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19 March 2014
Marubeni Corporation Agrees to Plead Guilty <br /> to Foreign Bribery Charges and to Pay an $88 Million FineRead the Press Release
Marubeni Corporation, a Japanese trading company involved in the handling of products and provision of services in a broad range of sectors around the world, including power generation, entered a plea of guilty today for its participation in a scheme to pay bribes to high-ranking government officials in Indonesia to secure a lucrative power project.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting U.S. Attorney Michael J. Gustafson of the District of Connecticut and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.
“Marubeni pleaded guilty to engaging in a seven-year scheme to pay – and conceal – bribes to a high-ranking member of Parliament and other foreign officials in Indonesia,” said Acting Assistant Attorney General Raman. “The company refused to play by the rules, then refused to cooperate with the government’s investigation. Now Marubeni faces the consequences for its crooked business practices in Indonesia .”
“For several years, the Marubeni Corporation worked in concert with a Connecticut company, among others, to bribe Indonesian officials in order to secure a contract to provide power-related services in Indonesia,” said Acting U.S. Attorney Michael J. Gustafson. “Today’s guilty plea by Marubeni Corporation is an important reminder to the business community of the significant consequences of participating in schemes to bribe government officials, whether at home or abroad.”
“Companies that wish to do business in the United States or with U.S. companies must adhere to U.S. law, and that means bribery is unacceptable,” said Assistant Director in Charge Parlave. “The FBI continues to work with our international law enforcement partners as demonstrated in this case to ensure that companies are held accountable for their criminal conduct. I want to thank the agents, analysts and prosecutors who brought this case to today’s conclusion.”
Marubeni entered a plea of guilty to an eight-count criminal information filed today in the U.S. District Court for the District of Connecticut, charging Marubeni with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA. Marubeni admitted its criminal conduct and has agreed to pay a criminal fine of $88 million, subject to the district court’s approval. Sentencing has been scheduled for May 15, 2014.
As part of the plea agreement, Marubeni has agreed to maintain and implement an enhanced global anti-corruption compliance program and to cooperate with the department’s ongoing investigation. The plea agreement cites Marubeni’s decision not to cooperate with the department’s investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offense, its failure to properly remediate and the lack of its voluntary disclosure of the conduct as some of the factors considered by the department in reaching an appropriate resolution.
Frederic Pierucci, who was the vice president of global boiler sales at Marubeni’s consortium partner, pleaded guilty on July 29, 2013, to one count of conspiring to violate the FCPA and one count of violating the FCPA. David Rothschild, a former vice president of regional sales at the consortium partner, pleaded guilty on Nov. 2, 2012, to one count of conspiracy to violate the FCPA. Lawrence Hoskins, a former senior vice president for the Asia region for the consortium partner, and William Pomponi, a former vice president of regional sales at the consortium partner, were charged in a second superseding indictment on July 30, 2013. The charges against Hoskins and Pomponi are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
According to court filings, Marubeni and its employees, together with others, paid bribes to officials in Indonesia – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia – in exchange for assistance in securing a $118 million contract, known as the Tarahan project, for Marubeni and its consortium partner to provide power-related services for the citizens of Indonesia. To conceal the bribes, Marubeni and its consortium partner retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project. The primary purpose for hiring the consultants, however, was to use the consultants to pay bribes to Indonesian officials.
As admitted in court documents, Marubeni and its co-conspirators retained the first consultant in the fall of 2002. However, in the fall of 2003, before the Tarahan contract had been awarded, Marubeni and its co-conspirators determined that the first consultant was not bribing key officials at PLN effectively. One e-mail between employees of the power company’s subsidiary in Indonesia described a meeting between Marubeni employees, employees of its consortium partner, and PLN officials during which the PLN officials expressed “concern” that if Marubeni and its consortium partner win the project, whether the agent would give the officials “rewards” that they would consider “satisfactory,” or “only give them pocket money and disappear. Nothing has been shown by the agent that the agent is willing to spend money.” Shortly thereafter, a Marubeni employee sent an e-mail to other employees at Marubeni and its consortium partner stating that “unfortunately our agent almost did not execute his function at all, so far. In case we don’t take immediate action now now [sic], we don’t have any chance to get this project forever.”
As a result, Marubeni and its consortium partner decided to reduce the first consultant’s commission from three percent of the total contract value to one percent, and pay the remaining two percent to a second consultant who could more effectively bribe officials at PLN. In an e-mail between two employees of Marubeni’s consortium partner, they discussed a meeting between Marubeni, an executive from the consortium partner, and the first consultant, stating that the first consultant “committed to convince [the member of Parliament] that ‘one’ [percent] is enough.”
Marubeni and its co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials. Marubeni and its co-conspirators paid hundreds of thousands of dollars into the first consultant’s bank account in Maryland to be used to bribe the member of Parliament. The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official.
This case is being investigated by FBI agents from the Washington Field Office, with assistance from the Resident Agency of the FBI in Meriden, Conn. Significant assistance was provided by the Criminal Division’s Office of International Affairs. In addition, the department greatly appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Office of the Attorney General in Switzerland and the Serious Fraud Office in the United Kingdom.
The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa .Manhattan U.S. Attorney Announces Criminal Charge Against Toyota Motor Corporation and Deferred Prosecution Agreement with $1.2 Billion Financial PenaltyRead the Press Release
Independent Monitor to Be Appointed to Oversee Toyota’s Public Statements and Reporting of Safety Issues
Eric Holder, the Attorney General of the United States, Anthony Foxx, the United States Secretary of Transportation, Preet Bharara, the United States Attorney for the Southern District of New York, Calvin L. Scovel, III, Inspector General of the United States Department of Transportation (“DOT”), and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced a criminal wire fraud charge against Toyota Motor Corporation (“TOYOTA” or the “Company”), an automotive company headquartered in Toyota City, Japan, that designs, manufactures, assembles, and sells Toyota and Lexus brand vehicles. The charge is that TOYOTA defrauded consumers in the fall of 2009 and early 2010 by issuing misleading statements about safety issues in Toyota and Lexus vehicles.
Also today, Mr. Bharara announced a deferred prosecution agreement with TOYOTA (the “Agreement”) under which the Company admits that it misled U.S. consumers by concealing and making deceptive statements about two safety issues affecting its vehicles, each of which caused a type of unintended acceleration. The admissions are contained in a detailed Statement of Facts attached to the Agreement. The Agreement, which is subject to judicial review, requires TOYOTA to pay a $1.2 billion financial penalty – the largest penalty of its kind ever imposed on an automotive company, and imposes on TOYOTA an independent monitor to review and assess policies, practices and procedures relating to TOYOTA’s safety-related public statements and reporting obligations. TOYOTA agrees to pay the penalty under a Final Order of Forfeiture in a parallel civil action also filed today in the Southern District of New York.
The criminal charge is contained in an Information (the “Information”) alleging one
count of wire fraud. If TOYOTA abides by all of the terms of the Agreement, the Government will defer prosecution on the Information for three years and then seek to dismiss the charge.
Attorney General Eric Holder said: “Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to Members of Congress. When car owners get behind the wheel, they have a right to expect that their vehicle is safe. If any part of the automobile turns out to have safety issues, the car company has a duty to be upfront about them, to fix them quickly, and to immediately tell the truth about the problem and its scope. Toyota violated that basic compact. Other car companies should not repeat Toyota’s mistake: a recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting.”
Transportation Secretary Anthony Foxx said: “Safety is our top priority. Throughout this recall process, NHTSA investigators worked tirelessly to make sure that Toyota recalled vehicles with defects causing unintended acceleration, and to determine when they learned of it, and as we learned today, they succeeded in this effort in spite of extraordinary challenges. Today’s penalties follow NHTSA’s own record civil penalties of more than $66 million – together, they send a powerful message to all manufacturers to follow our recall requirements or they will face serious consequences.”
Manhattan U.S. Attorney Preet Bharara said: “Toyota stands charged with a criminal offense because it cared more about savings than safety and more about its own brand and bottom line than the truth. In its zeal to stanch bad publicity in 2009 and 2010, Toyota misled regulators, misled customers, and even misstated the facts to Congress. The tens of millions of drivers in America have an absolute right to expect that the companies manufacturing their cars are not lying about serious safety issues; are not slow-walking safety fixes; and are not playing games with their lives. Companies that make inherently dangerous products must be maximally transparent, not two-faced. That is why we have undertaken this landmark enforcement action. And the entire auto industry should take notice.”
DOT Inspector General Calvin L. Scovel, III, said: “To the families and friends of those who died or were injured as a result of these incidents, I offer my deepest sympathies for your loss and my highest admiration for the strength you demonstrate every day. As is true for Secretary Foxx and DOT, safety is and will remain the highest priority of my office. The OIG is committed to working with our law enforcement and prosecutorial partners in pursuing those who commit criminal violations of the Department of Transportation’s or related laws. The efforts of this dedicated multi-agency team and the agreement reached with Toyota must serve as a clarion call to all auto manufacturers of the need to always be as vigilant and forthcoming as possible to keep the public safe.”
FBI Assistant Director-in-Charge George Venizelos said: “Toyota put sales over safety and profit over principle. The disregard Toyota had for the safety of the public was outrageous. Not only did Toyota fail to recall cars with problem parts, they continued to manufacture new cars with the same parts they knew were deadly. When media reports arose of Toyota hiding defects, they emphatically denied what they knew was true, assuring consumers that their cars were safe and reliable. Today's announcement could have been prevented if Toyota had done the right thing, told the truth, and disclosed the rampant safety problems. Instead, they denied and doubled-down. More than speeding cars or a major fine, the ultimate tragedy has been the unwitting consumers who died behind the wheel of Toyota vehicles.”
According to the allegations in the Information, as well as other documents filed today in Manhattan federal court, including the Statement of Facts:
In the fall of 2009, TOYOTA deceived consumers and its U.S. regulator, the National Highway Traffic Safety Administration (“NHTSA”), by claiming that it had “addressed” the “root cause” of unintended acceleration in its vehicles through a limited safety recall of eight models for floor-mat entrapment, a dangerous condition in which an improperly secured or incompatible all-weather floor mat can “trap” a depressed gas pedal causing the car to accelerate to a high speed. Such public assurances deceived customers and NHTSA in two ways: First, at the time the statements were made, TOYOTA knew that it had not recalled some cars with design features that made them just as susceptible to floor-mat entrapment as some of the recalled cars. Second, only weeks before these statements were made, TOYOTA had taken steps to hide from NHTSA another type of unintended acceleration in its vehicles, separate and apart from floor-mat entrapment: a problem with accelerators getting stuck at partially depressed levels, known as “sticky pedal.”
Floor-Mat Entrapment: A Fatal Problem
TOYOTA issued its misleading statements, and undertook its acts of concealment, against the backdrop of intense public concern and scrutiny over the safety of its vehicles following a widely publicized August 28, 2009 accident in San Diego, California that killed a family of four. A Lexus dealer had improperly installed an incompatible all-weather floor mat into the Lexus ES350 in which the family was traveling, and that mat entrapped the accelerator at full throttle. A 911 emergency call made from the out-of-control vehicle, which was speeding at over 100 miles per hour, reported, “We’re in a Lexus . . . and we’re going north on 125 and our accelerator is stuck . . . there’s no brakes . . . we’re approaching the intersection . . . Hold on . . . hold on and pray . . . pray.” The call ended with the sound of the crash that killed everyone in the vehicle.
The San Diego accident was not the first time that TOYOTA had faced a problem with floor-mat entrapment. In 2007, following a series of reports alleging unintended acceleration in Toyota and Lexus vehicles, NHTSA opened a defect investigation into the Lexus ES350 model (the vehicle involved in the 2009 San Diego accident), and identified several other Toyota and Lexus models it believed might likewise be defective. TOYOTA, while denying to NHTSA the need to recall any of its vehicles, conducted an internal investigation in 2007 which revealed that certain Toyota and Lexus models, including most of the ones that NHTSA had identified as potentially problematic, had design features rendering entrapment of the gas pedal by an all-weather floor mat more likely. TOYOTA did not share these results with NHTSA. In the end, the Company negotiated a limited recall of 55,000 mats (no vehicles) – a result that TOYOTA employees touted internally as a major victory: “had the agency . . . pushed for recall of the throttle pedal assembly (for instance), we would be looking at upwards of $100 million + in unnecessary costs.”
Shortly after TOYOTA announced its 2007 mat recall, Company engineers revised internal design guidelines to provide for, among other things, a minimum clearance of 10 millimeters between a fully depressed gas pedal and the floor. But TOYOTA decided those revised guidelines would only apply where a model was receiving a “full model redesign” – something each Toyota and Lexus model underwent only about once every three to five years. As a result, even after the revised guidelines had been adopted internally, many new vehicles produced and sold by TOYOTA – including the Lexus ES350 involved in the 2009 San Diego accident – did not comply with TOYOTA’s 2007 guidelines.
After the fatal and highly publicized San Diego accident, TOYOTA agreed to recall eight of its models, including the ES350, for floor-mat entrapment susceptibility. Thereafter, as part of an effort to defend its brand image, TOYOTA began issuing public statements assuring customers that this limited recall had “addressed the root cause of unintended acceleration” in its U.S.-sold vehicles.
As TOYOTA knew from internal testing it had completed by the time these statements were made, the eight-model recall had not in fact “addressed the root cause” of even the floor-mat entrapment problem. Models not recalled – and therefore still on the road – bore design features rendering them just as susceptible to floor-mat entrapment as those within the recall population. One engineer working at a TOYOTA facility in California had concluded that the Corolla, a top-selling car that had not been recalled, was among the three “worse” vehicles for floor-mat entrapment. In October 2009, TOYOTA engineers in Japan circulated a chart showing that the Corolla had the lowest rating for floor-mat entrapment under their analysis. None of these findings or this data were shared with NHTSA at the time.
The Sticky Pedal Problem
What is more, at the same time it was assuring the public that the “root cause” of unintended acceleration had been “addressed” by the 2009 eight-model floor-mat entrapment recall, TOYOTA was hiding from NHTSA a second cause of unintended acceleration in its vehicles: the sticky pedal. Sticky pedal, a phenomenon affecting pedals manufactured by a U.S. company (“A-Pedal Company”) and installed in many Toyota brand vehicles in North America as well as Europe, resulted from the use of a plastic material inside the pedals that could cause the accelerator pedal to become mechanically stuck in a partially depressed position. The pedals incorporating this plastic were installed in, among other models, the Camry, the Matrix, the Corolla, and the Avalon sold in the United States.
The sticky pedal problem surfaced in Europe in 2008. There, reports reflected instances of “uncontrolled acceleration” and unintended acceleration to “maximum RPM,” and customer concern that the condition was “extremely dangerous.”
In early 2009, TOYOTA circulated to European Toyota distributors information about the sticky pedal problem and instructions for addressing the problem if it presented itself in a customer’s vehicle. These instructions identified the issue as “Sudden RPM increase/vehicle acceleration due to accelerator pedal sticking,” and stated that should a customer complain of pedal sticking, the pedal should be replaced with pedals manufactured by a company other than A-Pedal Company. Contemporaneous internal TOYOTA documents described the sticky pedal problem as a “defect” that was “[i]mportant in terms of safety because of the possibility of accidents.”
TOYOTA did not then inform its U.S. regulators of the sticky pedal problem or conduct a recall. Instead, beginning in the spring of 2009, TOYOTA quietly directed A-Pedal Company to change the pedals in new productions of affected models in Europe, and to plan for the same design changes to be rolled out in the United States (where the same problematic pedals were being used) beginning in the fall of 2009. The design change was to substitute the plastic used in the affected pedal models with another material and to change the length of the friction lever in the pedal.
Meanwhile, the sticky pedal problem was manifesting itself in U.S. vehicles. On or about the same day the San Diego floor-mat entrapment accident occurred, staff at a U.S. TOYOTA subsidiary in California sent a memorandum to staff at TOYOTA in Japan identifying as “critical” an “unintended acceleration” issue separate and apart from floor-mat entrapment that had been identified in an accelerator pedal of a Toyota Matrix vehicle in Arizona. The problem identified, and then reproduced during testing of the pedal on September 17, 2009, was the sticky pedal problem. Also in August, the sticky pedal problem cropped up in a U.S. Camry.
On September 9, 2009, an employee of a U.S. TOYOTA subsidiary who was concerned about the sticky pedal problem in the United States and believed that TOYOTA should address the problem prepared a “Market Impact Summary” listing (in addition to the August 2009 Matrix and Camry) 39 warranty cases that he believed involved potential manifestations of the sticky pedal problem. This document, which was circulated to TOYOTA engineers and, later, to staff in charge of recall decisions in Japan, designated the sticky pedal problem as priority level “A,” the highest level.
By no later than September 2009, TOYOTA recognized internally that the sticky pedal problem posed a risk of a type of unintended acceleration – or “overrun,” as Toyota sometimes called it – in many of its U.S. vehicles. A September 2009 presentation made by a manager at a U.S. TOYOTA subsidiary to TOYOTA executives gave a “current summary of O/R [overrun] types in NA [North American] market” that listed the three confirmed types as: “mat interference” (i.e., floor-mat entrapment), “material issue” (described as “pedal stuck and . . . pedal slow return/deformed”), and “simultaneous pedal press” by the consumer. The presentation further listed the models affected by the “material issue” as including “Camry, Corolla, Matrix, Avalon.”
Hiding Sticky Pedal from NHTSA and the Public
As noted, TOYOTA had by this time developed internal plans to implement design changes for all A-Pedal-Company-manufactured pedals in U.S. Toyota models to address, on a going-forward basis, the still-undisclosed sticky pedal problem that had already been resolved for new vehicles in Europe. On October 5, 2009, TOYOTA engineers issued to A-Pedal Company the first of the design change instructions intended to prevent sticky pedal in the U.S. market. This was described internally as an “urgent” measure to be implemented on an “express” basis, as a “major” change – meaning that the part number of the subject pedal was to change, and that all inventory units with the old pedal number should be scrapped.
On October 21, 2009, however, in the wake of the San Diego floor-mat entrapment accident, and in the midst of TOYOTA’s discussions with NHTSA about its eight-model entrapment recall, engineers at TOYOTA and the leadership of TOYOTA’s recall decision group decided to cancel the design change instruction that had already been issued and to suspend all remaining design changes planned for A-Pedal Company pedals in U.S. models. U.S. TOYOTA subsidiary employees who had been preparing for implementation of the changes were instructed, orally, to alert the manufacturing plants of the cancellation. They were also instructed not to put anything about the cancellation in writing. A-Pedal Company itself would receive no written cancellation at this time; instead, contrary to TOYOTA’s own standard procedures, the cancellation was to be effected without a paper trail.
TOYOTA decided to suspend the pedal design changes in the United States, and to avoid memorializing that suspension, in order to prevent NHTSA from learning about the sticky pedal problem.
In early November 2009, TOYOTA and the leadership of a U.S. TOYOTA subsidiary became aware of three instances of sticky pedal in U.S. Corollas. Shortly thereafter, the leadership of the recall decision group within TOYOTA discussed a plan to finally disclose the sticky pedal problem to NHTSA. The recall decision group was aware at this time not only of the problems in the three Corollas in the United States but also of the problems that had surfaced in a Matrix and a Camry in August 2009 and been reproduced through testing in September 2009. The group was also familiar with the sticky pedal problem in Europe, the design changes that had been implemented there, and the cancellation and suspension of similar planned design changes in the United States. Knowing all of this, the group’s leadership decided that (a) it would not disclose the September 2009 Market Impact Summary to NHTSA; (b) if any disclosure were to be made to NHTSA, it would be limited to a disclosure that there were some reports of unintended acceleration apparently unrelated to floor-mat entrapment; and (c) NHTSA should be told that TOYOTA had made no findings with respect to the sticky pedal problem reflected in the reports concerning the three U.S. Corollas, and that the investigation of the problem had just begun.
On November 17, 2009, before TOYOTA had negotiated with NHTSA a final set of remedies for the eight models encompassed by the floor-mat entrapment recall, TOYOTA informed NHTSA of the three Corolla reports and several other reports of unintended acceleration in Toyota model vehicles equipped with pedals manufactured by A Pedal Company. In TOYOTA’s disclosure to NHTSA, TOYOTA did not reveal its understanding of the sticky pedal problem as a type of unintended acceleration, nor did it reveal the problem’s manifestation and the subsequent design changes in Europe, the planned, cancelled, and suspended design changes in the United States, the August 2009 Camry and Matrix vehicles that had suffered sticky pedal, or the September 2009 Market Impact Summary.
TOYOTA’s Misleading Statements
After the August 2009 fatal floor-mat entrapment accident in San Diego, several articles critical of TOYOTA appeared in U.S. newspapers. The articles reported instances of TOYOTA customers allegedly experiencing unintended acceleration and the authors accused TOYOTA of, among other things, hiding defects related to unintended acceleration.
On November 25, 2009, TOYOTA, through a U.S. subsidiary, announced its floor-mat entrapment resolution with NHTSA. In a press release that had been approved by TOYOTA, the U.S. subsidiary assured customers: “The safety of our owners and the public is our utmost concern and Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect trends that are identified.” A spokesperson for the subsidiary stated during a press conference the same day, “We’re very, very confident that we have addressed this issue.”
In truth, the issue of unintended acceleration had not been “addressed” by the remedies announced. A-Pedal Company pedals which could experience stickiness were still on the road and still, in fact, being installed in newly-produced vehicles. And the best-selling Corolla, the Highlander, and the Venza – which had design features similar to models that had been included in the earlier floor-mat entrapment recall – were not being “addressed” at all.
Again, on December 23, 2009, TOYOTA responded to media accusations that it was continuing to hide defects in its vehicles by authorizing a U.S. TOYOTA subsidiary to publish the following misleading statements on the subsidiary’s website: “Toyota has absolutely not minimized public awareness of any defect or issue with respect to its vehicles. Any suggestion to the contrary is wrong and borders on irresponsibility. We are confident that the measures we are taking address the root cause and will reduce the risk of pedal entrapment.” In fact, TOYOTA had “minimized public awareness of” both sticky pedal and floor-mat entrapment. Further, the measures TOYOTA had taken did not “address the root cause” of unintended acceleration, because TOYOTA had not yet issued a sticky pedal recall and had not yet recalled the Corolla, the Venza, or the Highlander for floor-mat entrapment.
TOYOTA’s False Timeline
When, in early 2010, TOYOTA finally conducted safety recalls to address the unintended acceleration issues it had concealed throughout the fall of 2009, TOYOTA provided to the American public, NHTSA, and the United States Congress an inaccurate timeline of events that made it appear as if TOYOTA had learned of the sticky pedal in the United States in “October 2009,” and then acted promptly to remedy the problem within 90 days of discovering it. In fact, TOYOTA had begun its investigation of sticky pedal in the United States no later than August 2009, had already reproduced the problem in a U.S. pedal by no later than September 2009, and had taken active steps in the months following that testing to hide the problem from NHTSA and the public.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Bonnie Jonas, Deputy Chief of the Criminal Division, and Assistant U.S. Attorney Sarah E. McCallum are in charge of the prosecution, and Assistant U.S. Attorney Sharon Cohen Levin, Chief of the Money Laundering and Asset Forfeiture Unit, is responsible for the forfeiture aspects of the case.
U.S. v. Toyota Corportation DPA, Statement of Facts, and Information
U.S. v. $1200000000 Civil CompliantLeader of Million Dollar “Felony Lane Gang” Sentenced to over Fifteen Years in PrisonRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that the leader of the “Felony Lane Gang” conspiracy was sentenced to 188 months in prison.
According to the United States Attorney, on March 18, 2014, U.S. District Senior Judge William Caldwell sentenced Travis J. Russ for his leadership role in a car break-in and bank fraud crew that stole over a million dollars in the five years it was in operation. Testimony presented at Russ’s sentencing showed that the crew stole millions of dollars from banks using stolen checks and identification. At the sentencing, Russ was identified as the leader of the group of thieves. Although they were only caught in the fall of 2012, Russ was implicated in committing this scheme over five years and victimizing over 250 people in the course of his fraud scheme, dubbed the “Felony Lane Gang.”
The “Felony Lane Gang” is a group of thieves based in Fort Lauderdale, Florida, that travels across the United States stealing identities and checkbooks from unattended cars (“smash and grabs”). With the stolen checkbooks and driver’s licenses, the gang cashes checks using the drive through lane of banks. The lane farthest from video cameras and tellers has been dubbed the “felony lane” because of the ease with which false identities can be used to cash checks.
In December 2012, a grand jury returned a four-count indictment charging 10 people with conspiracy to commit fraud, bank fraud, wire fraud, and aggravated identity theft. All of those who were charged entered guilty pleas, and the majority of them have been sentenced:
- Travis J. Russ, age 32, of Fort Lauderdale, Florida – identified as the leader and sentenced to 188 months in prison;
- Sylvester Joseph, age 26, of Derrfield, Florida – identified as a leader and pending sentencing;
- Jarrett Hobbs, age 31, of Fort Lauderdale, Florida – identified as a leader and pending sentencing;
- Khiante Thompson, age 20, Florida – sentenced to 14 months in prison;
- Phillip Etienne, age 31, of Margate, Florida – 46 months in prison;
- Willie L. Ogiste, age 35, of Fort Lauderdale, Florida – pending sentencing;
- Teresa L. Brimhall, age 45, of Oakland Park, Florida – 18 months in prison;
- April Ainsworth, age 26, of Richmond, Texas – 36 months in prison;
- Colleen Shelly, age 49, of Lauderdale Lakes, Florida – 11 months in prison; and
- Wendy Snyder-Lucas, age 31, of Fort Lauderdale, Florida – 11 months in prison.
The 10 persons charged in this indictment struck Pennsylvania from August to October 2012. During that time, they broke into and/or stole the identities of over 100 people. In addition, the group targeted state parks where victims left purses, wallets, and checkbooks in their cars while using the recreation facilities. The “smash and grabs” occurred at approximately 25 different state parks and recreation centers in and around Central Pennsylvania.
This group used stolen checks and identification to obtain funds from banks and credit unions. According to the indictment, a conspirator, disguised as the account holder, used the drive-through lane at the account holder’s bank, submitted to the teller a forged check with the stolen identification of the victim, and received the funds. Through this process, these conspirators successfully compromised numerous accounts and stole tens of thousands of dollars in funds from the victims.
This investigation was conducted by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), HSI’s Bulk Cash Smuggling Center, the United States Secret Service, the Pennsylvania State Police, the Federal Bureau of Investigation, the Pennsylvania Department of Conservation and Natural Resources and other state and local investigative agencies. The prosecutor assigned to the case is Assistant United States Attorney Michael A. Consiglio.
****Law Clerk, Stock Broker Charged in New Jersey with Trading on Inside Information Stolen from Prominent New York Law FirmRead the Press Release
More than $33 Million in Alleged Illegal Trades Netted $5.6 Million Over Four-Year Scheme
NEWARK, N.J. - The managing clerk of the New York office of Simpson Thacher & Bartlett LLP – a prominent, international law firm – and a professional stock broker who worked at Oppenheimer & Co. and Morgan Stanley were arrested today and charged with participating in a multi-year insider trading scheme that allegedly netted more than $5.6 million in illicit profits, New Jersey U.S. Attorney Paul J. Fishman announced.
Steven Metro, 40, of Katonah, N.Y., and Vladimir Eydelman, 42, of Colts Neck, N.J., are both charged by complaint with one count of conspiracy to commit securities fraud and tender offer fraud, as well as multiple counts of securities fraud and tender offer fraud: Metro is charged with nine counts of securities fraud; Eydelman is charged with eight counts of securities fraud; and each defendant is charged with four counts of tender offer fraud. FBI agents arrested Metro in Katonah and Eydelman in Colts Neck this morning. Both men are scheduled to appear this afternoon before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court.
“These defendants are charged with using confidential information that Metro stole from his employer to reap huge illegal profits,” U.S. Attorney Fishman said. “They allegedly rigged the system by exploiting sensitive information that was not available to other investors. This kind of activity undermines the integrity of our financial markets and weakens investor confidence.”
“As alleged in the complaint, Metro, Eydelman and another engaged in a lengthy insider trading scheme that reaped more than five million in illicit profits,” said FBI Special Agent in Charge Aaron T. Ford. “The FBI is committed to investigating allegations of insider trading and will hold violators accountable to ensure the integrity of the financial markets. We will continue to work with our partners to identify securities fraud so investors maintain a high level of confidence in the markets.”
According to the complaint unsealed today: Metro, Eydelman, and a third person who subsequently became a cooperating witness – referred to in court documents as “the CW” – engaged in an insider trading scheme that began in 2009. The conspirators invested more than $33 million and reaped more than $5.6 million in illicit profits over the life of the scheme.
Starting in November 1999, Metro worked at the New York office of Simpson Thacher & Bartlett LLP, one of the nation’s premier mergers and acquisitions law firms. During the period of the trading scheme, he was the firm’s managing clerk, responsible for, among other things, filing pleadings on behalf of attorneys. Eydelman was a broker-dealer employed first at Oppenheimer & Co. and most recently by Morgan Stanley, both renowned investment firms.
While at the law firm, Metro repeatedly obtained inside information regarding anticipated corporate mergers and acquisitions on which his firm was working. He disclosed the material, nonpublic information to his friend, the CW. Metro would arrange to meet the CW in person and would disclose inside information, including the stock exchange ticker symbol of the company in which to invest, and the pricing and/or timing of the planned transaction. The CW would write the information on a small piece of paper or napkin.
The CW would then meet with Eydelman, usually the same day, to divulge the stolen information. These meetings usually occurred at an agreed-upon location near the large clock in New York City’s Grand Central Terminal. The CW would show Eydelman the paper or napkin on which the CW had written the ticker symbol of the company whose securities should be purchased. After Eydelman memorized the ticker symbol, the CW then would place the paper or napkin into his mouth and chew it until it was destroyed.
Eydelman purchased securities for himself, family members, friends and clients, including the CW. Eydelman quickly sold the shares and covered any options positions once the relevant deal was publicly announced and the stock price rose.
Over the four-year period, the CW reinvested approximately $7,000 in profits that Metro made on the first deal, and updated Metro on the running balance of his profits from the insider trading scheme. As of October 2013, by which time the conspirators had traded ahead of at least 13 planned corporate transactions, Metro’s share of the profits had reached approximately $168,000.
The complaint specifically identifies the 12 transactions and one uncompleted transaction ahead of which Eydelman, Metro, and the CW traded between February 2009 and February 2013 – as outlined in an appended chart.
The complaint also details a number of recorded meetings among the conspirators. During the course of one meeting with the CW on Jan. 28, 2014, Metro expressed his desire to cash out his share of the illicit profits. Metro stated to the CW, “You gotta try to liberate some cash, somewhere, or I’m going to be freakin’ flat out.” Metro also promised to let the CW know of any planned M&A deals that he came across in the future, stating that although “Right now it’s all been private equity, private equity...I think this year, it’s going to be a good year[.]”
In a meeting on Feb. 6, 2014, Eydelman indicated he would be willing to pay a portion of the cash proceeds owed to Metro. Eydelman stated, “I got seven [thousand]….That’s all I can do, without [my wife] knowing.”
Eydelman came through with the $7,000 in cash for the CW to use to compensate Metro for tipping them inside information. During a recorded meeting with the CW on Feb. 20, 2014, Eydelman handed the CW a small plastic shopping bag with a cigar manufacturer’s logo on it, stating, “Take these cigars, put it to good use.” Eydelman enclosed $7,000 in cash in the cigar bag he handed to the CW.
The conspirators attempted to hide their illegal conduct. In addition to the CW destroying pieces of paper on which he wrote the ticker symbols provided by Metro, Eydelman sent the CW “covering” emails that contained false justifications designed to suggest that their trades in the subject securities were based on research, not inside information.
While Metro relied on the CW to reinvest his illicit profits on his behalf, Eydelman realized substantial personal profits on an ongoing basis from the insider trading scheme and used these unlawful proceeds to purchase a new 2011 Maserati Grand Turismo for $117,700 and to spend tens of thousands of dollars on expensive jewelry. Eydelman also used illicit proceeds to purchase his residence and to pay the mortgage on the property.
The conspiracy count with which Metro and Eydelman are each charged carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the aggregate loss to victims or gain to the defendants. On the substantive securities fraud and tender offer fraud charges, they each face a maximum of 20 years in prison and a $5 million fine. The complaint also seeks the forfeiture of Eydelman’s residence.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s arrests and complaint. He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Daniel Hawke. He also thanked the New York FBI, under the direction of Assistant Director in Charge George C. Venizelos, for assistance with the investigation.
The government is represented by Assistant U.S. Attorneys Shirley U. Emehelu of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark, and Joseph R. Gribko of the U.S. Attorney’s Office in Trenton, as well as Marion Percell, Chief of the of the Office’s Asset Forfeiture and Money Laundering Unit.
The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
These charges are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.14-093
Defense counsel: Metro: TBA
Vladimir Eydelman: William Silverman Esq., New York
Alleged Insider TradesAPPROX. DATE(S) OF PURCHASES
ANNOUNCEMENT DATE
SECURITY
APPROX. ILLICIT PROFIT
2/17/2009
Sirius XM Radio
$212,814
12/29/2009-1/15/2010
1/18/2010
Brinks Home Security
$773,154
7/8/2010-7/15/2010
7/15/2010
Smithtown Bancorp
$29,010
10/20/2010-10/29/2010
11/1/2010
CNA Surety Corporation
$241,141
4/11/2011-4/12/2011
4/13/2011
Graham Packing Company Inc.
$105,964
1/31/2011-4/19/2011
4/26/2011
SMART Modular Technologies
$1,575,382
4/4/2011-4/21/2011
4/27/2011
Vital Images, Inc.
$39,233
4/29/2011
5/2/2011
International Coal Group, Inc.
$231,276
6/21/2011-8/22/2011
8/23/2011
PharMerica Corp.
$1,517,092
4/16/2012-4/20/2012
5/1/2012
Collective Brands, Inc.
$360,775
5/14/2012-10/1/2012
N/A
“Company A”
N/A
9/20/2012-9/25/2012
9/27/2012
Sealy Corporation
$14,509
1/31/2013-2/15/2013
2/20/2013
Officemax Inc.
$573,332
APPROX. TOTAL ILLICIT PROFITS
$5,673,682
Metro, Steven, and Eydelman, Vladimir Complaint
Lapwai Man Indicted for First Degree MurderRead the Press Release
COEUR D’ALENE – Raymond Antoine Scott, Jr., 37, of Lapwai, Idaho, was indicted by a federal grand jury in Coeur d’Alene yesterday for first degree murder, U.S. Attorney Wendy J. Olson announced. Scott is currently being held at the Yakama Tribal Jail in Toppenish, Washington. An initial appearance in federal court has not been set.
The indictment alleges that on or about July 9, 2013, within the boundaries of the Nez Perce Indian Reservation, Scott, an enrolled tribal member, killed William Reich, also an enrolled tribal member.
The charge of first degree murder is punishable by life in prison and a maximum fine of $250,000.
The case is being investigated by the Federal Bureau of Investigation, Nez Perce Tribal Police, and the Lewiston City Police Department.
An indictment is a means of charging a person with criminal activity. It is not evidence. The person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Lake St. Louis Man Indicted on Tax ChargesRead the Press Release
St. Louis, MO – Kenneth Kreisch was indicted for allegedly failing to pay employment taxes that had been deducted from employee payrolls.
According to the indictment, Kreisch controlled and was part owner of Marble and Granite Worldwide LLC (MGW). The indictment alleges that after withholding employment taxes from his employees’ paychecks, other than two quarters in 2008, Kreisch made no payments to the IRS, which were due. During the seven calendar quarters beginning in 2006 through the fourth quarter of 2008, Kreisch failed to account for and pay over approximately $462,501 in employee taxes.
"Business owners who fail to remit withheld employment taxes to the IRS are not only enriching themselves, they are creating financial problems for their employees," said Sybil Smith, Special Agent in Charge of IRS Criminal Investigation.
KENNETH KREISCH, Lake St. Louis, MO, was indicted by a federal grand jury on seven felony counts of failure to pay over taxes.
If convicted, each count of the indictment carries a maximum penalty of five years in prison and/or fines up to $10,000. In determining the actual sentences, a Judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by IRS-Criminal Investigation. Assistant United States Attorney Jennifer Roy is handling the case for the U.S. Attorney's Office.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.Justice Department Announces Criminal Charge Against Toyota Motor Corporation and Deferred Prosecution Agreement with $1.2 Billion Financial PenaltyRead the Press Release
U.S. Attorney General Eric Holder, U.S. Secretary of Transportation Anthony Foxx, U.S. Attorney for the Southern District of New York Preet Bharara, Inspector General of the U.S. Department of Transportation (DOT) Calvin L. Scovel III, National Highway Traffic Safety Administration (NHTSA) Acting Administrator David Friedman and Federal Bureau of Investigation (FBI) Deputy Assistant Director Joe Campbell announced a criminal wire fraud charge against Toyota Motor Corporation (“TOYOTA” or “the company”), an automotive company headquartered in Toyota City, Japan, that designs, manufactures, assembles, and sells Toyota and Lexus brand vehicles. The charge is that TOYOTA defrauded consumers in the fall of 2009 and early 2010 by issuing misleading statements about safety issues in Toyota and Lexus vehicles.
Also today, the Department of Justice announced a deferred prosecution agreement with TOYOTA (“the agreement”) under which the company admits that it misled U.S. consumers by concealing and making deceptive statements about two safety issues affecting its vehicles, each of which caused a type of unintended acceleration. The admissions are contained in a detailed statement of facts attached to the agreement. The agreement, which is subject to judicial review, requires TOYOTA to pay a $1.2 billion financial penalty – the largest penalty of its kind ever imposed on an automotive company, and imposes on TOYOTA an independent monitor to review and assess policies, practices and procedures relating to TOYOTA’s safety-related public statements and reporting obligations. TOYOTA agrees to pay the penalty under a Final Order of Forfeiture in a parallel civil action also filed today in the Southern District of New York.
The criminal charge is contained in an Information (“the information”) alleging one count of wire fraud. If TOYOTA abides by all of the terms of the agreement, the Government will defer prosecution on the information for three years and then seek to dismiss the charge.
“Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to Members of Congress,” said Attorney General Eric Holder. “When car owners get behind the wheel, they have a right to expect that their vehicle is safe. If any part of the automobile turns out to have safety issues, the car company has a duty to be upfront about them, to fix them quickly, and to immediately tell the truth about the problem and its scope. Toyota violated that basic compact. Other car companies should not repeat Toyota’s mistake: a recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting.”
“Safety is our top priority,” said Transportation Secretary Anthony Foxx. “Throughout this recall process, NHTSA investigators worked tirelessly to make sure that Toyota recalled vehicles with defects causing unintended acceleration, and to determine when they learned of it, and as we learned today, they succeeded in this effort in spite of extraordinary challenges. Today’s penalties follow NHTSA’s own record civil penalties of more than $66 million – together, they send a powerful message to all manufacturers to follow our recall requirements or they will face serious consequences.”
“Toyota stands charged with a criminal offense because it cared more about savings than safety and more about its own brand and bottom line than the truth,” said U.S. Attorney Preet Bharara for the Southern District of New York. “In its zeal to stanch bad publicity in 2009 and 2010, Toyota misled regulators, misled customers, and even misstated the facts to Congress. The tens of millions of drivers in America have an absolute right to expect that the companies manufacturing their cars are not lying about serious safety issues; are not slow-walking safety fixes; and are not playing games with their lives. Companies that make inherently dangerous products must be maximally transparent, not two-faced. That is why we have undertaken this landmark enforcement action. And the entire auto industry should take notice.”
“To the families and friends of those who died or were injured as a result of these incidents, I offer my deepest sympathies for your loss and my highest admiration for the strength you demonstrate every day,” said DOT Inspector General Calvin L. Scovel III. “As is true for Secretary Foxx and DOT, safety is and will remain the highest priority of my office. The OIG is committed to working with our law enforcement and prosecutorial partners in pursuing those who commit criminal violations of the Department of Transportation’s or related laws. The efforts of this dedicated multi-agency team and the agreement reached with Toyota must serve as a clarion call to all auto manufacturers of the need to always be as vigilant and forthcoming as possible to keep the public safe.”
According to the allegations in the information, as well as other documents filed today in Manhattan federal court, including the Statement of Facts:
In the fall of 2009, TOYOTA deceived consumers and its U.S. regulator, the National Highway Traffic Safety Administration (“NHTSA”), by claiming that it had “addressed” the “root cause” of unintended acceleration in its vehicles through a limited safety recall of eight models for floor-mat entrapment, a dangerous condition in which an improperly secured or incompatible all-weather floor mat can “trap” a depressed gas pedal causing the car to accelerate to a high speed. Such public assurances deceived customers and NHTSA in two ways: First, at the time the statements were made, TOYOTA knew that it had not recalled some cars with design features that made them just as susceptible to floor-mat entrapment as some of the recalled cars. Second, only weeks before these statements were made, TOYOTA had taken steps to hide from NHTSA another type of unintended acceleration in its vehicles, separate and apart from floor-mat entrapment: a problem with accelerators getting stuck at partially depressed levels, known as “sticky pedal.”
Floor-Mat Entrapment: A Fatal Problem
TOYOTA issued its misleading statements, and undertook its acts of concealment, against the backdrop of intense public concern and scrutiny over the safety of its vehicles following a widely publicized Aug. 28, 2009 accident in San Diego, Calif., that killed a family of four. A Lexus dealer had improperly installed an incompatible all-weather floor mat into the Lexus ES350 in which the family was traveling, and that mat entrapped the accelerator at full throttle. A 911 emergency call made from the out-of-control vehicle, which was speeding at over 100 miles per hour, reported, “We’re in a Lexus . . . and we’re going north on 125 and our accelerator is stuck . . . there’s no brakes . . . we’re approaching the intersection . . . Hold on . . . hold on and pray . . . pray.” The call ended with the sound of the crash that killed everyone in the vehicle.
The San Diego accident was not the first time that TOYOTA had faced a problem with floor-mat entrapment. In 2007, following a series of reports alleging unintended acceleration in Toyota and Lexus vehicles, NHTSA opened a defect investigation into the Lexus ES350 model (the vehicle involved in the 2009 San Diego accident), and identified several other Toyota and Lexus models it believed might likewise be defective. TOYOTA, while denying to NHTSA the need to recall any of its vehicles, conducted an internal investigation in 2007 which revealed that certain Toyota and Lexus models, including most of the ones that NHTSA had identified as potentially problematic, had design features rendering entrapment of the gas pedal by an all-weather floor mat more likely. TOYOTA did not share these results with NHTSA. In the end, the Company negotiated a limited recall of 55,000 mats (no vehicles) – a result that TOYOTA employees touted internally as a major victory: “had the agency . . . pushed for recall of the throttle pedal assembly (for instance), we would be looking at upwards of $100 million + in unnecessary costs.”
Shortly after TOYOTA announced its 2007 mat recall, company engineers revised internal design guidelines to provide for, among other things, a minimum clearance of 10 millimeters between a fully depressed gas pedal and the floor. But TOYOTA decided those revised guidelines would only apply where a model was receiving a “full model redesign” – something each Toyota and Lexus model underwent only about once every three to five years. As a result, even after the revised guidelines had been adopted internally, many new vehicles produced and sold by TOYOTA – including the Lexus ES350 involved in the 2009 San Diego accident – did not comply with TOYOTA’s 2007 guidelines.
After the fatal and highly publicized San Diego accident, TOYOTA agreed to recall eight of its models, including the ES350, for floor-mat entrapment susceptibility. Thereafter, as part of an effort to defend its brand image, TOYOTA began issuing public statements assuring customers that this limited recall had “addressed the root cause of unintended acceleration” in its U.S.-sold vehicles.
As TOYOTA knew from internal testing it had completed by the time these statements were made, the eight-model recall had not in fact “addressed the root cause” of even the floor-mat entrapment problem. Models not recalled – and therefore still on the road – bore design features rendering them just as susceptible to floor-mat entrapment as those within the recall population. One engineer working at a TOYOTA facility in California had concluded that the Corolla, a top-selling car that had not been recalled, was among the three “worse” vehicles for floor-mat entrapment. In October 2009, TOYOTA engineers in Japan circulated a chart showing that the Corolla had the lowest rating for floor-mat entrapment under their analysis. None of these findings or this data were shared with NHTSA at the time.
The Sticky Pedal Problem
What is more misleading, at the same time it was assuring the public that the “root cause” of unintended acceleration had been “addressed” by the 2009 eight-model floor-mat entrapment recall, TOYOTA was hiding from NHTSA a second cause of unintended acceleration in its vehicles: the sticky pedal. Sticky pedal, a phenomenon affecting pedals manufactured by a U.S. company (“A-Pedal Company”) and installed in many Toyota brand vehicles in North America as well as Europe, resulted from the use of a plastic material inside the pedals that could cause the accelerator pedal to become mechanically stuck in a partially depressed position. The pedals incorporating this plastic were installed in, among other models, the Camry, the Matrix, the Corolla, and the Avalon sold in the United States.
The sticky pedal problem surfaced in Europe in 2008. There, reports reflected instances of “uncontrolled acceleration” and unintended acceleration to “maximum RPM,” and customer concern that the condition was “extremely dangerous.”
In early 2009, TOYOTA circulated to European Toyota distributors information about the sticky pedal problem and instructions for addressing the problem if it presented itself in a customer’s vehicle. These instructions identified the issue as “Sudden RPM increase/vehicle acceleration due to accelerator pedal sticking,” and stated that should a customer complain of pedal sticking, the pedal should be replaced with pedals manufactured by a company other than A-Pedal Company. Contemporaneous internal TOYOTA documents described the sticky pedal problem as a “defect” that was “[i]mportant in terms of safety because of the possibility of accidents.”
TOYOTA did not then inform its U.S. regulators of the sticky pedal problem or conduct a recall. Instead, beginning in the spring of 2009, TOYOTA quietly directed A-Pedal Company to change the pedals in new productions of affected models in Europe, and to plan for the same design changes to be rolled out in the United States (where the same problematic pedals were being used) beginning in the fall of 2009. The design change was to substitute the plastic used in the affected pedal models with another material and to change the length of the friction lever in the pedal.
Meanwhile, the sticky pedal problem was manifesting itself in U.S. vehicles. On or about the same day the San Diego floor-mat entrapment accident occurred, staff at a U.S. TOYOTA subsidiary in California sent a memorandum to staff at TOYOTA in Japan identifying as “critical” an “unintended acceleration” issue separate and apart from floor-mat entrapment that had been identified in an accelerator pedal of a Toyota Matrix vehicle in Arizona. The problem identified, and then reproduced during testing of the pedal on Sept. 17, 2009, was the sticky pedal problem. Also in August, the sticky pedal problem cropped up in a U.S. Camry.
On Sept. 9, 2009, an employee of a U.S. TOYOTA subsidiary who was concerned about the sticky pedal problem in the United States and believed that TOYOTA should address the problem prepared a “Market Impact Summary” listing (in addition to the August 2009 Matrix and Camry) 39 warranty cases that he believed involved potential manifestations of the sticky pedal problem. This document, which was circulated to TOYOTA engineers and, later, to staff in charge of recall decisions in Japan, designated the sticky pedal problem as priority level “A,” the highest level.
By no later than September 2009, TOYOTA recognized internally that the sticky pedal problem posed a risk of a type of unintended acceleration – or “overrun,” as Toyota sometimes called it – in many of its U.S. vehicles. A September 2009 presentation made by a manager at a U.S. TOYOTA subsidiary to TOYOTA executives gave a “current summary of O/R [overrun] types in NA [North American] market” that listed the three confirmed types as: “mat interference” (i.e., floor-mat entrapment), “material issue” (described as “pedal stuck and . . . pedal slow return/deformed”) and “simultaneous pedal press” by the consumer. The presentation further listed the models affected by the “material issue” as including “Camry, Corolla, Matrix, Avalon.”
Hiding Sticky Pedal from NHTSA and the Public
As noted, TOYOTA had by this time developed internal plans to implement design changes for all A-Pedal-Company-manufactured pedals in U.S. Toyota models to address, on a going-forward basis, the still-undisclosed sticky pedal problem that had already been resolved for new vehicles in Europe. On Oct. 5, 2009, TOYOTA engineers issued to A-Pedal Company the first of the design change instructions intended to prevent sticky pedal in the U.S. market. This was described internally as an “urgent” measure to be implemented on an “express” basis, as a “major” change – meaning that the part number of the subject pedal was to change, and that all inventory units with the old pedal number should be scrapped.
On Oct. 21, 2009, however, in the wake of the San Diego floor-mat entrapment accident, and in the midst of TOYOTA’s discussions with NHTSA about its eight-model entrapment recall, engineers at TOYOTA and the leadership of TOYOTA’s recall decision group decided to cancel the design change instruction that had already been issued and to suspend all remaining design changes planned for A-Pedal Company pedals in U.S. models. U.S. TOYOTA subsidiary employees who had been preparing for implementation of the changes were instructed, orally, to alert the manufacturing plants of the cancellation. They were also instructed not to put anything about the cancellation in writing. A-Pedal Company itself would receive no written cancellation at this time; instead, contrary to TOYOTA’s own standard procedures, the cancellation was to be effected without a paper trail.
TOYOTA decided to suspend the pedal design changes in the United States, and to avoid memorializing that suspension, in order to prevent NHTSA from learning about the sticky pedal problem.
In early November 2009, TOYOTA and the leadership of a U.S. TOYOTA subsidiary became aware of three instances of sticky pedal in U.S. Corollas. Shortly thereafter, the leadership of the recall decision group within TOYOTA discussed a plan to finally disclose the sticky pedal problem to NHTSA. The recall decision group was aware at this time not only of the problems in the three Corollas in the United States but also of the problems that had surfaced in a Matrix and a Camry in August 2009 and been reproduced through testing in September 2009. The group was also familiar with the sticky pedal problem in Europe, the design changes that had been implemented there, and the cancellation and suspension of similar planned design changes in the United States. Knowing all of this, the group’s leadership decided that (a) it would not disclose the September 2009 Market Impact Summary to NHTSA; (b) if any disclosure were to be made to NHTSA, it would be limited to a disclosure that there were some reports of unintended acceleration apparently unrelated to floor-mat entrapment; and (c) NHTSA should be told that TOYOTA had made no findings with respect to the sticky pedal problem reflected in the reports concerning the three U.S. Corollas, and that the investigation of the problem had just begun.
On Nov. 17, 2009, before TOYOTA had negotiated with NHTSA a final set of remedies for the eight models encompassed by the floor-mat entrapment recall, TOYOTA informed NHTSA of the three Corolla reports and several other reports of unintended acceleration in Toyota model vehicles equipped with pedals manufactured by A‑Pedal Company. In TOYOTA’s disclosure to NHTSA, TOYOTA did not reveal its understanding of the sticky pedal problem as a type of unintended acceleration, nor did it reveal the problem’s manifestation and the subsequent design changes in Europe, the planned, cancelled, and suspended design changes in the United States, the August 2009 Camry and Matrix vehicles that had suffered sticky pedal, or the September 2009 Market Impact Summary.
TOYOTA’s Misleading Statements
After the August 2009 fatal floor-mat entrapment accident in San Diego, several articles critical of TOYOTA appeared in U.S. newspapers. The articles reported instances of TOYOTA customers allegedly experiencing unintended acceleration and the authors accused TOYOTA of, among other things, hiding defects related to unintended acceleration.
On Nov. 25, 2009, TOYOTA, through a U.S. subsidiary, announced its floor- mat entrapment resolution with NHTSA. In a press release that had been approved by TOYOTA, the U.S. subsidiary assured customers: “The safety of our owners and the public is our utmost concern and Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect trends that are identified.” A spokesperson for the subsidiary stated during a press conference the same day, “We’re very, very confident that we have addressed this issue.”
In truth, the issue of unintended acceleration had not been “addressed” by the remedies announced. A-Pedal Company pedals which could experience stickiness were still on the road and still, in fact, being installed in newly-produced vehicles. And the best-selling Corolla, the Highlander, and the Venza – which had design features similar to models that had been included in the earlier floor-mat entrapment recall – were not being “addressed” at all.
Again, on Dec. 23, 2009, TOYOTA responded to media accusations that it was continuing to hide defects in its vehicles by authorizing a U.S. TOYOTA subsidiary to publish the following misleading statements on the subsidiary’s website: “Toyota has absolutely not minimized public awareness of any defect or issue with respect to its vehicles. Any suggestion to the contrary is wrong and borders on irresponsibility. We are confident that the measures we are taking address the root cause and will reduce the risk of pedal entrapment.” In fact, TOYOTA had “minimized public awareness of” both sticky pedal and floor-mat entrapment. Further, the measures TOYOTA had taken did not “address the root cause” of unintended acceleration, because TOYOTA had not yet issued a sticky pedal recall and had not yet recalled the Corolla, the Venza, or the Highlander for floor-mat entrapment.
TOYOTA’s False Timeline
When, in early 2010, TOYOTA finally conducted safety recalls to address the unintended acceleration issues it had concealed throughout the fall of 2009, TOYOTA provided to the American public, NHTSA and the United States Congress an inaccurate timeline of events that made it appear as if TOYOTA had learned of the sticky pedal in the United States in “October 2009,” and then acted promptly to remedy the problem within 90 days of discovering it. In fact, TOYOTA had begun its investigation of sticky pedal in the United States no later than August 2009, had already reproduced the problem in a U.S. pedal by no later than September 2009, and had taken active steps in the months following that testing to hide the problem from NHTSA and the public.
* * *
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Bonnie Jonas, Deputy Chief of the Criminal Division and Assistant U.S. Attorney Sarah E. McCallum are in charge of the prosecution, and Assistant U.S. Attorney Sharon Cohen Levin, Chief of the Money Laundering and Asset Forfeiture Unit is responsible for the forfeiture aspects of the case.
Related Materials:
Deferred Prosecution Agreement
Toyota Information
Toyota Statement of FactsJoint Law Enforcement Operation Leads to Return of Accused Argentine War Criminal Hiding in United StatesRead the Press Release
USDOJ: INTERPOL Washington: Updates
Department of Justice
INTERPOL Washington FOR IMMEDIATE RELEASE Wednesday, March 19, 2014Joint Law Enforcement Operation Leads to Return of Accused Argentine War Criminal Hiding in United States
WASHINGTON - An exhaustive investigation spearheaded by INTERPOL Washington and the U.S. Marshals Service International Investigations Branch ended with one of Argentina's most sought-after war criminals being located in Miami.
In December 2013, INTERPOL Buenos Aires requested assistance from U.S. law enforcement officials in establishing the whereabouts of Rodolfo Adolfo Gimenez. A former Argentine military officer, Gimenez, is accused of committing atrocities against civilians during Argentina's “dirty war” in the 1970s.
Knowing that an international arrest warrant would be forthcoming, Gimenez fled Argentina in October 2013, traveling through Chile and ultimately seeking safe haven in Florida. INTERPOL Washington and investigators from the U.S. Marshals Service subsequently determined Gimenez had taken refuge in a safe house situated well within the Spanish speaking community in Miami, where he believed that he could easily acclimatize and blend in.
On Friday, at the request of INTERPOL Washington, U.S. Marshals Service personnel from the Southern District of Florida and agents from the Miami office of U.S. Immigration and Customs Enforcement - Homeland Security Investigations positively located and identified Gimenez and facilitated his removal from the United States back to Argentina. There, he was taken into custody by Argentine National Police representatives from INTERPOL Buenos Aires.
“This is an excellent example of U.S. law enforcement and the Argentina government working together to apprehend a wanted fugitive,” said Amos Rojas, U.S. Marshal for the Southern District of Florida. “The Marshals Service is dedicated to pursuing all those who choose to flee rather than face justice.”
According to the INTERPOL Red Notice and warrants of arrest issued by Federal Courts in Argentina, Gimenez is specifically implicated “in the unlawful imprisonment of 22 year old Juan Marcos Herman, a political activist in student circles and a member of the anti-military Peronist Youth Movement. In July 1977, Herman was kidnapped at gunpoint by a group of military personnel.” He was subsequently taken to a clandestine detention center in Buenos Aires where he was “subjected to repeated mental and physical torture, and relentless interrogation.” Herman was never again seen alive, and his remains have never been recovered. If convicted as charged, Gimenez faces life in prison.
“I commend the work of all the law enforcement authorities involved in this investigation,” said INTERPOL Washington Director Shawn Bray. “This is a great example of U.S. law enforcement agencies and their international partners sharing information to locate and bring criminals to justice. No matter how far and hard this fugitive ran he could not escape the coordinated international effort to locate him.”
INTERPOL Washington credits the combined efforts of INTERPOL, INTERPOL Buenos Aires, the U.S. Marshals Service, U.S. Immigration and Customs Enforcement – Homeland Security Investigations and Enforcement Removal Operations, U.S. Customs and Border Protection, U.S. Citizenship and Immigration Services, the Transportations Security Administration, the U.S. Department of State Bureau of Diplomatic Security, and the U.S. Department of Justice Office of International Affairs.
Jacksonville Man Pleads Guilty to Conspiring and Attempting to Support TerroristsRead the Press Release
Jacksonville, Florida – United States Attorney A. Lee Bentley, III announces that Shelton Thomas Bell (20, Jacksonville) today pleaded guilty to conspiracy to provide material support to terrorists and attempting to provide material support to terrorists. Bell faces a maximum penalty of 30 years in federal prison. A sentencing date has not yet been set.
According to the plea agreement, between May 2012 and continuing through at least July 18, 2012, Bell agreed and conspired with a juvenile, and one other individual, to train and prepare themselves as combatants for overseas violent jihad, then travel from Jacksonville to the Middle East for the ultimate purpose of providing themselves to terrorists, including members of Ansar al-Sharia in Yemen. Once overseas, their plan included receiving further training and deadly weapons from Ansar al-Sharia, and then engage in violent jihad against, and to kill, others in the country of Yemen and elsewhere.
In May 2012, Bell introduced the juvenile to the concept of traveling overseas for the purpose of engaging in violent jihad and inspired the juvenile and another person with the teachings of an Al Qaida spokesperson, Anwar al-Awlaki ("al-Awlaki"). Bell suggested traveling to Yemen to fight because of al-Awlaki's teachings - that all young people should travel to Yemen to “take up the fight.” Bell and the juvenile subsequently agreed to a plan in which they would travel to Israel and then make Hajj. As part of the deception, the conspirators told others, including their parents, that they were traveling overseas to attend Hajj, to study, and to get an education. By July 2012, Bell, the juvenile, and another individual began taking actions to train for their unlawful activities by conducting mental training that included watching al-Awlaki videos and looking at images of dead Muslims.
Another part of the training took place on July 4, 2012, when Bell and another individual conducted a late-night “jihadi training mission” that involved the destruction of religious statues in a multi-denominational cemetery located in Jacksonville, Florida. In preparation for the mission, the two dressed in all black clothing, wore tactical gloves, masks, and wrapped their shoes in black duct tape to avoid leaving footprints. Bell brought a loaded 9 mm pistol with him on the mission, to use “in case any kuffar want to cause any trouble.” Other training sessions conducted by Bell included a homemade firing range and impromptu battlefield lessons intended for recording and uploading to the Internet, to be used in the recruitment of others as to “the actions of Jihad.” At the conclusion of one training session, Bell placed the American flag on a machete, burned it, and commented that the flag was “burning to the ground by the mujahidin’s hands.” To recruit other youth to travel and join in armed conflict, Bell and the juvenile also planned to take footage of each other actually participating in armed conflict in the Middle East, once they made it there and began fighting.
On September 25, 2012, Bell and the juvenile left Jacksonville and flew to New York, Poland, and Tel Aviv, Israel, where they were detained by Israeli officials and deported to Poland. From there, Bell and the juvenile traveled to Jordan to stay with the juvenile's relatives. While in Jordan, Bell and the juvenile contacted another person to assist in their plan of joining up with Ansar al-Sharia. Bell and the juvenile also bought airline tickets to the country of Oman, believing they would fly to Oman and walk across the border to Yemen to join the armed conflict there. As part of the conspiracy, Bell and the juvenile intended to travel to Yemen, where they intended to carry out their plan. During their overseas travel, Bell and the juvenile took steps to avoid detection by law enforcement.
Ultimately, Bell and the juvenile were deported from Jordan to the United States on November 21, 2012. At that time, Bell spoke with agents and stated, among other things, that he and the juvenile had purchased plane tickets to Oman, with the intention of entering Yemen. Bell stated, “If you ask me if [I] was going for jihad in Yemen, I say yes.” Bell confirmed that Ansar al-Sharia was the group that they sought to join, but explained that several groups were affiliated with Ansar al-Sharia, including al Qa’ida and the Taliban.
In commenting on this case, United States Attorney A. Lee Bentley, III stated, “Working with our law enforcement partners to prevent terrorism and promote national security is a top priority. We are thankful that this investigation was resolved without harm or injury to any citizens, at home or abroad.”
“Stopping these threats from within is the grim reality we deal with today,” said Special Agent in Charge Michelle S. Klimt, FBI - Jacksonville. “This case serves as a reminder that terrorist-related activities can occur anywhere. It also shows that we will use all the resources at our disposal to root out the individuals posing these threats to keep America safe.”
This case was investigated by the FBI's Jacksonville Joint Terrorism Task Force (JTTF). The JTTF is a multi-agency task force comprised of full-time personnel from the FBI, U.S. Coast Guard Investigative Service, U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement's Homeland Security Investigations, the Jacksonville Sheriff's Office, Florida Highway Patrol, the Florida Department of Law Enforcement, and the Naval Criminal Investigative Service. It is being prosecuted by Assistant United States Attorney Mac D. Heavener, III and Department of Justice Trial Attorney Mara M. Kohn from the Department's Counter Terrorism Section, National Security Division.
Jacksonville Man Pleads Guilty in Scheme to Defraud over $904,000Read the Press Release
Jacksonville, Florida – United States Attorney A. Lee Bentley, III announces that David Allen Dinsbeer (37) today pleaded guilty to 16 counts of conspiracy to commit wire fraud and wire fraud. Each count carries a maximum penalty of up to 20 years in prison. Dinsbeer is currently released on bond, pending a sentencing hearing.
Dinsbeer was indicted on October 3, 2013.
According to court records, between January 2011 and May 2012, Dinsbeer defrauded the Hickory Foods group of companies out of approximately $904,000. The Hickory Foods companies are best known for Bubba Burgers. The investigation revealed that Dinsbeer used phony supplier companies to bill for supplies that were never delivered. He then deposited checks, which were issued on false invoices, into bank accounts for the phony companies, which he controlled. An FBI forensic accountant determined that the companies had no legitimate business expenses and that Dinsbeer withdrew money from the accounts, using them to pay his personal expenses. To facilitate the scheme, Dinsbeer conspired with an employee of Hickory Foods companies.
This case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Dale Campion.
###Indictment: Kansas City, Kan., Tax PreparerPrepared False Income Tax ReturnsRead the Press Release
KANSAS CITY KAN. - A tax preparer in Kansas City, Kan., was indicted today by a federal grand jury on charges of preparing false tax returns, U.S. Attorney Barry Grissom said.
Ahferom Goitom, 34, Kansas City, Kan., is charged with fourteen counts of preparing false tax returns. The indictment alleges that Goitom was a professional tax return preparer who worked in Kansas City, Kan., and was the manager of a franchise business that prepares tax returns. He used commercial tax preparation software at the business to file returns electronically with the Internal Revenue Service.
He prepared at least 34 Form 1040s containing false and fraudulent education credits, charitable deductions, medical and dental expenses, home mortgage interest deductions, gross receipts for a sole proprietorship business, expenses for a sole proprietorship business and deductions for rental real estate.
For example, count one of the indictment alleges Goitom filed a return for a taxpayer in calendar year 2009 claiming medical and dental expenses of $5,050; gifts to charity of $8,200; and job expenses and miscellaneous deductions of $5,821. He knew that in fact the taxpayer was entitled to claim medical and dental expenses of only $226, gifts to charity of approximately $2,000 and no job expenses or other miscellaneous deductions.
If convicted, he faces a maximum penalty of three years in federal prison and a fine up to $250,000 on each count. The Internal Revenue Service investigated. Assistant U.S. Attorney Scott Rask is prosecuting.
OTHER INDICTMENTS
Lamar Lynch, 41, Kansas City, Kan., is charged with 13 counts of stealing government funds by filing false and fraudulent federal income tax returns and nine counts of aggravated identity theft. The crimes are alleged to have occurred in 2011 and 2012 in the state of Kansas.
If convicted, he faces a maximum penalty of 10 years in federal prison and a fine up to $250,000 on each count of filing a false tax return, and a penalty of not less than two years and a fine up to $250,000 on each count of aggravated identity theft. The Internal Revenue Service – Criminal Investigation Division, U.S. Secret Service and Housing and Urban Development – Office of Inspector General investigated. Assistant U.S. Attorney Tris Hunt is prosecuting.
Randy A. Cornelius, 21, Kansas City, Mo., Allen J. Williams, 23, Kansas City, Mo., and Alvin J. Williams, 23, Kansas City, Mo., have been indicted on bank robbery and federal firearms charges.
A federal criminal complaint filed Feb. 28 in U.S. District Court in Kansas City, Kan., charged each of the defendants with one count of bank robbery in the Feb. 27, 2014, robbery of Inter-State Federal Savings at 8620 Metcalf in Overland Park, Kan. Today’s indictment adds a charge against each defendant of using a firearm during the robbery. In addition, Allen J. Williams is charged with one count of unlawful possession of a firearm after a felony conviction.
If convicted, the defendants face a maximum penalty of 25 years in federal prison and a fine up to $250,000 on the bank robbery charge, and a penalty of not less than seven years and a fine up to $250,000 on the charge of using a firearm in the robbery. In addition, the charge of unlawful possession of a firearm after a felony conviction carries a maximum penalty of 10 years and a fine up to $250,000. The Overland Park Police Department, the Kansas City, Mo., Police Department and the FBI investigated. Assistant U.S. Attorney Tris Hunt is prosecuting.
Jose Angel Aquilera-Franco, 20, Bonner Springs, Kan., and Darin Glassburn, 44, are charged in a second superseding indictment with one count of attempted possession with intent to distribute methamphetamine. The crime is alleged to have occurred Dec. 5, 2013, in Kansas City, Kan.
In addition, Aguilera-Franco is charged with one count of distributing methamphetamine within 1,000 feet of St. Peter’s Catholic School in Kansas City, Kan., one count of distributing methamphetamine and one count of dealing in firearms without a federal license.
Upon conviction, the crimes carry the following penalties: Distributing methamphetamine within 1,000 feet of a school: A maximum penalty of 40 years in federal prison and a fine up to $2 million.
Distributing methamphetamine: A maximum penalty of 20 years and a fine up to $1 million.
Dealing in firearms without a license: A maximum penalty of five years and a fine up to $250,000.
Attempted possession with intent to distribute methamphetamine: Not less than 10 years and a fine up to $10 million.The U.S. Postal Inspection Service and the Kansas City, Kan., Police Department investigated. Special Assistant U.S. Attorney Erin Tomasic is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Illegal Alien Pleads Guilty to Firearms and Drug Trafficking ChargesRead the Press Release
SHREVEPORT, La. –United States Attorney Stephanie A. Finley announced today that Jose Luis Ariciaga-Banda, 28, of Mexico, pleaded guilty Tuesday before U.S. District Judge Donald E. Walter to possession of a firearm and ammunition by a felon, possession of a firearm and ammunition by an illegal alien, possession with the intent to distribute marijuana, and illegal reentry into the United States after deportation.
According to evidence presented at the guilty plea, Louisiana State Troopers stopped the truck Ariciaga-Banda was driving on August 7, 2013 on Mansfield Road in Shreveport for a traffic violation. He was found to be a Mexican citizen and illegally in the United States. An Immigration and Customs Enforcement Special Agent who arrived at the scene placed the defendant under arrest. A search warrant was also obtained and executed at Ariciaga-Banda’s residence. A 9 mm pistol, ammunition, money and approximately 18 pounds of marijuana were found at Ariciaga-Banda’s residence. The defendant was previously convicted in September of 2008 for possession of cocaine in Caddo Parish District Court. In November of 2010, he was convicted in federal court of two counts of possession of a firearm by an alien illegally in the United States and a count of illegal reentry after his deportation from the United States.
Ariciaga-Banda faces 10 years in prison for being a felon in possession of a firearm; 10 years in prison for being an illegal alien in possession of a firearm; 20 years in prison for illegal reentry after deportation; and five years in prison for possession with intent to distribute marijuana. Each count also carries up to a $250,000 fine. Sentencing is set for June 26, 2014.The U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Louisiana State Police, the Caddo Parish Sheriff-Shreveport Police Drug Task Force, and the Caddo Parish Sheriff’s Department investigated the case. Assistant U.S. Attorney Robert W. Gillespie Jr. prosecuted this case as part of Project Safe Neighborhoods. Project Safe Neighborhoods is a nationwide program started in 2001 designed to reduce violence by aggressively enforcing existing federal firearms laws.
Heroin Dealer from Ohio Pleads Guilty to Federal Drug ChargeRead the Press Release
Charleston, W.Va. – An Ohio man has pleaded guilty to conspiring to distribute heroin, U.S. Attorney Booth Goodwin announced today. Christopher Swann, 23, admitted at today’s plea hearing that he and others traveled back and forth from Charleston, West Virginia, to Ohio to purchase heroin for resale in Charleston. Swann was previously indicted on one count of conspiracy to distribute heroin in October of 2013. He is scheduled to be sentenced on June 18, 2014. He faces up to 20 years imprisonment, a $1,000,000 fine and at least three years of supervised release.
This case was investigated by Charleston Police Department’s Special Enforcement Unit.
This case is being prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs and heroin. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin in communities across the Southern District.
Five Defendants Sentenced in Identity Theft Tax Refund Fraud and Access Device Fraud SchemesRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Paula Reid, Special Agent in Charge, U.S. Secret Service (USSS), Miami Field Office, and Scott Israel, Sheriff, Broward Sheriff’s Office (BSO), announce that Alex Dontfred, 29, David Tilus, 27, Sherika Rowe, 20, Fritznel Etienne, 24, and Latonya Ware, 27, all of Lauderhill, were sentenced for their participation in a stolen identity tax refund scheme and an access device fraud scheme that resulted in the submission of over $137,000 in fraudulent tax refund claims and over $49,000 in unauthorized access device purchases.
Dontfred was sentenced yesterday to 46 months in prison, followed by three years of supervised release, and was ordered to pay forfeiture of $49,561.88 and restitution in the amount of $45,711.10. Tilus was sentenced on March 10, 2014 to 70 months in prison, followed by three years of supervised release, and was ordered to pay $188,322 in restitution. Rowe was sentenced on March 13, 2014 to 45 months in prison, followed by three years of supervised release, and was ordered to pay a money judgment of $136,538 and restitution in the amount of $136,535. Etienne was sentenced on March 14, 2014 to 34 months in prison, followed by two years of supervised release, and was ordered to pay a money judgment of $11,204 and restitution in the amount of $3,844.81. Latonya Ware was sentenced on March 10, 2014 to 34 months in prison, followed by three years of supervised release, and was ordered to pay a money judgment of $136,535 and restitution in the amount of $136,535.
Dontfred previously pled guilty to one count each of conspiracy to commit access device fraud and access device fraud, in violation of Title 18, United States Code, Sections 1029(b)(2) and 1029(a)(2), respectively. Tilus previously pled guilty to one count each of conspiracy to commit wire fraud, wire fraud, conspiracy to commit access device fraud, and aggravated identity theft, in violation of Title 18, United States Code, Sections 1349, 1343, 1029(b)(2) and 1028A(a)(1), respectively. Rowe previously pled guilty to one count each of conspiracy to commit wire fraud, wire fraud and aggravated identity theft, in violation of Title 18, United States Code, Section 1349, 1343 and 1029A(a)(1), respectively. Etienne previously pled guilty to one count each of access device fraud and aggravated identity theft, in violation of Title 18, United States Code, Sections 1029(a)(2) and 1028A(a)(1), respectively. Latonya Ware previously pled guilty to one count each of conspiracy to commit wire fraud and aggravated identity theft, in violation of Title 18, United States Code, Section 1349 and 1029A(a)(1), respectively.
According to court documents, Andrew Ware, David Tilus, Latonya Ware and Sherika Rowe obtained the personal identifying information (PII) of numerous identity theft victims, including their names, dates of birth, and social security numbers. Latonya Ware stole patients' names and social security numbers from a medical office where she worked, and gave the PII to Tilus and her cousin, Andrew Ware. Rowe electronically filed fraudulent tax returns utilizing the victims’ names and social security numbers, and the fraudulent refunds from these returns were loaded onto prepaid debit cards that Tilus and Andrew Ware used to purchase gift cards and other merchandise from retail stores. Fraudulent refunds claimed by Andrew Ware, Tilus, Latonya Ware and Rowe from the stolen identities totaled approximately $137,132.
Court documents state that Andrew Ware, David Tilus, Jaqwayn Henry, Alex Dontfred and Fritznel Etienne utilized victims’ access devices, without their authorization, to purchase merchandise totaling at least $1,000 in a single year. These defendants obtained credit card numbers from various victims and used these stolen access devices to purchase merchandise, gift cards and prepaid debit cards for later use. The total amount of fraudulent charges made or attempted to be made by Andrew Ware, Tilus, Henry, and Dontfred utilizing the stolen credit cards is $49,561.88. From approximately January 20, 2012 through January 22, 2012, the total amount of fraudulent charges made or attempted to be made by Etienne utilizing a stolen credit card number is $11,942.23.
Co-defendant Andrew Ware, 27, of Lauderhill, previously pled guilty to one count each of conspiracy to commit wire fraud, wire fraud, conspiracy to commit access device fraud, and aggravated identity theft, in violation of Title 18, United States Code, Sections 1349, 1343, 1029(b)(2) and 1028A(a)(1), respectively. The defendant is scheduled to be sentenced on April 18, 2014.
Co-defendant Jaqwayn Henry, 23, of Lauderhill, is a fugitive. The indictment was dismissed against Latanya Ware.
Mr. Ferrer commended the investigative efforts of IRS-CI, the USSS, and BSO. The case is being prosecuted by Assistant U.S. Attorneys Alicia Shick and Harry Wallace.
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.
Federal Judge Sentences Manager of Heroin Conspiracy that distributed heroin resulting in death to twenty years in prisonRead the Press Release
PORTLAND, Ore. - On March 18, 2014, U.S. District Court Judge Marco Hernandez sentenced Samuel Navarrette-Aguilar, 41, a citizen of Mexico, to 240 months for his managerial role in a heroin trafficking conspiracy involving a kilogram or more of heroin. A federal jury found the defendant guilty of the conspiracy in June of 2013. Judge Hernandez further found by a preponderance of evidence that heroin distributed by the defendant resulted in the death of Erin Freeman, 22, who overdosed on heroin in her Portland residence in June of 2012. Judge Hernandez cited this and other factors to support his sentence including the fact that the defendant committed this crime after escaping from a Washington state prison sentence for drug trafficking and having remained at large since 1999. Although the quantity of heroin subjected the defendant to a statutorily mandated minimum sentence of twenty years, Judge Hernandez indicated he would have pronounced the same sentence independent of the mandatory minimum requirement.
Reaching into the upper echelon of a trafficking conspiracy from the tragic scene of a young woman’s last failure against heroin addiction, required a fast moving investigation led by the Portland Police Bureau Drugs and Vice Division with support from the Federal Bureau of Investigation and the Drug Enforcement Administration.
“This sentence serves justice. In 2012 we lost 147 Oregonians to heroin, many of those, like Erin Freeman, were far too young”, said U.S. Attorney Amanda Marshall. “This defendant and other purveyors of this deadly drug face heavy penalties as Oregon and communities across the nation address the clear and present danger of this heroin epidemic.”This case was prosecuted by Assistant U.S. Attorney Kathleen Bickers.
Federal Grand Jury Indicts Ohio Men for Heroin DistributionRead the Press Release
CHARLESTON, W.Va. – A federal grand jury in Charleston, West Virginia, returned two indictments yesterday related to the illegal distribution of heroin.
The grand jury returned a three-count indictment charging Marion Alonvo Felder of Upper Sandusky, Ohio, with the distribution of heroin on September 2, September 14 and October 1, 2013, in Parkersburg, West Virginia. The grand jury also charged Keith Irons, 25, of Marion County, Ohio, with heroin distribution. According to the two-count indictment of Irons, he distributed heroin on October 3 and October 6, 2013, in Parkersburg, West Virginia.
Marion and Irons each face up to 20 years in prison on each count if convicted.
The investigation was conducted by the Parkersburg Police Department and the Parkersburg Violent Crime and Narcotics Task Force. Assistant United States Attorney Joshua Hanks is in charge of the prosecution.
This case is being prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs and heroin. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin in communities across the Southern District.
Note: The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Federal Appellate Court Reverses U.S. District Court Order Granting New Trial for Reese DefendantsRead the Press Release
ALBUQUERQUE – The Tenth Circuit Court of Appeals today issued a ruling reversing the Feb. 1, 2013 Order of the U.S. District Court for the District of New Mexico which granted a new trial for the owner of a gun shop in Deming, N.M., his wife and their son who were found guilty on federal firearms charges by a jury on Aug. 1, 2012.
Today’s ruling upholds the convictions of Rick Reese, 58, Terri Reese, 52, and Ryin Reese, 26, on charges that they aided and abetted straw purchases of firearms at their place of business, New Deal Shooting Sports. In reaching this decision, the appellate court rejected the defendants’ arguments that the United States failed to disclose material information that could have been used to impeach a government witness at trial.
In announcing the appellate court’s decision, Acting U.S. Attorney Steven C. Yarbrough said, “The United States takes its obligation to disclose material information favorable to a criminal defendant very seriously. The Tenth Circuit’s conclusion that my office did not violate its disclosure obligations during its prosecution of this case is, therefore, a very important one. We affirm our commitment to vigorously prosecute those who commit federal crimes and to do so in a manner that ensures that criminal defendants receive the fair trials to which they are entitled.”
The defendants have a period of time to seek en banc review from the Tenth Circuit Court of Appeals or a writ of certiorari from the U.S. Supreme Court. Absent further appeal, the case returns to the district court for sentencing. Rick, Terri and Ryin Reese each face a maximum penalty of five years in prison. Their sentencing hearings have yet to be scheduled.
This case was investigated by Homeland Security Investigations and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant U.S. Attorneys Maria Y. Armijo and Aaron O. Jordan of the U.S. Attorney’s Las Cruces Branch Office are prosecuting the case in the district court. Assistant U.S. Attorney Laura Fashing, Chief of the U.S. Attorney’s Appellate Division, represented the United States on the appeal.
- Reese Appellate Decision
Fayetteville Man Sentenced in Child Pornography CaseRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announced that in federal court today United States District Judge Terrence W. Boyle sentenced FRANKLIN WADE MEARES, 46to 96 months imprisonment followed by 10 years supervised release.
A Federal Grand Jury returned a Criminal Indictment on June 18, 2013.On December 18, 2013, MEARES pled guilty to receipt of child pornography.
According to the investigation, on September 14, 2012, the Cumberland County Sheriff’s Office initiated an undercover investigation related to the distribution of child pornography through the use of peer-to-peer (P2P) software. P2P software allows users to search for images, videos, and digital files by entering search terms. During the course of the investigation, a computer was identified by its IP address as using the Gnutella P2P network and offering to share child pornography. The IP addressed led law enforcement to MEARES and a search warrant was executed. Forensic examination of the computer uncovered over 12,000 images depicting children under the age of 12 engaged in sexual activity.
Investigation of this case was conducted by the Cumberland County Sheriff’s Office. Assistant United States Attorney Ethan A. Ontjes prosecuted the case.
This case was part of the Project Safe Childhood initiative, a national program aimed at ensuring that criminals exploiting children are effectively prosecuted by making full use of all available law enforcement resources at every level. For more information about this important national project, Project Safe Childhood, go to www.projectsafechildhood.gov.
East Hampton Woman Admits Role in Real Estate Appraisal Fraud SchemeRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that BRANDY GOMEZ, 35, of East Hampton, pleaded guilty today before U.S. District Judge Alvin W. Thompson in Hartford to one count of conspiracy to commit mail and bank fraud related to a real estate appraisal scheme.
According to court documents and statements made in court, GOMEZ was a provisional licensed appraiser in Connecticut. Under Connecticut’s real estate appraisal regulations, GOMEZ was required to be supervised by a certified appraiser. Between 2006 and 2008, GOMEZ conspired with another individual to obtain real estate appraisal fees to which they were not entitled. As part of the scheme, GOMEZ’s co-conspirator obtained the names, certified appraiser numbers, appraiser certificates, business names and addresses, and electronic signatures of certified appraisers and, without the certified appraisers’ knowledge, used this information when submitting real estate appraisals that GOMEZ had purportedly completed to mortgage brokers and lenders. GOMEZ deposited fraudulently obtained appraisal fees into her personal bank account and shared them with her co-conspirator.
GOMEZ and her co-conspirator also submitted falsified work logs to the Connecticut Department of Consumer Protection purporting to show that GOMEZ completed dozens of real estate appraisals under the supervision of a certified appraiser when, in fact, she had not performed such work and was not entitled to the appraisal fees.
GOMEZ and her co-conspirator received approximately $47,908 as a result of submitting the unauthorized and fraudulent appraisals.
Judge Thompson scheduled sentencing for June 20, 2014, at which time GOMEZ faces a maximum term of imprisonment of 30 years.
This case is being investigated by the Federal Bureau of Investigation, the U.S. Department of Housing and Urban Development – Office of Inspector General, the Internal Revenue Service – Criminal Investigation Division and the U.S. Postal Inspection Service. The case is being prosecuted by Assistant U.S. Attorneys David T. Huang and Paul H. McConnell.
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(203) 821-3722 [email protected]Drug Dealer SentencedRead the Press Release
Michael J. Moore, United States Attorney for the Middle District of Georgia, announced that Bobby Charles Taylor, a/k/a “Big Fifty”, aged 38, of Leary, Georgia, was sentenced on Wednesday, March 19, 2014, to serve 30 years imprisonment in a case of conspiracy to possess with the intent to distribute cocaine and cocaine base. The sentence was handed down by the Honorable W. Louis Sands, United States District Court Judge, in Albany, Georgia.
Mr. Taylor was convicted of the charges on September 5, 2013 following a 20 day jury trial. Testimony at trial revealed that Mr. Taylor was involved in a large-scale cocaine and crack cocaine distribution organization responsible for the distribution of over 750 kilograms of cocaine.
U.S. Attorney Michael Moore said, “This brings to an end the criminal career of a major drug distributor in Southwest Georgia. There is no parole for those convicted and sentenced in the federal courts, so it will be three decades before Mr. Taylor will have the opportunity to ply his trade again.”
The case was investigated by agents from the U.S. Drug Enforcement Administration, Georgia Bureau of Investigation, Bainbridge Department of Public Safety and Georgia State patrol. Assistant United States Attorney Leah E. McEwen prosecuted the case for the government.Inquiries regarding the case should be directed to Pamela Lightsey, United States Attorney's Office at (478) 621-2603.
Drug Dealer Prosecuted in Federal Court for "Designer" or "Bath Salt" Substances Called AnaloguesRead the Press Release
PITTSBURGH - A Beaver County resident pleaded guilty in federal court to charges of violating federal narcotics laws, United States Attorney David J. Hickton announced today.
Michael Anthony Stokes, 27, of New Brighton, Pa., pleaded guilty to eight counts before United States District Judge Nora Barry Fischer.
In connection with the guilty plea, the court was advised that on March 12, 2011, New Brighton Police observed an apparent drug purchaser leaving the residence of Stokes and Ryan Konarski. The marijuana purchaser was apprehended and confirmed that he bought from that residence, (about a block from the police station). Police obtained a state search warrant and located not only marijuana and indicia that it was being both used and sold there, but over 900 grams of 3,4-Methylenedioxymethcathinone, a so called "bath salt" commonly known as methylone or "Molly", typically used at Rave-type gatherings. Police also located empty capsules and handguns in both Stokes' and Konarski's bedrooms, along with money orders and common carrier packages indicating the methylone was coming from China.
Drug suppliers, especially those involved in Rave-type drugs such as ecstasy (MDMA), will often tweak the chemical manufacturing process causing minor modifications to the chemical formula of the end product. The result is a product that is not yet specifically listed as a controlled substance. Congress closed this loophole by creating the analogue statute at 21 U.S.C. '802(32), which essentially makes these new "designer" or "bath salt" creations a Schedule I drug if they are similar to an already controlled substance and are intended for human consumption.
Both Stokes and Konarski were prosecuted for the felony marijuana charges in state court, but since Pennsylvania has no "analogue" statute these other actions went un-prosecuted. Stokes received "Intermediate Punishment" where he served six months’ house arrest followed by probation. Law enforcement then received information that Stokes was again dealing drugs once off of house arrest.
When Stokes was arrested on the federal charges by DEA on March 14, 2013, drugs and other items were again located at the same drug house. These indicate that Stokes was still dealing. The drugs located were MDMA [ecstasy], DMT and Methylone. Methylone was included as a Schedule I drug on Oct. 21, 2011.
Ryan Konarski previously pleaded guilty. He is scheduled to be sentenced on May 22, 2014, at 11 a.m.
Judge Fischer scheduled Stokes’ sentencing for Aug. 6, 2014, at 9:30 a.m. The law provides for a total sentence of 160 years in prison, a fine of $7,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the prior criminal history of the defendant.
Assistant United States Attorney Ross E. Lenhardt is prosecuting this case on behalf of the government.
The Drug Enforcement Administration and the New Brighton Police Department conducted the investigation that led to the prosecution of Michael Anthony Stokes.
Distributing Child Pornography Lands Former Local Resident in Federal PrisonRead the Press Release
CORPUS CHRISTI, Texas – Trent Ashley Willis, 37, formerly of Corpus Christi, has been ordered to prison for 10 years following his conviction of distributing child pornography, announced United States Attorney Kenneth Magidson. Willis pleaded guilty Jan, 8, 2014.
Today, Senior U.S. District Judge Janis Graham Jack took into consideration the need to protect the public and deter future criminal conduct and handed Willis a total of 120 months in federal prison. Additional information was also presented today, including the fact that in addition to his distribution of actual child pornography, Willis had posted non-pornographic images of children with whom he had contact on the web in an effort to entice other pedophiles. In handing down the sentence, Judge Jack stated that she doubted anything could be done to deter his future criminal conduct and ordered Willis to serve a lifetime of supervised release following completion of his prison term. During that time, he will have to comply to comply with numerous requirements designed to restrict his access to children and the Internet. He will also be ordered to register as a sex offender.
Willis came to the attention of law enforcement after multiple pornographic images of children were posted to several websites. The investigation led to the identity of Willis who had been posting and exchanging child pornography in Corpus Christi between May and October of 2012 via legitimate websites with other users who were similarly interested. Willis resided in Corpus Christi during parts of 2012, but left the area sometime during late 2012. He was eventually discovered and arrested without incident in Petersberg, Va., in October 2013.
The ongoing investigation has linked Willis to numerous occurrence of Internet-based child pornography related activities in multiple states.
Willis will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.The FBI investigated with the assistance of the Corpus Christi Police Department’s Internet Crimes Against Children Task Force.
This case, prosecuted by Assistant United States Attorney Lance Duke, was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."David Renz Sentenced on Federal Child Pornography OffensesRead the Press Release
SYRACUSE, NEW YORK – United States Attorney Richard S. Hartunian announced that David J. Renz, 30, of North Syracuse was sentenced in federal court in Syracuse today on one count of receiving and five counts of possessing child pornography.
United States Senior District Court Judge, Hon. Norman A. Mordue sentenced Renz to a total of 30 years in federal prison: 20 years on his conviction for receiving child pornography, to be served consecutively to concurrent 10 year sentences on each of the possession charges. Mordue ordered that the sentence shall run consecutively to the state court sentence Renz faces in Onondaga County Court based upon his guilty pleas there to Predatory Sexual Assault Against a Child and Murder in the First Degree, for crimes he committed while on pre-trial release for the child pornography charges. The state court sentencing is tentatively scheduled for May 16, 2014 in Onondaga County Court.
If ever released, Renz was ordered to be placed on federal supervised release for life, and will have to register as a sex offender.
Renz's arrest on the child pornography charges was the result of an investigation by the Federal Bureau of Investigation as a part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys’ Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc.
The federal prosecution was handled by Assistant U.S. Attorney Lisa Fletcher.
Dakota Southern Railroad Supervisor Admits to Negligent EndangermentRead the Press Release
COEUR D’ALENE – John Wilhelm Myre, 55, of Garretson, South Dakota, pleaded guilty yesterday to negligent endangerment under the Clean Air Act, U.S. Attorney Wendy J. Olson announced. Myre was charged by information on February 3, 2014.
According to the plea agreement, Myre admitted that between January 25 and 29, 2013, he was the supervisor of approximately five laborers for Dakota Southern Railroad. While the employees were working in Kamiah, Idaho, Myre directed them to use acetylene cutting torches to cut apart steel beams from an old railroad trestle. These steel beams were painted with lead- based paint. When the paint was burned by the torches it became volatilized and released lead compounds into the air. One of the workers was taken to the hospital and diagnosed with acute lead poisoning. Dakota Southern Railroad was not prosecuted.
The charge of negligent endangerment pursuant to the Clean Air Act is punishable by up to one year in prison, a maximum fine of $100,000, and five years’ probation.
Sentencing is set for June 17, 2014, before U.S. District Judge Edward J. Lodge at the federal courthouse in Coeur d’Alene.
The case was investigated by the Environmental Protection Agency.
Coral Gables Resident Pleads Guilty and Is Sentenced for Possession of Migratory BirdsRead the Press Release
Wifredo Ferrer, United States Attorney for the Southern District of Florida, David Pharo, Resident Agent in Charge, U.S. Fish & Wildlife Service, and Major Alfredo Escanio, Commander of South Region Bravo, Florida Fish & Wildlife Conservation Commission, announced that Jose E. Souto, 71, of Coral Gables, pled guilty and was sentenced yesterday by U.S. District Judge Kathleen Williams for his involvement in the illegal possession of thirty-four specimens of migratory birds, protected by federal law and regulation, in violation of the Migratory Bird Treaty Act (MBTA), Title 16, United States Code, Sections 703 and 707(a), and Title 18, United States Code, Section 2.
Judge Williams sentenced Souto to the maximum criminal fine under the statute, $15,000, and a one month term of probation. Additionally, pursuant to the plea agreement, Souto must abandon the thirty-four avians, a cage, and a bird trap seized by the government pursuant to a search warrant, and he must also make a donation of $7,500 to the Tropical Audubon Society for the purpose of funding research, education, and monitoring of migratory birds and their habitats in South Florida.
According to the Court documents and a joint factual statement executed by the parties, Souto, at the time a resident of Coconut Grove, was observed by a knowledgeable citizen to possess numerous migratory birds at his residence. Aware that the birds were subject to the protections of the MBTA, the citizen alerted Fish & Wildlife Service Special Agents. A review of federal records revealed that Souto held no valid permits to take and possess any migratory bird as defined in the MBTA and the implementing regulations. A search warrant subsequently executed at the residence located 34 birds, including among other MBTA listed species, thirteen Northern Cardinals (Cardinalis cardinalis), four Indigo Buntings (Passerina cyanea), nine Painted Buntings (Passerina ciris), one Blue Grosbeak (Guiraca cycaerulea), and three Rose-Breasted Grosbeaks (Pheucticus ludovicianus). These species are among a number of native migratory bird species that have diminished significantly over their range in the Eastern United States in recent years.
In order to protect migratory birds from over-exploitation, the MBTA makes it unlawful at any time, by any means or in any manner, to pursue, hunt, take, capture, kill, attempt to take, capture, or kill, possess, offer for sale, sell, offer to barter, barter, offer to purchase, purchase, deliver for shipment, ship, export, import, cause to be shipped, exported, or imported, deliver for transportation, transport or cause to be transported, carry or cause to be carried, or receive for shipment, transportation, carriage, or export, any migratory bird, any part, nest, or egg of any such bird, or any product, whether or not manufactured, which consists, or is composed in whole or part, of any such bird or any part, nest, or egg thereof, subject to certain exceptions not applicable in this case. The protected species are listed in the Code of Federal Regulations at 50 C.F.R. Part 10.13, and in the absence of valid permits, may not be taken or possessed.
Mr. Ferrer commended the investigative efforts of the U.S. Fish & Wildlife Service and the Florida Fish & Wildlife Conservation Commission. The case was prosecuted by Certified Legal Intern Natalie Harrison and Assistant U.S. Attorney Thomas Watts-FitzGerald.
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.
Convicted Felon Charged Federally with Possessing A Stolen FirearmRead the Press Release
The United States Attorney's Office for the Middle District Pennsylvania announced that a federal grand jury in Harrisburg returned an indictment today charging David Thomas Macon, Jr., age 23, of Harrisburg, Pennsylvania, with possessing a stolen firearm and possessing a firearm after having been convicted of a felony.
According to United States Attorney Peter Smith, initially Harrisburg City Police responded to a 911 hang-up call and learned that Macon allegedly had assaulted his former girlfriend. Allegedly Macon was stopped shortly thereafter and found to be allegedly in possession of a loaded stolen 9 mm semi-automatic handgun, a violation of federal firearms laws.
The case was investigated by the Harrisburg City Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives as part of a coordinated effort to prosecute violent crime in Harrisburg involving firearms.
Prosecution is assigned to Assistant United States Attorney Daryl Bloom.
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 for each count of the Indictment is ten years imprisonment, a term of supervised release following imprisonment and a fine. Under the Federal Sentencing Guidelines, the Judge is 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.
Convenience Store Robber Sentenced to 80 Months’ ImprisonmentRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced today that United States District Court Judge Malachy E. Mannion sentenced Daniel Ortiz, age 28, of Watertown, New York, to 80 months’ imprisonment for his involvement in four robberies of convenience stores in April and May 2011.
According to United States Attorney Peter J. Smith, Ortiz previously pleaded guilty in federal court to robbing (1) the Hilltop Sunoco / Extra Mart located at 238 State Route 6, Milford, Pennsylvania on April 6, 2011; and (2) the Turkey Hill Minit Market, 912 Pennsylvania Avenue, Matamoras, Pennsylvania, on April 11, 2011; (3) the Hilltop Sunoco / Extra Mart located at 238 State Route 6, Milford, Pennsylvania on April 17, 2011; and (4) the Turkey Hill Minit Market, 912 Pennsylvania Avenue, Matamoras, Pennsylvania, on May 5, 2011. In doing so, Ortiz brandished weapons to instill fear to facilitate the robberies. Judge Mannion ordered that Ortiz be placed on supervised release for three years following the service of his 80-month prison sentence.
The case was investigated by the Federal Bureau of Investigation, the Eastern Pike Regional Police Department, and the Pennsylvania State Police. Assistant United States Attorney John Gurganus prosecuted the case.
Colombo Family Leader Sentenced to 224 Months in PrisonRead the Press Release
Earlier today, Thomas Gioeli, who at the time of his arrest was the street boss of the Colombo organized crime family of La Cosa Nostra (the “Colombo Family”), was sentenced to 224 months in prison at the United States Courthouse in Brooklyn, New York. In May 2012, a jury convicted Gioeli of racketeering conspiracy spanning nearly two decades including three murder conspiracies as predicate racketeering acts.1
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office.
“Thomas Gioeli rose to power in the Colombo Family by cultivating a lethal crew of criminals loyal to him and the mafia’s twisted code of honor,” stated United States Attorney Lynch. “Today’s sentence signifies the end of Gioeli’s criminal reign and also sends an important message to members and associates of organized crime. We will never stop investigating and prosecuting the violent crimes they commit, no matter how long ago they occurred, and we will hold them accountable, regardless of how long they have avoided justice.” Ms. Lynch praised the FBI and the New York City Police Department for their partnership in the government’s investigation and prosecution and also thanked the Nassau County District Attorney’s Office, the New York County District Attorney’s Office, and the Nassau County Police Department for their assistance.
The evidence at trial established Gioeli’s involvement in a racketeering conspiracy that spanned from 1991 through 2008. The jury found that Gioeli participated in murder conspiracies that culminated in the June 12, 1991 murder of Frank Marasa and the March 25, 1992 murder of John Minerva, who was killed as part of the bloody Colombo Family war that pitted two factions of the crime family against each other in a violent struggle for control of the enterprise. Also in connection with the Colombo Family war, the jury found that Gioeli conspired to kill rival Orena faction members between 1991 and 1993.
Today’s sentencing marks the culmination of a lengthy investigation and prosecution by the U.S. Attorney’s Office and the FBI. Since Gioeli’s arrest in June 2008, over 70 members and associates of the Colombo Family, including its leadership, have been arrested, prosecuted and convicted.
The sentencing proceeding was held before the Honorable Brian M. Cogan, United States District Judge for the Eastern District of New York. During the sentencing proceeding, Judge Cogan found that, in addition to the crimes found proved by the trial jury, the government had proved by a preponderance of the evidence that Gioeli had participated in the 1995 murder of Richard Greaves, a Colombo Family associate, and the 1999 murder of Colombo Family underboss William “Wild Bill” Cutolo, and that Gioeli had a leadership position in the Colombo Family. In addition, Judge Cogan entered orders of forfeiture and restitution against Gioeli, each in the amount of $360,000.
The government’s case was prosecuted by Assistant United States Attorneys Elizabeth A. Geddes, James D. Gatta, and Cristina M. Posa.
The Defendant:
THOMAS GIOELI
Age: 61
___________________________________________________________________________
1 Gioeli’s co-defendant, Colombo Family soldier Dino Saracino, was also convicted at trial of racketeering conspiracy, loansharking, witness tampering, and obstruction of justice. Saracino is scheduled to be sentenced on April 3, 2014.
Collin County Man Sentenced in Mortgage Fraud SchemeRead the Press Release
Department of Justice
Office of Public AffairsSHERMAN, Texas – A 43-year-old Plano, Texas man has been sentenced for his role in a mortgage fraud scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Anthony Glen Jones pleaded guilty on Oct. 23, 2013 to bank fraud in connection with a FHA insured home loan and was sentenced to 27 months in federal prison today by U.S. District Judge Thad Heartfield. Jones was also ordered to pay restitution in the amount of $348,918.44 and submit to forfeiture of $152,795.83.
According to court documents, in October 2007, Jones devised and executed a scheme to defraud Prime Lending, a subsidiary of Plains Capital Bank, a federally insured bank. To execute the scheme, Jones used another person’s identity without their knowledge or consent to sell property located at 1626 Lipscomb Street in Fort Worth, twice within one week. With respect to the second transaction, Jones caused a fraudulent loan application package to be submitted to Prime Lending while failing to notify Prime Lending that he had already sold the same property. As a result Prime Lending funded a loan of $184,300 for the second transaction. Jones fraudulently gained $152,795.83 from this criminal conduct and caused a loss to lending institutions of about $456,601.68. Jones was indicted by a federal grand jury on Mar. 13, 2013.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.
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 case was investigated by the U.S. Secret Service and the Federal Housing Finance Agency-Office of Inspector General. The case was prosecuted by Assistant U.S. Attorneys Christopher A. Eason and Andy Williams. ####Co-Defendant Sentenced in MarCon CaseRead the Press Release
Federal Jury Found Company Shareholder Guilty of Obstruction of Justice and
Conspiracy to Obstruct JusticeBOISE – Darrell Swigert, 68, of Boise, Idaho, the second of two defendants in a Treasure Valley federal fraud case, was sentenced to three months in prison followed by two years of supervised release, U.S. Attorney Wendy J. Olson and Assistant Attorney General for the Tax Division Kathryn Keneally announced. Chief U.S. District B. Lynn Winmill also ordered Swigert to pay a $5,000 fine and perform 100 hours of community service. Swigert was convicted by a federal jury on September 19, 2013, of two counts of obstruction of justice and one count of conspiracy to obstruct justice.
Swigert was a co-owner of MarCon, Inc., a highway construction company that specialized in guardrail installation. Swigert’s co-defendant, Elaine Martin, of Meridian, Idaho, the former president and majority stockholder of MarCon, was sentenced on February 27, 2014, to 84 months in prison for wire fraud and mail fraud. She was sentenced to 24 months in prison for conspiracy, tax fraud, and obstruction of justice, with the sentences to run concurrently. Martin was ordered to pay restitution of $98,825.20 to the Internal Revenue Service and $32,575.28 to the Idaho Disadvantaged Business Enterprise (DBE) Program, as well as prosecution costs of $22,859.60. Martin also forfeited $3,084,038.05, which was paid in full prior to sentencing.
Swigert was convicted of obstructing the then-pending IRS civil audit, as well as the subsequent criminal investigations by the IRS and U.S. Attorney’s Office for the District of Idaho. During the 26-day trial, the jury heard evidence that Swigert conspired with Martin and others to provide false and fraudulent information to the IRS revenue agent who was conducting the civil audit of MarCon and Martin. The jury also heard that Swigert provided hundreds of thousands of dollars in loans to MarCon and a closely related company, Martin Swigert LLP, although he denied knowledge of these loans before the grand jury. Swigert was also convicted of fabricating documents that were designed to conceal over $250,000 that he was holding off the books for Martin. When asked about one of these documents in grand jury, Swigert falsely claimed that the money was his, and that he was giving the money to Martin in thanks for her investment advice over the years.
The jury also heard evidence that Swigert assisted Martin in submitting false and fraudulent applications so that her construction company, MarCon, could participate in two different federally funded programs, the U.S. Small Business Administration (SBA) 8(a) Program, and the Department of Transportation DBE Program. Both programs are designed to help economically and socially disadvantaged businesses compete in the marketplace. To be admitted into the program, the owner/shareholder who qualifies as socially disadvantaged must also demonstrate economic disadvantage, in part by having a personal net worth below a certain statutory cap. Martin took steps to artificially lower her personal net worth, such as by failing to report all of her income from MarCon, and acquiring, holding and transferring assets into the names of nominees in order to appear to be economically disadvantaged. At trial, the government presented evidence that one of these nominees was Swigert. The jury heard evidence that MarCon received more than $2.5 million in government contracts based on the company’s fraudulently obtained SBA 8(a) status, and that MarCon received more than $15 million in government contracts based on the company’s fraudulently obtained DBE status in the states of Idaho and Utah. Swigert, as a co-owner of MarCon, was shown to have financially benefited from these fraudulently-obtained contracts.
“This sentence sends a strong message to those who lie to obtain preferences for federal contract awards,” said Inspector General Peggy E. Gustafson of the Small Business Administration. “We are committed to helping ensure that only eligible disadvantaged small businesses benefit from the SBA’s 8(a) Business Development Program.”
“The sentence handed down today is a clear signal that severe penalties await those that would seek to defraud DOT’s DBE Program,” said William Swallow, regional Special Agent-in-Charge of the DOT’s Office of Inspector General. “DBE fraud harms the integrity of the program and adversely impacts law-abiding, small business contractors trying to compete on a level playing field. Working with the Secretary of Transportation and other DOT leaders, and our law enforcement and prosecutorial colleagues, we will continue to protect the taxpayers’ investment in our nation’s infrastructure from fraud, waste, abuse and violations of law.”
The case was investigated by Internal Revenue Service-Criminal Investigation, Federal Bureau of Investigation, the Office of Inspector General for the U.S. Small Business Administration, and the Office of Inspector General for the U.S. Department of Transportation. It was prosecuted by Assistant U.S. Attorney George Breitsameter and Trial Attorneys Katherine Wong and Mark Williams from the Tax Division.
Today’s announcement is part of an effort by President Obama's Financial Fraud Enforcement Task Force (FFETF), created in November 2009, to combat financial fraud crimes by waging aggressive, coordinated and proactive investigations and prosecutions. With more than 20 federal agencies, 94 U.S. attorneys' offices and state and local partners, the task force is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Branford Resident Sentenced to More Than Eight Years in Prison for Operating Ponzi SchemeRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that FEISAL SHARIF, 43, of Branford, was sentenced today by U.S. District Judge Stefan R. Underhill in Bridgeport to 100 months of imprisonment, followed by three years of supervised release, for operating a Ponzi scheme that defrauded investors of more than $3.6 million.
According to court documents and statements made in court, from approximately 2003 to September 2012, SHARIF ran an investment fraud scheme through First Financial, LLC, a firm he operated out of his Branford residence. As part of the scheme, SHARIF convinced numerous individuals to give him money to invest in what they believed was a commodity pool to profit from trading in commodity futures. In an effort to make investors believe that their money was safely invested and earning a sizeable return, SHARIF regularly made monthly payments to investors, falsely claiming the payments represented returns on their investments. He also supplied investors with monthly statements from First Financial that falsely reported the purported balances of their investments and their rate of return on the investments.
In fact, SHARIF was mostly paying existing investors with new money he raised from other investors. Very little of the investment money he raised was used to trade in commodity futures, and what he did invest in commodity futures did not generate returns anywhere near those he reported to investors. In addition, a review of First Financial’s bank records revealed that from 2006 to 2012, SHARIF took more than $500,000 by way of ATM withdrawals, ATM transfers or checks made payable to himself. SHARIF also made hundreds of other bank transfers unrelated to any investments for various personal expenses.
Through this scheme, SHARIF defrauded more than 70 investors of more than $3.6 million. SHARIF’s victims included relatives, friends and people he knew through their common connection with a religious institution. Many of these individuals lost substantial portions of their life savings as a result of the scheme.
SHARIF was ordered to pay restitution of $3,682,930.84.
On August 27, 2013, SHARIF pleaded guilty to one count of fraud by a commodity pool operator and and one count of wire fraud.
SHARIF was ordered to report to prison on May 1, 2014.
In a related proceeding, the U.S. Securities and Exchange Commission today barred SHARIF from associating with any broker, dealer, or investment advisor as a result of his conduct giving rise to his conviction in the criminal matter.
This matter was investigated by the Federal Bureau of Investigation and the U.S. Postal Inspection Service. U.S. Attorney Daly also acknowledged the assistance of the Commodity Futures Trading Commission and the State of Connecticut Department of Banking. The case was prosecuted by Senior Litigation Counsel Richard J. Schechter and Assistant U.S. Attorney Paul Murphy.
tizens are encouraged to report any financial fraud schemes by calling, toll free, 855-236-9740, or by sending an email to [email protected].
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]Boone County Man Admits Producing Child Pornography VideosRead the Press Release
COVINGTON, KY - A Boone County man has admitted in federal court that he created multiple videos of minors engaged in sexually explicit conduct. Michael Schweitzer, 46, pleaded guilty on Tuesday, in front of U.S. District Judge David L. Bunning, to producing and possessing child pornography. Schweitzer was taken into custody of the U.S. Marshal.
Schweitzer has entered into an agreement with the U.S. Attorney’s Office that, pending the Court’s approval, would result in a sentence of 35 years in prison. Under federal law, Schweitzer will have to serve at least 85 percent of the prison sentence imposed. His sentencing is scheduled for July 1.
According to court documents, in November 2012, Schweitzer provided a drug to a minor and then recorded himself sexually exploiting the minor, while the minor was under the influence.
During the investigation, authorities seized Schweitzer’s cell phone and discovered more videos that he had produced, which also involved minors engaged in sexually explicit conduct.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Michael Helmig, Boone County Sheriff, jointly made the announcement today.
The investigation was conducted by the Boone County Sheriff’s Office. The Ft. Mitchell Branch of the U.S. Attorney’s Office prosecuted this case on behalf of the federal government.
Bergen County, N.J., Man Pleads Guilty to Making False Report of Kidnapping to U.S. EmbassyRead the Press Release
NEWARK, N.J. — A Bergen County, N.J., man today admitted using the Internet and social media to fabricate a fictitious high school girl, using that fake personality to engage in an online relationship with a teenage male, and then making a false report to a U.S. Embassy that the girl was kidnapped, U.S. Attorney Paul J. Fishman announced.
Andriy Mykhaylivskyy, a/k/a “Andriy Haddad,” 19, of Rutherford, N.J., pleaded guilty today before U.S. District Judge Claire C. Cecchi in Newark federal court to an information charging him with making false statements in a matter within the jurisdiction of the executive branch of the U.S. government.
According to documents filed in this case and statements made in court: Mykhaylivskyy admitted he used Facebook, Twitter, Skype, text messages, and other electronic means to create a fake online identity for a teenage girl he called “Kate Fulton.” He pretended to be Kate Fulton while he initiated and maintained an electronic relationship with “Individual One,” a then18-year-old New Jersey resident.
On July 2, 2013, Mykhaylivskyy called the U.S. Embassy in Chisinau, Moldova, and reported the false kidnapping of Kate Fulton. Mykhaylivskyy also admitted that he both personally, and as Kate Fulton, informed Individual One that Kate Fulton had been kidnapped. On July 8, 2013, Individual One called the U.S. Embassy in Sofia, Bulgaria, seeking assistance regarding the kidnapping of Kate Fulton, who was allegedly kidnapped while vacationing in Burgas, Bulgaria.
Mykhaylivskyy also admitted to sending tweets from Kate Fulton on June 29, 2013, after she was allegedly kidnapped, including one that read “Someone help me.” During his plea hearing, Mykhaylivskyy acknowledged that he knew at all times that Kate Fulton was not a real person and had not been kidnapped.
Mykhaylivskyy admitted one instance of obstruction of justice. During his August 27, 2013, initial appearance in Newark federal court, he was told not to have contact with witnesses. However, upon arriving at jail later that day, he called and spoke to Individual One and told him Kate Fulton had been arrested in California. During the call, Mykhaylivskyy arranged to meet Individual One in person and asked him to delete both Mykhaylivskyy’s and Kate Fulton’s personal Facebook and Twitter accounts.
The charge to which Mykhaylivskyy pleaded guilty is punishable by a maximum of five years in prison and a statutory maximum fine of $250,000. Sentencing is scheduled for June 25, 2014.
U.S. Attorney Fishman credited the U.S. Department of State’s Diplomatic Security Service (DSS) Office of Protective Intelligence Investigations and DS agents assigned to the DSS New York Field Office for their assistance in the investigation leading to today’s guilty plea. He also thanked members of the FBI Newark Joint Terrorism Task Force for their assistance in the investigation.
The government is represented by Assistant U.S. Attorney Sara F. Merin of the U.S. Attorney’s Office General Crimes Unit in Newark.
14-095Defense counsel: Candace Hom, Assistant Federal Public Defender, Newark
Mykhaylivskyy Information
Beckley Woman Sentenced for Obtaining Oxycodone by FraudRead the Press Release
BECKLEY, W.Va. – Crystal Gail Graham, 38, was sentenced today in Beckley, West Virginia, by United States District Court Judge Irene C. Berger to three years of probation and ordered to perform 100 hours of community service. Graham previously pleaded guilty in November of 2013 to obtaining oxycodone by misrepresentation, fraud, forgery, deception and subterfuge. Graham was employed as a licensed practical nurse at Beckley’s Jackie Withrow Hospital. She used her position at the hospital to illegally obtain oxycodone that she later sold to a confidential informant working with the Raleigh County Sheriff’s Department. Graham’s employment at the hospital was terminated as a result of the incident.
This case was prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs and heroin. The United States Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin.
Beaver Woman Sentenced for Selling Oxycodone and AlprazolamRead the Press Release
BEAVER, W.Va. – Leah Kirk, age 21, was sentenced today in Beckley, West Virginia, by United States District Court Judge Irene C. Berger to three years of probation and ordered to perform 100 hours of community service. Kirk previously pleaded guilty in November 2013 to distributing oxycodone, a powerful prescription pain killer. Kirk admitted that between May 15, 2013 and June 12, 2013, she sold several oxycodone pills and alprazolam pills to a confidential informant who was working with the Beckley Police Department and the Raleigh County Sheriff’s Department. The drug sale occurred on Eisenhower Drive in Beckley.
This case was prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs and heroin. The United States Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin.
$1.5M Settlement with West Penn Allegheny Health System Resolves False Claims Act AllegationsRead the Press Release
PITTSBURGH - West Penn Allegheny Health System, Inc. (“WPAHS”) has agreed to pay the United States $1,529,281.50 to settle False Claims Act allegations, United States Attorney David Hickton announced today.
The settlement results from a self-disclosure by WPAHS to the United States Attorney’s Office. Based on information provided by WPAHS, the United States alleged that WPAHS leased space to physicians at below-market rates to induce referrals of patients to WPAHS, in violation of the Anti-Kickback Statute and Stark Law. The United States further alleged that these referrals resulted in improper claims being submitted to federal health care programs.
The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. The Stark Law forbids a hospital from billing federally funded programs for certain services referred by physicians who have a financial relationship with the hospital, unless certain limited exceptions apply.
This matter was investigated by the Office of Inspector General of the Department of Health and Human Services and the United States Attorney’s Office for the Western District of Pennsylvania. Assistant United States Attorney David Lew handled this matter on behalf of the United States.
18 March 2014
York Man Sentenced to Prison for Filing Dozens of False Tax ReturnsRead the Press Release
JOHNSTOWN, Pa. - A resident of York, Pa., has been sentenced in federal court to 33 months in prison, three years supervised release, and ordered to pay restitution to the Internal Revenue Service in the amount of $128,105 on his conviction of conspiracy to defraud the government and filing false claims with Internal Revenue Service, United States Attorney David J. Hickton announced today.
United States District Judge Kim R. Gibson imposed the sentence on Wendell Parker, 41.
According to information presented to the court, from April 2008 to Oct. 2010 Parker conspired to file 72 false and fictitious income tax returns claiming tax refunds totaling $210,581, and from Dec. 15, 2008, to May 26, 2010, he prepared and filed federal income tax returns claiming refunds knowing the claimant's address, wage information and withholding information was false and fictitious.
Assistant United States Attorney John J. Valkovci, Jr., prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Internal Revenue Service-Criminal Investigation for the investigation leading to the successful prosecution of Parker.
Worcester Tax Preparer Charged with Tax FraudRead the Press Release
BOSTON – The owner and operator of a Worcester tax preparation business was arrested yesterday and charged with tax fraud.
Yaw Aboagye- Marfo was indicted on 23 counts of tax fraud. Between 2009 and 2012, Marfo, the owner and operator of a tax preparation business, variously called “People’s Choice Tax Service” and “National Taxpert,” with locations in Worcester and outside of Boston, filed false tax returns seeking refunds for individuals who were not entitled to tax refunds. Marfo also prepared false tax returns for clients and falsely reported that those clients owned sole proprietorship businesses.
If convicted, Marfo faces a maximum sentence of five years in prison and a $250,000 fine on each count of filing false claims.
Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division, United States Attorney Carmen M. Ortiz and William P. Offord, Special Agent in Charge of the Internal Revue Service’s Criminal Investigation in Boston, made the announcement. The case is being prosecuted by Assistant Chief Karen Kelly and Trial Attorney Sean Delaney of the Department’s Tax Division.
The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Wheeling Man Sentenced for Failure to Register as A Sex OffenderRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-0100 ● Contact: Chris Zumpetta-Parr, Public Affairs SpecialistWHEELING, WV – A Wheeling man was sentenced by Judge Frederick P. Stamp, Jr. for failure to register as a sex offender and two others entered pleas of guilty.
United States Attorney William J. Ihlenfeld, II announced that: JONAH L. BEGAY, age 38, a sex offender from Utah who moved to Wheeling last year, was sentenced to 30 months in prison and five years of supervised release for "Failure to Register and Update Registration as a Sex Offender." BEGAY was previously convicted in Utah District Court of “Attempted Sexual Abuse of a Child” and as a result is required to register as a sex offender under both state and federal law. His conviction in Utah involved a 10-year old victim. On November 11, 2013, police officers were advised that an individual later identified as Mr. BEGAY was being aggressive and appeared to be intoxicated in an area near Bridge Street Middle School. Officers responded and arrested BEGAY and then learned that he had moved to Wheeling in June, and in October began working at the McDonald’s restaurant in the Elm Grove section of Wheeling. At no point did BEGAY update his registration with the State of Utah nor did he register in the State of West Virginia. BEGAY was remanded to the custody of the United States Marshal pending designation to a Federal institution. This case was prosecuted by Assistant U.S. Attorney Stephen L. Vogrin and investigated by the United States Marshals Service and the West Virginia State Police.
JAVON L. SCOTT, age 28, of Wellsburg, West Virginia, entered a plea of guilty “Felon in Possession of a Firearm.” SCOTT, who is in custody pending sentencing, faces up to 10 years in prison. This case was prosecuted by Assistant U.S. Attorney Stephen L. Vogrin and investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
KRISTEN NIEMAN, age 22, of Benwood, West Virginia, entered a plea of guilty to “Aiding and Abetting the Distribution of Oxycodone within 1,000 Feet of the Moundsville Middle School.” NIEMAN, who is in custody pending sentencing, faces up to 40 years in prison. This case was prosecuted by Assistant U.S. Attorney Robert H. McWilliams, Jr. and was investigated by the Marshall County Drug Task Force, which includes officers and agents from the Moundsville Police Department, the Marshall County Sheriff’s Department, and the Drug Enforcement Administration.
The following appeared before Magistrate Judge James E. Seibert:
MARK TUCKER, age 44, of Wheeling, entered a plea of guilty to “Obtaining a Controlled Substance by Forgery.” As part of his plea, TUCKER will make restitution to Wheeling Hospital in the amount of $2,923. This case was prosecuted by Assistant U.S. Attorney Michael D. Stein and investigated by the Marshall County Sheriff’s Department.
West Virginia Woman Facing Fraud Charges for Nigerian "Mystery Shopper" ScamRead the Press Release
PITTSBURGH - A West Virginia woman has been indicted by a federal grand jury in Pittsburgh on charges of fraud conspiracy and wire fraud, United States Attorney David J. Hickton announced today.
The two-count indictment named Linda Walker, 60, as a defendant.
According to the indictment, Walker was involved in a Nigerian “Mystery Shopper” scam whereby she knowingly prepared and addressed fraudulent mail containing counterfeit instruments to victims, who believed they were acting as mystery shoppers. The victims unwittingly received the counterfeit commercial and Postal money orders and checks and cashed them to make small purchases for purposes of evaluating the commercial services provided. They then wire transferred excess funds back to Walker and others. After these transactions, the money orders and checks were returned as counterfeit by the victims’ banks and they were left to repay the bank from their own funds.
The law provides for a maximum total sentence of 40 years in prison, a fine of $500,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Paul E. Hull is prosecuting this case on behalf of the government.
The United States Postal Inspection Service and Homeland Security Investigations conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Two Who Conspired in Identity Theft Scheme Sentenced to Nearly Four Years in Federal PrisonRead the Press Release
LOUISVILLE, Ky. – Two Louisville residents were sentenced today by Senior U.S. District Judge Thomas B. Russell to 42 months in prison, for their roles in a conspiracy to commit wire fraud and aggravated identity theft announced David J. Hale, United States Attorney for the Western District of Kentucky.
Darnell Brown, age 28 , and Tierra Beans, age 30, received 18 months for wire fraud, to be served consecutively to 24 months for aggravated identity theft for a total of 42 months in prison followed by a term of supervised release for 3 years and ordered to pay $16,554.58 in restitution.
Brown and Beans admitted in court to using the personal identifier of a real person, to open fraudulent lines of credit at Best Buy and J.C. Penney and thereby defrauded HSBC Bank and GE Capital Bank. The lines of credit were opened in Louisville, Kentucky, to purchase merchandise causing an interstate wire communications. The total loss amount was $17,248.25.
The defendants agreed to forfeit two Apple Ipads, one Best Buy Gift Card ($200), two Olive Garden Gift Cards ($25), on J.C. Penny Gift Card ($350), three J.C. Penny Gift Cards ($500) and various fraudulent identification cards.
This case was prosecuted by Assistant United States Attorney Joshua Judd and was investigated by the United States Secret Service.
Three Individuals Convicted on Drug ChargesRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-0100 ● Contact: Chris Zumpetta-Parr, Public Affairs SpecialistELKINS, WEST VIRGINIA – Four individuals entered pleas of guilty before Magistrate Judge John S. Kaull on drug-related charges.
United States Attorney William J. Ihlenfeld, II, announced that:
JASON DWIGHT MACKENZIE, age 33, of Elkins, entered a plea of guilty to “Distribution of Buprenorphine.” MACKENZIE, who is free on bond pending sentencing, faces up to 10 years in prison. This case was prosecuted by U.S. Attorney Ihlenfeld.
KEITH ALLEN POTEETE, age 48, of Elkins, entered a plea of guilty to “Distribution of Buprenorphine within 1,000 feet of the Davis Street Park Playground.” POTEETE, who is free on bond pending sentencing, faces up to 20 years in prison. This case was prosecuted by Assistant U.S. Attorney Stephen D. Warner.
These two cases were the result of the work of the Mountain Region Drug and Violent Crime Task Force, consisting of officers from the West Virginia State Police-Bureau of Criminal Investigations, U.S. Forest Service, Randolph County Sheriff’s Department, Tucker County Sheriff’s Department and the DEA, assisted by the DEA Tactical Diversion Squad.
DENNIS LYNN SMITH, age 56, of Upper Tract, West Virginia, entered a plea of guilty to “Maintaining Drug-Involved Premise” for the purpose of storing, manufacturing and using methamphetamine. SMITH, who is free on bond pending sentencing, faces up to 20 years in prison. This case was prosecuted by Assistant U.S. Attorney Andrew R. Cogar and investigated by the West Virginia State Police.Tax Preparer Pleads Guilty to Income Tax EvasionRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, and William P. Offord, Special Agent in Charge of IRS Criminal Investigation in New England, announced that KENNETH ZITO, 51, of Wethersfield, waived his right to indictment and pleaded guilty today before U.S. Magistrate Judge Thomas P. Smith in Hartford to one count of tax evasion.
According to court documents and statements made in court, ZITO worked at Daniel Zito Financial Services, a South Windsor commercial financial services firm owned by ZITO’s father, where ZITO prepared tax returns for individuals and businesses. Although ZITO and his father worked together, they submitted client tax returns separately. Between 2007 and 2009, ZITO cashed checks he received from clients as payment for his services, but did not deposit the checks or declare them on his federal income tax return. In pleading guilty, ZITO admitted that he failed to report $219,759.32 in income during that three-year period, and that he owes the Internal Revenue Service $59,621 in back taxes, as well as interest and penalties.
ZITO’s sentencing is scheduled for June 10, 2014 before Senior U.S. District Judge Alfred V. Covello in Hartford, at which time ZITO faces a maximum term of imprisonment of five years and a fine of up to $100,000.
This investigation was conducted by the Internal Revenue Service – Criminal Investigation Division. The case is being prosecuted by Assistant U.S. Attorney David J. Sheldon.
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(203) 821-3722 [email protected]Tampa Man Took $3.9M from More Than Three Dozen InvestorsRead the Press Release
PITTSBURGH - A resident of Tampa, Fla., pleaded guilty in federal court to a charge of wire fraud, United States Attorney David J. Hickton announced today.
Fotios Geivelis, Jr., a/k/a Frank Geivelis, a/k/a Frank Anastasio, 34, pleaded guilty to one count before United States District Judge Nora Barry Fischer.
In connection with the guilty plea, the court was advised that Geivelis, through operation of his Florida company, Worldwide Funding III, Ltd. (WWF), obtained approximately $3.9 million in increments of $60,000 or $90,000 from more than three dozen investors, to each of whom he promised to obtain a $10 million “non-recourse” overseas loan for a “humanitarian” or “job- creating” project. The funds were wired into the escrow accounts of a Florida attorney Geivelis designated as the “Paymaster,” and thereafter paid out to that attorney, brokers who had referred the investors to WWF and to Geivelis, who spent his share on personal expenses such as hotels, casinos, restaurants, strip clubs, automobiles, clothing and jewelry. No loans were ever obtained for the investors, who Geivelis attempted to lull by repeated assurances that their deals would close within a short period of time. .
Judge Fischer scheduled sentencing for July 31, 2014 at 9:30 a.m. The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Leo M. Dillon is prosecuting this case on behalf of the government.
The United States Secret Service conducted the investigation that led to the prosecution of Geivelis.
Suspect Charged in Clinton, Iowa Bank RobberyRead the Press Release
DAVENPORT, IA – On January 22, 2014, a federal grand jury returned an indictment charging Shane Roger Hoiland, age 21, with the February 25, 2013, bank robbery of the Clinton National Bank, announced United States Attorney Nicholas A. Klinefeldt. Hoiland made his initial appearance in the United States District Court for the Southern District of Iowa in Des Moines, Iowa, on March 13, 2014. He is being held in custody pending resolution of the case. Hoiland faces a maximum term of imprisonment of twenty years and a maximum fine of $250,000.
As in all criminal cases, the indictment is merely an allegation. The defendant is presumed to be innocent until proven guilty.
This case was investigated by the Federal Bureau of Investigation and the Clinton, Iowa, Police Department, and is being prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
Any media inquiries should be directed to Kevin VanderSchel, First Assistant United States Attorney, at the contact number provided above.
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Straw Owner of Clinic Sentenced in Medicare Fraud SchemeRead the Press Release
A Florida man who had been the straw owner of a physical therapy rehabilitation facility has been sentenced to serve 30 months in prison for his role in a $28.3 million Medicare fraud scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Middle District of Florida A. Lee Bentley III, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office and Acting Special Agent in Charge Brian P. Martens of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Florida region made the announcement.
Roberto Fernandez Gonzalez, 63, formerly of southwest Florida, was sentenced by U.S. District Judge Susan C. Bucklew in the Middle District of Florida and was ordered to forfeit $446,738 and pay the same amount in restitution. Fernandez pleaded guilty on June 24, 2013, to conspiracy to commit health care fraud.
According to court documents, Fernandez and his co-conspirators used various physical therapy clinics and other business entities throughout Florida – including Rehab Dynamics Inc. in Venice, Fla. – to submit approximately $28.3 million in fraudulent reimbursement claims to Medicare from 2005 through 2009. Medicare paid approximately $14.4 million on those claims.
Fernandez’s co-conspirators obtained and controlled Rehab Dynamics. They engaged in a sham sale of Rehab Dynamics to Fernandez, a Cuban immigrant with no background in the health care industry. Fernandez did not have the money to buy Rehab Dynamics. Instead, the co-conspirators paid Fernandez approximately $20,000 to serve as the straw owner of Rehab Dynamics from January 2008 through March 2008. During that time, Rehab Dynamics submitted approximately $1.6 million in fraudulent claims to Medicare seeking reimbursement for rehabilitation therapy services that were not provided. Medicare paid approximately $446,738 on those false claims.
This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida. This case is being prosecuted by Trial Attorneys Christopher J. Hunter and Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant United States Attorney Simon A. Gaugush of the U.S. Attorney’s Office for the Middle District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov .Straw Owner of Clinic Sentenced in Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Florida man who had been the straw owner of a physical therapy rehabilitation facility has been sentenced to serve 30 months in prison for his role in a $28.3 million Medicare fraud scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Middle District of Florida A. Lee Bentley III, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office and Acting Special Agent in Charge Brian P. Martens of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Florida region made the announcement.
Roberto Fernandez Gonzalez, 63, formerly of southwest Florida, was sentenced by U.S. District Judge Susan C. Bucklew in the Middle District of Florida and was ordered to forfeit $446,738 and pay the same amount in restitution. Fernandez pleaded guilty on June 24, 2013, to conspiracy to commit health care fraud.
According to court documents, Fernandez and his co-conspirators used various physical therapy clinics and other business entities throughout Florida – including Rehab Dynamics Inc. in Venice, Fla. – to submit approximately $28.3 million in fraudulent reimbursement claims to Medicare from 2005 through 2009. Medicare paid approximately $14.4 million on those claims.
Fernandez’s co-conspirators obtained and controlled Rehab Dynamics. They engaged in a sham sale of Rehab Dynamics to Fernandez, a Cuban immigrant with no background in the health care industry. Fernandez did not have the money to buy Rehab Dynamics. Instead, the co-conspirators paid Fernandez approximately $20,000 to serve as the straw owner of Rehab Dynamics from January 2008 through March 2008. During that time, Rehab Dynamics submitted approximately $1.6 million in fraudulent claims to Medicare seeking reimbursement for rehabilitation therapy services that were not provided. Medicare paid approximately $446,738 on those false claims.
This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida. This case is being prosecuted by Trial Attorneys Christopher J. Hunter and Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant United States Attorney Simon A. Gaugush of the U.S. Attorney’s Office for the Middle District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
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Stamford Man Sentenced to Four Years in Federal Prison for Distributing CrackRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that TERRELL WILLS, 40, of Stamford, was sentenced today by U.S. District Judge Stefan R. Underhill in Bridgeport to 48 months of imprisonment, followed by four years of supervised release, for his role in a southwestern Connecticut narcotics trafficking ring.
This matter stems from a six-month investigation spearheaded by the Drug Enforcement Administration and the Stamford Police Department’s Narcotics and Organized Crime Squad. As a result of the investigation, 20 individuals have been charged in federal court with various offenses related to the distribution of cocaine and crack cocaine in Bridgeport, Norwalk and Stamford.
During the investigation, law enforcement officers seized more than $100,000 in cash, 500 grams of cocaine, 350 grams of crack cocaine, several vehicles and jewelry.
According to court documents and statements made in court, the investigation revealed that Marvin Wooten, also known as “Smash,” of Norwalk, was operating a significant crack cocaine distribution ring in Fairfield County. Between September 2012 and January 2013, Wooten regularly purchased multi-hundred gram quantities of cocaine from various sources of supply, including individuals who were selling cocaine out of a Bridgeport barbershop. He then converted the cocaine to crack cocaine and distributed it to other dealers and customers. WILLS regularly purchased crack cocaine from Wooten’s associate, Gary England, and then sold the drug to his own customers.
On September 12, 2013, WILLS pleaded guilty to one count of possession with the intent to distribute cocaine base (“crack cocaine”).
Wooten and England also pleaded guilty. On May 22, 2013, Wooten was sentenced to 120 months of imprisonment. England awaits sentencing.
This matter has been investigated by the Drug Enforcement Administration’s Bridgeport High Intensity Drug Trafficking Area (HIDTA) Task Force – including the Bridgeport, Stamford, Norwalk, Milford, Westport, and Stratford Police Departments, and the Connecticut State Police – and the Stamford Police Department’s Narcotics and Organized Crime Squad. The U.S. Marshals Service also assisted in the arrests of several of the defendants.
This case is being prosecuted by Assistant U.S. Attorneys Sarah Karwan and Robert Spector.
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(203) 821-3722 [email protected]Southern Oregon Sex Offender Sentenced to 37 Years in Federal Prison for Producing Child PornographyRead the Press Release
MEDFORD, Ore.—On Monday, March 17, 2014, Senior U.S. District Judge Owen M. Panner sentenced Christopher Keith Hammer, 43, of Central Point, Oregon, to 37 years in federal prison for production of child pornography.
In February 2013, a nationwide FBI child pornography investigation revealed that sexually explicit photos of a four year old child were being distributed from an e-mail account linked to Hammer’s residence. The Southern Oregon High Tech Crimes Task Force (SOHTCTF) executed a search warrant at Hammer’s residence, identified the child, and matched the clothing and furniture depicted in the sexually explicit photos. Hammer was arrested immediately. Hammer’s e-mail account contained several thousand images of child pornography, along with dozens of photos of the four year old child in sexually explicit poses, which Hammer took over the course of a year. Hammer e-mailed the photos to several other child molesters he met online, and described his ongoing sexual abuse of the child, and his plans to take photos and videos of the sexual abuse. Hammer also indicated a desire to sexually abuse other children, and encouraged other child molesters to sexually abuse their own children and send photos of the abuse to Hammer.
Hammer has two previous felony convictions in California for Lewd and Lascivious Acts Upon a Child Under 14 in 1994, in which he sexually abused his six year old and eight year old relatives. Under federal law, any person who produces child pornography after two previous felony convictions for child sex abuse faces a mandatory minimum of 35 years in prison.
“These pictures represent the worst type of child sex offender—one who not only sexually exploits children, but also documents and shares his experiences with others, and encourages others to do the same, “” said U. S. Attorney Amanda Marshall. “The severe penalties imposed by federal law are well deserved and necessary to protect our most vulnerable victims--children.”
This case was investigated by the SOHTCTF, a multi-jurisdictional computer crimes task force comprised of the FBI, Department of Homeland Security, Central Point PD, Medford PD, Ashland PD, Jackson County Sheriff's Office, and the Jackson County District Attorney's Office, and was prosecuted by Assistant U. S. Attorney Douglas W. Fong.
Singapore Executive Is Second to Plead Guilty in International Navy Corruption Scandal; Admists Bilking U.S. Navy of More Than $20 MillionRead the Press Release
SAN DIEGO - Alex Wisidagama, a former executive with Glenn Defense Marine Asia (GDMA), pleaded guilty today to participating in a scheme to defraud the United States, admitting that he and others duped the U.S. Navy into overpaying by at least $20 million for supplies and services to American ships in Asian ports.
Wisidagama’s plea is the second in an extensive international fraud and bribery scandal that has ensnared GDMA employees and several U.S. Navy officials. The government has alleged that Wisidagama’s cousin and owner of GDMA, Leonard Glenn Francis, bribed Navy officials with luxury travel and prostitutes in exchange for confidential information and other assistance in winning and retaining hundreds of millions of dollars in Navy contracts.
In his plea agreement, Wisidagama, 40, of Singapore, admitted that he and others used numerous methods to trick the Navy into overpaying for things like fuel and port fees. According to his plea agreement, Wisidagama and others submitted fraudulent or inflated invoices to the Navy; offered up phony competitive bids from non-existent companies so GDMA could win every time; and created fictitious port authorities with significantly inflated port tariff rates.
For example, the plea agreement describes details of the USS Mustin’s visit to Laem Chabang, Thailand, in the fall of 2011. GDMA billed the Navy $2.3 million for fuel that really cost $900,000 and $133,232 for “port dues” that really cost $6,849. The overcharges totaled $1.5 million.
“Wisidagama and others were creative, deceitful and audacious in their efforts to manipulate the Navy and steal millions of dollars from U.S. taxpayers,” said U.S. Attorney Laura Duffy. “This plea is an important development in our ongoing case, and we will continue to pursue all avenues.”
“Today's guilty plea of former Glenn Defense Marine Asia Vice President Alex Wisidagama is part of a far reaching corruption investigation by the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and the Defense Contract Audit Agency,” said James B. Burch, Deputy Inspector General for Investigations, Office of the Inspector General, Department of Defense. “Corrupt contracting practices damage the public trust and ultimately undermine the efforts of the Department of Defense to support our men and women in uniform. Along with our law enforcement partners, we make the investigation of such offenses a top priority. Cases such as these are not motivated by need or other difficult personal circumstances; they are the product of simple greed.”
NCIS Director Andrew L. Traver said: “Special Agents from the Naval Criminal Investigative Service and the Defense Criminal Investigative Service have worked diligently with support from the Defense Criminal Audit Agency, our foreign law enforcement partners, and the Department of Justice to uncover the fraud committed by Alex Wisidagama and his co-conspirators. Today’s guilty plea highlights the strength of the evidence, and our investigative team continues to aggressively pursue all leads related to GDMA.”
The plea was accepted by U.S. Magistrate Judge Jan M. Adler and is subject to acceptance by U.S. District Judge Janis L. Sammartino. Sentencing was set for June 13, 2014 at 9 a.m. before Judge Sammartino.
Wisidagama, who was arrested in San Diego, California, on September 16, 2013, served as the general manager of Global Government Contracts for GDMA. GDMA was a multi-national corporation with headquarters in Singapore and operating locations in other countries, including Japan, Singapore, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Philippines, Sri Lanka and the United States. GDMA provided hundreds of millions of dollars in husbanding services to the U.S. Navy, such as the coordinating, scheduling and procurement of items and services required by ships and submarines when they arrive at port. These services included providing tugboats; paying port authority and customs fees; furnishing security and transportation; supplying provisions, fuel and water; removing trash and collecting liquid waste.
Wisidagama is the second defendant to plead guilty as part of this investigation. On December 17, 2013, former NCIS Supervisory Special Agent John Bertrand Beliveau Jr. pleaded guilty to conspiracy to commit bribery and bribery charges after admitting to providing Francis with sensitive law enforcement information in exchange for things of value such as cash, luxury travel accommodations, lavish dinners and prostitutes. In addition to Beliveau and Wisidagama, Francis and U.S. Navy Commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez have been charged as part of the bribery scheme.
The ongoing investigation is being conducted by the Naval Criminal Investigative Service, the Defense Criminal Investigative Service and the Defense Contract Audit Agency. The case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California and Director of Procurement Fraud Catherine Votaw and Trial Attorneys Brian Young and Wade Weems of the Criminal Division’s Fraud Section.
Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.
DEFENDANT Case No. 13cr4043-JLS Alex Wisidagama Age: 40 Singapore CHARGESConspiracy to Defraud the United States in violation of 18 USC 286
INVESTIGATING AGENCY
Maximum of 10 years in prison; a maximum $250,000 fine, or twice the gross gain or loss from the offense, whichever is greaterDefense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.