in prison for beating a man to death with a barbell in an attack in Northwest Washington, U.S. Attorney Ronald C. Machen Jr. announced.
Mills was found guilty by a jury in November 2013, following a trial in the Superior Court of the District of Columbia, of charges of voluntary manslaughter while armed and carrying a dangerous weapon. He was sentenced by the Honorable John Ramsey Johnson. Mills was sentenced to 18 years in prison for voluntary manslaughter while armed and three years for carrying a dangerous weapon. The sentences will run concurrent to one another. Upon completion of his prison term, Mills will be placed on five years of supervised release.
According to the government’s evidence, the victim, Juan Antonio Paredes, 45, was with several friends on the afternoon of Saturday, Jan. 14, 2012 on the Park Road sidewalk near the intersection with 14th Street NW. Mills, a local street vendor who would often park his van on Park Road and sell wares from a table he set up on the sidewalk, was also out that afternoon.
For no discernible reason, at about 1:55 p.m., Mills grabbed a long, 15-pound barbell that he often used to lift weights during the day. He then rushed at Mr. Paredes, striking him broadside in the back and then again in the back of the head, as if he was swinging a baseball bat. Before the attack, Mr. Paredes was talking with friends and had his back to the defendant.
Mr. Paredes, who did not see the attack coming, crumbled and fell against a cement bike rack and then to the ground. As he lay defenseless on his back, Mills stood over him and continued to jab him in the chest and abdomen with the end of the barbell. He also kicked him about the body. Witnesses described how the defendant struck Mr. Paredes about the body five to 10 times while Mr. Paredes was on the ground. At the time of the offense, Mills repeatedly yelled that Mr. Paredes had attacked him with a knife. However, as multiple witnesses testified during trial, Mr. Paredes was not threatening Mills in any way before he was attacked.
In announcing the sentence, U.S. Attorney Machen commended the officers, detectives, mobile crime lab technicians, and other personnel who investigated the case for the Metropolitan Police Department. He also expressed appreciation for the assistance provided by the U.S. Marshals Service, the U.S. Immigration and Customs Enforcement, the District of Columbia Department of Forensic Sciences, and other agencies. He acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Intelligence Specialist Zachary McMenamin; Information Technology Specialists Jeanie Latimore-Brown and Thomas “Ron” Royal; Supervisory Information Technology Specialist Joe Calvarese; Victim/Witness Advocate Christina Principe; Supervisory Victim/Witness Services Coordinator David Foster, and Paralegal Specialist Alesha Matthews Yette. Finally, he thanked Assistant U.S. Attorney Erin O. Lyons, who prosecuted the case.
14-044Disability Doctor Peter J. Lesniewski Sentenced in Manhattan Federal Court to Eight Years in Prison for His Role in LIRR Fraud SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that PETER J. LESNIEWSKI, a Board-certified orthopedist, was sentenced today in Manhattan federal court to eight years in prison for his role in the alleged massive fraud scheme in which Long Island Railroad (“LIRR”) workers claimed to be disabled upon early retirement so that they could receive disability benefits to which they were not entitled. Between 1999 and 2008, LESNIEWSKI provided fraudulent medical narratives in support of the disability applications of at least 230 LIRR employees. In all, over 98% of the more than 400 LIRR employees he supposedly treated received disability benefits after seeing LESNIEWSKI. Following a three-week jury trial, LESNIEWSKI was convicted on August 6, 2013, on all 10 counts with which he was charged, including: one count of conspiracy to commit mail fraud, wire fraud and health care fraud; one count of conspiracy to defraud the Railroad Retirement Board (“RRB”); three counts of health care fraud; and five counts of mail fraud.
Manhattan U.S. Attorney Preet Bharara said: “In perpetrating this elaborate scheme, Dr. Lesniewski compromised both his professional and his personal integrity. Regrettably, Dr. Lesniewski is one of a number of healthcare professionals whose gross misconduct has depleted the RRB’s funds and diverted benefits from the rightful beneficiaries of its disability program.”
According to the Complaint, the Superseding Indictments, the evidence at trial, and statements made in court:
The RRB is an independent U.S. agency that administers benefit programs, including disability benefits, for the nation’s railroad workers and their families. A unique LIRR contract allowed employees to retire at the relatively young age of 50 – the age of eligibility has since changed to 55 – if they had been employed by the LIRR for at least 20 years. Eligible employees are entitled to receive an LIRR pension, which is a portion of the full retirement payment for which they are eligible at 65. In addition, at full retirement age (between age 60 and age 65 depending on years of service) they are eligible to receive an RRB retirement pension. LIRR workers who retired at 50 with only an LIRR pension would receive less than their prior salary and substantially lower pension payments than those to which they would be entitled at full retirement age. However, LIRR employees who retired and claimed disability could receive a disability payment from the RRB on top of their LIRR pension, regardless of age. A retiree’s LIRR pension, in combination with RRB disability payments, can be roughly equivalent to the base salary earned during his or her career.
Hundreds of LIRR employees have allegedly exploited the overlap between the LIRR pension and the RRB disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under penalty of prosecution in disability applications, allowed LIRR employees to retire as early as age 50 with an LIRR pension, supplemented by the fraudulently obtained RRB disability annuity. From 1995 through 2011, more than 75% of retiring LIRR employees stopped working and began receiving RRB disability benefits, whereas during this same period, only 25% of retiring Metro-North employees stopped working and began receiving RRB disability benefits.
LESNIEWSKI was instrumental in helping LIRR retirees receive disability benefits to which they were not entitled. As part of the massive fraud scheme, LESNIEWSKI prepared false documentation purporting to show the LIRR employees’ steady decline toward disability exactly at the time they pre-planned their retirement. He then provided to those LIRR employees a narrative for submission to the RRB that claimed they should receive a disability annuity. These medical narratives were completely fabricated or grossly exaggerated so that LESNIEWSKI could recommend a set of restrictions that, if legitimate, would render it impossible for the LIRR employees to continue performing their jobs. Many of the purportedly “objective” findings from the tests he conducted showed nothing more than normal degenerative changes one would expect to see in patients within the relevant age bracket.
LESNIEWSKI received approximately $1,000, often in cash, for these fraudulent assessments and narratives, and hundreds of thousands of dollars in additional health insurance payments for unnecessary medical treatments. In turn, the 242 patients who obtained disability benefits with LESNIEWSKI’s assistance have received approximately $70 million in RRB disability benefit payments. In sentencing LESNIEWSKI, Judge Marrero found that the total intended losses from his fraud were over $90 million, and that the actual losses suffered by the RRB and insurance companies to date total over $70 million.
In addition to his prison term, LESNIEWSKI, 63, of Rockville Centre, New York, was also sentenced to three years of supervised release. He was also ordered to forfeit $70,947,699 and pay $70,632,900 in restitution.
Thirty-three people have been charged in connection with the LIRR disability fraud scheme, 28 of whom have pled guilty and five of whom were convicted after trial.
Mr. Bharara praised the Railroad Retirement Board’s Office of the Inspector General, the FBI, and the Metro Transit Authority’s Office of the Inspector General for their outstanding work in the investigation, which he noted is ongoing. He also acknowledged the previous investigation conducted by the New York State Attorney General’s Office into these pension fraud issues.
The Office’s Complex Frauds Unit is handling the case. Assistant U.S. Attorneys Justin Weddle, Daniel Tehrani, and Nicole Friedlander are in charge of the prosecution.
Denver Man Sentenced to Federal Prison for Being A Felon in Possession of A FirearmRead the Press Release
DENVER – Reginald Jerome Wray, age 35, of Denver, was recently sentenced by U.S. District Court Judge Raymond P. Moore to serve 77 months in federal prison, followed by 3 years on supervised release, for being a felon in possession of a firearm, U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Luke Franey announced. Wray, who appeared at the sentencing hearing in custody, was remanded at the end of the proceeding.
Wray was indicted by a federal grand jury in Denver on May 8, 2013. He pled guilty before Judge Moore on November 4, 2013. Wray was sentenced on February 19, 2014.
According to the stipulated facts contained in the plea agreement, on April 1, 2013, shortly before 2:00 a.m., Denver police attempted to make a traffic stop of a speeding Jeep Commander SUV. When the officer turned on his overhead lights, the SUV took off at a high rate of speed and eluded the officer. The SUV turned a corner and crashed into two parked cars. The driver, who was the sole occupant of the vehicle, fled from the SUV on foot. Police officers gave chase and found the defendant, Reginald Jerome Wray, hiding behind a wall near the scene of the accident. The defendant admitted that he was the driver of the SUV.
Police conducted an inventory search of the SUV. Inside, officers found a firearm, specifically a Charter Arms, Bulldog .44 caliber revolver, loaded with 5 rounds of ammunition. Officers also found marijuana, Diazepam (Valium), a portable scale, and two cell phones in the vehicle. The defendant intentionally fled from police because he was on the run, as he was on parole and had an active warrant for a parole violation.
Prior to April 1, 2013, the defendant was a convicted felon and prohibited person. He had previously been convicted of the following felony offenses punishable by more than one year imprisonment:
* 8/16/2010: Marijuana - Possession of 8 oz or More, Boulder County, Colorado, District Court Case No. 2010CR0221;
* 6/18/2010: Escape - Attempt from Felony Pending, Boulder County, Colorado, District Court Case No. 2010CR00008;
* 10/8/2009: Possession of Weapon by Previous Offender, Boulder County, Colorado, District Court Case No. 2008CR1488;
* 11/15/2002: Possession of Schedule 2 Controlled Substance, Denver County, Colorado, District Court Case No. 2002CR3054;
* 2/3/2000: Felony Menacing, Arapahoe County, District Court, Case No. 1999CR3166
During sentencing, Judge Moore ruled that the defendant’s prior statutory rape conviction, a misdemeanor under Colorado law, qualified as a felony crime of violence for sentencing purposes. Specifically, in 2007, the defendant was convicted in Jefferson County of Sex Assault – 10 Year Age Difference. In that case, the defendant, 29-years-old at the time, had sexual intercourse with a 16-year-old minor in an automobile. He received 24-months in jail for that offense. A violation of this state law is a Class 1 misdemeanor and an “extraordinary risk” crime under Colorado law, punishable by up to 24 months imprisonment. While the crime may be classified as a “misdemeanor” under state law, it is considered a felony for sentencing purposes because it carries a potential penalty of more than one year imprisonment. The judge’s ruling increased the defendant’s prison sentence.
“The defendant’s long criminal record demonstrates that he remains a danger to the community,” said U.S. Attorney John Walsh. “As today’s sentence shows, felons in possession of firearms face stiff prison sentences.”
“ATF will continue to identify violent offenders who violate federal firearms law,” said Denver ATF Special Agent in Charge Luke Franey. “Taking these felons off the streets of Denver will make our communities a safer place to live.”
“This is a great example of how the Denver Police Department works closely with our State and Federal Law Enforcement partners,” said Denver Police Chief Robert White.
This case was investigate by the ATF and the Denver Police Department.
Wray was prosecuted by Assistant U.S. Attorney Richard A. Hosley, Chief of the Major Crimes Section, Criminal Division.
Clay County Jail Administrator Pleads Guilty to Violating Inmates' Civil RightsRead the Press Release
BIRMINGHAM -- The former jail administrator of the Clay County Detention Center pleaded guilty Wednesday to violating the civil rights of inmates by using his authority to sexually abuse or otherwise deprive the inmates of their constitutional rights, announced U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Richard D. Schwein Jr.
JEFFREY SCOTT COTNEY, 48, of Ashland, entered his plea before U.S. District Judge L. Scott Coogler to four counts of deprivation of rights under color of law between May 2009 and spring 2010 while he worked as Clay County's jail administrator. As part of that job, Cotney ran the inmate worker program, recommending which inmates could participate in the program and supervising the inmate workers.
A federal grand jury indicted Cotney in November. His sentencing is scheduled May 27.
As part of Cotney's plea agreement with the government, he must register as a sex offender, surrender all current law enforcement licenses and certifications and neither seek nor hold a law enforcement job or one where he would have custodial authority over others, including as a correctional or probation officer or bail bondsman.
Cotney pleaded guilty to four counts involving three inmates, but the conduct he admitted to in his plea agreement also includes a fourth inmate.
In his plea, Cotney admitted to coercing one inmate to submit to a sexual act on four occasions in 2009, three times at Cotney's home and once on the side of the road during a trip to Oxford to get automobile parts.
Cotney admitted to violating the civil rights of a second inmate in 2009, forcing that inmate to submit to a strip search with no law enforcement justification.
Cotney admitted to repeatedly and improperly grabbing and touching a third inmate in 2009 and 2010, including telling the inmate that he needed to check whether the inmate had any new tattoos and ordering the inmate to remove all his clothing. The inmate had tattoos on his legs, chest, hipbones, arms and groin, and Cotney felt all the tattoos, according to his plea agreement.
Cotney admitted to falsely accusing a fourth inmate of possessing contraband and ordering that inmate into lockdown for 45 days and then having him transferred to a state prison, all in retaliation for the man rejecting a sexual proposition from Cotney.
By pleading guilty to four of the eight charges in the indictment, Cotney could face a year in prison on each of the four counts of using his authority as a jail administrator to deprive the inmates of their civil rights.
The FBI and the Alabama Bureau of Investigation investigated the case, which Assistant U.S. Attorney Tamarra Matthews Johnson is prosecuting.
Clay County Jail Administrator Pleads Guilty to Violating Inmates' Civil RightsRead the Press Release
BIRMINGHAM -- The former jail administrator of the Clay County Detention Center pleaded guilty Wednesday to violating the civil rights of inmates by using his authority to sexually abuse or otherwise deprive the inmates of their constitutional rights, announced U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Richard D. Schwein Jr.
JEFFREY SCOTT COTNEY, 48, of Ashland, entered his plea before U.S. District Judge L. Scott Coogler to four counts of deprivation of rights under color of law between May 2009 and spring 2010 while he worked as Clay County's jail administrator. As part of that job, Cotney ran the inmate worker program, recommending which inmates could participate in the program and supervising the inmate workers.
A federal grand jury indicted Cotney in November. His sentencing is scheduled May 27.
As part of Cotney's plea agreement with the government, he must register as a sex offender, surrender all current law enforcement licenses and certifications and neither seek nor hold a law enforcement job or one where he would have custodial authority over others, including as a correctional or probation officer or bail bondsman.
Cotney pleaded guilty to four counts involving three inmates, but the conduct he admitted to in his plea agreement also includes a fourth inmate.
In his plea, Cotney admitted to coercing one inmate to submit to a sexual act on four occasions in 2009, three times at Cotney's home and once on the side of the road during a trip to Oxford to get automobile parts.
Cotney admitted to violating the civil rights of a second inmate in 2009, forcing that inmate to submit to a strip search with no law enforcement justification.
Cotney admitted to repeatedly and improperly grabbing and touching a third inmate in 2009 and 2010, including telling the inmate that he needed to check whether the inmate had any new tattoos and ordering the inmate to remove all his clothing. The inmate had tattoos on his legs, chest, hipbones, arms and groin, and Cotney felt all the tattoos, according to his plea agreement.
Cotney admitted to falsely accusing a fourth inmate of possessing contraband and ordering that inmate into lockdown for 45 days and then having him transferred to a state prison, all in retaliation for the man rejecting a sexual proposition from Cotney.
By pleading guilty to four of the eight charges in the indictment, Cotney could face a year in prison on each of the four counts of using his authority as a jail administrator to deprive the inmates of their civil rights.
The FBI and the Alabama Bureau of Investigation investigated the case, which Assistant U.S. Attorney Tamarra Matthews Johnson is prosecuting.
Churchill Man Sentenced for Unlawfully Selling Drug SamplesRead the Press Release
PITTSBURGH - A resident of Allegheny County, Pennsylvania, has been sentenced in federal court to six months imprisonment, six months of home confinement, three years of supervised release, and forfeiture of $56,000, on his conviction of unlawfully selling drug samples, United States Attorney David J. Hickton announced today.
United States District Judge Cathy Bissoon imposed the sentence on Lawrence A. Swanson, 54.
According to the information presented to the court, from in and around January 2005, to in and around May 2011, Swanson sold prescription drug samples such as samples of Allegra, Avalide, Avapro, Avelox, Benicar, Celebrex, Crestor, Cymbalta, Diovan, Diovan HCT, Evista, Janumet, Januvia, Lexapro, Lovaza, Lyrica, Micardis HCT, Namenda, Nexium, Plavix, Prevacid, Prilosec, Seroquel XR, Singular, TriCor, Vytorin, Zetia, Zyprexa, Benicar, Lipitor, and Pristi Q, to two local pharmacists. Those pharmacists were separately charged. Swanson met his supplier in various grocery store parking lots late at night to receive garbage bags filled with the samples. The samples had the lot numbers and expiration dates removed from the pill packaging making it impossible to know if the drugs had expired or had been recalled. There was a possibility of harm to patients, but no harm or injury to any patient was ever reported. Over the time period charged, Swanson collected a total of $181,108.07.
Judge Bissoon stated that engaging in the black market sale of sample drugs is a serious crime that threatens the integrity of our medicine distribution system, and in order to deter others and to properly punish this defendant a jail sentence is necessary.
Assistant United States Attorney Nelson P. Cohen prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the U.S. Food and Drug Administration-Office of Criminal Investigations, and the Internal Revenue Service-Criminal Investigation, for the investigation leading to the successful prosecution of Lawrence A. Swanson.
California State Senator Ronald Calderon Charged with Taking Bribes in Exchange for Official Acts on Behalf of Hospital Owner and Independent Film Studio That Was Actually an FBI FrontRead the Press Release
LOS ANGELES – Ronald Calderon, a member of the California State Senate, has agreed to surrendered to federal authorities on Monday after being named in a federal grand jury indictment that accuses him of taking tens of thousands of dollars in bribes from a businessman and from people who were associated with a Hollywood film studio, but who were in actuality undercover FBI agents.
Ronald S. Calderon, 56, of Montebello, is charged in a 24-count indictment that was returned late yesterday by a federal grand jury with mail fraud, wire fraud, honest services fraud, bribery, conspiracy to commit money laundering, money laundering and aiding in the filing of false tax returns.
The indictment also charges Thomas M. Calderon, 59, also of Montebello, who is Ronald’s brother and a former member of the California State Assembly. Along with his brother, Thomas Calderon is charged in the money laundering conspiracy and with seven substantive counts of money laundering.
Tom Calderon self-surrendered this morning after being informed of the indictment and is expected to be arraigned this afternoon in United States District Court.
Ron Calderon is travelling and has agreed to surrender Monday morning. Ron Calderon’s arraignment will be Monday afternoon.
The indictment describes a scheme in which Ron Calderon allegedly solicited and accepted approximately $100,000 in cash bribes – as well as plane trips, gourmet dinners and trips to golf resorts – in exchange for official acts, such as supporting legislation that would be favorable to those who paid the bribes and opposing legislation that would be harmful to them. The indictment further alleges that Ron Calderon attempted to convince other public officials to support and oppose legislation.
“Public corruption is a betrayal of the public trust that threatens the integrity of our democratic institutions,” said United States Attorney André Birotte Jr. “Senator Calderon is accused of accepting tens of thousands of dollars in bribes and using the powers of his elected office to enrich himself and his brother Tom, rather than for the benefit of the public he was sworn to serve.”
Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office, stated: “Corruption victimizes each and every one of us. The indictment alleges Mr. Calderon traded influence for cash in the 30th District and beyond. In addition to robbing us of taxpayer money, corrupt practices rob us of trust in government.”
In the first part of the bribery scheme, Ron Calderon allegedly took bribes from Michael Drobot, the former owner of Pacific Hospital in Long Beach, a major provider of spinal surgeries that were often paid by workers’ compensation programs. California law allowed the hospital to pass on to insurance companies the full cost it had paid for medical hardware it used during spinal surgeries. In another case filed this morning, Drobot admitted that his hospital exploited this law, which was often called the “spinal pass-through,” by using hardware that had been purchased at highly inflated prices from companies that Drobot controlled and passing this cost along to insurance providers. Drobot allegedly bribed Ron Calderon so that he would use his public office to preserve this law that helped Drobot maintain a long-running and lucrative health care fraud scheme.
While the corruption indictment does not implicate Ron Calderon in the health care fraud scheme, Ron Calderon is charged with taking bribes from Drobot to preserve the spinal pass-through law. The indictment specifically alleges that Drobot bribed Ron Calderon by hiring Calderon’s college-age son to work as a file clerk at his company and paying him approximately $30,000 over the course of three summers. Ron Calderon’s son showed up for only about 15 days of work each summer, according to the indictment, which also accused Ron Calderon of accepting plane trips, golf outings and expensive dinners from Drobot. Ron Calderon allegedly arranged meetings between Drobot and other public officials and helped Drobot attempt to persuade the other legislators to keep the spinal pass-through law in effect.
In another case filed this morning in United States District Court, Drobot has agreed to plead guilty to charges of conspiracy and paying illegal kickbacks. In his plea agreement, Drobot admits paying bribes to Ron Calderon.
In another part of the bribery scheme, Ron Calderon allegedly solicited and accepted bribes from people he thought were associated with an independent film studio, but who were in fact undercover FBI agents. Ron Calderon solicited and accepted bribes in exchange for supporting an expansion of a state law that gave tax credits to studios that produced independent films in California. The Film Tax Credit applied to productions of at least $1 million, but, in exchange for bribes, Ron Calderon agreed to support new legislation to reduce this threshold to $750,000, according to the indictment. The indictment specifically alleges that Ron Calderon agreed to support the new Film Tax Credit legislation in exchange for his daughter being paid $3,000 a month for a job he knew she simply did not perform.
According to the indictment, Ron Calderon took several official actions with respect to reducing the threshold for the Film Tax Credit. Ron Calderon signed an official letter indicating that he supported a lower threshold, he met with other state senators to discuss the benefits of lowering the threshold, and he “caused legislation to be introduced in the Senate, which he intended to use as a vehicle to create a separate tax credit,” according to the indictment.
In addition to the nearly $40,000 paid to his daughter, Ron Calderon allegedly solicited from the undercover FBI agents payments that included $5,000 for his son’s college tuition and $25,000 to Californians for Diversity, a non-profit political organization operated by Tom Calderon.
Both Calderons face money laundering charges for allegedly funneling bribe money through Californians for Diversity and Tom Calderon’s consulting firm, some of which went to Ron Calderon and his daughter.
Ron Calderon faces two tax fraud charges for allegedly helping in the preparation of false tax returns that fraudulently claimed business expense deductions in relation to the money his son received from Drobot.
Joel P. Garland, the Acting Special Agent in Charge for IRS Criminal Investigation’s Los Angeles Field Office, commented: “Ronald and Thomas Calderon were granted the privilege of political office to better the lives of the citizens they represented, but instead Ronald Calderon used his office to commit bribery, tax and other crimes for their own selfish benefit. Today’s actions reaffirm our commitment to this joint agency task force and our pursuit of justice. Public officials hold a position of trust and those who commit bribery, tax fraud and other crimes, take note.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If Ron Calderon were to be convicted of the 24 charges in the indictment, he would face a statutory maximum sentence of 396 years in federal prison.
If Tom Calderon is convicted of the money laundering charges alleged in the indictment, he would face a statutory maximum sentence of 160 years in prison.
The investigation into the Calderons was conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation.
Release No. 14-026
California Residents Plead Guilty in Scheme to Defraud NissanRead the Press Release
Francisco DeLaRosa, 40, of West Covina, Calif., and Tracey Young, 45, of Los Angeles, pleaded guilty today before U.S. Chief District Judge William J. Haynes, Jr. to conspiring to launder money derived from a scheme to defraud Nissan North America, announced David Rivera, U.S. Attorney for the Middle District of Tennessee.
Young and DeLaRosa each admitted in their plea agreement that from March 2007 through April 2008, they conspired to launder the proceeds that resulted from the scheme to defraud Nissan. Young and DeLaRosa admitted that they, and others, would approach individuals who owned Nissan vehicles to obtain information such as the owner’s name, address, and vehicle identification number. They then passed this information to Kenneth Carter a co-defendant and Nissan employee, who used the information to file false and fraudulent claims at Nissan requesting settlement checks.
After the checks were issued by Nissan to settle the fictitious claims, Young and DeLaRosa, and others, directed the Nissan owners to deposit the checks into their bank accounts or to cash the checks and return funds from the settlement checks to Young and DeLaRosa, who then transferred the funds either directly or indirectly to Kenneth Carter, who was involved in the scheme. Young admitted she often kept a portion of the proceeds.
According to the indictment, approximately 80 false claims were filed as part of the scheme, totaling approximately $571,500.
DeLaRosa agreed to pay restitution of at least $31,500 for his portion of the scheme, and Young agreed to pay restitution in the amount of at least $191,250 for her portion of the scheme.Sentencing is scheduled for June 13, 2014. Each defendant faces up to 20 years in prison and a fine of $500,000.
On November 18, 2013, another co-defendant in the case, Adrian Franklin, 40, of Chandler, Arizona, pleaded guilty to one count of conspiracy to commit money laundering. Franklin is scheduled to be sentenced on March 28, 2014.
The indictment that also named three other defendants whose cases are still pending: Kenneth Carter, 44, of Corona, Calif; Bruce Young, 49, of Compton, Calif; and Wendell Young, 34, of Inglewood, Calif. The indictment charged conspiracy, mail fraud, and conspiracy to commit money laundering, and alleged that Nissan lost approximately $571,500 as a result of the scheme.
An indictment is merely an accusation and all persons are presumed innocent unless and until proven guilty in a court of law.
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.
Burlington, N.J., Real Estate Consultant Sentenced to 20 Months in PrisonRead the Press Release
Helped Clients Fraudulently Obtain Multiple Home Equity Loans.
CAMDEN, N.J. – A real estate consultant was sentenced today to 20 months in prison for helping five people defraud banks by obtaining multiple home equity loans on the same property, U.S. Attorney Paul J. Fishman announced.
William Barksdale, 47, of Burlington, N.J., previously pleaded guilty before U.S. District Judge Robert B. Kugler to an information charging him with one count of conspiracy to commit wire fraud. Judge Kugler imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
Barksdale was the owner of Barksdale Business Group, Barksdale Investment Properties, and Barksdale Loan Consultants. He devised a scheme to obtain multiple home equity lines of credit on a single home for more than the property was worth. A homeowner would submit loan applications to several lenders simultaneously without advising each lender about the other applications. Any bank conducting a title search would receive a clean title report because the other home equity lines of credit had not yet been recorded.
Barksdale advised five people to secure multiple home equity loans using his scheme, and each obtained at least three home equity loans on a single property. One individual obtained seven home equity loans on one home. Each person paid Barksdale a portion of the fraudulent proceeds. Many of the home equity loans later went into default. The scheme caused more than $1 million in losses.
In addition to the prison term, Judge Kugler sentenced Barksdale to five years of supervised release. A restitution hearing will be held at a later date.
U.S. Attorney Fishman credited agents of the FBI’s Trenton Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford, and agents of the N.J. Division of Criminal Justice, under the leadership of Director Elie Honig, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney R. David Walk Jr. of the U.S. Attorney’s Office Criminal Division in Camden.
14-058Defense counsel: Robert N. Agre Esq., Haddonfield, N.J.
Barksdale Information