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7 March 2014
Two Ocean Shipping Companies to Pay $3.4 Million to Settle Claims<br /> of Price Fixing Government Cargo Transportation ContractsRead the Press Release
Sea Star Line LLC and Horizon Lines LLC have agreed to resolve allegations that they violated the False Claims Act by fixing the price of government cargo transportation contracts between the continental United States and Puerto Rico, the Department of Justice announced today. Under the settlement agreements, Sea Star Line has agreed to pay $1.9 million, and Horizon Lines has agreed to pay $1.5 million.“Today’s civil settlements demonstrate our continuing vigilance to ensure that those doing business with the government do not engage in anticompetitive conduct,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Government contractors who seek to profit at the expense of taxpayers will face serious consequences.”
The government alleged that former executives of the defendant ocean shippers used personal email accounts to communicate confidential bidding information, thereby enabling each of the shippers to know the transportation rates that its competitor intended to submit to federal agencies for specific routes. This information allowed the shippers to allocate specific routes between themselves at predetermined rates. Among the contracts affected were U.S. Postal Service contracts to transport mail and Department of Agriculture contracts to ship food. Both Sea Star Line and Horizon Lines previously pleaded guilty, in related criminal proceedings, to anticompetitive conduct in violation of the Sherman Act.
“Postal Service contractors must understand and know that actions that undermine the contracting process, such as conspiring to suppress and eliminate competition, will not be tolerated and will be aggressively investigated,” said Tom Frost, Special Agent in Charge of the Major Fraud Investigations Division (MFID) with the Postal Service Office of Inspector General. “MFID will continue to work with DOJ, both criminally and civilly, to bring those individuals and companies to justice.”
The civil settlements resolve allegations in a lawsuit filed in federal court in Jacksonville, Fla., by former Sea Star Line executive William B. Stallings. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act also allows the government to intervene and take over the action, as it did in this case. Stallings will receive $512,719 of the recovered funds.
The settlements were the result of a coordinated effort by the Civil Division of the Department of Justice and the U.S. Postal Service Office of Inspector General.
The case is captioned United States ex rel. Stallings v. Sea Star Line LLC, et al., Case No. 3:13-cv-152-J-12JBT (M.D. Fla.). The claims resolved by the settlements are allegations only, except to the extent the conduct was admitted as part of the defendants’ prior guilty pleas, and there has been no determination of liability.
Two Citizens of Malaysia Sentenced in U.S. District CourtRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that Defendant KUAN SIONG TAN, age 23, and Defendant CHOON BOON TAN, age 27, both citizens of Malaysia, were sentenced on March 5, 2014, in the District Court of Guam, for their convictions of aggravated identity theft. Each defendant was sentenced to a 24-month term of imprisonment to be followed by three years of supervised release. They were also ordered to pay restitution to the victims of their criminal conduct in the amount of $634.42 for CHOON BOON TAN and $1,961.43 for KUAN SIONG TAN.
On January 8, 2013, KUAN SIONG TAN and CHOON BOON TAN entered Guam from Malaysia. A secondary inspection by the U.S. Customs and Border Protection agency was conducted, and the defendants were found with numerous counterfeit access devices or credit cards. Prior to their arrival into Guam, the defendants used counterfeit access devices or credit cards to fraudulently obtain goods and services from a hotel and merchants in Kuala Lumpur, Malaysia, and Bangkok, Thailand. KUAN SIONG TAN possessed 47 counterfeit cards while CHOON BOON TAN possessed 39 such cards. Some of the credit cards were encoded with stolen credit card account information of account holders in the mainland United States with institutions such as Chase Bank, Bank of America, and Capital One Bank. KUAN SIONG TAN and CHOON BOON TAN were arrested on January 8, 2013, by agents with the Homeland Security Investigations and the U.S. Secret Service.
U.S. Attorney Alicia A.G. Limtiaco stated, “Identity theft and related white collar and financial fraud crimes victimize individuals, financial institutions and merchants. The U.S. Attorney’s Office for the Districts of Guam and the Northern Mariana Islands and the Department of Justice are committed to combating identity theft and other white collar and financial fraud crimes. We will continue to dedicate federal resources effectively to prevent, investigate and prosecute the unlawful use of identifying information. Federal and local law enforcement are committed to protecting our community and consumers against theft, fraud and other related criminal activity.”
This case was investigated by special agents from the Department of Homeland Security/Homeland Security Investigations and U.S. Secret Service and prosecuted by Assistant U.S. Attorney Stephen F. Leon Guerrero.- The U.S. Attorney’s Office Announced Today A Jury Found Gary Conti Guilty of Bankruptcy Fraud. Judge Brian Morris Declared A Mistrial on the Remaining Counts of the Indictment Because the Jury Could Not Reach A Verdict.
The Executive Office for Immigration Review to Host Stakeholder Meeting on Recognition and Accreditation ProgramRead the Press Release
SUMMARY: The Executive Office for Immigration Review (EOIR) invites interested parties to participate in a meeting providing a general overview of EOIR's recognition and accreditation program.
DATE: Friday, March 21, 2014, at 2 p.m.
MEETING LOCATION: 5107 Leesburg Pike, Suite 1800, Falls Church, VA.
RSVP: To RSVP for the meeting, please contact Lauren Alder Reid, Counsel for Legislative and Public Affairs, 703-305-0289, [email protected], by noon on March 20, 2014. In-person attendance will be limited to the first forty (40) individuals to RSVP. Those who are unable to attend in person will be able to participate via teleconference and to view meeting slides via the Internet during the meeting. Call-in and Web access information will be available to those who RSVP. To attend the meeting via conference call and Web, please RSVP with the name(s) of the attendee(s), the attendee's organization, and an email address where instructions may be sent for accessing the conference call and Web meeting.
- EOIR -
The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR’s immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR’s Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.
Statement of Manhattan U.S. Attorney Preet BhararaOn the Verdict in United States V. James Rosemond and Rodney JohnsonRead the Press Release
“We are gratified that the jury reached a unanimous verdict finding Rodney Johnson guilty of narcotics distribution and possession of firearms in connection with a drug conspiracy. As for the charges on which the jury was not able to reach a unanimous verdict, the Government’s contention remains that James Rosemond and Rodney Johnson are responsible for the murder of Lowell Fletcher. We are currently considering our options with respect to a retrial.”
Six Members of Human Smuggling Organization IndictedRead the Press Release
Tampa, Florida – United States Attorney A. Lee Bentley, III announces the unsealing of an indictment charging Carlos Velazquez-Roman (52, North Port), Jasmine Santos-Martinez (40, North Port), Yoel Emilio Baez-Hernandez (40, Hialeah), Edel Mesa-Hernandez (35, Miami), Mario Emilio Tamayo-Mejias (51, Port Charlotte), and Amable Gonzalez-Mandin (56, Miami) with conspiring to bring more than 100 illegal aliens into the United States, bringing illegal aliens into the U.S., transporting illegal aliens, and violating a federal regulation prohibiting departing U.S. waters with intent to enter Cuban waters without authorization. If convicted, each faces up to 10 years in federal prison for each alien, as it relates to the conspiracy charge. Bringing illegal aliens in the U.S. yields a mandatory minimum penalty of five years, up to a maximum of 15 years in federal prison. Transporting illegal aliens carries a maximum penalty of 10 years in federal prison. Violating a federal regulation prohibiting departing U.S. waters with intent to enter Cuban waters without authorization can result in a maximum penalty of 10 years in federal prison. The indictment also notifies all six individuals that the United States is seeking a forfeiture money judgment of at least $1,530,000, the proceeds of the charged criminal conduct, real property located at 4871 Kendsha Street, North Port, Florida, and a vessel registered to Velazquez-Roman, both of which are to be forfeited to the United States as substitute assets.
According to the indictment, beginning on an unknown date prior to May 3, 2007 and continuing through at least May 15, 2013, all six individuals were part of a conspiracy to bring and attempt to bring more than 100 illegal aliens to the United States. Velazquez- Roman is charged with six instances of bringing illegal aliens to the U.S., while Mesa-Hernandez, Santos-Martinez, Tamayo-Mejias, and Gonzalez-Mandin are each charged with one instance of bringing illegal aliens to the U.S. Velazquez-Roman is charged with two instances of departing U.S. territorial waters and entering Cuban territorial waters without permission, while Mesa-Hernandez, Tamayo-Mejias, and Gonzalez-Mandin are each charged with one such incident. Velazquez-Roman and Gonzalez-Mandin are each charged with transporting an illegal alien within the U.S.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by agents of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, U.S. Border Patrol, and the United States Coast Guard Investigative Service. It will be prosecuted by Assistant United States Attorney and Senior Litigation Counsel Donald L. Hansen.
Sioux Falls Man Charged with Failure to AppearRead the Press Release
United States Attorney Brendan V. Johnson announced that a Sioux Falls, South Dakota, man has been charged by an Information filed May 15, 2013, with a federal offense of Failure to Appear.
David Andrews, age 31, appeared before U.S. Magistrate Judge Mark A. Moreno on March 5, 2014, and pled not guilty to the charge.
The maximum penalty upon conviction is up to 1 year in custody and/or a $100,000 fine, 1 year of supervised release, and $25 to the Federal Crime Victims Fund. Restitution may also be ordered.
On May 6, 2013, Andrews, having been convicted of the offense of Possession of a Controlled Substance, failed to appear for his sentencing hearing in Pierre as required by law.
The charge is merely an accusation and Andrews is presumed innocent until and unless proven guilty.
The investigation is being conducted by the U.S. Marshals Service. Assistant U.S. Attorney Jay Miller is prosecuting the case.
Andrews was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set.
Russell Adler Charged with Conspiracy to Violate the Federal Election Campaign ActRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announce the filing of charges against Russell S. Adler, 52, of Ft. Lauderdale. The defendant is alleged to have conspired to violate the Federal Election Campaign Act while a shareholder of the former Fort Lauderdale law firm of Rothstein, Rosenfeldt and Adler, P.A. (RRA).
According to the criminal information filed with the Court earlier today, the defendant was an attorney who was designated as a shareholder of RRA. He was charged with one count of conspiracy to violate the Federal Election Campaign Act and to defraud the United States, in violation of Title 18, United States Code, Section 371. If convicted, the defendant faces a maximum statutory sentence of up to five years in prison
The information charges that in order to circumvent campaign finance laws setting limitations on the amounts which donors can contribute, Rothstein enlisted some of the attorneys and administrative personnel of RRA, and other persons associated with RRA, including Adler, to make political contributions to various political campaigns which were unlawfully reimbursed to them by RRA.
U.S. Attorney Wifredo A. Ferrer stated, “The Federal Election Campaign Act is designed to limit financial influence in the election of candidates. Russell Adler blatantly ignored and circumvented clearly established campaign finance laws in an effort to increase the stature and apparent political power of RRA. The information filed today against Adler holds him accountable for his acts. Adler is now the seventh attorney and seventeenth accomplice to be held accountable in Rothstein’s $1.2 billion Ponzi scheme.”
“According to these charges, Russell S. Adler sought to undermine the campaign finance process and will now have to answer for his decision to do so,” said George L. Piro, Special Agent in Charge, FBI Miami. “This investigation is not over.”
IRS-CI Special Agent in Charge Jose A. Gonzalez stated, “The defendant made contributions to the presidential primary campaign of John McCain and the United States Senate campaign of Charlie Crist, which were unlawfully reimbursed by RRA. Today’s action demonstrates our collective efforts to enforce the law and ensure public trust. This investigation is not over as we are committed to ‘following the money trail’ and pursuing the evidence wherever it leads.”
Mr. Ferrer commended the investigative efforts of the FBI and IRS-CI. This case is being prosecuted by Assistant U.S. Attorneys Lawrence D. LaVecchio, Paul F. Schwartz, and Jeffrey N. Kaplan.
An information is only an accusation and a defendant is presumed innocent unless and until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Real Estate Developer Sentenced for Bank and Loan FraudRead the Press Release
PHILADELPHIA - Michael Pouls, 52, of Gladwyne, Pennsylvania, was sentenced today to 96 months in prison for fraudulently inducing two banks to loan him a total of $13.35 million. Pouls defrauded National Penn Bank in 2007 and the former Wilmington Bank in 2008 by presenting fraudulent securities statements. He pleaded guilty on December 10, 2012 to one count of bank fraud, one count of wire fraud and two counts of loan fraud.
Pouls signed closing documents on the National Penn loan in November 2007 knowing that the collateral he had pledged – a TD Ameritrade account - had already been depleted. Seven months later, in June 2008, he likewise obtained a second and much larger loan from Wilmington Trust based on the same non-existent collateral, giving both banks negative pledges on the identical phony collateral. For a period of more than two years, Pouls regularly provided both banks with forged account statements. In 2010, Pouls asked the banks for even more money and that’s when National Penn discovered the fraud.
In addition to the prison term, U.S. District Court Judge Paul S. Diamond ordered five years of supervised release, restitution/forfeiture in the amount of $11,975,053.80, and a $400 special assessment.
The case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Karen Grigsby.
Ramsey Man Sentenced on Health Care Fraud ChargeRead the Press Release
Follow @SDILNewsStephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today that on March 7, 2014, William Dale Sidener, 31, of Ramsey, Illinois, was sentenced on the one-count indictment charging that he engaged in a scheme to commit health care fraud in the United States District Court in East St. Louis, Illinois. The district court sentenced Sidener to serve three years of probation, with the three months to be in home confinement. The district court also ordered Sidener to pay $4,677.75 in restitution to the Illinois Department of Human Services and pay a special assessment of $100.00.
During his plea hearing, Sidener admitted that he had submitted false and fraudulent bills in relation to his alleged performance of personal assistant services in the Home Services Program, a Medicaid Waiver Program designed to allow individuals to stay in their homes instead of entering a nursing home. Sidener admitted to falsely billing the program between November 2012 and February 2013, when he moved away from the person for whom he was supposed to be caring. As a result, Sidener improperly received $4,677.00 in payments for services not performed.
The investigation was conducted by the U.S. Department of Health and Human Services Office of Inspector General and the Illinois State Police Medicaid Fraud Control Bureau. The case is being prosecuted by Assistant United States Attorney Liam Coonan.
Pueblo Man Sentenced to 71 Months in Federal Prison for Tax Evasion, Bank Fraud and Interfering with IRS LawsRead the Press Release
DENVER – Michael Destry Williams, age 49, of Pueblo, Colorado, was sentenced yesterday by U.S. District Court Judge Christine M. Arguello to serve 71 months in federal prison for tax evasion, currency structuring, bank fraud, and interfering with the IRS’s administration of the internal revenue laws, the U.S. Attorney’s Office, Internal Revenue Service - Criminal Investigation (IRS CI) and Treasury Inspector General for Tax Administration (TIGTA) announced. Williams was also ordered to serve a five year term of supervised release, following his prison sentence, and to pay a $10,000 fine and $60,597.80 in restitution to the IRS. Williams has remained in federal custody in this case since his arrest on June 26, 2013 and will ultimately be designated to a Bureau of Prisons facility to complete service of his imprisonment term.
Williams was found guilty by a jury on November 5, 2013 following a 6 day trial before Judge Arguello. Williams was indicted by federal grand jury in Denver on March 22, 2012, followed by a superseding indictment on July 26, 2012.
According to the indictment, superseding indictment and evidence presented at trial, Williams was self-employed as a general contractor focusing primarily on residential construction projects, including roofing, remodeling and the repair and restoration of residential structures sustaining fire and water related damage. He was also self-employed as a real estate investor involved in the purchase, renovation and resale (commonly known, as “fixing and flipping”) of residential properties. Williams operated under the name of Greenview Construction, Inc., a Colorado corporation.
From April 2005 and continuing through January 2008, Williams willfully attempted to evade a substantial amount of income tax and self-employment tax due and owing by him to the United States for calendar years 2005, 2006 and 2007. He failed to file income tax returns and failed to pay to the IRS income tax and self-employment tax. To conceal his income, Williams established and used trusts as part of his tax evasion scheme and structured over $90,000 in deposited funds from July 2008 through September 2008.
In November of 2009, Williams attempted to defraud a Colorado financial institution by depositing worthless fabricated United States Treasury checks for his own benefit. There were two false treasury checks totaling $55,000 payable to Greenview Construction. In February of 2010, there was a third fabricated United States Treasury check in the amount of $250,000 that Williams tendered to the El Paso County Court to settle a criminal misdemeanor case for which he had been sentenced to a jail term.
From October 2008 through December 2010, Williams mailed numerous frivolous correspondences to the Secretary of the Treasury as well as various IRS offices in an attempt to obstruct and impede the administration of the internal revenue laws. The obstructive efforts included attempts by Williams to target State of Colorado judicial officers who had presided over three separate state cases in which Williams was named as a defendant. In particular, Williams sent IRS criminal referrals accusing one of these judicial officers and the Clerk of the El Paso County District Court with committing criminal tax and related offenses.
“As part of his wholesale disregard for his legal obligations, Mr. Williams decided simply to pocket money due to the IRS for both his income tax and his self-employment tax,” said U.S. Attorney John Walsh. “Because of his criminal actions, the defendant is going to spend nearly 6 years in federal prison.”
“This sentencing is a reminder there are serious and significant consequences for those who commit tax fraud. IRS CI will continue their pursuit of those who attempt to defraud and intentionally interfere with America's tax system,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
“Congratulations all around for the excellent work on this case,” said J. Russell George, the Treasury Inspector General for Tax Administration. “This is another example of outstanding collaboration between TIGTA and the Internal Revenue Service’s Criminal Investigation Division to stop fraudulent schemes in their tracks. Those who engage in such schemes will be investigated and referred for prosecution. Thanks to the work of Mr. Harmon and his entire office, such individuals are prosecuted to the fullest extent of the law.”
This case was investigated by agents with IRS Criminal Investigation (IRS CI) and U.S. Treasury Inspector General for Tax Administration (TIGTA). The case was prosecuted by Assistant U.S. Attorney Kenneth Harmon with assistance from the Department of Justice Tax Division Trial Attorney Kevin Sweeney.
Provider of Services for Special Needs Preschool Students Pleads Guilty in Manhattan Federal Court to Fraud ChargeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that CHEON PARK, owner and executive director of Bilingual SEIT, a government-funded provider of special education services and preschool programs to New York City preschool children, pled guilty today for his role in defrauding the federal, New York State, and New York City governments of millions of dollars. PARK pled guilty in Manhattan federal court before the U.S. District Judge J. Paul Oetken.
Manhattan U.S. Attorney Preet Bharara said: “Cheon Park has admitted his role in a criminal scheme to enrich himself by taking federal, state, and city funds intended for special needs children and diverting them for his own personal use. With today’s guilty plea, he now stands convicted of a federal crime and faces the prospect of a substantial prison term.”
According to the Information, an earlier Criminal Complaint, and statements made at court proceedings:
Between 2005 and 2012, PARK deliberately inflated both the amount of compensation Bilingual SEIT paid certain of its employees and contractors, and the type of work performed by certain employees on annual certified consolidated fiscal reports (“CFRs”) and financial statements submitted to the New York State Education Department (“NYSED”) and the New York City Department of Education (“NYCDOE”).
PARK owned and operated Bilingual SEIT from at least 2005 to 2012. During that time, Bilingual SEIT had a contract with the NYCDOE to provide publicly funded special education services and preschool programs to New York City schoolchildren aged three to five with physical, emotional, and/or developmental disabilities. Specifically, Bilingual SEIT received funding to provide: (1) special education itinerant teacher, commonly referred to as SEIT, services; (2) special education classes in a center-based setting for preschool students with special needs; (3) individual evaluations for preschool students with disabilities; and (4) physical, occupational, and/or speech therapy for preschool students who qualified for such services. As of September 2012, Bilingual SEIT operated out of five locations in Manhattan, Queens, and Brooklyn.
During the seven-year period that Bilingual SEIT was under contract with the NYCDOE, it claimed reimbursement for and received approximately $94.5 million in federal, New York State, and New York City funding to provide the services described above. In order to receive such money, on behalf of Bilingual SEIT, PARK was required to file a CFR supported by audited financial statements with the NYSED. The CFR and audited financial statements represented the costs that Bilingual SEIT had incurred the previous year and the justification for those costs, and included compensation Bilingual SEIT purported to pay its employees and contractors. Each year, PARK signed the certification pages for the CFRs filed with the NYSED, which relied on the CFR and audited financial statements in determining the amount of public funds to pay Bilingual SEIT per student for the services Bilingual SEIT provided to New York City preschool students.
Beginning in approximately June 2011, the New York State Comptroller’s office (the “Comptroller”) conducted an audit of Bilingual SEIT to determine whether the costs reported by Bilingual SEIT on the CFRs for the years July 2007 through 2009 were properly calculated, justified, and allowable under guidance issued by the NYSED. In July 2012, the Comptroller issued a report that concluded that nearly $1.5 million of the costs that PARK certified for the two-year audit period should have been disallowed, including money paid to 26 employees whose time and attendance could not be substantiated. As a result of the Comptroller’s report, the NYCDOE cancelled Bilingual SEIT’s classes and declined to renew its contract with Bilingual SEIT.
In fact, PARK engaged in several schemes designed to inflate the costs Bilingual SEIT represented it incurred, resulting in more public money for Bilingual SEIT, much of which, as set forth below, was kicked back to PARK. PARK fraudulently received funds from New York State and New York City to pay multiple individuals who performed little or no work for Bilingual SEIT. At PARK’s request and direction, these individuals then kicked back as much as 50% of the salary they fraudulently received from Bilingual SEIT to PARK. PARK also fraudulently received funds from New York State and New York City to deliberately overpay other individuals who worked for Bilingual SEIT. At PARK’s request and direction, these individuals also kicked back a portion of the overpayment to PARK on a regular basis.
Further, in addition to receiving kickbacks, PARK used Bilingual SEIT funds for his personal benefit in other ways. PARK arranged for Bilingual SEIT to pay his ex-wife and ex-sister-in-law for work they did not perform, and also arranged for Bilingual SEIT to pay for tutoring for PARK’s children and for a Bilingual SEIT employee to clean PARK’s home twice a week.
PARK, 46, of Manhasset, New York, pled guilty to one count of mail fraud, which carries a maximum term of 20 years in prison. He is scheduled to be sentenced by Judge Oetken on July 29, 2014, at 2:00 p.m. The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the investigative work of the Office of the State Comptroller, the Special Commissioner of Investigation for New York City’s Department of Education, the Office of Inspector General for the United States Department of Education. He also thanked the Queens County District Attorney’s Office for its assistance.
This case is being prosecuted by the Office’s Public Corruption Unit. Assistant United States Attorneys Paul Krieger, Rebecca Ricigliano, and Martin Bell are in charge of the prosecution.
U.S. v. Cheon Park Information
Pittsburgh Man Pleads Guilty in Heroin Trafficking ConspiracyRead the Press Release
PITTSBURGH – On March 6, Terrious Harper was convicted of conspiring to distribute and possess with intent to distribute in excess of 100 grams of heroin, United States Attorney David J. Hickton announced today.
Harper, 29, of Pittsburgh, Pa., pled guilty before United States District Judge Nora Barry Fischer. Judge Fischer scheduled sentencing to occur on July 29, 2014, at 9:30 a.m.
In support of the guilty plea, the Court was informed that, during 2012 and up to May 2013, Harper was supplied with bricks of heroin on credit by members of a drug-trafficking organization based out of Pittsburgh’s Larimer neighborhood after the members of the organization received the heroin from their out-of-state sources of supply. Over the course of that time period, Harper received hundreds of bricks of heroin and then distributed them in the Pittsburgh area and paid those who supplied him back.
The law provides for a maximum total sentence of at least five and up to 40 years in prison, a fine of up to $5,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Craig W. Haller is prosecuting this case on behalf of the United States.
The Drug Enforcement Administration in Pittsburgh and New York, the Pennsylvania State Police, the Pittsburgh Bureau of Police, the Allegheny County Police Department, the Pennsylvania Attorney General's Office, the Wilkins Township Police Department, the East Pittsburgh Police Department, the New York Police Department, the Blair County District Attorney's Office, and the Allegheny County District Attorney's Office conducted the investigation leading to the conviction in this case.
Owner of Tax Preparation Business in Washington, D.C., Indicted for Conspiring to Defraud the Internal Revenue Service and Preparing False Individual Income Tax ReturnsRead the Press Release
On Feb. 26, 2014, a federal grand jury sitting in the District of Columbia returned a 17 count indictment charging Sherri Davis, previous owner and operator of 2FT Fast Facts Tax Service, a tax return preparation business located in Washington, D.C., for conspiring to defraud the Internal Revenue Service (IRS), aiding and assisting in the preparation of false individual income tax returns and filing false individual income tax returns, the Justice Department and IRS announced following the unsealing of Davis’ indictment today.
According to the indictment, from 2006 through 2011, Davis conspired with others to defraud the IRS by preparing and filing false income tax returns that contained fraudulent deductions, expenses, losses and credits to which 2FT clients were not entitled, thereby generating fraudulent income tax refunds. Davis instructed co-conspirator LaDonna Davis to falsify tax documents for 2FT clients in order to reduce their taxable income and to get a larger refund than what the client was entitled to receive. Davis also provided 2FT clients with false documentation to support fraudulently claimed charitable contributions and mileage expenses on their individual income tax returns for use in a potential or pending audit.
The indictment also alleges that Davis filed false 2007 through 2009 individual income tax returns for herself, which underreported 2FT’s gross receipts and falsely claimed business losses for 2FT. Davis faces a statutory maximum potential sentence of 53 years in prison and a fine of up to $4,250,000.
The case is being prosecuted by Trial Attorneys Jessica Moran and Tiwana Fleming of the Justice Department’s Tax Division. Additional information about the division and its enforcement efforts may be found at its website .
O.C. Woman Sentenced to over 3 Years in Prison for Defrauding NunsRead the Press Release
SANTA ANA, California – An Irvine woman was sentenced today to 37 months in federal prison for defrauding a group of Roman Catholic Sisters out of $285,000, which she misappropriated and spent for her own use after promising to use the money to help the nuns purchase a retirement home.
Linda Rose Gagnon, 59, was sentenced by United States District Judge Andrew J. Guilford, who presided over Gagnon’s trial last year.
Gagnon was found guilty of three counts of wire fraud in November for defrauding the U.S. Province of the Religious of Jesus & Mary (RJM), an order of nuns devoted to educational and charitable work. The evidence presented at trial showed that Gagnon promised to use RJM funds to purchase a retirement home for the Sisters. Instead, Gagnon used the funds to pay for her personal expenses and to fund the unprofitable operations of her real estate finance company – burning through the entire $285,000 in only 64 days. Gagnon used the funds to pay for personal expenses, including travel, lingerie, groceries, manicures, hair dressing, restaurants, lease payments for an Audi TT sports car, and valet pet-sitting services for her dog.
In addition to the prison term, which Gagnon was ordered to begin serving by June 13, Judge Guilford said he would order the defendant to pay full restitution to the victim nuns. The amount of restitution will include at least the $285,000 that Gagnon stole from RJM, but the court may order her to pay RJM for other related losses.
This case was investigated by the FBI.
Release No. 14-030
O'Fallon Man Pleads Guilty to Fraud ConspiracyRead the Press Release
St. Louis, MO – JASON RAUSCHELBACH pled guilty to charges involving his conspiracy to defraud the United States and several banks through his business, The Mortgage Store, Inc., in 2008.
According to court documents, Rauschelbach was the CEO of The Mortgage Store, Inc. (TMS) and the president of Title America. By 2008, TMS was a major mortgage brokering business with officers in four states and hundreds of employees. The main offices were in Westport Plaza and Wentzville. The businesses were operating at a financial deficit in 2008. TMS incurred over $600,000 in federal employment (including withholding) tax liabilities in the first three quarters of 2008 that were not paid over to the United States. There were not sufficient funds available to fund the disbursements from TMS and, in addition, to meet all of the expenses incurred by TMS, including the delinquent employment tax liabilities. In order to meet certain expenses and, at the same time, conceal the absence of adequate funds, Rauschelbach and others at TMS caused insufficient funds checks drawn on the checking accounts of both TMS and Title America to be deposited between those accounts in such a way that the "float" concealed the true balances of each account. The accounts were at Enterprise Bank in Clayton and at the First Bank of the Lake in Osage Beach, Missouri. The TMS account had a negative balance of approximately $850,000 in June 2008, when the banks stopped accepting the floated checks.
In order to maintain its status as a loan correspondent for loans guaranteed by the Federal Housing Administration, TMS was required to maintain certain net worth balances that would be audited by a HUD authorized private firm and submitted to HUD by TMS. In June 2008, Rauschelbach and others at TMS falsified information concerning the net worth of TMS to the auditor for submission to HUD.
Additionally, in June and July 2008, TMS incurred liabilities for a 401k retirement plan in effect for its employees, as well as liabilities for the health and dental insurance plans offered to its employees. The amounts withheld from the employees’ pay checks were not paid over as required by law.
Finally, Rauschelbach received substantial distributions from TMS and Title America in 2008 despite the federal employment tax delinquencies and other unpaid liabilities, as well as the artificial balances being maintained in the TMS and Title America checking accounts. In addition, he and others at TMS directed that TMS funds be paid on loans on properties at Tan-Tar-A Resorts in the Lake of the Ozarks, and for a ranch property in Breckenridge, Colorado. He was a partial owner of those properties
Rauschelbach, of O’Fallon, Missouri, pled guilty to one felony count of conspiracy before United States District Judge Henry E. Autrey. Sentencing has been set for June 2, 2014.
He now faces a maximum penalty of five years in prison and/or fines up to $250,000. In determining the actual sentences, a Judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by the FBI, IRS Criminal Investigation and the Inspector General Offices of HUD and the Department of Labor. Assistant United States Attorney James E. Crowe, Jr., is handling the case for the U.S. Attorney's Office.
Member of the Granados-Hernandez Sex Trafficking Organization, Eleuterio Granados-Hernandez, Sentenced to 22 Years in PrisonRead the Press Release
Earlier today, Eleuterio Granados-Hernandez was sentenced before Judge Kiyo A. Matsumoto in U.S. District Court in Brooklyn, New York, to 22 years’ imprisonment, to be followed by five years of supervised release, for the sex trafficking of five victims and restitution in the amount of approximately $3 million for three victims.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York and James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York.
“This defendant preyed on young women with the intent to force them into a degrading life of sexual slavery. He targeted the women, disregarding their dignity, solely to line his pockets in proceeds from the prostitution business,” stated United States Attorney Lynch. “This sentence sends a message to other would-be traffickers that we are committed to eradicating the sex trafficking of young girls.” Ms. Lynch extended her grateful appreciation to the organizations that provided services and advocacy to the victims in this case, including Sanctuary for Families, Safe Horizon, My Sister’s Place and the law firm of King and Spalding.
On August 1, 2012, Granados-Hernandez pled guilty to a superseding information charging that between October 2000 and April 2011, he smuggled five victims, including one minor, from Mexico illegally into the United States and forced each of them to engage in prostitution. Granados-Hernandez, who kept the prostitution proceeds earned by the victims, engaged in a pattern of abuse for over a decade.
According to court documents, Granados-Hernandez smuggled each of the victims with the intent to force then into prostitution. For example, soon after he smuggled the victim identified as Jane Doe #2 to New York, Granados-Hernandez insisted that she work as a prostitute where she provided sexual services for as many as 15 to 18 clients per day.
Similarly, in 2003, Granados-Hernandez smuggled the victim identified as Jane Doe #3 into the United States and soon after forced her into prostitution. Jane Doe #3 worked for Granados-Hernandez for approximately six years and during that period, he beat her and threatened her frequently.
In 2009, Granados-Hernandez met the 17 year-old victim known as Jane Doe #5 in Puebla, Mexico and smuggled her to New York shortly after she turned 18 years old. Three months after her arrival in New York, Granados-Hernandez insisted that Jane Doe #5 work as a prostitute. When Jane Doe #5 refused, Granados-Hernandez physically assaulted her several times. Fearing more violence, Jane Doe #5 worked for Granados-Hernandez as a prostitute until 2010.
In 2005, Granados-Hernandez became romantically involved with the victim identified as Jane Doe #11 when she was 15 years old. Soon after their initial meeting, Granados-Hernandez smuggled her into the United States. Once in the United States, Granados-Hernandez told Jane Doe #11 that she had to work as a prostitute to repay the smuggling debt. Although she initially refused, Jane Doe #11, age 16 at the time, feared physical abuse and relented to working as a prostitute for Granados-Hernandez.
At the sentencing, Jane Doe #11 spoke about her victimization by Granados-Hernandez over a four-year period. She stated that, “When I was just 15 years old he took advantage of my innocence and lied to me so I could be under his control. He promised me a happy life next to him but instead I lived the worst nightmare.” Jane Doe #11 further stated that, “Granados-Hernandez never cared about how much I suffered. To him, I was just an object that brought him money.”
As set forth in court filings, Granados-Hernandez’s brother Samuel Granados-Hernandez and his cousins, Angel Cortez-Granados and Antonio Lira-Robles, also smuggled young women from Mexico illegally into the United States, forced them to work as prostitutes in New York City and elsewhere, and collected profits from their activities. Cortez-Granados, Samuel Granados-Hernandez and Lira-Robles all pleaded guilty to sex trafficking. In September 2013, Cortez-Granados was sentenced to 15 years in prison, in a separate case. At the time of their sentencings, Samuel Granados-Hernandez and Lira-Robles likewise face a 15-year mandatory minimum sentence.
The government’s case was prosecuted by Assistant United States Attorney Soumya Dayananda.
The Defendant:
ELEUTERIO GRANADOS-HERNANDEZ
Age: 31
Mexico
E.D.N.Y. Docket No. CR-11-297 (S-5) (KAM)
Martial Arts Instructor Will Serve 90 Years in Federal Prison for Production of Child PornographyRead the Press Release
Follow @SDILNewsChristopher M. Horton, 21, of Highland, Illinois was sentenced today in the U.S. District Court to 90 years in prison for six counts of Production of Child Pornography, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced. Horton was also ordered to pay $3,250 in restitution to the victims of his offenses and a $600 special assessment. If he is ever released from prison, he will be on federal supervised release for the remainder of his life.
“While there is little comfort for the instant victims, it is assuring to know that such a vicious predator will never again walk free in Southern Illinois.” said United States Attorney Wigginton.
Employed as a martial arts instructor at a studio in Belleville, Illinois, Horton sexually abused three students, ages 6, 6, and 10 years, and video recorded these acts of abuse using his cell phone. Horton also attempted to engage a fourth minor, who was 7 years old, in sexually explicit conduct to produce a recording of that conduct. Approximately 57 video files containing child pornography were recovered from Horton’s cellular phone, which were created by Horton between the dates of May 1, 2012, and February 9, 2013. During an interview with law enforcement, Horton confessed to sexually abusing the minors and to having produced video recordings of the abuse.
In all, evidence showed that Horton preyed upon children whenever given the opportunity, including at the karate studio where he worked, private residences, and at his home. United States Attorney Wigginton noted, “Horton demonstrated brazen arrogance in his commission of the sexual abuse of these children, committing his acts while other adults were in the same building and often just on the other side of a closed door.” Two electronic entries, located in the “Notes” folder of Horton’s iPhone, found during the forensic examination, demonstrated the calculated and premeditated manner in which Horton targeted each of his victims. In the two entries, Horton meticulously scripted what he would say to his young victims to solicit them, groom them and to keep them silent.
In pronouncing the sentence, Chief United States District Judge David R. Herndon commented on the shocking and serious nature of the offenses committed by Horton: “Probably in my 15 years as a federal judge this is the most serious and heinous case that I have seen. . . . The dangerousness and deviousness of the defendant’s acts are off the charts.”
The case was investigated by the Madison County Sheriff’s Department, the Federal Bureau of Investigation’s Metro East Cyber Crimes and Analysis Task Force, the Highland, Illinois, Police Department and the Belleville, Illinois, Police Department. Horton is also charged with several counts of Predatory Criminal Sexual Assault and Aggravated Criminal Sexual Abuse in the Circuit Courts of Madison and St. Clair Counties. Those charges are still pending. The case was prosecuted by Assistant United States Attorney Ali Summers.
Manhattan U.S. Attorney Announces Medicaid Fraud Charges Against Postal Employee and SpouseRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Thomas O’Donnell, the Special Agent in Charge of the New York Office of the United States Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), today announced charges against ALEXANDER KNOBEL, an employee of the United States Postal Service the (“Postal Service”), and his spouse, YANA MALKINA, for Medicaid fraud. The Complaint alleges that KNOBEL and MALKINA repeatedly submitted fraudulent documents to obtain and continue to receive Medicaid for themselves and their family, defrauding the Medicaid Program of nearly $100,000, and causing resources designed for low-income individuals to be diverted to themselves. The defendants were arrested this morning and are expected to be presented today before U.S. Magistrate Judge James L. Cott.
Manhattan U.S. Attorney Preet Bharara said: “Defendants like Alexander Knobel, a U.S. Postal Service employee, and his wife, Yana Malkina, who allegedly manipulate and exploit the Medicaid system, divert valuable resources from those who truly need the assistance. Such allegedly criminal conduct is particularly troubling when committed by an employee of the federal government.”
HHS-OIG Special Agent in Charge Thomas O’Donnell said: “Scammers who corruptly take advantage of the Medicaid system and deprive poor and vulnerable beneficiaries of the care and support they need, take note: the Office of Inspector General, New York Regional Office will continue to work aggressively to eliminate such schemes - and those who perpetrate them - from our health care system.”
According to the allegations in the Complaint unsealed today in Manhattan federal court:
Medicaid is a largely federally-funded program in the United States designed to provide low-income families with affordable health care. In New York State, the Department of Health administers the Medicaid Program, and the New York City Human Resources Administration oversees the program and processes applications in New York City.
In late 2008, KNOBEL, who had been employed by the Postal Service since the spring of 2006, and MALKINA, his wife, who had been employed as a home attendant for several years, submitted an application for Medicaid on behalf of themselves and their children in which they falsely stated that no adult in the household was employed. Based on this fraudulent application, KNOBEL, MALKINA, and their children were approved to receive Medicaid. Each year thereafter, KNOBEL and/or MALKINA submitted renewals to continue to receive Medicaid for themselves and their family. Each annual renewal form, signed by KNOBEL and/or MALINKA, contained multiple false statements, including with respect to KNOBEL’s employment, MALKINA’s employment and income, and whether KNOBEL and MALKINA were able to obtain health insurance through their employers. Further, in summer 2010, KNOBEL and MALKINA purchased a home for $445,000, but in multiple subsequent renewals, KNOBEL and MALKINA falsely stated that they did not own their home.
KNOBEL, 37, and MALKINA, 37, both of Brooklyn, New York, are each charged with one count of conspiracy to commit mail fraud and health care fraud, one count of mail fraud, and one count of health care fraud, which carry maximum sentences of 20 years, 20 years, and 10 years in prison, respectively. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Bharara praised the investigative work of HHS-OIG, and thanked the United States Postal Service, Office of the Inspector General, and the New York City Human Resources Administration for their assistance in this investigation, which he noted is ongoing.
This case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorney Daniel C. Richenthal is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.
U.S. v. Alexander Knobel and Yana Malkina Complaint
Man Admits Stalking Former Federal Witness Against HimRead the Press Release
Faces New Jail Term of Up To 5 Years
SYRACUSE, NEW YORK – Paul Raymond Ross, 59, of Endwell, NY pled guilty today in United States District Court before the Honorable Thomas J. McAvoy to Interstate Stalking of a former witness against him in a previous federal prosecution – announced United States Attorney Richard S. Hartunian. In 2008 Ross pled guilty to making extortionate demands for $20,000 from a victim who has been identified publically by the initials “K.O.D.” The victim in that previous case provided assistance to the Federal Bureau of Investigation, including by producing copies of threatening communication received from the defendant. As a result of his plea in that earlier case, Ross was sentenced to 27 months in prison, followed by 3 years of supervised release. Upon completion of his sentence, Ross immediately began to stalk KOD electronically. That is, Ross began to send out thousands of electronic messages to the victim’s clients, her employees, the media, and, via the mail, to her in any effort to harass, injure, and cause her severe emotional distress and financial damage. Ross posted threatening photographs and made false statements about her.
On October 31, 2013, Ross was indicted by a federal grand jury for Retaliation Against a Witness and Interstate Stalking. He is being held in pretrial detention. His guilty plea today subjects him to a maximum possible penalty of 5 years in jail, a $250,000 fine, and 3 years of supervised release. Sentencing has been set for June 4, 2014 at 9:30 AM in Binghamton, NY.
This matter was investigated by Special Agents of the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Craig A. Benedict, who may be reached at 315-448-0672 with questions about the case.
Lubbock Man Sentenced to 210 Months in Federal Prison for Producing Child PornographyRead the Press Release
LUBBOCK, Texas — Nicholas Lee Blair, 31, was sentenced today by U.S. District Judge Sam R. Cummings to 210 months in federal prison and a lifetime of supervised release, following his guilty plea in November 2013 to an indictment charging one count of production of child pornography. The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
According to the documents filed in the case, on or about December 25, 2012, when he resided in Lubbock, Texas, Blair persuaded a minor female, “Jane Doe,” to engage in sexually explicit conduct while he used his cellphone camera, aimed at her while she was in the bathroom of his home, to record a video of her.
The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 2006 by the Department of Justice, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/. For more information about Internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”
The Lubbock Police Department and the FBI investigated. Assistant U.S. Attorney Steven M. Sucsy prosecuted.
Local Real Estate Business Owner Pleads Guilty to Federal Fraud ChargesRead the Press Release
St. Louis, MO - RICHARD SADDLER owned Omicron Capital LLC, a company in the business of assisting customers in refinancing commercial and real estate loans.
According to court documents and statements made in court at the time of his guilty plea hearing, between Jan. 1, 2010, and March 31, 2013, Saddler accepted roughly $350,000 from at least seven customers based upon his false representations that the money would be used for down payments or appraisals on commercial real estate refinancing. Instead, Saddler actually used the money to pay the mortgage on his home, which was in foreclosure, as well as airline tickets, meals and other personal expenses.
Saddler, St. Louis County, pled guilty to three felony counts of wire fraud before United States District Judge Carol E. Jackson. Sentencing has been set for May 30, 2014.
Each count of wire fraud carries a maximum penalty of 20 years in prison and/or fines up to $250,000. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by the Federal Bureau of Investigation. Assistant United States Attorney Hal Goldsmith is handling the case for the U.S. Attorney’s Office.
Local Man Sentenced Involving Wire Fraud SchemeRead the Press Release
St. Louis, MO - SEAN HOLLAND was sentenced to 14 months in prison involving a wire fraud scheme whereby he embezzled money from a condominium association for which he served as bookkeeper.
Holland worked as a bookkeeper for Maryland House Condominium in St. Louis between 2008 and 2010 and made $64,000 of unauthorized electronic transfers of funds to his personal bank account and concealed the transfers from the management of the association.
Holland, St. Louis, pled guilty in September and appeared today for sentencing before U.S. District Judge Catherine D. Perry.
The case was investigated by the St. Louis Metropolitan Police Department, the U.S. Secret Service and the St. Louis Circuit Attorney’s Office. Assistant United States Attorney Tom Albus handled the case for the U.S. Attorney’s Office.
Local 17 President and Business Manager Convicted of Racketeering Conspiracy, Conspiracy to Commit Extortion and Attempted ExtortionRead the Press Release
BUFFALO, N.Y. B The United States Attorney's Office announced today that following a nine week trial, a federal jury has convicted Mark N. Kirsch, 54, President and Business Manager of Operating Engineers Local 17, based in Hamburg, N.Y., of conspiracy to commit racketeering, conspiracy to commit extortion, and attempted extortion. The charges carry a maximum penalty of 20 years in prison, a $250,000 fine, or both. In addition, the defendant=s interest in Local 17, including his management position within the Union, is subject to forfeiture.
According to Assistant U.S. Attorneys Anthony M. Bruce and Edward H. White, who, along with U.S. Department of Justice Trial Attorney Robert S. Tully, handled the prosecution of the case, defendant Kirsch, from at least January 1997 to December 2007, participated in a criminal enterprise with the objective of extorting property from various construction firms throughout Western New York. The objective of the Local 17 criminal enterprise was to obtain several types of property through extortion, including: (1) the right of various businesses to make business decisions free from outside pressure; (2) the wages and benefits to be paid by various businesses for unwanted, unnecessary, and superfluous labor; (3) the jobs and associated wages and benefits of employees of various businesses at construction sites in the Western District of New York; and (4) the property of construction contractors consisting of wages and benefits to be paid pursuant to labor contracts with Local 17. Among the unlawful means the defendant Kirsch used to secure these objectives were actual violence, threats, intimidation, sabotage of property, and threats and attempts to interrupt and delay construction projects in order to drive up costs to the contractors and thus cause economic harm.
“Today’s verdict confirms that for over 10 years, former IUOE Local 17 President and Business Manager, Mark N. Kirsch, operated a criminal enterprise. Kirsch engaged in a decade-long Racketeering Conspiracy. He conspired to extort employers and employees of Western New York of jobs, wages, and benefits through the use of physical violence and the destruction of property. The Office of Inspector General will continue to work with the United States Attorney’s Office and our other law enforcement partners to investigate criminal allegations of wrongdoing by union officials and union members," stated Cheryl Garcia, Acting Special Agent-in-Charge of the New York Regional Office of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.
Retired Local 17 Business Representative Gerald E. Bove, member Michael J. Caggiano, member Kenneth Edbauer, and Business Representative Thomas Freedenberg, were acquitted of similar charges.
The verdict is the result of an investigation by the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Acting Special Agent-in-Charge of the New York Regional Office, the Federal Bureau of Investigation, and the New York State Police, under the direction of Major Michael Cerretto.Leader of Identity Theft Ring Sentenced <br /> for Stealing More Than 600 Identities <br /> and Causing More Than $1 Million in LossesRead the Press Release
The leader of an identity theft ring that stole more than 600 identities from U.S. government employees and others was sentenced today to serve 12 years in prison, followed by three years of supervised release.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting United States Attorney Dana J. Boente of the Eastern District of Virginia, Special Agent in Charge Kathy A. Michalko of the United States Secret Service’s Washington Field Office and Chief Edwin C. Roessler Jr. of the Fairfax County Police Department made the announcement.
Jenaro Blalock, 31, of Clinton, Md., pleaded guilty on Oct. 29, 2013, to access device fraud and aggravated identity theft and was sentenced by United States District Judge Claude M. Hilton. Blalock was also ordered to pay full restitution to victims.
According to court documents, between June 2011 and July 2013, Blalock and co-leader Christopher Bush recruited women with access to identity information through their employers to steal more than 600 identities, primarily belonging to employees of the U.S. Department of State, the U.S. Department of Defense and the U.S. Agency for International Development. Blalock provided blank driver’s licenses so that Bush could make fraudulent driver’s licenses bearing the victims’ real names, addresses and dates of birth. Blalock also made fraudulent credit cards bearing victims’ names. Members of the identity theft ring, including Blalock, used those fraudulent driver’s licenses and victims’ social security numbers to open instant credit lines at retailers and obtain rental cars, which were frequently sold on the black market with altered vehicle identification numbers. According to information provided at sentencing, the identity theft ring caused victim losses of between $1 million and $2.5 million.
On Jan. 17, 2014, Bush was sentenced to serve 10 years in prison for his role in the scheme.
This case was investigated by the United States Secret Service and the Fairfax County Police Department, with assistance from the City of Fairfax Police Department, Prince George’s County Washington Area Vehicle Enforcement, Prince George’s County Financial Crimes Section, the Metropolitan Washington Airport Authority, the Delaware State Police, the Maryland State Police, the D.C. Metropolitan Police Department, the U.S. Postal Inspection Service, the Office of the Inspector General of the U.S. Department of Agriculture and the Office of the Inspector General of the U.S. Department of State .
The case was prosecuted by Trial Attorney Peter Roman of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Lindsay Kelly of the Eastern District of Virginia.Leader of Identity Theft Ring Targeting Government Employees and Others Sentenced to 12 YearsRead the Press Release
Defendants stole over 600 identities and caused more than $1 million in victim losses
ALEXANDRIA, Va. – Jenaro Blalock, 31, of Clinton, Md., was sentenced today to 12 years in prison, followed by three years of supervised release, for access device fraud and aggravated identity theft. Blalock also was ordered to pay full restitution to the victims.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Kathy A. Michalko, Special Agent in Charge for the United States Secret Service’s Washington Field Office; and Colonel Edwin C. Roessler, Jr., Fairfax County Chief of Police, made the announcement after sentencing by United States District Judge Claude M. Hilton.
Blalock pleaded guilty on Oct. 29, 2013.
According to court documents, between June 2011 and July 2013, Blalock and co-leader Christopher Bush recruited women with access to identity information through their employers to steal more than 600 identities, primarily belonging to employees of the U.S. Department of State, the U.S. Department of Defense and the U.S. Agency for International Development. Blalock provided blank driver’s licenses so that Bush could make fraudulent driver’s licenses bearing the victims’ real names, addresses and dates of birth. Blalock also made fraudulent credit cards bearing victims’ names. Members of the identity theft ring, including Blalock, used those fraudulent driver’s licenses and victims’ social security numbers to open instant credit lines at retailers and obtain rental cars, which were frequently sold on the black market with altered vehicle identification numbers. The identity theft ring caused victim losses of between $1 million and $2.5 million.
On Jan. 17, 2014, co-leader Bush was sentenced to 10 years in prison.
This case was investigated by the United States Secret Service and the Fairfax County Police Department, with assistance from the City of Fairfax Police Department, Prince George’s County Washington Area Vehicle Enforcement, Prince George’s County Financial Crimes Section, the Metropolitan Washington Airport Authority, the Delaware State Police, the Maryland State Police, the D.C. Metropolitan Police Department, the U.S. Postal Inspection Service, the Office of the Inspector General of the U.S. Department of Agriculture, and the Office of the Inspector General of the U.S. Department of State. Assistant United States Attorney Lindsay Kelly and Special Assistant United States Attorney Peter Roman of the Department of Justice’s Computer Crimes and Intellectual Property Section prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Lakeland Man Convicted of Charges Related to Armed RobberyRead the Press Release
Tampa, FL – United States Attorney A. Lee Bentley, III announces that a federal jury today found Kristian Keron Green (23, Lakeland) guilty of conspiracy to interfere with interstate commerce by robbery, interference with interstate commerce by robbery, and using and carrying a firearm during and in relation to a crime of violence. Green faces a maximum penalty of 20 years in federal prison on each of the robbery counts and a mandatory minimum of 10 years on the firearm charge, which must run consecutive to the robbery counts. His sentencing hearing will be scheduled at a later date. Green was indicted on March 5, 2013.
According to the evidence presented at trial, early in the morning of December 4, 2010, Green and Joshua Antoin Chatmon robbed a Circle K convenience store, in Lakeland, at gunpoint. During the robbery, Chatmon held a firearm, which was discharged, striking the clerk. Green and Chatmon took $40 from the store.
On July 31, 2013, Chatmon pleaded guilty for his role in the crime. His sentencing hearing is scheduled for March 25, 2014, at 9:00 a.m., before U.S. District Judge Mary Scriven.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and the Polk County Sheriff’s Office. It is being prosecuted by Assistant United States Attorneys Joseph W. Swanson and James A. Muench.
It is another case prosecuted as a part of the Department of Justice’s “Project Safe Neighborhoods” program - a nationwide, gun-violence reduction strategy. United States Attorney A. Lee Bentley, III, along with Julie Leon, Special Agent in Charge, ATF, is coordinating the Project Safe Neighborhoods effort here in the Middle District of Florida in cooperation with federal, state, and local law enforcement officials. It is also a part of ATF’s Frontline strategy to reduce violent crime and improve the quality of life in communities where law enforcement efforts are focused.
Justice Department Sues to Stop California Tax Return PreparersRead the Press Release
The United States filed a civil complaint asking a federal court in Fresno, Calif., to enjoin Ken Mendoza and Alice Mendoza from preparing federal tax returns for others, the Justice Department announced today. The complaint alleges that the Mendozas frequently prepare tax returns for individuals claiming refunds from the federal government that are not deserved. According to the complaint, since 2010, the Mendozas have prepared over 600 tax returns for individuals in the Fresno area.
According to the complaint, the Mendozas improperly understate their customers’ federal tax liabilities by fabricating business expenses, claiming false or inflated credits, particularly educational credits, and deducting customers’ personal expenses that are not legally deductible. In total, the complaint alleges that the loss to the U.S. Treasury from the Mendozas’ activities could be as much as $2.8 million for tax years 2010 through 2011.
In addition, the complaint seeks to enjoin anyone acting in concert with the Mendozas from preparing or filing federal tax returns; to prohibit the Mendozas from requesting or directing the preparation of federal tax returns for others; to require the Mendozas, within 30 days of entry of an injunction issued in this case, to contact all persons for whom they prepared a federal tax return since Jan. 1, 2008, and to inform all such persons of the permanent injunction entered against them; to require the Mendozas to provide a list of all such persons to the United States; to allow the United States to monitor the Mendozas’s compliance with any such injunction; and to request that the court retain jurisdiction over this case to enforce any injunction entered against the Mendozas.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2013 . The IRS has some tips on their website for choosing a tax preparer. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website . An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page . If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Related Materials:
United States v. Ken Mendoza, etc., et al.
Complaint for Permanent Injunction and Other Equitable ReliefJury Convicts Doctor, Pharmacist, Marketer in Health Care Fraud SchemeRead the Press Release
A doctor, a pharmacist and a marketer were convicted today in federal court in Detroit for health care fraud and controlled substance distribution, U.S. Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Acting Special Agent in Charge James V. Allen, Drug Enforcement Administration, Detroit Division, Paul R. Abbate, Special Agent in Charge, Federal Bureau of Investigation, and Lamont Pugh, III, Special Agent in Charge, Department of Health and Human Services Office of Inspector General ("HHS-OIG").
The jury returned guilty verdicts against Dr. Carl Fowler, M.D., 61, of West Bloomfield, pharmacist Mukesh Khunt, 34, of Toronto, Ontario, Canada, and Michael Thoran of Detroit. Defendants Fowler and Thoran were convicted on all three of the counts with which they were charged, conspiracies to commit health care fraud, to distribute controlled substances, and to pay or receive health care kickbacks. Defendant Khunt was convicted of six of the seven counts with which he was charged, health care fraud conspiracy, conspiracy to distribute controlled substances, and two counts health care fraud and two counts of controlled substances distribution. The jury was unable to reach a verdict on the seventh count charging a conspiracy to pay or receive health care kickbacks.
McQuade stated, “Law enforcement investigators in metro-Detroit are aggressively investigating health care fraud and detecting abuses by doctors and pharmacists. We hope that prosecutions like this one will deter medical professionals from stealing taxpayer funds intended for health care.”
The evidence presented during the three-week trial demonstrated that, from approximately January 2006 through August 2011, Canton Pharmacist Babubhai Patel owned and controlled 26 pharmacies (termed “the Patel Pharmacies” at trial), which operated in and around Detroit. The evidence also showed that Babubhai Patel’s model for turning a profit at his pharmacies was based upon large-scale health care fraud and the diversion of controlled substances. Babubhai Patel paid cash kickbacks and other things of value to physicians in exchange for those physicians writing prescriptions for expensive medications, without regard to medical necessity, that could be billed to Medicare, Medicaid, or a private insurer through one of the Patel Pharmacies. Physicians affiliated with Babubhai Patel would also write prescriptions for controlled substances for their patients, again regardless of medical necessity, which would then be filled at one of the Patel Pharmacies. These controlled substances were distributed to patients and patient recruiters as a kickback in exchange for the patients using a Patel Pharmacy. Pharmacists at the Patel Pharmacies would increase the pharmacies’ profits by billing insurers for medications never actually distributed to patients.
The evidence presented at trial showed that Fowler was one of the physicians to whom Babubhai Patel paid bribes and kickbacks in exchange for referrals of prescriptions. In exchange, Dr. Fowler wrote numerous prescriptions for expensive medications, without regard to medical necessity, that could be filled at one of the Patel Pharmacies. He also wrote unlawful prescriptions for narcotic drugs in Schedules II-V, including oxycontin and oxycondone, which were resold on the street market.
Evidence also demonstrated that Khunt, a pharmacist in Babubhai Patel’s organization, billed Medicare, Medicaid, and private insurers for expensive medications he never dispensed to patients. He also knowingly filled prescriptions for scheduled controlled substances such as vicodin that were never intended for the patients, but which were resold by marketers on the street market.
The evidence showed that Thoran was a marketer who recruited patients who were seen by cooperating doctors or clinics. After unlawful prescriptions for controlled substances were written and filled at the pharmacies, Thoran would take possession of the controlled drugs in order to sell them on the street market.
These defendants are three of 39 individuals who have been charged with offenses relating to their involvement with Babubhai Patel’s pharmacy network. All but three of the defendants have now been convicted of felonies arising out of their involvement with Babubhai Patel; 24 of those defendants entered guilty pleas, and 12, including the three defendants today, have been convicted after trial. Defendant Babubhai Patel was convicted at a trial in August 2012; he is serving a 17-year prison sentence. One defendant remains a fugitive, while two defendant’s cases remain pending, with a trial date set for July, 2014.
The case was prosecuted by Assistant United States Attorneys John K. Neal and Wayne F. Pratt.
Jackson Man Pleads Guilty to Federal Civil Rights Charge of Desecrating Religious ParaphernaliaRead the Press Release
Jackson, TN – Justin Shawn Baker, 25, of Jackson, TN, was sentenced to 12 months in prison following his guilty plea of violating the civil rights of students and faculty of the Margolin Hebrew Academy by defacing a Torah and religious prayer books, announced U.S. Attorney Edward L. Stanton III.
According to information contained in the indictment and facts revealed during today’s sentencing hearing, on or about January 12, 2013, students and faculty of the Margolin Hebrew Academy were staying overnight at the Doubletree Hotel in Jackson en route to Gatlinburg, TN. While there, they used a meeting room at the hotel to conduct a Sabbath worship service. A Torah, religious books, and musical instruments were left in the meeting room overnight with the intention of continuing worship services on the following morning.
The facts presented today further revealed Baker admitted that while employed as a security guard at the hotel, he discovered the items in the room, and defaced the Torah, the prayer books, and the musical instruments with profanity, anti-Semitic phrases, and Satanic writing. He also admitted to spitting on the Torah. Photographic evidence presented during the hearing confirmed that the Torah was defaced with profanity and phrases including “Hail Satan.”
In addition to the prison sentence, Chief U.S. District Judge J. Daniel Breen ordered Baker to pay $9,999.99 in restitution to Margolin Hebrew Academy and to serve one year of supervised release. There is no parole in the federal system.
This case was investigated by the FBI and is being prosecuted by First Assistant U.S. Attorney Larry Laurenzi and Trial Attorney Douglas Kern of the Civil Rights Division’s Criminal Section.# # # #
Investment Manager Who Fled During Trial Sentenced to 210 Months for Foreign Currency Fraud SchemeRead the Press Release
Earlier today, Thomas Qualls, the President of International Foreign Currency, Inc., was sentenced to a term of imprisonment of 210 months following his convictions for mail fraud, wire fraud, conspiracy and obstruction of justice. The proceeding was held before the Hon. Dora L. Irizarry, United States District Judge, at the United States Courthouse in Brooklyn. Judge Irizarry also imposed restitution of approximately $817,000.
During the fourth week of his trial, Qualls failed to appear in court on the day closing arguments were scheduled to begin. After determining that Qualls had fled, the court resumed the trial in the defendant’s absence, and the jury returned a verdict of guilty on all counts. Approximately six months later, Canadian authorities apprehended Qualls, and he remained in Canadian custody until he was extradited to the United States.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, U.S. Postal Inspector-in-Charge, New York Division.
“The defendant bilked his clients by stealing their hard-earned money, and when faced with the overwhelming evidence of his misdeeds presented to a jury of his peers, he fled the country,” said United States Attorney Lynch. “This case shows, once again, that you can run, but you cannot hide – we will continue to safeguard the markets by zealously prosecuting fund managers who betray the trust of investors.” Ms. Lynch expressed her grateful appreciation to the United States Marshals Service and the Postal Inspection Service, as well as law enforcement authorities in Canada, for their assistance.
Qualls operated a fraudulent investment firm known as International Foreign Currency, Inc. (“IFC”) in Garden City, New York. Qualls and his co-conspirators purported to invest funds in foreign currency. Instead, Qualls stole investors’ funds and spent them on business and personal expenses, including a Caribbean cruise, expenses for his pets, and payments on a Jaguar automobile. At the trial, multiple former IFC employees testified that the defendant was the head of the company, controlled all the trading and all the company’s funds, and instructed them to provide false and misleading information to prospective investors. The defendant also created falsified account statements to conceal the fraud from investors. Ultimately, investors lost approximately $1 million as a result of the defendant’s scheme. The evidence at trial also established that Qualls participated in multiple prior fraudulent schemes.
The government's case was prosecuted by Assistant United States Attorney Daniel Spector.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it 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 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The Defendant:
THOMAS QUALLS
Age: 45
Hanover Township Man Sentenced for Distribution of Crack CocaineRead the Press Release
The United States Attorney's Office for the Middle District of Pennsylvania, announced that Anthony Moore, age 31, of Hanover Township, Pennsylvania, was sentenced by U.S. District Court Judge Robert D. Mariani today in Scranton to 130 months’ incarceration to be followed by a four-year term of supervised release, for distribution of crack cocaine.
Moore was indicted in January 2013 for illegal distribution of heroin, cocaine base (crack) involving 500 grams or more of cocaine. He pled guilty in October 2013 pursuant to a plea agreement.
The investigation was conducted by the DEA. The case was prosecuted by Assistant United States Attorney Todd K. Hinkley.
****Four Sentenced for Vee Quiva Casino Robbery AttemptRead the Press Release
PHOENIX – On March 5, 2014, Darvon Hibbler, 26, of Phoenix, was sentenced by U.S. District Judge James Carr to 24 months in prison. Hibbler pled guilty on Dec. 17, 2013, to conspiring to commit a robbery and theft. He was the final defendant to be sentenced in this attempted robbery of the Vee Quiva Casino on the Gila River Indian Community.
On May 31, 2013, Hibbler and Corey Wright, 42, of Phoenix, walked into the Vee Quiva Casino with the intent to steal money. Hibbler went up to the teller at the cashier’s cage and demanded money while Wright stood back as the lookout. Hibbler reached into his waistband as though he had a gun. Another teller saw what was happening and called for security. Hibbler and Wright left the casino without any money. Katrina Serna, 31, and Joseph Shope, 35, both of Laveen, Ariz., knew about the plan to rob the casino, failed to notify law enforcement, and helped Hibbler and Wright escape the casino after the robbery. On Feb. 14, 2014, Wright was sentenced to 14 months in prison for his part in the attempted robbery. Serna, on March 4, 2014, and Shope, on March 5, 2014, were each sentenced by U.S. District Judge James Carr to five years probation and four months home confinement for failing to report the conspiracy.
The investigation in this case was conducted by the Federal Bureau of Investigation and the Gila River Police Department. The prosecution was handled by Raynette Logan, Assistant U.S. Attorney, District of Arizona, Phoenix.
CASE NUMBER: CR-13-829-PHX-NVW
RELEASE NUMBER: 2014-015_HibblerFor more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Fort Pierce Man Sentenced for Firearms ChargesRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Hugo Barrera, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), announce the sentencing of Samuel George Brown, 49, of Fort Pierce, on charges of prohibited possession of firearms, in violation of Title 18, United States Code, Section 922(k); and, possession of a firearm in furtherance of a drug trafficking crime, in violation of Title 18, United States Code, Section 924(c). Brown appeared in court on March 7, 2014, in Fort Pierce before U.S. Senior District Judge Donald L. Graham.
According to the indictment, as well as an earlier federal complaint, and facts agreed upon by the parties at sentencing, Brown was found in possession of a .380 caliber Hi-Point handgun, as well as a .22 caliber Marlin rifle and a 12-gauge Mossberg shotgun, with corresponding ammunition, in his home. Officers of the St. Lucie County Sheriff’s Office discovered the firearms and ammunition, together with marijuana packaged for sale, when they executed a search warrant at Brown’s Fort Pierce home on June 8, 2013. Brown is a previously convicted felon.
Brown pleaded guilty to two counts of the indictment, charging him with possession of a firearm with an obliterated or altered serial number; and possession of a firearm in furtherance of a drug trafficking crime. Judge Graham sentenced Brown to a term of 66 months in prison, to be followed by three years of supervised release, and payment of a $200 special assessment.
Mr. Ferrer commended the investigative efforts of ATF, the Fort Pierce Police Department, and the St. Lucie County Sheriff’s Office. The case is being prosecuted by Assistant U.S. Attorney Theodore Cooperstein.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Former State Correctional Officer Charged with Civil Rights ViolationRead the Press Release
TALLAHASSEE, FLORIDA – Christopher Brunson, 38, of Perry, Florida, has been indicted for violating the civil rights of a Taylor County Correctional Institution inmate. The indictment was announced by Pamela C. Marsh, United States Attorney for the Northern District of Florida.
The indictment alleges that on January 30, 2013, Brunson, who was then employed as a correctional officer at the Taylor Correctional Institution, struck and assaulted an inmate resulting in bodily injury. Brunson was arraigned in federal court today and a trial date was scheduled for April 14, 2014.
If convicted, Brunson faces a maximum sentence of ten years in federal prison.
The case was investigated by the Federal Bureau of Investigation, the Florida Department of Law Enforcement, and the Florida Department of Corrections, Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney Karen Rhew-Miller
An indictment is merely an allegation by a grand jury that a defendant has committed a violation of federal criminal law and is not evidence of guilt. All defendants are presumed innocent and entitled to a fair trial, during which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Former Rmbs Trader Convicted of Securities Fraud, Defrauding Tarp ProgramRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, today announced that a federal jury in New Haven has convicted JESSE C. LITVAK, a registered broker-dealer and former managing director at New York investment bank Jefferies & Co., Inc., of multiple offenses involving a scheme to defraud customers trading in residential mortgage-backed securities (RMBS). The jury convicted Litvak on all counts, including 10 counts of securities fraud, one count of Troubled Asset Relief Program fraud and four counts of making false statements within the jurisdiction of the United States Government.
The trial before Chief U.S. District Judge Janet C. Hall began on February 18 and the jury returned its verdict today after deliberating for approximately two days.
“Today’s verdict shows plainly and powerfully that Wall Street professionals are not above the law,” said U.S. Attorney Daly. “A lie is a lie, and fraud is fraud. The jury rightly rejected Mr. Litvak’s shameful claim that he did nothing wrong because many on Wall Street engage in the same conduct. The defendant manipulated facts and made self-serving misrepresentations about the bonds he was buying and selling in a scheme that netted him and his employer more than $2 million in ill-gotten gain. His crime caught the attention of the Attorney General’s RMBS Working Group because much of that $2 million was from the defendant’s scheme to defraud a federal program created with taxpayer money to aid our nation in recovering from the 2008 financial meltdown. I want to acknowledge SIGTARP and the FBI for their incredible work on this ongoing investigation. The U.S. Attorney’s Office and our RMBS Working Group partners remain highly committed to investigating the fraud and abuse that helped lead to the 2008 financial crisis, particularly where that fraud is related to the government’s response to the crisis.”
“This afternoon at 2:30pm, Jesse Litvak, a former senior trader at New York investment bank Jefferies & Co., was convicted of lying through his teeth to defraud American taxpayers out of their hard-earned TARP investments,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “The defendant was the first person SIGTARP arrested for a crime related to the TARP bailout program known as PPIP, and he is now the first person convicted of a crime related to that program. Trading in mortgage securities can be a complicated business, but what the defendant did was simple – he lied to, defrauded, and illegally overcharged customers out of pure greed to benefit Jefferies and himself. Some of those customers were taxpayers who funded the TARP bailout. I would like to thank Assistant U.S. Attorneys Jonathan Francis and Eric Glover for their hard work and the deftness with which they prosecuted the case. SIGTARP and our law enforcement partners stand united in protecting taxpayers’ TARP investments, and we will track down perpetrators of TARP fraud and ensure they receive swift justice.”
“Today’s verdict was swift and just, and serves as a stern warning to those who defraud the Government for their own greed and avarice,” stated FBI Special Agent in Charge Ferrick. “TARP was designed to aid in the recovery from one of the worst recessions in U.S. history. Mr. Litvak orchestrated a scheme of deceit and prevarication to manipulate the program to the detriment of investors and the markets. The U.S. Attorney’s Office and all the other members of the RMBS Working Group form a highly effective partnership that will continue to identify and prosecute those who steal TARP funds.”
According to the evidence introduced during the three-week trial, in response to the 2008 financial collapse, the U.S. Department of Treasury introduced the Legacy Securities Public-Private Investment Program (PPIP), and used more than $22 billion of bailout money from the Troubled Asset Relief Program (TARP) to restart the trading markets for many troubled securities, including certain kinds of RMBS. The program created nine PPIP funds, and more than 100 firms applied to manage the funds. TARP infused between $1.4 billion and $3.7 billion of bailout money into each of the PPIP funds that was to be invested alongside private capital.
LITVAK, 39, of New York, N.Y., was a senior trader and managing director at Jefferies & Co, Inc. (“Jefferies”), a global securities and investment banking firm headquartered in New York. Jefferies also had a trading floor in Stamford, Conn., where LITVAK and other members of its Mortgage and Asset-Backed Securities trading group worked.
The jury found that LITVAK engaged in a scheme to defraud based on two types of misrepresentations. First, as a broker-dealer, only LITVAK – not the bond seller or buyer – knew the selling and asking prices of the parties. LITVAK exploited this information by misrepresenting the RMBS seller’s asking price to the buyer and by misrepresenting the buyer’s asking price to the seller. Having fraudulently manufactured a gap, LITVAK, on behalf of Jefferies, pocketed the difference in the price paid by the buyer and the price paid to the seller. Second, LITVAK took bonds held in Jefferies’ inventory and sold them to RMBS buyers only after inventing a fictitious third-party seller. This ruse allowed LITVAK to charge the buyer an extra commission that Jefferies was not entitled to because it was selling bonds it held in its own inventory.
Through these schemes, LITVAK defrauded numerous PPIP funds and multiple private investment funds of a total of more than $2 million.LITVAK was found guilty of ten counts of securities fraud, a charge that carries a maximum term of imprisonment of 20 years on each count, one count of TARP fraud, which carries a maximum term of imprisonment of 10 years, and four counts of making false statements to the federal government, a charge that carries a maximum term of imprisonment of five years on each count.
Judge Hall scheduled sentencing for May 30, 2014. LITVAK has been released on bond since his arrest on January 28, 2013.
This matter is being investigated by SIGTARP and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorneys Jonathan Francis and Eric Glover.
This prosecution was brought in coordination with the RMBS Working Group, a joint federal and state initiative created to investigate those responsible for misconduct contributing to the 2008 financial crisis. RMBS were pools of mortgages deposited into trusts and then sold as securities to investors who were to receive a stream of income from the mortgages packaged in the RMBS. The RMBS Working Group, which is chaired by Attorney General Eric Holder, brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, ten U.S. Attorneys’ Offices, the FBI, the Securities and Exchange Commission, the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the Federal Housing Finance Agency’s Office of Inspector General, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than ten state Attorneys General offices around the country.
For more information about the RMBS Working Group and the Financial Fraud Enforcement Task Force, please visit: www.stopfraud.gov.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]Former Owner of Trading Company Pleads Guilty to Multi-Million Dollar Fraud SchemeRead the Press Release
BOSTON – The former owner of Boston Trading and Research pleaded guilty today to charges stemming from his role in an investment scheme that defrauded more than 1,000 investors out of more than $30 million.
Craig A. Karlis, 53, of Hopkinton, pleaded guilty before U.S. District Court Senior Judge Mark L. Wolf, to nine counts of wire fraud and two counts of filing false tax documents. His sentencing is scheduled for June 2, 2014 at 3:00pm. His business partner, Ahmet Devrim Akyil, 41, formerly of Hingham, was charged with 10 counts of wire fraud. Akyil left the United States for Turkey in 2009 and remains a fugitive.
In 2007, Karlis and Akyil founded Boston Trading and Research (BTR) and recruited customers to open accounts in order to trade their money in the foreign currency exchange (FOREX) market. By July 2008, BTR had approximately 1,200 customers and more than $35 million under management.
Karlis and Akyil made a series of misrepresentations to customers about how BTR operated and about what they were doing with their money. While they told customers that BTR was compensated based on a percentage of the customers= trading profits, Karlis and Akyil in fact used millions of dollars from BTR customer accounts to pay business expenses, as well as their own personal expenses, such as houses, cars, and jewelry. Karlis and Akyil concealed this misappropriation from BTR's customers on BTR=s computerized customer platform and account statements, which, contrary to Karlis and Akyil =s representations, did not show all of the trades that BTR had placed using customer money.
Karlis and Akyil also told customers that BTR employed strategies to reduce risk, including a protection in the company=s computerized trading platform that automatically shut down all trading in a customer=s account if BTR=s trading lost 30% of the value in that account. However, the computerized platform did not have an automatic shut-down mechanism. In fact, over the course of BTR=s existence, Akyil repeatedly ignored the 30% Adraw-down@ limits. In August and September 2008, after Karlis had left BTR, Akyil continued trading long after he had lost more than 30% of the customer account funds. Ultimately, this trading caused BTR to lose approximately 90% of their customer=s money, or more than $30 million.
Karlis filed a false 2008 tax return in which he failed to report approximately $1.3 million in income he had received from BTR during that year. Karlis also filed another false document with the IRS in which he concealed the fact that he owned a second home which he had purchased with more than $600,000 from a BTR customer account.
AThe Department of Justice, along with our law enforcement and civil regulatory partners, is committed to protecting investors,” said U.S. Attorney Carmen M. Ortiz. “Especially during challenging financial times, we cannot, and will not, allow financial predators to mislead and take advantage of hard-working Americans.”
“Mr. Karlis chose greed over honesty,” said Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation. “By doing so, he upended the lives of approximately 1200 people, many of whom were from Massachusetts and Florida. Others of his kind should know that our team always beats those who are not honest about their investment management.”
“IRS Criminal Investigation is committed to investigating individuals who use their corporations as personal piggy banks,” said William P. Offord, Special Agent in Charge. “High-ranking corporate officials hold positions of trust not only in their companies but also in the eyes of the public. That trust is broken when such officials abuse their power and commit crimes.”
Karlis faces up to 20 years in prison, three years of supervised release, and a $250,000 fine on each of the wire fraud charges. Karlis also faces up to three years in prison, one year of supervised release and a $100,000 fine on the charges of filing false tax documents.
The Securities and Exchange Commission, which conducted a separate parallel civil investigation and cooperated with criminal authorities, has also filed a lawsuit alleging that Karlis and Akyil defrauded investors out of millions of dollars.
U.S. Attorney Ortiz; SAC Lisi of the FBI, Boston Field Division; and SAC Offord of the IRS’s Criminal Investigations in Boston, made the announcement today. The Commodity Futures Trading Commission also cooperated with the investigation. The case is being prosecuted by Assistant U.S. Attorneys Sarah E. Walters of Ortiz's Economic Crimes Unit and Adam J. Bookbinder of Ortiz’s Cybercrime Unit.
Former New York City Comptroller Candidate Pleads Guilty in Manhattan Federal Court to Illegally Distributing Prescription PillsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that KRISTIN DAVIS, a former candidate for New York City Comptroller, pled guilty today in Manhattan federal court to illegally distributing prescription pills. DAVIS, who was arrested in August 2013, entered her plea today before U.S. District Judge Edgardo Ramos.
Manhattan U.S. Attorney Preet Bharara said: “Kristin Davis now stands convicted of illegally selling hundreds of highly-addictive and dangerous prescription pills in exchange for cash. Abuse of illegally distributed prescription pills is the fastest-growing drug problem in the country, and this Office will do everything in its power to help combat this public health epidemic.”
According to the Complaint, Superseding Information, other information in the public record, and today’s plea proceeding:
On multiple occasions from January 2013 to March 2013, DAVIS sold hundreds of prescription pills containing amphetamine, alprazolam, zolpidem, and carisoprodol to a person she knew from prior purchases and sales to be a drug dealer. Unbeknownst to DAVIS, the person was a cooperating witness (the “CW”) with the Federal Bureau of Investigation (“FBI”) and was equipped with a recording device. During these sales, DAVIS was recorded saying that the pills she was selling were “Ambien,” “Soma,” and “Xanax.” On a fourth occasion, in April 2013, DAVIS arranged for another individual to sell approximately 180 oxycodone pills to the CW.
There is an illegal market for all of the drugs DAVIS sold and assisted another to sell. Oxycodone is a powerful painkiller with a high potential for addiction and abuse, and it is often used as a substitute for, or adjunct to, other illegal drugs, such as heroin. Amphetamine is a psycho-stimulant, often referred to as “speed,” and it often used as a substitute for, or adjunct to, other illegal drugs, including methamphetamine and cocaine. Alprazolam is a psychoactive drug often used as a substitute for, or adjunct to, other illegal drugs, such as LSD, heroin or opiates. Zolpidem is a sedative/hypnotic drug often used as a substitute for, or adjunct to, other illegal drugs, including amphetamine, methamphetamine, cocaine, and MDMA (commonly known as ecstasy). Carisoprodol is a skeletal muscle relaxant often used in conjunction with painkillers and so-called “date rape” drugs.
DAVIS, 38, of New York City, pled guilty to one count of distributing and possessing with intent to distribute controlled substances, specifically alprazolam, zolpidem, and carisoprodol. She faces a maximum sentence of five years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. DAVIS is scheduled to be sentenced by Judge Ramos on July 25, 2014.
DAVIS was one of several people arrested as part of an ongoing joint investigation conducted by the FBI, the New York City Police Department ("NYPD"), and the U.S. Attorney’s Office into the unlawful distribution of prescription drugs containing controlled substances in and around New York City:
- Thomas Rock was arrested on July 10, 2013, for distributing and conspiring to distribute oxycodone and alprazolam. He pled guilty on February 24, 2014, before U.S. District Judge Paul A. Engelmayer to distributing oxycodone and alprazolam, and is scheduled to be sentenced by Judge Engelmayer on June 6, 2014.
- Eugene Kurochkin was arrested on July 11, 2013, for distribution of oxycodone, alprazolam, amphetamine, and zolpidem. He pled guilty on November 1, 2013, to distributing oxycodone, alprazolam, amphetamine, and zolpidem, and was sentenced by U.S. District Judge Robert W. Sweet on February 10, 2014, to 12 months in prison.
- Raoul Goldberger and Rebecca Teman were arrested on July 29, 2013, for distributing and conspiring to distribute amphetamine, oxycodone, and vicodin. Goldberger pleaded guilty on August 21, 2013, to distributing amphetamine and oxycodone, and is scheduled to be sentenced by U.S. District Judge Colleen McMahon on March 12, 2014. Teman pleaded guilty on November 12, 2013, before U.S. Magistrate Judge Henry B. Pitman to misbranding a prescription drug, and is scheduled to be sentenced by Judge Pitman on March 11, 2014.
- Erik Pichardo, who was referred to as “Individual-1” in the Complaint against DAVIS, was arrested in August 2013 for distributing oxycodone. He pled guilty on December 12, 2013, before U.S. District Judge Harold Baer to conspiracy to distribute oxycodone, and is scheduled to be sentenced by Judge Baer on April 10, 2014.
- David J. Wright was arrested on October 3, 2013, in connection with this investigation on charges of distributing oxycodone, amphetamine, and carisoprodol, which charges are pending. The charges against Wright are merely accusations, and he is presumed innocent unless and until proven guilty.
Mr. Bharara praised the investigative work of the FBI. He also thanked the United States Department of Health and Human Services, Office of Inspector General, and the NYPD for their assistance in the ongoing investigation.
The cases are being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Daniel C. Richenthal, Kristy J. Greenberg, and Edward A. Imperatore are in charge of the prosecutions.
U.S. v. Kristin Davis Superseding Information
Former Highland Park Police OfficerSentenced to Prison for Taking A $10,000 BribeRead the Press Release
A former Highland Park police officer was sentenced to prison today for taking a $10,000 bribe and for conspiring with three other police officers to protect shipments of cocaine, U.S. Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by FBI Special Agent in Charge Paul M. Abbate.
During a hearing today before U.S. District Judge Avern Cohn, Price Montgomery, 40, of Detroit, Michigan, was sentenced to 18 months in prison and two years of supervised release based on his plea of guilty to conspiring to accept bribes and to commit extortion. Montgomery, an officer with the Highland Park Police Department for two years, accepted a $10,000 bribe from a man he had arrested on gun charges in return for agreeing not to appear as a witness at the man=s November 2012 criminal trial. Montgomery accepted the bribe with his partner, former police officer Anthony Bynum. Montgomery and Bynum failed to appear at the trial, and the charges were dismissed. Later, Montgomery, Bynum, and two other Highland Park police officers accepted cash from an FBI informant in exchange for protecting a shipment that contained what the officers believed were four kilograms of cocaine. The officers used their police guns and badges to protect the shipment.
The sentencing of Montgomery completes the case against the four former Highland Park police officers. Defendant Craig Clayton was sentenced to 12 months in prison on June 27, 2013. Defendant Shawn Williams was sentenced to 15 months in prison on October 8, 2013. Defendant Bynum was sentenced to 18 months in prison on November 7, 2013.
United States Attorney McQuade said, “The court’s sentence today sends a strong message that public officials who use their positions of trust to personally profit will be punished. Police officers who take bribes and use their badges to make money will go to prison.”"Government officials who breach the public trust for their own selfish purposes - regardless of who they are - will be pursued aggressively and brought to justice," said Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. "Today's sentence sends another message that corrupt police officers who accept bribes and use their positions for personal financial gain will be punished."
The case was investigated by agents of the FBI. It is being prosecuted by Assistant United States Attorneys David A. Gardey.
Former Florida Resident Arrested for Attempted Sex TraffickingRead the Press Release
Orlando, Florida – United States Attorney A. Lee Bentley, III announces that Patrick R. Minga (50, formerly of Cape Coral) was arrested today on a criminal complaint for attempting to induce and facilitate, for his own financial gain, the travel of an individual from Brevard County, Florida, to Quito, Ecuador, so that the individual could engage in illicit sexual conduct with minor girls. If convicted, Minga faces a maximum penalty of 30 years in federal prison.
According to the criminal complaint, Minga advertised, on Craigslist, a sex tourism business in Ecuador. Minga indicated that, for a fee, he could facilitate lodging, transportation, meals, and unlimited access to females from Ecuador and Colombia. An undercover agent with a U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Task Force observed the ad and contacted Minga. Over the course of several months, Minga tried to induce and arrange the travel of the undercover agent from Florida to Quito, where Minga advised that he could provide sexual encounters with minors as young as 13 and 14 years of age.
On March 2, 2014, Minga traveled from Ecuador to the United States, where agents subsequently arrested him in Huntsville, Alabama. He is currently detained, pending removal proceedings before a United States Magistrate Judge in Birmingham, Alabama. Thereafter, he will be transported to the Middle District of Florida for further proceedings.
This case is being investigated by the Brevard County Sheriff’s Office and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). It is being prosecuted by Assistant United States Attorney Ilianys Rivera Miranda.
It is another case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc.
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Former Family Physician Sentenced to Probation, Community Service for Selling Drug SamplesRead the Press Release
PITTSBURGH – A Pittsburgh-area family doctor has been sentenced in federal court to one year of probation with 200 hours of community service and a $5000 fine on his conviction of the unlawful sale of pharmaceutical drug samples, United States Attorney David J. Hickton announced today.
United States District Judge Arthur J. Schwab imposed the sentence on Douglas Dunham, 77, of McDonald, Pa.
According to information presented to the court, Dunham operated a family practice medical office in McDonald, Pa., for over 20 years. In his practice, Dunham received free samples of prescription drugs from pharmaceutical drug company representatives. The free samples were not intended to be sold, and were intended to be given free-of-charge to patients to promote the sale of the drugs. For roughly the past eight years, Dunham received the drug samples free-of-charge from the pharmaceutical drug company representatives and then sold the samples to his patients for a fee, instead of providing the samples free-of-charge.
Prior to imposing sentence, Judge Schwab stated that he considered the defendant’s voluntary surrender of his medical license to be part of the defendant’s punishment in this case.
Assistant United States Attorney Tonya Sulia Goodman prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended Federal Agents with the Food and Drug Administration's Office of Criminal Investigations, the Federal Bureau of Investigation and the Department of Health and Human Services for the investigation leading to the successful prosecution of Dunham.
Former Army Sergeant First Class Sentenced for Government Theft ChargesRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announced that in federal court today United States District Judge Louise Wood Flanagan sentenced MAURICIO ESPINOZA, 34, of Modesto, California, to 51 months of imprisonment and 3 years of supervised release. The Court further ordered ESPINOZA to pay $114,034.80 in restitution and the forfeiture of criminal proceeds in the same amount.
After initially failing to appear for trial, ESPINOZA pled guilty to conspiring to commit mail fraud and wire fraud, to steal and convert monies belonging to the U.S. Government, and to smuggle currency into the United States as well as to theft and conversion of government property. ESPINOZA then failed to appear for his sentencing hearing originally scheduled for January 2014. He was subsequently arrested and placed in custody pending his hearing today.
According to the Indictment and information in the public record, between July, 2009 and January, 2010, while deployed to Afghanistan, former Sergeant First Class ESPINOZA, 34, and former-Staff Sergeant Philip Wooten, 36, (who previously pled guilty to the same offenses) stole federal monies entrusted to them and which were earmarked for operational and reconstruction efforts.
ESPINOZA deployed to Afghanistan from July 2009 through July 2010 with a small detachment from the United States Army 7th Special Forces Group. ESPINOZA’S duties included that of Paying Agent. Wooten, who was assigned to the same detachment, was the Field Ordering Officer (FOO). As the FOO, Wooten was responsible for contracting with local vendors for various operational and reconstruction efforts in Afghanistan. As the Paying Agent, ESPINOZA was responsible for making payments to the local vendors to whom Wooten awarded contracts and for properly accounting for the expenditure of federal funds under his control. Together, as the Paying Agent and the Field Ordering Officer, ESPINOZA and Wooten were entrusted with U.S. funds allocated for military operations and reconstruction efforts in Afghanistan. Before their deployment and thereafter, the two soldiers planned how they would steal those funds.
Beginning in or about July 2009, ESPINOZA signed for and withdrew U.S. funds in the form of Afghani currency from the U.S. Finance Office on the military installation known as Kandahar Air Field (KAF). The funds were meant to finance purchases (such as provisions for the Special Forces Team) and construction projects near the team’s forward operating base. ESPINOZA knew that he would have to periodically return to the United States Finance Office at KAF in Kandahar, Afghanistan, to review the status of the funds that he withdrew. In advance of each trip to the Finance Office, ESPINOZA and Wooten falsified receipts from Afghani vendors to reflect greater amounts than were actually paid for goods and services that the Afghans had provided. ESPINOZA then handed in the falsified, inflated receipts to the Finance Office and kept for himself and his co-conspirator the difference between the inflated numbers and the amounts actually paid. Thereafter, and while still at the military base in Kandahar, the conspirators arranged with an Afghani national to have the stolen funds converted into U.S. dollars.
Once in possession of the U.S. dollars, ESPINOZA and his co-conspirator then converted a portion of the stolen funds into U.S. postal money orders, $30,000 of which ESPINOZA shipped to the United States via an international carrier. ESPINOZA also purchased a Harley-Davidson motorcycle with some of the stolen funds.
In addition, ESPINOZA wired and caused to be wired some of the money electronically through Western Union to various locations in the United States and Peru. ESPINOZA directed at least one recipient of the wired money to transfer funds to his own bank account.
The total loss to the government exceeded $200,000.
In a letter to the Court, Major General Edward M. Reeder, Jr., United States Army, reflected on the impact of the ESPINOZA’s conduct on the Special Forces’ mission overseas, noting that “The success of a Special Forces unit when dealing with the local Afghan populace is based on trust and respect. The majority of the Afghan population views the United States as one more in a long line of interlopers. When a person they regularly do business with, in this case Espinoza, is exposed as a thief and a liar, the established trust and respect is destroyed and can only be regained, if ever, through extraordinary efforts.”
Wooten plead guilty to a criminal information on Dec. 13, 2011, which charged conspiring to commit mail fraud and wire fraud, to steal and convert monies belonging to the U.S. Government and to smuggle currency into the United States along with aiding and abetting theft and conversion of government property. Wooten, who provided significant cooperation during the course of the investigation, was sentenced to 15 months imprisonment on October 3, 2013 for his role in this crime.
The case was investigated by the Defense Criminal Investigation Service, United States Postal Inspection Service, Office of the Special Inspector General for Afghanistan Reconstruction, United States Army Criminal Investigation Command, and the FBI from Fayetteville, NC; Fort Walton Beach, FL; and Panama City, FL. Special assistance was provided by the U.S. Immigration and Customs Enforcement – Homeland Security Investigation. The case was prosecuted by Assistant U.S. Attorney Banumathi Rangarajan of the Eastern District of North Carolina and Fraud Section Trial Attorney Wade Weems, on detail from the Special Inspector General for Afghanistan Reconstruction (SIGAR).
Federal Jury Convicts Twin Falls Woman of Conspiring to Sell Drug ParaphernaliaRead the Press Release
Defendant and Four Others Indicted in 2012 in Nationwide Law Enforcement Action
POCATELLO – Stephanie Nagel, 40, of Twin Falls, Idaho, was convicted yesterday in United States District Court in Pocatello of conspiracy to sell drug paraphernalia, U.S. Attorney Wendy J. Olson announced. A sentencing date has not been set. U.S. District Judge Fred L. Van Sickle of the Eastern District of Washington presided over the trial.
Evidence presented at trial showed that from 2007 to 2012, Nagel owned and operated a business called the Smoke N’ Head on Washington Street in Twin Falls, Idaho. Nagel sold various items of drug paraphernalia from the shop, including marijuana pipes and assorted paraphernalia used for marijuana and other controlled substances. Evidence also showed that Nagel had previously sold a substance commonly referred to as “spice,” which was subsequently determined to be a controlled substance analogue.
Nagel faces up to three years in prison, a maximum fine of $100,000, and one year of supervised release.
This case was part of a larger enforcement operation, which included 14 search warrants that were executed in July 2012 by law enforcement agencies at 11 locations in Twin Falls County, and three locations in Tigard, Oregon, and Vancouver, Washington. The warrants were related to a nationwide law enforcement action against the synthetic designer drug industry responsible for the production and sale of dangerous and deadly drugs that are often marketed as bath salts, “spice,” incense, or plant food, which are prohibited under the federal controlled substance analogue statute. Operation Log Jam targeted every level of the synthetic drug industry, including retailers, wholesalers, and manufacturers, in more than 80 U.S. cities.
In a related case, Joshua P. Becker, of Portland, Oregon, was sentenced in December 2013 to 48 months in prison for conspiracy to launder money. In October 2013, Gary E. Nagel and Joshua Cserepes, both of Twin Falls, Idaho, and Shyloh Becker, of Portland, Oregon, were each sentenced to 36 months’ probation and fined $500 for related charges, including possession with intent to distribute a controlled substance analogue, conspiracy to sell drug paraphernalia, and aiding and abetting in a monetary transaction in property derived from specified unlawful activity, respectively. Allen W. Nagel, of Twin Falls, is scheduled to be sentenced on March 17, 2014, by Judge Brian Ted Stewart of the District of Utah. He pleaded guilty in June 2013, to conspiracy to launder money.
The joint investigation of the Organized Crime and Drug Enforcement Task Force (OCDETF), is led by the Drug Enforcement Administration in conjunction with Twin Falls City Police Department, Twin Falls County Sheriff's Office, U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), Internal Revenue Service-Criminal Investigation, U.S. Customs and Border Patrol, U.S. Postal Inspection Service, Bureau of Alcohol, Tobacco, Firearms and Explosives, Idaho State Police, Ada County Sheriff's Office, Nampa City Police Department, Meridian City Police Department, Gooding County Sheriff's Office, Cassia County Sheriff's Office, and Minidoka County Sheriff's Office.
The OCDETF program is a federal multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
Federal Jury Convicts Methamphetamine TraffickerRead the Press Release
Defendant Also Possessed An Illegal Short-Barreled Shotgun And Other Firearms
CHARLOTTE, N.C. B A Charlotte jury returned a guilty verdict against Martin Martinez Saldana, 44, of West Jefferson, N.C., following a four day trial that ended today, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Saldana was convicted of conspiracy to distribute and to possess with intent to distribute methamphetamine and possession of an illegal short-barreled shotgun.
U.S. Attorney Tompkins is joined in making today’s announcement by Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office; Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; Greg McLeod, Director of the North Carolina State Bureau of Investigation (NC SBI); and Sheriff James Williams of the Ashe County Sheriff’s Office (ACSO).
According to court documents and evidence introduced at trial, from as early as 2011 through the end of 2012, Saldana and his co-conspirators distributed in Ashe County and elsewhere more than 20 pounds of near-pure crystal methamphetamine, also known as “ice.” According to trial evidence, the high level of purity of the methamphetamine indicates it originated from a Mexican “super lab” and had an estimated street-level value of more than $1 million. The evidence at trial also established that when law enforcement executed a search warrant at Saldana’s residence they seized four handguns, including a revolver hidden under his mattress, and an illegal short-barreled shotgun, as well as ammunition. Over the course of the investigation, law enforcement also seized five real properties in Ashe County worth over $500,000 combined, $50,000 in cash, one vehicle, one-quarter kilogram of methamphetamine “ice” and drug packaging materials. Among the seized items also were three images of Santa Muerte, who has been adopted by drug traffickers as folk “patron saint.”
Law enforcement arrested Saldana on December 12, 2012, as he was planning to leave for Mexico. He has been in federal custody since his arrest and will remain in custody until his sentencing date, which has not yet been set. The charges levied against Saldana carry a statutory mandatory minimum sentence of 10 years to life in prison, and a fine of up to $10,000,000.
U.S. Attorney Tompkins commended the DEA in Charlotte, ACSO, NC SBI, and ATF for the investigation leading to the successful prosecution of Martin Martinez Saldana. U.S. Attorney Tompkins also thanked the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Alleghany Sheriff’s Office and the Boon Police Department for the assistance in this case. Assistant U.S. Attorney Steven R. Kaufman is handling the prosecution for the case.
Federal Grand Jury Criminal Indictments AnnouncedRead the Press Release
TULSA, Okla. — The results of the March 2014 Federal Grand Jury were announced today by Danny C. Williams Sr., United States Attorney for the Northern District of Oklahoma.
The following named individuals have been charged with a federal crime or crimes by the return of an indictment by the Grand Jury. The return of an indictment is a method of informing the defendant of alleged violations which must be proven in a court of law beyond a reasonable doubt to overcome the defendant’s presumption of innocence.
Alfonso Delgado-Castorena. Alien in the United States After Deportation. Delgado-Castorena, 42, was arrested in Tulsa County and is charged with having returned to the United States unlawfully after being deported in February 2005 near San Luis, Arizona. If convicted, Delgado-Castorena would face a maximum of twenty (20) years imprisonment and/or a fine up to $250,000. The U.S. Immigration and Customs Enforcement’s (ICE) Enforcement and Removal Operations (ERO) is the lead agency.
Carl Don Floyd. Aiming a Laser Pointer at an Aircraft. Floyd, 42, of Tulsa, is charged with aiming the beam of a green laser pointer at the Tulsa Police Department helicopter on February 15, 2014. If convicted, the maximum penalty would be five (5) years in prison and a fine up to $250,000. The Federal Bureau of Investigation is the lead agency.
Curtis Leon Gann. Felon in Possession of Firearm and Ammunition, Possession of Methamphetamine with Intent to Distribute, and Possession of a Short-Barreled Shotgun. Gann, 41, of Tulsa, is charged with possessing methamphetamine with intent to distribute and possessing two shotguns, a rifle, a pistol, and ammunition after prior convictions of the same charges in August 2005. One of the shotguns is alleged to have an illegally shortened barrel. If convicted, the maximum penalty for Count 1 would be ten (10) years in prison and a fine of $250,000; Count 2 carries a maximum penalty of twenty (20) years in prison and a fine of $250,000; and for Count 3 the maximum penalty would be ten (10) years in prison and a fine up to $10,000. The Tulsa County Sheriff’s Office Drug Task Force is the lead agency.
Darrick Garner. Failure to Register as a Sex Offender. Garner, 37, of Tulsa, is charged with failing to register as a sex offender after a federal sexual assault conviction in 2010. If convicted, Garner would face a maximum penalty of ten (10) years incarceration and a fine of up to $250,000. The United States Marshals Service is the lead investigative agency.
Donald Lee Hill. Possession of Methamphetamine with Intent to Distribute. Hill, 33, of Tulsa, is charged with possessing methamphetamine with intent to distribute on January 12, 2014. If convicted, the maximum penalty would be twenty (20) years in prison and a $1,000,000 fine. The U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Bureau of Alcohol, Tobacco, Firearms and Explosives are the lead agencies.
Jose Abraham Jain-Vielmas. Alien in the United States After Deportation. Jain-Vielmas, 33, was arrested in Tulsa County and is charged with having returned to the United States unlawfully after being deported in January 2000 near El Paso, Texas. If convicted, Jain-Vielmas would face a maximum of twenty (20) years imprisonment and/or a fine up to $250,000. The U.S. Immigration and Customs Enforcement’s (ICE) Enforcement and Removal Operations (ERO) is the lead agency.
Michael Anthony Llanos, Ramy McMann, Peppa Ann Smith, Alfredo Sustiata Jr., and Marcelo Alejandro Torres. Drug Conspiracy, Distribution and Possession with Intent to Distribute Methamphetamine, and Felon in Possession of Firearm and Ammunition. Llanos, 45, McMann, 37, Smith, 42, all of Tulsa, Sustiata, 29, and Torres, 36, both from California, are all charged with drug conspiracy and possessing 50 grams or more of methamphetamine with intent to distribute on January 6, 2014. Llanos is also charged with possessing a 9mm caliber pistol and ammunition after a prior felony conviction of beating/injuring children in 1997. If convicted, the maximum penalty each defendant would face for Counts 1 and 2 would be not less than five (5) years and not more than forty (40) years and/or a fine of $5,000,000. For the felon in possession of a firearm and ammunition charge, Llanos would face ten (10) years in prison and a fine up to $250,000. The Tulsa County Sheriff’s Office Drug Task Force is the lead agency.
Lazaro Lopez-Nava. Alien in the United States After Deportation. Lopez-Nava, 32, was arrested in Tulsa County and is charged with having returned to the United States unlawfully after being deported in April 2012 near Del Rio, Texas. If convicted, Lopez-Nava would face a maximum of twenty (20) years imprisonment and/or a fine up to $250,000. The U.S. Immigration and Customs Enforcement’s (ICE) Enforcement and Removal Operations (ERO) is the lead agency.
David Santisteban. Felon in Possession of Firearm and Ammunition. Santisteban, 28, of Tulsa, is charged with possessing a firearm and ammunition after prior convictions including possession of controlled dangerous substance with intent to distribute in 2008. If convicted, the maximum penalty would be ten (10) years in prison and a fine up to $250,000. The Bureau of Alcohol, Tobacco, Firearms and Explosives is the lead agency.
Jackson Dwain Shields. Possession of Stolen Mail Matter. Shields, 34, of Tulsa, is charged with possessing three checks on February 11, 2014, knowing that they had been stolen from mail placed in a residential mailbox for pickup by the Postal Service. If convicted, Shields would face a maximum penalty of five (5) years in prison and a fine of up to $250,000. The case has been investigated by the United States Postal Inspection Service, the Glenpool Police Department and the Creek County Sheriff’s Office.
Federal Court Sentences Former Davenport Man on Child Exploitation ChargesRead the Press Release
DAVENPORT, IA- On March 7, 2014, Samuel Henderson III, age 61, formerly of Davenport, was sentenced by United States District Court Judge John A. Jarvey to 156 months imprisonment, after pleading guilty to coercion and enticement of a minor and possession of child pornography, announced United States Attorney Nicholas A. Klinefeldt. Henderson was also ordered to serve fifteen years of supervised release and pay $200 towards the Crime Victims Fund. Henderson will also be required to register as a sex offender. Between June 14 and July 11, 2013, Henderson used a cellular phone to persuade, induce, entice and coerce a 14 year old female to engage in criminal sexual offenses. During this same time period, Henderson knowingly possessed images of child pornography on his cellular phone.
This case was being prosecuted by the United States Attorney’s Office for the Southern District of Iowa. This case was investigated by the United States Secret Service Cyber-Crimes Task Force, the Davenport Police Department and the Moline Police Department.
(Download Press Release )
Federal Authorities Continue Crackdown on Smuggling of Protected Marine Animals on Southwest BorderRead the Press Release
SAN DIEGO - United States Attorney Laura E. Duffy announced that yesterday Cheng Zhuo Liu, pled guilty to smuggling protected sea cucumbers. In pleading guilty, Liu admitted that he had smuggled 100 pounds of dried sea cucumber into the United States from Mexico on October 3, 2013, concealed in the spare tire area of his Hyundai. The smuggled sea cucumbers were members of the species Isostichopus fuscus, with a market value of between $5,000-$10,000.
According to scholarly articles, sea cucumbers are marine animals with a leathery skin and an elongated body. They are found on the sea floor worldwide with the greatest number of species being located in the Asian Pacific Ocean. Sea cucumbers serve a useful role in the marine ecosystem as they help recycle nutrients, breaking down detritus and other organic matter after which bacteria can continue the degradation process. Due to overfishing, many species of sea cucumber (including Isostichopus fuscus) are protected under Appendix III of the Convention on International Trade in Endangered Species (CITES) and require a CITES permit from the country of origin and a U.S. Fish and Wildlife Import/Export permit to import them into the United States. Liu admitted that he had neither permit.
Unfortunately, there is presently a thriving black market in sea cucumbers driven by demand in Asia where a pound might sell for $300. In China, the sea cucumber is used in Chinese cuisine (as Hoi Sam) as well as for medicinal purposes. Our Southwest border is not the only area where smuggling sea cucumber is a problem. India has been grappling with sea cucumbers being smuggled in large quantity to Indonesia, Japan and Sri Lanka due to its alleged medicinal properties. Similarly, in the Caribbean Sea off the shores of the Yucatàn Peninsula near fishing ports such as Dzilam de Bravo, illegal harvesting devastated the population of sea cucumbers and resulted in conflict in the community as rival gangs struggled to control the illegal harvest.
According to the American Cancer Society, although it has been used in traditional Asian folk medicine for a variety of ailments, "there is little reliable scientific evidence to support claims that sea cucumber is effective in treating cancer, arthritis, and other diseases."
Liu agreed to forfeit the sea cucumber seized as part of the case and is scheduled to be sentenced on June 9, 2014, at 9:00 a.m. before the Honorable Roger T. Benitez.
DEFENDANT Criminal Case No. 13-CR-4347-BEN Cheng Zhuo Liu Age: 50 Chula Vista, California CHARGESSmuggling, a felony, in violation of Title 18, United States Code, Section 545
INVESTIGATING AGENCY
Maximum Penalty: 5 years in custody, a $20,000 fine and a $100 penalty assessmentNational Oceanic and Atmospheric Administration (NOAA); U.S. Fish and Wildlife Service
Facebook Post of Harassing Manatees Leads to Guilty Pleas in Federal CourtRead the Press Release
Orlando, Florida – United States Attorney A. Lee Bentley, III announces that Taylor Blake Martin (22, Alabama) and Seth Andrew Stephenson (22, Rockledge) pleaded guilty before U.S. Magistrate Judge Gregory J. Kelly yesterday to taking (harassing) an endangered species. Each faces a maximum penalty of one year in prison and a $50,000 fine. A sentencing date has not yet been scheduled.
According to court documents, the U.S. Fish and Wildlife Service became aware of a video posted on Facebook that showed one individual luring two manatees to a dock with a water hose, and another individual jumping off of a boat dock, “cannonballing” an adult manatee and a calf. Further investigation revealed that Martin was the individual who “cannonballed” on top of the manatees. Stephenson was identified as the one who lured the manatees to the dock with the water hose. The video shows Martin landing on the back of the adult manatee as the manatees swim away. Stephenson then begins to use the water hose in an attempt to lure the manatees back as the video ends.
After the video was posted on Facebook, several people commented on it. In response to a post that expressed displeasure with Martin’s actions, Martin responded, “hahaha…in my debue [sic] as tayla the manatee slaya…im f---- ready to cannonball on every manatee living yewwww.”
"This case demonstrates our resolve to address the illegal harassment of Manatees, as well as the enforcement of speed zones, and other more serious forms of take which result in the death or injury of Florida's Endangered Manatees," said Special Agent in Charge Luis Santiago, Southeast Region, Office of Law Enforcement, U.S. Fish and Wildlife Service.
This case was investigated by the United States Fish and Wildlife Service and the Florida Fish and Wildlife Conservation Commission. It was prosecuted by Assistant United States Attorney Shawn P. Napier.
El Departamento de Justicia Presenta una Demanda para Prohibir a Preparadores de Declaraciones de Impuestos de CaliforniaRead the Press Release
WASHINGTON – Estados Unidos inició una demanda civil en la que pidió a un juzgado federal de Fresno, California, que prohibiera a Ken Mendoza y Alice Mendoza preparar declaraciones de impuestos federales para terceros, anunció hoy el Departamento de Justicia. La demanda alega que los Mendoza solían preparar declaraciones de impuestos para terceros, en las que pedían al gobierno federal reintegros indebidos. De acuerdo con la demanda, los Mendoza prepararon desde 2010 más de 600 declaraciones de impuestos para personas del área de Fresno.
De acuerdo con la demanda, los Mendoza declaran indebidamente las obligaciones de impuestos federales de sus clientes al inventar gastos de negocios, pedir créditos falsos o inflados, especialmente créditos educativos, y deducir gastos personales de los clientes que no son legalmente deducibles. En total, la demanda alega que el Tesoro de EE.UU. pudo haber perdido debido a las actividades de los Mendoza hasta 2.8 millones de dólares para los años fiscales 2010 a 2011.
Además, la demanda busca prohibir a cualquiera que actúe en conjunto con los Mendoza preparar o presentar declaraciones de impuestos federales; prohibir a los Mendoza solicitar o instruir la preparación de declaraciones de impuestos federales para terceros; que se les exija a los Mendoza, en el plazo de 30 días a partir de la emisión de un interdicto en este caso, que se comuniquen con todas las personas para quienes prepararon una declaración de impuestos federales desde el 1° de enero de 2008, y que informen a todas dichas personas del interdicto permanente en su contra; que se les exija a los Mendoza que provean a Estados Unidos una lista de todas dichas personas; que se le permita a Estados Unidos controlar el cumplimiento de dicho interdicto por parte de los Mendoza; y solicita que el tribunal retenga jurisdicción sobre este caso para hacer valer cualquier interdicto emitido contra los Mendoza.
El fraude de preparación de declaraciones de impuestos es uno de los ardides de la Docena sucia de ardides tributarios de 2013 del Servicio de Impuestos Internos [Internal Revenue Service (IRS)]. El IRS tiene algunos consejos en su portal en Internet para la elección de un preparador de impuestos. En la última década, la División de Impuestos ha obtenido interdictos contra cientos de preparadores de impuestos inescrupulosos. Se puede encontrar información sobre estos casos en el portal del Departamento de Justicia. Se encuentra una lista alfabética de personas prohibidas de preparar declaraciones de impuestos y promover ardides tributarios en esta página. Si usted cree que una de las personas o empresas bajo prohibición puede estar violando un interdicto, por favor comuníquese con la División de Impuestos para proveer detalles.
East St. Louis Man Pleads Guilty to Falsifying Firearm RecordsRead the Press Release
Follow @SDILNewsOn March 5, 2014, Mack Davis, Jr., a 22-year old East St. Louis, Illinois, man pled guilty in federal district court, in East St. Louis, to one count of filing false firearm records, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. Davis is scheduled for sentencing on June 27, 2014, at which time he faces a maximum sentence of 5 years’ in prison, a fine of up to $250,000, not more than 3 years supervised release, and a $100 special assessment.
Court proceedings revealed that on February 19, 2013, Davis pled guilty to a felony residential burglary charge in St. Clair County, Illinois. That same day he went to Ron and Jo’s Firearms and Sporting Supplies, Inc., attempting to purchase two firearms. In order to purchase, Davis filled out Federal Firearms Form 4473, marking “no” to a question asking whether or not he had been convicted in court of a crime punishable by imprisonment for a term exceeding one year.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives. Special Assistant United States Attorney Neal C. Hong is prosecuting the case.