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19 December 2013
Local Venture Capitalist Sentenced on Tax ChargesRead the Press Release
St. Louis, MO -- BURTON DOUGLAS MORRISS was sentenced to sixty months on tax evasion charges associated with his evasion of taxes on millions of dollars of income he earned between 2006 and 2009. According to his plea agreement, the tax liability Morriss attempted to evade in 2007 was $2,888,483. The total tax due and owing by Morriss for all tax years is $5,559,386.
"Tax evasion is not a victimless crime, said Sybil Smith, Special Agent in Charge of IRS Criminal Investigation. "We all pay when others swindle the government."
According to court documents, Morriss was a venture capitalist living in St. Louis County. Morriss admitted that, through his work, he was versed in tax laws. As a venture capitalist, he would discuss tax consequences of buying and selling investments to sophisticated investors. Moreover, he had been dealing with advisers and lawyers regarding his personal taxes for many years before 2006.
For the tax year 2007, which is the tax evasion count to which he pleaded guilty, Morriss earned substantial income from his venture capital activities. In order to reduce his tax liability for that year, he claimed $18,160,613 in losses associated with a number of entities, including Morriss Holdings, MIC Aircraft, Tech Aircraft and MIC Real Estate. These entities were established as single-member limited liability companies for Morriss' mother. Additionally, Mrs. Morriss had already claimed these passive losses for her own benefit in previous years. In addition to these 2007 tax losses, Morriss admitted to evading millions more in taxes on income from his venture capital companies in subsequent tax years.
Morriss did not timely file tax returns for 2006, 2007, 2008 and 2009. On June 27,2011, Morriss filed the delinquent 2007 tax return that is the subject of the guilty plea, along with delinquent 2008 and 2009 tax returns.Morriss, Creve Coeur, MO, pled guilty in August to one felony count of tax evasion, and appeared today for sentencing before United States District Judge Rodney Sippel.
Morriss' case was prosecuted at the same time as the civil enforcement action of Securities and Exchange Commission v. Burton Douglas Morriss was pending in the Eastern District of Missouri. On August 13, 2013, United States District Judge Carol E. Jackson ordered that Morriss, among other things, be prohibited from acting as an officer or director of certain companies issuing securities. The SEC matter was filed in 2012 in the wake of the collapse of the Acartha Group, LLC and other venture capital companies run by Morriss. The SEC complaint alleged that Morriss had fraudulently transferred millions of investor dollars to himself for personal use. In addition to the director/officer bar, the SEC will ask the Court to order disgorgement of ill-gotten gains and civil penalties.
In addition to the SEC, this case was investigated by Internal Revenue Service Criminal Investigation, the Federal Bureau of Investigation and the United States Postal Inspection Service. Assistant United States Attorney Tom Albus handled the case for the U.S. Attorney's Office.
Local Appraiser Pleads Guilty to Conspiracy to Commit Bank FraudRead the Press Release
BUFFALO, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that Darryl Glasco, 54, of North Tonawanda, N.Y., a licensed New York State appraiser, pleaded guilty to conspiracy to commit bank fraud. The charge carries a maximum penalty of 30 years in prison, a fine of $ 1,000,000, or both.
Assistant U.S. Attorney Kathleen A. Lynch, who is handling the case, stated that the defendant conspired with James P. Vasiliou Jr., a borrower, to submit a false appraisal to JP Morgan Chase Bank to refinance a property located at 16 Blackley Court in Lockport, N.Y. The false statements resulted in an inflated fair market value for the property and were used to obtain approval of the loan.
Vasiliou pleaded guilty to bank fraud and is awaiting sentencing.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The plea is the result of an investigation by the Mortgage Fraud Task Force of WNY, led by the U.S. Attorney’s Office, which includes agents and personnel from the United States Secret Service, under the direction of Special Agent in Charge Tracy Gast, and the Federal Bureau of Investigation, under the direction of Special Agent in Charge Brian P. Boetig.Lehigh County Couple Charged with Passing Counterfeit U.S. Currency in Five Pennsylvania CountiesRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Mohammed Abughaniyeh, age 29, of Laury’s Station, Pennsylvania, and Stacy Miller, age 25, of Whitehall, Pennsylvania, were indicted yesterday by a federal grand jury in Harrisburg and charged with Uttering Counterfeit Obligations of the United States.
According to U.S. Attorney Peter J. Smith, in October 2013 and November 2013, Abughaniyeh and Miller allegedly passed counterfeit $100 bills, at businesses in Mifflin, Blair, Clearfield, Indiana, and Bedford Counties. If convicted, they each face up to 20 years’ imprisonment and a fine of up to $250,000.
This case is being investigated by the United States Secret Service and the Pennsylvania State Police and is being prosecuted by Assistant United States Attorney Daryl F. Bloom.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is 20 years’ imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.Leader of Detroit-based Identity-theft Ring SentencedRead the Press Release
Organizer of Traveling Fraud Scheme to Serve 10.5 Years in Federal Prison
GRAND RAPIDS, MICHIGAN – The lead defendant in a prosecution that resulted in felony convictions of eight Detroit residents for identity theft, wire fraud, and conspiracy was sentenced today by Chief U.S. District Judge Paul L. Maloney. Charles J. Finley, 26, will serve 10.5 years in federal prison for his crimes, and was also ordered to pay restitution of $95,489 to the victims of the crime.
The investigation, which was conducted by the Grand Rapids office of the U.S. Secret Service, began in May 2012 after loss-prevention investigators of Meijer corporation became aware that teams of identity thieves were visiting stores in the Lansing and Grand Rapids area and purchasing high-value Meijer gift cards using credit cards that had been re-encoded with account data from compromised credit card accounts. The in-store cards were then used to purchase large numbers of expensive electronic devices such as iPads, iPhones, and laptop computers. Already familiar with similar “carding” schemes based on previous successful investigations, through which it had developed a close working relationship with Meijer loss-prevention specialists, the Secret Service opened an investigation that eventually identified most of the participants in this latest appearance of the fraud. The subsequent prosecution resulted in the following sentences: Sharonique S. Pointer, 22, will serve 24 months; Mark A. Houston, Jr., 24, will serve 36 months; Donald D. Peterson, Jr., 26, will serve 33 months; Gary K. Smith-Brown, Jr., 27, will serve 36 months; Adrian R. Evans, 26, will serve 75 months; and Dewain J. Clark, 29, will serve 24 months. Each defendant was also ordered to pay restitution to the victims of the offenses. Deaunte G. Finley, the last defendant to be arrested and convicted, is scheduled to be sentenced on 13 January 2014.
Commenting on the case, U.S. Attorney Patrick A. Miles, Jr., stressed his Office’s commitment to pursue all forms of identity-theft, which he described as one of the “most serious, and growing, forms of white-collar crime.” Said Miles, “identity theft doesn’t just cause financial harm, it damages the hard-earned reputations of productive members of society. Identity thieves who think that West Michigan is fertile ground to commit this crime are making a serious mistake. These defendants learned that fact the hard way.”
Resident Agent-in-Charge Kim Cheatle, U.S. Secret Service, echoed Miles. “This investigation demonstrated the commitment the Secret Service has to partner with private industry to pursue financial crimes cases. This case in particular had a significant community impact. We are thankful for the assistance rendered by the Meijer Corporation, and the relationship we have with the U.S. Attorney’s Office, which culminated in the successful prosecution of this group.”
The case was prosecuted by Assistant U.S. Attorney Hagen W. Frank, who leads the U.S. Attorney’s Office identity-theft task force.
END
Key West Man Sentenced to Thirty Years on Drug ChargesRead the Press Release
TALLAHASSEE, FLORIDA – United States Attorney Pamela C. Marsh announced thatMichael Clifford Watson, 32, of Key West, Florida, was sentenced today by United States District Judge Robert Hinkle to serve 360 months in prison for drug conspiracy charges. Watson will serve an eight-year term of supervised release after his incarceration.
Watson was arrested at a Tallahassee apartment on November 19, 2012, based upon outstanding drug charges from Key West. Six ounces of cocaine, digital scales, and $2,760 were seized at the time of his arrest. At Watson’s sentencing, the Court determined that he was distributing oxycodone in addition to cocaine in Tallahassee. Watson pled guilty in October 2013, on the date set for jury selection.
Watson was sentenced as a career offender. He was convicted in 2001 of possession of cocaine with intent to sell, and in 2010 of sale of cocaine, both times in Key West. According to court proceedings, Watson has served three terms in the Florida Department of Corrections.
U.S. Attorney Marsh credited the success of this prosecution to the joint efforts of the Tallahassee Police Department, the U.S. Drug Enforcement Administration, the U.S. Marshal’s Service, and the Key West Police Department.
The case was prosecuted by Assistant United States Attorney Michael T. Simpson.
KC Man Sentenced to 20 Years for Illegal FirearmRead the Press Release
Project Ceasefire
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was sentenced in federal court today for illegally possessing a firearm.
Dennis T. Hart, 55, of Kansas City, was sentenced by U.S. District Judge Beth Phillips to 20 years in federal prison without parole.
On Sept. 17, 2013, Hart pleaded guilty to being a felon in possession of a firearm. Hart was arrested after police officers responded to a report of an outside disturbance at about 12:56 p.m. at 29th and Prospect in Kansas City, Mo., on April 7, 2013, following an altercation between Hart and another person. After punching the victim in the face, Hart pulled up his sweater to show the victim he had a loaded Lorcin .380-caliber pistol tucked into his waistband. When the victim drove away, Hart got on a bus and left.
Officers later located Hart along the bus route. While struggling with the officers during his arrest, Hart pulled out the firearm and dropped it on the ground.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Hart has three prior felony convictions for possessing a controlled substance, a prior felony conviction for distributing a controlled substance, two prior felony convictions for forgery, two prior felony convictions for assault, and prior felony convictions for tampering and fraud.
This case is being prosecuted by Assistant U.S. Attorney Bruce E. Clark. It was investigated by the Kansas City, Mo., Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Project Ceasefire
Project Ceasefire, launched in October 1999, is a cooperative initiative by federal and local law enforcement and the Kansas City Crime Commission that targets for federal prosecution persons who unlawfully use or possess firearms.Justice Department Reaches Settlement with State of New Hampshire to Expand Community Mental Health Services and Prevent Unnecessary InstitutionalizationRead the Press Release
The Justice Department announced today that the United States and a coalition of mental health advocacy organizations have entered into a comprehensive settlement agreement with the state of New Hampshire that will transform New Hampshire’s mental health system by significantly expanding and enhancing mental health service capacity in integrated community settings.
The settlement agreement will provide people with serious mental illness in New Hampshire with robust community alternatives that will reduce or eliminate the need for hospitalization. Individuals who receive expanded services in New Hampshire will have fewer visits to emergency rooms and will avoid unnecessary institutionalization at state mental health facilities, including New Hampshire Hospital and the Glencliff Home.
“Today’s agreement realizes the promise of the Americans with Disabilities Act for people with serious mental illness in New Hampshire,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “It will better ensure that effective community services will get to the people most in need when and where they need services – in their homes and communities. These services will help people with mental illness avoid and respond to crises without escalating them and without giving up their important connections to their communities. This agreement is also a testament to the vision and leadership of Governor Maggie Hassan and Attorney General Joe Foster.”
“The settlement of this landmark federal civil rights lawsuit marks a major step forward in New Hampshire’s treatment of one of its most vulnerable populations – those who suffer from mental illness,” said U.S. Attorney John P. Kacavas for the District of New Hampshire. “I commend the progressive leadership of Governor Hassan and New Hampshire Attorney General Joe Foster and their respective staffs, without whose efforts and will this achievement would not have been possible.”
The agreement requires the state to create and expand services over the next six years. The state will: create new mobile crisis teams and new community crisis apartments in Manchester, Concord and Nashua; expand and enhance Assertive Community Treatment team services, which will provide state-wide coverage for at least 1,500 people; add hundreds of new supported housing units and work to create community alternatives for people with complex health care needs; and expand effective supported employment services for hundreds of people. An independent expert reviewer will evaluate the state’s compliance with the agreement and will issue public reports on the state’s ongoing implementation efforts.
The settlement resolves outstanding issues in a 2012 federal class action lawsuit brought under the Americans with Disabilities Act (ADA) – Amanda D. v. Hassan; United States v. New Hampshire. The ADA and the Supreme Court’s landmark decision in Olmstead v. L.C. affords individuals with disabilities the right to receive services in the most integrated setting appropriate to their needs, and today’s agreement will help ensure that adults with serious mental illness in New Hampshire can exercise that right.
In recent years, the Justice Department’s Civil Rights Division has entered into a number of statewide ADA/Olmstead settlements, including comprehensive agreements with Georgia, Delaware, Virginia, North Carolina, and now New Hampshire, that give thousands of persons with disabilities new and meaningful opportunities to live in and be active members of their communities – outside of segregated institutional settings. Visit www.ada.gov/olmstead to learn more about these settlement agreements, the Olmstead decision, the ADA, and other laws enforced by the Civil Rights Division.
The parties’ proposed class action settlement agreement must still be approved by U.S. District Court Judge Steven J. McAuliffe, who is presiding over the lawsuit. In September 2013, the Court certified a class of plaintiffs that includes all persons with serious mental illness who are unnecessarily institutionalized in NHH or Glencliff or who are at serious risk of unnecessary institutionalization in these facilities. The parties have proposed that appropriate notice of the settlement be provided to class members, that they be able to submit concerns or comments to the proposed settlement by the end of January 2014, and that the Court schedule a fairness hearing on or after Feb. 17, 2014.The New Hampshire settlement agreement was realized due to the efforts of the following attorneys in the Special Litigation Section: Deputy Chief Judy C. Preston and Trial Attorneys Richard J. Farano, Deena S. Fox, Katherine V. Houston and Alexandra L. Shandell. In addition, the Civil Rights Division received ongoing support and assistance from Assistant U.S. Attorney John J. Farley for the District of New Hampshire.
Justice Department Reaches Settlement with Fort Davis State Bank to Resolve Allegations of Lending DiscriminationRead the Press Release
The Justice Department announced today that Fort Davis State Bank, based in Fort Davis, Texas, will implement uniform pricing policies, conduct employee training and pay $159,000 as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of national origin.
The settlement, which is subject to court approval, was filed in conjunction with the department’s complaint in the U.S. District Court for the Western District of Texas. The complaint alleges that Fort Davis State Bank violated the Equal Credit Opportunity Act (ECOA) by charging higher prices for unsecured consumer loans to Hispanic borrowers than to similarly qualified non-Hispanic borrowers.
Fort Davis State Bank is a community bank with three branches that for many years has been a significant presence in the local Hispanic community.
“This settlement ensures that Hispanic borrowers who paid more for their loans will be properly compensated,” said Acting Assistant Attorney General Jocelyn Samuels for the department’s Civil Rights Division. “We commend Fort Davis State Bank’s commitment to meeting the special lending needs of all individuals within its community on an equal basis and to working cooperatively with the Justice Department in reaching an appropriate resolution of this case.”The lawsuit originated from a 2011 referral to the Department by the Federal Deposit Insurance Corporation (FDIC). Fort Davis State Bank is regulated by the FDIC.
The proceeds of the settlement will be used to compensate Hispanic victims of Fort Davis State Bank’s alleged discrimination. Under the proposed settlement, a list of individual victims will be identified by the United States and receive notification of eligibility from the bank, and the department will monitor the compensation process.Prior to the settlement, Fort Davis State Bank implemented uniform pricing policies that substantially reduced the discretion of its loan officers to vary a loan’s interest rate from the price it set based on borrower’s objective credit-related factors. Today’s settlement requires Fort Davis State Bank to keep its improved policies in place for at least the next three years, as well as to continue to monitor its lending for signs of discrimination and provide monitoring reports to the United States.
The department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Rights Division. Since the Fair Lending Unit was established in February 2010, it has filed or resolved 29 lending matters under the Fair Housing Act, ECOA and the Servicemembers Civil Relief Act. The settlements in these matters provide for nearly $700 million in monetary relief for impacted communities and individual borrowers. The Attorney General’s annual reports to Congress subject to ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications .
The Civil Rights Division and the FDIC are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, along with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov .
A copy of the complaint and proposed order, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department website at www.justive.gov/fairhousing .
Justice Department Announces Fair Housing Settlement with W.V. DeveloperRead the Press Release
The Justice Department announced today that developer Douglas Pauley and entities affiliated with him have agreed to pay $110,000 and make all retrofits required to remove accessibility barriers at 30 apartment complexes, involving more than 750 units, in West Virginia that were developed through the federal government’s Low-Income Housing Tax Credit program. The parties’ agreement will settle the United States’ claims that defendants violated the Fair Housing Act by building the complexes with a variety of features that made them inaccessible to persons with disabilities.
Under the terms of the parties’ agreement, Pauley, as general partner of 30 limited liability partnerships, must take extensive actions to make the complexes accessible to persons with disabilities. These corrective actions include replacing cabinets in bathrooms and kitchens to provide sufficient room for wheelchair users, reducing door threshold heights, replacing excessively sloped portions of sidewalks and installing properly sloped curb ramps that allow persons with disabilities access to sidewalks from the parking areas. In addition, the defendants will pay $100,000 to establish a settlement fund for the purpose of compensating disabled individuals impacted by the accessibility violations and $10,000 as a civil penalty.
“The Fair Housing Act protects the rights of persons with disabilities to have equal opportunities to enjoy the housing of their choice,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division . “The Justice Department is strongly committed to the enforcement of the fair housing laws. It is especially important that multi-family properties developed using federal programs are designed to provide accessible and affordable housing to those who need it the most.”
“When developers and building professionals fail to design and construct homes with the required accessibility features, we will vigorously enforce the law," said U.S. Attorney R. Booth Goodwin for the Southern District of West Virginia.
Individuals who are entitled to share in the settlement fund will be identified through a process established in the settlement. Notices of the settlement and a list of subject properties will be published in the Charleston Gazette. Persons who believe they were subjected to unlawful discrimination at one of those properties either when they lived there or considered living there should contact the Justice Department toll-free at 1-800-896-7743 mailbox # 9993 or e-mail the Justice Department at [email protected]The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt . Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Line at 1-800-896-7743, e-mail the Justice Department at [email protected] or contact The Department of Housing and Urban Development at 1-800-669-9777.
International Arms Smuggler Sentenced to 180 Months in PrisonRead the Press Release
Siarhei Baltutski, aka Sergey Boltutskiy, 41, of Minsk, Belarus, was sentenced today to serve 180 months in prison for conspiracy to violate the Arms Export Control Act, conspiracy to violate the International Emergency Economic Powers Act and conspiracy to commit money laundering.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting Assistant Attorney General John Carlin of the Justice Department’s National Security Division and U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania made the announcement.
Baltutski pleaded guilty on Jan. 25, 2013. In addition to the prison term, U.S. District Court Judge Paul S. Diamond of the Eastern District of Pennsylvania ordered Baltutski to serve three years of supervised release.
Between Jan. 1, 2008, and Sept. 21, 2011, Baltutski organized a network of buyers in the United States to obtain and illegally export to Belarus high-tech military hardware such as Scorpion Thermal Weapon Sights, ThOR 2 Thermal Imaging Scopes, Thermal-Eye Renegade 320’s, and other night vision targeting devices. During the course of the conspiracy, Baltutski and his associates illegally exported hundreds of these items. Baltutski then arranged for hundreds of thousands of dollars to be secretly wired, via offshore shell companies, to purchase these items, to pay for shipping, and to pay his network of buyers.
The Arms Export Control Act and the International Emergency Economic Power Act prohibit the export of high-tech military technology. Keeping this technology out of the hands of current and potential adversaries is critical to national interest and the safety and success of U.S. service members in combat.
This case was investigated by the U.S. Immigration and Customs Enforcement Homeland Security Investigations and the FBI. The case was prosecuted by Trial Attorney Jerome Maiatico of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Robert Livermore of the Eastern District of Pennsylvania, with assistance from Trial Attorney David Recker of the National Security Division’s Counterespionage Section.Illinois Woman Pleads Guilty in Federal Court to False PersonificationRead the Press Release
PANAMA CITY, FLORIDA– Adrienne Eve Williams, 32, of Wexford, Illinois, pleaded guilty today in federal court to falsely personifying an officer or employee of the United States.
During the plea hearing, Williams admitted that between October 2012 and April 2013, she impersonated Northern District of Florida United Stated District Judge Richard Smoak, United States Attorney Pamela C. Marsh, and a certified legal assistant when she drafted fraudulent legal documents that pertained to a pending civil case and were allegedly signed by Smoak, Marsh, and the legal assistant.
Williams is currently scheduled to be sentenced in federal court on March 5, 2014, in Panama City. She faces a term of imprisonment of up to three years, followed by a term of one year of supervised release, and a fine of up to $250,000.
This case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Katy Risinger.
Holabird Woman Charged with Wire FraudRead the Press Release
United States Attorney Brendan V. Johnson announced that a Holabird, South Dakota, woman has been indicted by a federal grand jury for Wire Fraud.
Frances Smith, age 68, was indicted on November 13, 2013. She appeared before U.S. Magistrate Judge Mark A. Moreno on December 16, 2013, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 20 years in custody and/or a $250,000 fine, 3 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The Indictment alleges that from 2009 to the present, Smith and two others organized and conducted a fraudulent investment scheme involving wire fraud.
The charge is merely an accusation and Smith is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Internal Revenue Service. Assistant U.S. Attorney Meghan N. Dilges is prosecuting the case.
Smith was released on bond pending trial. A trial date has not been set.
Health Care Clinic Owner Sentenced<br /> for Role in $7 Million Medicare Fraud SchemeRead the Press Release
The owner of a Miami home health care company was sentenced to serve 235 months in prison today for her participation in a $7 million health care fraud scheme involving defunct home health care company Anna Nursing Services Corp.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.
Dora Moreira, 46, was sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida. In addition to her prison term, Moreira was sentenced to serve three years of supervised release and ordered to pay $6,928,931 in restitution.
In October 2013, Moreira was convicted by a jury of one count of conspiracy to commit health care fraud, one count of conspiracy to defraud the United States and receive and pay health care kickbacks, one count of payment of kickbacks in connection with a federal health care program, one count of conspiracy to commit money laundering and five counts of money laundering.
Moreira was the owner and operator of Anna Nursing, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.According to evidence presented at trial, Moreira operated Anna Nursing for the purpose of billing the Medicare Program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or not provided.
Moreira paid kickbacks and bribes to patients, negotiated and interacted with patient recruiters, and coordinated and oversaw the submission of fraudulent claims to the Medicare program. Moreira also laundered money received from Medicare in order to conceal her financial transactions and generate cash needed to pay kickbacks to patients, patient recruiters, and others in return for assisting her in the fraudulent scheme at Anna Nursing.
From approximately July 2010 through approximately May 2013, Anna Nursing was paid approximately $7 million by Medicare for fraudulent claims for home health services that were not medically necessary and/or not provided.
This case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. The case was prosecuted by Assistant Chief Benton Curtis and Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.govGrand Island Man Convicted of Receipt of Child PornographyRead the Press Release
United States Attorney Deborah R. Gilg announced today that following a 3 day trial in United States District Court, a jury found James B. Haugh, age 57, guilty of receiving and distributing child pornography. Haugh, a resident of Grand Island, Nebraska, faces imprisonment of at least 5 years and a maximum of 20 years, a fine of $250,000, and a term of supervised release after imprisonment of at least 5 years and a maximum life term of supervision. In addition, United States District Court Judge John M. Gerrard ordered that the property used to commit the crime be forfeited to the United States.
Haugh came to the attention of investigators of the Nebraska Attorney General’s Office through a proactive investigation conducted by the Nebraska Attorney General into the receipt and distribution of child pornography through file sharing software. Investigators used automated software to determine that a computer utilizing a specific IP address was sharing child pornography through the Internet.
The investigation led to the execution of a search warrant on December 28, 2012, at Haugh’s residence in Grand Island, Nebraska. A forensic examination of a computer and other storage media seized at the residence revealed numerous videos child pornography that had been received and distributed between January 3, 2009 and December 28, 2013.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.This case was investigated by the Nebraska Attorney General’s Office.
Georgia Aircraft Restorer settles dispute with Federal Authorities over removing rare aircraft parts from Alaska Public LandRead the Press Release
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that an aircraft restoration company based in Douglas, Georgia, reached a settlement agreement for unauthorized use of public lands in Alaska.
B-25 Group, LLC, a commercial aircraft restoration company, led by Aircraft Restoration Specialist Edward Thomas Reilly Jr. has paid the U.S. Bureau of Land Management (BLM) $55,000 to conclude a five year investigation surrounding the unauthorized removal of parts from a historic F-82 crash site located south of Fairbanks, Alaska.
The F-82, serial number 46-497, took off with two other F-82 aircraft from Ladd Air Force Base (AFB) (currently U.S Army Garrison Fort Wainwright) on January 16, 1950, for local practice of aerial interceptions. During the flight 46-497 crashed on the Tanana Flats near Fairbanks, killing both military service members on-board.
During July 2008, salvagers affiliated with B-25 Group located and removed parts from the crash site without authorization from BLM, the agency that manages federally owned lands. B-25 Group initially asserted the parts had been lawfully acquired from a salvage yard in Fairbanks. Although the U.S. Air Force had formally abandoned ownership of the remains of all USAF aircraft which had crashed prior to November 1961, Air Force and public land policy requires salvagers to obtain permission and coordinate salvage plans with the owner of the land. In the case of this F-82 aircraft, the land owner is the U.S. Department of the Interior, Bureau of Land Management.
The settlement agreement provides BLM with $50,000 for archeological work in recovering the remainder of this historic aircraft. B-25 Group has also agreed to provide patterns and specifications for the parts it recovered from 46-497 and built into its P-82 currently undergoing restoration.
Ms. Loeffler commends the U.S. Bureau of Land Management, Department of the Interior, for the investigation of this case. In addition to the BLM, the Federal Bureau of Investigation and U.S. Air Force Office of Special Investigations also are to be commended for their efforts associated with the investigation of this case.
According to Assistant U.S. Attorney Stephen Cooper, the additional $5,000 was assessed as a civil penalty and will be used by BLM to further its efforts to protect historic aviation properties in the State of Alaska.Four Defendants in Tax Fraud Scheme Sentenced to PrisonRead the Press Release
PANAMA CITY, FLORIDA — United States Attorney Pamela C. March announced the sentencing of four defendants by United States District Judge Richard Smoak today.
Wilson Calle, 55, of New York, New York, Blaine Johnston, 62, of Marianna, Florida, Wilfredo Rodriguez, 53, and Diana Gonzalez, 63, both of Miami, Florida, were all sentenced today, based on charges brought against them by the U.S. Attorney’s Office, alleging various federal tax violations. During a federal trial in September, Calle and Johnston were found guilty by a federal jury of conspiring to defraud the United States by filing, or assisting others in filing, false federal income tax returns, and multiple counts of filing false federal income tax returns. Rodriguez was found guilty by the jury of filing a false federal income tax return seeking a false and fraudulent refund. Gonzalez had previously entered a guilty plea to the charge of conspiracy to defraud the United States by filing, or assisting others in filing, false federal income tax returns seeking false and fraudulent refunds.
The sentences imposed today by Judge Smoak for each defendant are as follows:
- Wilson Calle was sentenced to 78 months in prison and was ordered to pay restitution to the Internal Revenue Service in conjunction with other defendants in the amount of $245,747.32;
- Blaine Johnston was sentenced to 78 months in prison and was ordered to pay restitution to the Internal Revenue Service in conjunction with other defendants in the amount of $245,747.32;
- Wilfredo Rodriguez was sentenced to 27 months in prison and was ordered to pay restitution to the Internal Revenue Service in the amount of $160,490.93; and
- Diana Gonzalez was sentenced to 63 months in prison and was ordered to pay restitution to the Internal Revenue Service in conjunction with other defendants in the amount of $245,747.32.
In announcing the sentence imposed by the court, United States Attorney Marsh said, “In these difficult economic times, tax refund fraud is especially harmful to our communities and our nation. It harms the government, as well as every honest taxpayer who dutifully pays taxes. We will continue to aggressively pursue those who defraud and illegally manipulate the tax system, especially those individuals who concoct schemes to submit false tax returns and assist others in doing so.”
During the jury trial, the prosecutors presented evidence that, between 2008 and 2009, the defendants prepared and filed fraudulent tax returns seeking more than $19 million in refunds. By using an obscure IRS Form 1099-OID, the defendants falsely reported that creditors of the defendants and their clients had withheld large amounts of federal income taxes and asserted that the creditors had paid those amounts over to the IRS. In doing so, the defendants fraudulently reported debts they owed as income tax withholdings. As a result of the fraudulently overstated income tax withholding, the tax returns filed on behalf of the defendants or their clients claimed large refunds, to which they were not entitled.
The case was prosecuted by Assistant U.S. Attorneys J. Ryan Love and Randall J. Hensel.Former Vice President of Alberici Constructors and Subcontractor Sentenced on Fraud ChargesRead the Press Release
St. Louis, MO - CLONE JEFFERSON OLIVER was sentenced to 60 months in prison for his participation in a scheme to defraud Alberici Constructors, Inc. by inflating invoices.
Oliver, Apollo Beach FL, former vice-president of construction at St. Louis-based Alberici, pled guilty to six counts of mail fraud, wire fraud and money laundering last September and appeared today for sentencing before United States District Judge Catherine D. Perry.Sybil Smith, Special Agent in Charge of IRS Criminal Investigation said, “This is yet another example of multiple agencies working together with our financial fraud investigators to dismantle a sophisticated fraud scheme.”
According to court documents, Oliver was the project manager for Alberici on a project to build a water treatment plant in Arlington County, Virginia. Work on the project began in September 2006 and the cost of the project was $238,000,000. Oliver and Kenneth Marc Simmons, a subcontractor on the project, participated in a scheme to defraud Alberici through the preparation and submission of inflated invoices and false change orders for materials provided to the project by Simmons' business, Industrial and Municipal Supply (IMS). When IMS received payment on the bad invoices, Simmons kept a share and then forwarded money in the nature of kickbacks to Oliver. Simmons made many of the payments to a corporation formed by Oliver called Advanced Construction Solutions, which had the same initials (ACS) as another supplier to the Arlington project, American Construction Services. The court document refers to Oliver's company as the "fake ACS" while the latter company is referred to as the “real ACS.” Oliver admitted that, in the scheme to overpay IMS, Alberici was overbilled in the amount of $4.8 million from 2006 through 2011.
The real ACS provided welding services to the project. At Oliver's direction the owner of the real ACS billed Alberici for piping actually supplied by IMS in a situation where the real ACS provided only welding services on that piping. IMS invoiced the real ACS for that piping through inflated invoices of approximately $2,000,000. The real ACS included those billings in the invoices it submitted to Alberici for payment.Oliver will be liable to pay Alberici the full $6.8 million in restitution. He also agreed that property and assets he acquired with the stolen money would be forfeited. This includes two houses in Florida (one in Apollo Beach and one in Zephyrhills), a diamond ring with platinum mounting, a 2010 Mercedes Benz vehicle, a 2007 Sea Ray boat, two SeaDoo Bombardier water craft and several bank accounts.
Co-defendant Kenneth Marc Simmons, La Grange GA, pled guilty in September to two felony counts of mail fraud and two felony counts of wire fraud and was sentenced yesterday to 24 months prison and ordered to pay restitution of $4.8 million.
This case was investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation. Assistant United States Attorneys Anthony Franks and Richard Finneran handled the case for the U.S. Attorney’s Office.
Former Stock Broker Pleads Guilty in Manhattan Federal Court to Insider Trading ChargesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that DAVID J. WEISHAUS, a former stock broker at a securities trading firm (“Securities Trading Firm-1”), pled guilty today in Manhattan federal court to charges arising from his involvement in an insider trading scheme. The alleged scheme involved the misappropriation of material, non-public information (“Inside Information”) concerning IBM’s acquisition of a software company, SPSS, Inc., in 2009. WEISHAUS was charged in November 2012, and pled guilty today before U.S. District Judge Andrew L. Carter, Jr., pursuant to a cooperation agreement.
According to the Indictment to which WEISHAUS pled guilty, statements made during the plea proceeding, and other court documents:
The Inside Information concerning IBM’s acquisition of SPSS originated from a corporate lawyer who was part of the legal team that represented IBM in the transaction (“Attorney-1”) in 2009. On May 31, 2009, Attorney-1 shared Inside Information concerning the transaction, including the names of the parties and the fact that IBM was going to acquire SPSS for a significant premium over its market price, with his close friend, Trent Martin, a former research analyst at an international financial services firm. The information was shared in confidence and, based on their longstanding history of sharing confidences, Attorney-1 expected that Martin would not share the information or use it to trade.
However, in June and July 2009, Martin bought SPSS common stock and call option contracts based on the Inside Information he was given by Attorney-1 and, in turn, shared the tip with his roommate, Thomas Conradt, who worked as a stock broker at Securities Trading Firm-1. In June and July 2009, Conradt bought SPSS common stock and tipped WEISHAUS, his co-worker at Securities Trading Firm-1, who also bought SPSS common stock and call options. Conradt also tipped his co-workers at Securities Trading Firm-1 (“CC-1 and CC-2”), who then bought SPSS call option contracts. When IBM announced its acquisition of SPSS on July 28, 2009, the share price of SPSS common stock rose by 41% in one day. Thereafter, Martin, Conradt, WEISHAUS, CC-1, and CC-2 sold their SPSS positions, yielding total profits of approximately $1 million.
WEISHAUS, 33, of New York, New York, pled guilty to one count of conspiracy to commit securities fraud and one count of securities fraud. The conspiracy count carries a maximum sentence of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million. As part of his plea agreement, WEISHAUS agreed to forfeit his share of the proceeds obtained from the offense. He is scheduled to be sentenced by Judge Carter on April 25, 2014, at 3:15 p.m.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Securities and Exchange Commission. Mr. Bharara noted that the investigation is continuing.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive,
coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20
federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition
of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases
against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For
more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys John T. Zach and Telemachus P. Kasulis are in charge of the prosecution.
U.S. v. Thomas C. Conradt and David J. Weishaus Indictment 12 Cr 887
Former St. Louis Parks Division Deputy Commissioner Sentenced on Fraud ChargesRead the Press Release
St. Louis, MO - JOSEPH VACCA, Former Deputy Commissioner of the St. Louis Parks Division, was sentenced to 36 months in prison on charges that he and Thomas Stritzel, Former Chief of the St. Louis Park Rangers, defrauded the City of St. Louis of approximately one-half million dollars by submitting false invoices purportedly for materials and services supplied to the Parks Division. He appeared before United States District Judge Jackson in St. Louis.
According to court documents at the time of their guilty pleas, from January 1, 2005, to December 31, 2012, Vacca and Stritzel embezzled funds of the City of St. Louis based upon the submission of sham and false invoices, which included false charges of approximately $472,722. They used the funds for their own personal use, including lease payments on personal vehicles, fuel costs, the payment of personal credit card charges and other personal living expenses unrelated to the legitimate operations of the St. Louis Parks Division.
Vacca and Stritzel set up a sham company called Dynamic Management and then funneled city funds received through the submission of false and sham invoices to Dynamic Management's bank account. They then used those fraudulently obtained funds for their own personal use, including leasing personal vehicles, payment of fuel costs and the payment of personal credit card charges.
Vacca was also ordered to pay restitution to the City of St. Louis in the amount of $472,722.26
Co-defendant Thomas Stritzel is scheduled for sentencing January 27, 2014.
This case was investigated by the Federal Bureau of Investigation and the St. Louis Metropolitan Police Department. Assistant United States Attorney Hal Goldsmith is handling the case for the U.S. Attorney's Office.
Former Socorro I.S.D. Trustee Sentenced to Federal Prison in El Paso Corruption CaseRead the Press Release
In El Paso today, former Socorro Independent School District Trustee Guillermo “Willie” Gandara, Sr., was sentenced to 42 months in federal prison followed by three years of supervised release for using his influence with the school board to secure and retain lucrative health services contracts for ACCESS Health Source announced United States Attorney Robert Pitman and FBI Special Agent in Charge Douglas E. Lindquist.
United States District Judge Frank Montalvo also ordered that Gandara pay a $25,000 fine as well as $5,575.67 restitution to Socorro ISD. Furthermore, Judge Montalvo ordered that Gandara self–surrender to a U.S. Bureau of Prisons designated facility on or before February 4, 2014, to begin serving his prison term.
“The sentence handed down today should reassure the public that we will be relentless in pursuing those public officials who violate their public trust for personal gain,” stated U.S. Attorney Robert Pitman.
ACCESS, among other things, was a third party administrator of healthcare benefits for self-insured entities. Between 1998 and 2007, ACCESS contracted with self-insured local (El Paso) government entities, including Socorro ISD, to provide administrative services for health insurance programs provided by their employer.
On July 22, 2013, Gandara pleaded guilty to one count of conspiracy to commit mail fraud. By pleading guilty, Gandara admitted that from 1998 until July 2007, he schemed to defraud the school district and deny the citizens of El Paso the right to honest services by their elected officials. Furthermore, that Gandara knowingly aided and abetted former ACCESS CEO and President Frank Apodaca and others by performing acts in his official capacity which benefited ACCESS.
“Today’s sentencing of former SISD Trustee Guillermo Gandara, Sr., marks the final sentencing of eleven individuals who were entrusted to serve the citizens of Socorro and El Paso but instead used their positions and influence to promote their own personal interests. This sentencing is yet another reminder of the FBI’s continued commitment to pursue individuals who have violated the public’s confidence and hold them accountable, irrespective of status,” stated FBI Special Agent In Charge Douglas E. Lindquist.
This FBI investigation has resulted in 39 federal convictions -- 36 individuals who entered guilty pleas and three individuals who were convicted by juries.
Assistant United States Attorneys Debra Kanof and Jose Luis Gonzalez are prosecuting this case on behalf of the Government.Former President of Southbury Synagogue Sentenced to 30 Months in Prison for Embezzling More Than $600,000Read the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that JODI CHURCHILL, 45, of Orange, was sentenced today by U.S. District Judge Robert N. Chatigny in Hartford to 30 months of imprisonment, followed by three years of supervised release, for embezzling more than $600,000 from a Southbury synagogue. CHURCHILL was also ordered to serve six months of home confinement and perform 120 hours of community service while on supervised release.
According to court documents and statements made in court, beginning in November 2010, while serving as the vice president of the Beth El Synagogue in Southbury, CHURCHILL began embezzling funds from the synagogue. In June 2011, CHURCHILL became president of the synagogue and used her new position to open a checking account and a money market account in the name of the synagogue. CHURCHILL was the only signatory on the accounts. Initially, CHURCHILL opened the accounts using the synagogue’s business address in Southbury, but in 2011, she directed the bank to change the mailing address on the accounts to her residence in Orange. Thereafter, all bank statements for accounts were mailed to CHURCHILL’s home address.
Between June 2011 and December 2011, CHURCHILL deposited bank checks totaling more than $300,000 into the accounts. The checks reflected the proceeds of certificates of deposit held by the synagogue that had matured at other financial institutions.
The investigation has revealed that CHURCHILL made more than 60 unauthorized ATM and over-the-counter withdrawals of synagogue funds in amounts ranging from $200 to $5,000. CHURCHILL used embezzled funds to pay school-related expenses for her children, expenses for leasing a horse used by one of her children, vehicle expenses, airline tickets and hotel expenses for personal travel. She also provided stolen funds to a relative.
During the course of this scheme, CHURCHILL embezzled more than $661,000 in synagogue funds.
After the embezzlement scheme was uncovered, the government seized approximately $104,000 from CHURCHILL’s bank accounts, and seized and sold, for approximately $22,000, an automobile she had purchased with synagogue funds. The funds have been returned to the synagogue.
Judge Chatigny ordered CHURCHILL to pay restitution in the amount of $531,985.25 to the synagogue and its insurer.
On May 31, 2013, CHURCHILL waived her right to indictment and pleaded guilty to one count of mail fraud.
This matter was investigated by the United States Secret Service and was prosecuted by Assistant United States Attorney Christopher W. Schmeisser.
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Tom Carson
(203) 821-3722 [email protected]Former Partner in International Law Firm Sentenced to More Than 17 Years in Prison for Sex Trafficking of A Minor, Distributing Images of Child Sexual AbuseRead the Press Release
NEWARK, N.J. – A Bergen County, N.J., man admitted today to engaging in the sex trafficking of a young boy and distributing child pornography over the Internet and was sentenced during the same proceeding to 210 monthsin prison. He was also ordered to pay $1.2 million in restitution to his victims, New Jersey U.S. Attorney Paul J. Fishman announced.
Edward M. De Sear, 67, of Saddle River, N.J., pleaded guilty before U.S. District Judge William J. Martini to a superseding information charging him with one count of sex trafficking of a child and four counts of distributing child pornography. Judge Martini imposed the sentence today in Newark federal court.
At the time of his initial arrest in July 2011 on a federal complaint charging him with distribution of child pornography, De Sear was a partner at the New York office of a prominent international law firm. He was released on bail and taken into custody again in August 2012, when he was charged in an indictment with multiple offenses related to images of children being sexually abused.
According to documents filed in this case and statements made in court:
De Sear admitted that in June 2011, he arranged for a young boy to travel from Paris to Brussels, Belgium, and sexually abused the child. De Sear facilitated the boy’s international travel by, among other means, paying cash to the boy’s father.
On several occasions between May 2010 and February 2011, De Sear also distributed hundreds of video and image files depicting young children being sexually abused, sometimes violently, via a peer-to-peer file-sharing program.
In addition to the prison term and restitution, Judge Martini ordered De Sear to pay a $25,000 fine and sentenced him to a lifetime of supervised release He is also required to register as a sex offender.
U.S. Attorney Fishman credited special agents of the FBI’s Child Exploitation Task Force, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s guilty plea and sentencing.
The government is represented by Assistant U.S. Attorneys Shirley U. Emehelu and Leslie F. Schwartz of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense counsel: John Vazquez and Michael Critchley Sr., Esqs., Roseland, N.J.
De Sear, Edward Superseding Information
Former Parker Man Sentenced to Serve 51 Months in Federal Prison for $1.7 Million Fraudulent Ponzi SchemeRead the Press Release
DENVER – Shawon McClung, age 27, formerly of Parker, Colorado, was sentenced earlier this week by U.S. District Court Judge R. Brooke Jackson to serve 51 months in federal prison for wire fraud, U.S. Attorney John Walsh and FBI Denver Division Special Agent in Charge Thomas Ravenelle announced. Following his prison sentence, Judge Jackson ordered McClung to serve 3 years on supervised release. The defendant was also ordered to pay $1,756,750 in restitution to the 15 victims of his fraud. McClung was ordered to voluntarily surrender to the institution designated by the U.S. Bureau of Prisons within 15 days from the date of designation.
McClung was first charged by Information on June 12, 2013. He pled guilty before Judge Jackson on July 30, 2013. The defendant was sentenced on December 16, 2013.
According to court documents, including the stipulated facts contained in the plea agreement, in 2009, McClung began Flint‑McClung Capital, LLC ("FMC") in Indiana. In November 2010, McClung moved FMC from Indiana to Denver, Colorado. In early 2009, McClung entered into financing discussions with a software programmer for the development of proprietary software to make automated trades on the foreign currency ("FOREX") market. The goal was to develop a software program that would perform numerous automated trades during a short time based on an algorithm designed to predict and exploit differences in foreign exchange rates. On December 15, 2010, an agreement was reached by McClung and the software programmer to provide funding for the software program. However, McClung only provided approximately $213,000 of the promised $614,790, and the software program was never developed and was never available for FMC’s use.
Despite the fact that the software program had not been developed, from approximately March 2009 to approximately April 2011, McClung solicited investor money by falsely representing that FMC owned and used a proprietary "massively parallel automated trading system" to trade currencies on the FOREX market. McClung falsely told investors that this proprietary software was already being used at FMC and had a history of success. Both verbally and in writing, McClung falsely represented to investors, potential investors and others that investors in the investment programs he was offering "historically" received returns of 15% to 100% approximately every 14 to 30 days. In reality, as McClung well knew, the software program did not exist and had no history of success.
Both verbally and in written "Investment Contracts" and "Joint Venture Agreements," McClung falsely represented to investors, potential investors and others that FMC guaranteed from loss the principal of the investment placed with FMC. McClung also falsely represented to investors, potential investors and others that FMC would use their entire investment to trade in currencies using FMC’s proprietary system, which McClung knew did not exist. In fact, McClung did not place any of the investors’ money in trades.
McClung did make some promised payouts to early investors using money he received from other investors. Some of those early investors told other potential investors about their successful "investments" with FMC, which reassured others about investing their money with McClung and FMC.
After McClung and FMC failed to make promised payments to investors via email and other forms of communication, McClung made a number of false excuses to investors and others regarding why the payments had not been made. He also made a number of false promises about future payments. In March 2011, McClung sent to several investors via email a document entitled "Cancellation of Contract and Account Settlement" in which he falsely represented that FMC would return an amount of money specified in the document if the investor signed and released McClung and others of any liability. After receiving signed "Cancellation of Contract and Account Settlement" from many investors, McClung failed to make the promised payouts and failed to return the investors’ principal.
“All too often we see con men like the defendant in this tragic case, who claim to have a super-secret method that enables them to make instant millions by manipulating or outwitting the financial markets,” said U.S. Attorney John Walsh. “That sort of claim always deserves the highest level of skepticism – if a deal promises sky-high returns with no risk, it’s too good to be true, and investors should run away.”
“In order to ensure our financial markets operate fairly, the FBI is committed to aggressively pursuing those who commit investment fraud,” said FBI Denver Division Special Agent in Charge Thomas P. Ravenelle. “We are confident the results of this investigation will deter others who engage in these types of fraudulent schemes.”
This case was investigated by the Federal Bureau of Investigation (FBI).
McClung was prosecuted by Assistant U.S. Attorney Pegeen Rhyne.
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Former Loan Officer Sentenced to 11 Years in Prison for Mortgage Fraud SchemeRead the Press Release
LAS VEGAS, Nev. – A Billings, Mont. man who worked as a loan officer in Las Vegas during 2006 and 2007 was sentenced today to 11 years in prison, five years of supervised release and ordered to pay over $2.2 million in restitution for his fraud and identity theft convictions related to a mortgage fraud scheme, announced Daniel G. Bogden, United States Attorney for the District of Nevada and Mythili Raman, Acting Assistant Attorney General for the Justice Department’s Criminal Division.
Nicholas Lindsey, 40, was sentenced by Senior U.S. District Judge Lloyd D. George. Lindsay was convicted by a federal jury in April of nine counts of wire fraud and one count of aggravated identity theft.
“Many innocent homeowners in Nevada have suffered because of this type of crime involving fraudulent residential mortgage transactions,” said U.S. Attorney Bogden. “Unfortunately, these crimes are not victimless and the damage to the community is lasting. Since 2008, when the FBI and our office made mortgage fraud prosecutions a priority, we have investigated, charged and convicted hundreds of persons for federal mortgage fraud crimes and most of them are now serving time in federal prison.”
According to the indictment and evidence presented to the jury during the trial, from about May to September 2006, Lindsey, who worked as a loan officer for Clear Mortgage and Signature Mortgage, recruited straw buyers to participate in what he described as a lucrative real estate investment opportunity by purchasing five homes in the Las Vegas area. Evidence at trial demonstrated that Lindsey secured over $3 million in mortgage loans by knowingly causing to be placed in the straw buyers’ mortgage loan applications false information concerning the buyers’ income, assets and intent to occupy the homes. Once the mortgages were approved, Lindsey fraudulently diverted to his bank account a portion of the proceeds disbursed from escrow and used these funds for his own benefit. Lindsey realized additional profits by living in or renting out properties in the buyers’ names.
In addition to the five homes of which the buyers were aware, Lindsey stole two buyers’ identities and used their personal information to purchase three additional properties in their names. The evidence established that Lindsey leased two of these properties and collected rental income and used the third as his own personal residence. After collecting profits, Lindsey stopped making the mortgage payments on the properties and allowed all eight homes to default in the borrowers’ names, causing an estimated loss to lenders of $1.6 million. At sentencing, the court also found that Lindsey used his position as a loan officer to commit fraud in relation to five additional properties, causing additional losses of $703,005 for a total loss of approximately $2.3 million.
The case was investigated by the FBI and prosecuted by Assistant U.S. Attorney Christina Brown and Trial Attorney Brian Young of the Criminal Division’s Fraud Section.
This case was handled in connection with the President's Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorney’s 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 nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.Former Huntington Bank Manager Sentenced for Embezzling from the ElderlyRead the Press Release
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ELKINS, WEST VIRGINIA —United States Attorney William J. Ihlenfeld, II, announced that a former branch manager from Huntington National Bank was sentenced to 37 months in prison for stealing nearly $250,000 from accounts belonging to elderly customers.
DEBORAH D. RADCLIFF, age 51, of Weston, West Virginia, was sentenced to over three years in prison by Chief Judge John Preston Bailey and was also ordered to repay the victims of her crime. Judge Bailey made a specific finding that RADCLIFF had methodically selected her victims due to their age. RADCLIFF had previously entered guilty pleas to the felony offenses of “Embezzlement by a Bank Employee” and one count of “Structuring.”
“Ms. Radcliff preyed upon her most vulnerable customers at the bank in order to line her own pockets,” said Ihlenfeld. “Anyone who targets the elderly in a scheme like this deserves a significant punishment like the one imposed by the Court.”
During the period July 1, 2011, to November 5, 2012, while serving as the branch manager of Huntington Bank in Weston, RADCLIFF embezzled and misapplied $247,249.88 from customers’ accounts and engaged in acts of structuring to cause the bank to fail to file a Currency Transaction Report for currency transactions of $10,000 or more. To execute the scheme, RADCLIFF utilized her position as branch manager to issue or direct to be issued cashier’s checks from funds withdrawn from customer accounts issued in the name of the customer. RADCLIFF would then take possession of the cashier’s check, forge the name of the depositor and cash the checks for her own personal benefit. The ages of the alleged victims ranged from 56 to 90 years, with all but one alleged victim 64 years or older.
RADCLIFF, who is free on bond, will report to federal prison in February.The case was prosecuted by Assistant United States Attorney John C. Parr and investigated by the Federal Bureau of Investigation and Internal Revenue Service, with cooperation from the Huntington National Bank’s Corporate Security office.
Former Dickinson Resident and Leader of Meth Trafficking Organization Gets 30 YearsRead the Press Release
HOUSTON - Huey Joseph Hebert, 35, formerly of Dickinson, has been sentenced to 360 months in federal prison for his role as a leader in a methamphetamine trafficking organization, announced United States Attorney Kenneth Magidson. Hebert pleaded guilty May 9, 2013.
Today, U.S. District Judge Sim Lake handed Hebert 120 months for methamphetamine trafficking along with two additional 120-month-terms for engaging in monetary transactions in property greater than $10,000 with narcotics proceeds. All sentences were ordered to be served consecutively for a combined 30-year sentence. Hebert must also pay a $2000 fine and will serve five years of supervised release following completion of his prison term. Judge Lake further ordered the forfeiture of two Harris County properties.
At the time of the plea, Hebert admitted he conspired with 14 other individuals to distribute methamphetamine with a purity just shy of 100% (referred to as “ice”) from Dickinson to Louisiana and elsewhere from mid-2008 until February of 2012. In addition to distributing methamphetamine, the organization also distributed more than 1000 kilograms of marijuana during this timeframe.Nash Pitre, 46, of Houma, La., a narcotics and currency courier for Hebert, was also sentenced today. Judge Lake ordered he serve a term of 112 months followed by five years supervised release for transporting 100 kilograms or more of methamphetamine and marijuana from Houston to Houma.
This investigation was conducted by a Drug Enforcement Administration lead Organized Crime Drug Enforcement Task Force (OCDETF) investigation dubbed “Operation Country Roads.” Officials with the Internal Revenue Service - Criminal Investigation lead the financial aspect of this case. These officials were invaluably assisted by a wide variety of law enforcement agencies including police departments in Dickinson, League City and Pasadena; sheriff's offices in Galveston, Harris, Jefferson, Fort Bend and Brazoria Counties; as well as Texas Department of Public Safety and the U.S. Marshals Service.Assistant United States Attorney Shelley Hicks is prosecuting.
Former Des Moines, Iowa, Police Officer Indicted for Civil Rights ViolationRead the Press Release
DES MOINES, IA – Colin Boone, previously employed as an officer of the Des Moines, Iowa, Police Department, was indicted on Tuesday, December 17, 2013, on the charge of deprivation of rights under color of law for assaulting a civilian during the course of an arrest on February 19, 2013, announced United States Attorney Nicholas A. Klinefeldt. Boone was arrested in South Dakota this morning, and is scheduled to have an initial appearance before a U.S. Magistrate Judge in Sioux Falls, South Dakota at 3:15 p.m. this afternoon.
The charge of deprivation of rights under color of law, in violation of Title 18, United States Code, Section 242, carries a maximum penalty of ten years in prison and a maximum fine of $250,000. The indictment specifically charges that Boone physically assaulted the victim by kicking him, resulting in bodily injury.
Today’s indictment is the result of an investigation conducted by the Des Moines Resident Office of the Federal Bureau of Investigation. Prosecution of this matter is being handled by the U.S. Attorney’s Office for the Southern District of Iowa and the Civil Rights Division of the U.S. Department of Justice.
The public is reminded that an indictment is only an accusation, and the defendant is presumed innocent unless and until proven guilty.
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Former Belgrade State Bank Branch Manager Indicted on Fraud and Embezzlement ChargesRead the Press Release
St. Louis, MO --A federal indictment was returned today naming Sheila Aubuchon as the defendant in an alleged scheme to misdirect funds held at Belgrade State Bank to her personal use. The indictment alleges that Aubuchon forged signatures, altered account numbers and evaded bank procedures in order to conceal her misappropriation of more than $120,000 in funds owned by Belgrade State Bank and its customers. The indictment also alleges that Aubuchon failed to file currency transaction reports (CTRs) relating to these transactions as required by federal law.
SHEILA AUBUCHON was indicted by a federal grand jury on three felony counts of bank fraud, three felony counts of theft or embezzlement by a bank employee and two felony counts of causing Belgrade Bank to fail to file CTRs. If convicted, each count of bank fraud and embezzlement carries a maximum penalty of 30 years in prison. Failure to file a CTR carries a maximum penalty of 10 years in prison. In determining any actual sentence imposed, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
The case is being investigated by the United States Secret Service and the Internal Revenue Service. Assistant United States Attorney Richard E. Finneran is handling the case for the U.S. Attorney’s Office.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Florida Man Sentenced to 12 Years in Federal Prison for Operating Investment Fraud SchemesRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, today announced that ROBERT RIVERNIDER, 48, of Wellington, Fla., was sentenced yesterday by U.S. District Judge Robert N. Chatigny in Hartford to 144 months of imprisonment, followed by five years of supervised release, for operating two investment schemes that caused a loss of more than $25 million to individuals and lending institutions.
According to court documents and statements made in court, between approximately June 2005 and April 2008, RIVERNIDER and Robert Ponte of Stonington, Conn., conspired to defraud several victim investors by misrepresenting that the investors’ monies would be invested in legitimate, high-return investments. As part of the conspiracy, RIVERNIDER and Ponte used the Internet and other means to market a debt payment program typically called “No More Bills” through The Hudson Group, an entity that Ponte established. With the “No More Bills” program, RIVERNIDER and Ponte sought victim investors to invest monies with them, funds that the victim investors typically would raise through home equity lines of credit, or would borrow from 401K plans.
RIVERNIDER and Ponte misrepresented that investors would receive a substantial investment return, typically a monthly repayment on the invested monies of approximately seven to ten percent of their initial investment; that the returns would continue for a period substantially longer than needed to recoup the initial investment and result in a return substantially greater than the initial investment; that the victim investors’ existing debts and home equity lines of credit, if taken out to fund the investment, would be repaid in full from investment returns, and that the victim investors’ monies were being invested offshore in legitimate high-return investments, including investments in foreign currency exchanges, hedge funds, or other high-yield ventures. Instead of investing the funds as promised, RIVERNIDER and Ponte used the funds to pay their and their extended families’ living expenses, as well as the preexisting debts of other investors.
Through this first scheme, investors lost approximately $2.2 million.
In a second scheme, between approximately November 2006 and December 2007, RIVERNIDER, Ponte, and Loretta Seneca of Boynton Beach, Fla., engaged in a real estate investment conspiracy that defrauded both lenders and individuals they recruited. Seneca is RIVERNIDER’s sister. As part of the scheme, RIVERNIDER, Ponte and others recruited victim borrowers to take out financing to purchase various investment properties, primarily in Tennessee and Florida, with financing from victim lenders. RIVERNIDER and Ponte typically represented to borrowers that these properties would be passive investments and that RIVERNIDER and Ponte would be responsible for the details of the purchase, rental, maintenance and payment of the mortgages on the properties. The co-conspirators made false representations to the victim borrowers that RIVERNIDER and Ponte would arrange for the purchase of the properties by the borrowers at markedly discounted values. In fact, RIVERNIDER and Ponte frequently marked up the purchase price of the properties to the victim borrowers, often by as much as 25 percent, without disclosing the increase in the purchase price. RIVERNIDER, Ponte and others also falsely represented that the investment properties would return to the victim borrowers sufficient monies to cover the carrying costs, as well as reduce the borrowers’ other debt burden.
RIVERNIDER, Ponte, Seneca and others victimized lenders by making multiple false representations in loan applications and other documents provided to the victim lenders. Seneca, a trained mortgage broker, was actively involved in the real estate transactions, including organizing and gathering many of the materials needed by the victim lenders, gathering certain information from the victim borrowers, providing certain comparables based on properties brokered by RIVERNIDER to be used for purportedly independent appraisals, and a range of other background tasks necessary for the lenders to make the loans.
This scheme involved at least 100 properties, and the investigation has revealed that the victim lending institutions suffered more than $23 million in losses.
Judge Chatigny will issue an order within 90 days requiring RIVERNIDER to pay full restitution to the victims of both schemes.
On February 25, 2013, RIVERNIDER pleaded guilty to two counts of conspiracy and 16 counts of wire fraud, and Seneca pleaded guilty to one count of conspiracy and one count of wire fraud. On March 1, 2013, Ponte pleaded guilty to two counts of conspiracy, 14 counts of wire fraud and two counts of tax evasion. All three guilty pleas occurred during the middle of a trial, and RIVERNIDER pleaded guilty to all counts of the indictment in which he was charged.
Ponte and Seneca await sentencing.
This matter has been investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorneys John H. Durham and Christopher W. Schmeisser.
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(203) 821-3722 [email protected]Federal Jury Convicts Fort Worth Financial Planner on Wire Fraud and Money Laundering ChargesRead the Press Release
Defendant Remanded into Federal Custody Following Verdict
FORT WORTH, Texas — Following a two-day trial, before U.S. District Judge John McBryde, a federal jury convicted Caleb Deason, a 34 year old Fort Worth resident, late yesterday on an indictment charging one count each of wire fraud and money laundering. Following the verdict, Judge McBryde remanded Deason into custody. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
The government presented evidence at trial that Deason owned and operated CD Financial, a financial services business in Fort Worth, Texas. Deason was an agent of Transamerica Life Insurance Company from November 206 through May 2012. In October 2011, Deason sold an individual a Transamerica policy with a death benefit of approximately $1 million.
In January 2012, the insured died unexpectedly. Transamerica conducted extensive due diligence before agreeing to pay the policy’s death benefit to the insured’s wife. However, Deason fraudulently changed the bank account and routing information and forged the beneficiary’s signature on a Transamerica wire request form in order to divert the proceeds from the life insurance policy to his own personal use, which included purchasing a 2010 Range Rover.
Deason faces a maximum statutory penalty of 20 years in federal prison on the wire fraud conviction and 10 years on the money laundering conviction. Each count of conviction also carries a fine of up to $250,000. The 2010 Range Rover has already been administratively forfeited by the U.S. Secret Service. Sentencing has been set for April 4, 2014.
The case was investigated by the U.S. Secret Service and the Texas Department of Insurance. Assistant U.S. Attorneys Brian Poe and John de la Garza were in charge of the prosecution.
Federal Jury Convicts Dallas Man for Role in Conspiracies to Distribute Cocaine and MethamphetamineRead the Press Release
Defendant Also Convicted on Obstruction and Perjury Charges
DALLAS — A Dallas man arrested this summer as part of an Organized Crime Drug Enforcement Task Force (OCDETF) operation was convicted late yesterday, following a three-day trial before U.S. District Judge Reed C. O’Connor, announced U.S. Attorney Sarah R. Saldana.
The jury found Reynaldo Macedo-Flores, 35, guilty as charged on all five counts of the indictment, including one count of conspiracy to possess with intent to distribute cocaine; one count of conspiracy to possess with intent to distribute methamphetamine, one count of obstruction of justice and two counts of perjury. The obstruction and perjury convictions stem from Macedo-Flores’s false testimony at the trial of Austreberta Macedo-Flores, his mother, in September 2013, also before U.S. District Judge Reed O’Connor. (Austreberta Macedo-Flores was also convicted of conspiring to distribute methamphetamine; her sentencing hearing is pending.)
The government presented evidence at trial that Reynald Macedo-Flores repeatedly sold narcotics to an undercover officer, bragged about taking the risk of distributing narcotics on a wiretap, and plotted to present false testimony – and then did so – at his mother’s trial.
Macedo-Flores faces a statutory penalty of five to 40 years in federal prison on the cocaine conviction, 10 years to life in prison on the methamphetamine conviction, up to 20 years in prison on the obstruction conviction and up to five years in prison on each of the perjury convictions. He could also be ordered to pay millions of dollars in fines. Sentencing is set for March 20, 2014, before Judge O’Connor.
All 10 defendants in the case have now been convicted and are awaiting sentencing. Eight defendants entered guilty pleas.
The case involved undercover purchases, wiretaps and search warrants, and was investigated by the FBI in conjunction with the Dallas Police Department. In total, over 15 kilograms of cocaine, four and one-half pounds of methamphetamine (ICE), five firearms, four luxury vehicles and $351,010 in cash – much of it, as trial testimony showed, packaged for shipment to Mexico – have been seized in the operation.
The case is being prosecuted by Assistant U.S. Attorney Jason Schall.
Englishtown, N.J., Pharmacy Burglar Sentenced to Four Years in Prison for Conspiracy to Distribute Stolen OxycodoneRead the Press Release
TRENTON, N.J. - A Brooklyn, N.Y., man was sentenced today to 48 months in prison for his involvement in a plot to burglarize a pharmacy in Englishtown, N.J., and distribute stolen narcotics, U.S. Attorney Paul J. Fishman announced.
Dzheykhun Avshalumov, 24, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with one count of conspiracy to distribute and possess with intent to distribute oxycodone. Judge Wolfson imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
The Union Hill-Supremo Pharmacy in Englishtown was burglarized shortly after 4:00 a.m. on June 17, 2012. Avshalumov and his conspirators filled 17 garbage bags and two cardboard boxes with merchandise from the pharmacy, including approximately 1,988 dosage units of methylphenidate, 500 dosage units of hydromorphone, 300 dosage units of Opana (a trade name for oxymorphone) and 3,800 dosage units of oxycodone – all Schedule II controlled substances.
The stock lost by the pharmacy was valued at approximately $350,000. Avshalumov admitted that he stole the drugs, and that he did so knowing they would be distributed.
In addition to the prison term, Judge Wolfson sentenced Avshalumov to three years of supervised release and ordered him to pay $334,722.12 in restitution.
Two of Avshalumov’s conspirators have previously pleaded guilty to this criminal conduct. James Zarbailov pleaded guilty before Judge Wolfson to conspiracy to distribute and possess with intent to distribute oxycodone. Zarbailov was sentenced to 63 months in prison on Nov. 18, 2013. David Mordukhaev pleaded guilty before Judge Wolfson to the same offense, and was sentenced to 65 months in prison on Dec. 11, 2013.
U.S. Attorney Fishman credited special agents of the FBI’s Red Bank Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and law enforcement officers from the Marlboro Township Police Department, under the direction of Police Chief Bruce E. Hall, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office Criminal Division in Trenton.13-477
Defense counsel: Michael A. Armstrong Esq., Willingboro, N.J.
Energy Company to Pay $3.2 Million Penalty to Resolve Clean Water Violations in West VirginiaRead the Press Release
The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today that Chesapeake Appalachia LLC, a subsidiary of Chesapeake Energy, the nation’s second largest natural gas producer, will spend an EPA-estimated $6.5 million to restore 27 sites damaged by unauthorized discharges of fill material into streams and wetlands and to implement a comprehensive plan to comply with federal and state water protection laws at the company’s natural gas extraction sites in West Virginia, many of which involve hydraulic fracturing operations.
The company will also pay a civil penalty of $3.2 million, one of the largest ever levied by the federal government for violations of Section 404 of the Clean Water Act (CWA), which prohibits the filling or damming of wetlands, rivers, streams, and other waters of the United States without a federal permit.
“With this agreement, Chesapeake is taking important steps to comply with state and federal laws that are essential to protecting the integrity of the nation’s waters, wetlands and streams,” said Robert G. Dreher, Acting Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division. “We will continue to ensure that oil and gas development, including development through the use of hydraulic-fracturing techniques, complies with the Clean Water Act and other applicable federal laws.”
“Ensuring environmentally-sound and legal natural gas production is critical to protecting wetlands and local water supplies that communities depend on,” said Cynthia Giles, Assistant Administrator of EPA’s Office of Enforcement and Compliance Assurance. “By enforcing the law with a large producer like Chesapeake Appalachia, we’re also helping to level the playing field for businesses in this industry.”
The federal government and the West Virginia Department of Environmental Protection (WVDEP) allege that the company impounded streams and discharged sand, dirt, rocks and other fill material into streams and wetlands without a federal permit in order to construct well pads, impoundments, road crossings and other facilities related to natural gas extraction. The alleged violations being resolved by today’s settlement occurred at 27 sites located in the West Virginia Counties of Boone, Kanawha, Lewis, Marshall, Mingo, Preston, Upshur and Wetzel, including 16 sites involving hydraulic fracturing operations. The government alleges that the violations impacted approximately 12,000 linear feet of stream, or approximately 2.2 miles, and more than three acres of wetlands.
The settlement requires that the company fully restore the wetlands and streams wherever feasible, monitor the restored sites for up to 10 years to assure the success of the restoration, and implement a comprehensive compliance program to ensure future compliance with the CWA and applicable state law. To offset the impacts to sites that cannot be restored, the company will perform compensatory mitigation, which will likely involve purchasing credits from a wetland mitigation bank located in a local watershed.
EPA discovered some of the violations through information provided by the public and routine inspections. In addition, the company voluntarily disclosed potential violations at 19 of the sites following an internal audit. In 2010 and 2011, EPA issued administrative compliance orders for violations at 11 sites. Since that time, the company has been correcting the violations and restoring those sites in full compliance with EPA’s orders.
The settlement also resolves alleged violations of state law brought by WVDEP. The state of West Virginia is a co-plaintiff in the settlement and will receive half of the civil penalty.
In a related case, in December 2012, the company pleaded guilty to three violations of the CWA related to natural gas extraction activity in Wetzel County, at one of the sites subject to today’s settlement. The company was sentenced to pay a $600,000 penalty to the federal government for discharging crushed stone and gravel into Blake Fork, a local stream, to create a roadway to improve access to a drilling site. The company has already fully restored the damage done to the site.
Filling wetlands illegally and damming streams can result in serious environmental consequences. Streams, rivers, and wetlands benefit the environment by reducing flood risks, filtering pollutants, recharging groundwater and drinking water supplies, and providing food and habitat for aquatic species.
Chesapeake Appalachia engages in the exploration and production of natural gas in the Appalachian Basin. The company has oil and natural gas properties in West Virginia, Pennsylvania, and Ohio.
The consent decree, lodged today in the Northern District of West Virginia, is subject to a 30-day public comment period and court approval. The consent decree is available for review at www.justice.gov/enrd/Consent_Decrees.html.
More information about the settlement: www2.epa.gov/enforcement/chesapeake-appalachia-llc-clean-water-settlement.El Departamento de Justicia Realiza Acuerdo Conciliatorio con Fort Davis State Bank en Resolución de Alegatos de Discriminación en el Otorgamiento de PréstamosRead the Press Release
El Departamento de Justicia anunció hoy que Fort Davis State Bank, con sede en Fort Davis, Texas, implementará políticas de precios uniformes, brindará capacitación a empleados y pagará 159,000 dólares como parte de un acuerdo conciliatorio en resolución de alegatos que había mantenido un patrón o práctica de discriminación basado en origen nacional.
El acuerdo conciliatorio, que está sujeto a aprobación del tribunal, fue presentado junto con la demanda del departamento en el Tribunal Federal de Distrito del Distrito Oeste de Texas. La demanda alega que Fort Davis State Bank violó la Ley de Igualdad de Oportunidades de Crédito [Equal Credit Opportunity Act [ECOA]) al cobrar precios más altos a prestatarios hispanos por préstamos de consumidor sin garantía, que a prestatarios no hispanos con cualificaciones similares.
Fort Davis State Bank es un banco comunitario con tres sucursales con presencia significativa en la comunidad hispana local hace muchos años.
"Este acuerdo conciliatorio asegura que los prestatarios hispanos que pagaron más por sus préstamos serán debidamente indemnizados", señaló la Secretaria de Justicia Auxiliar Interina de la División de Derechos Civiles del departamento Jocelyn Samuels. "Consideramos encomiable el compromiso de Fort Davis State Bank de satisfacer las necesidades especiales de préstamo de consumidor de esta comunidad de manera igualitaria y trabajar en conjunto con el Departamento de Justicia para lograr una resolución adecuada para este caso".
La demanda surgió de una remisión al departamento realizada en 2011 por la Federal Deposit Insurance Corporation (FDIC). Fort Davis State Bank está regulada por la FDIC.
Los fondos del acuerdo conciliatorio se utilizarán para indemnizar a víctimas hispanas de la presunta discriminación llevada a cabo por Fort Davis State Bank. Según el acuerdo conciliatorio propuesto, los Estados Unidos identificarán una lista de víctimas, quienes recibirán un aviso de elegibilidad del banco, y el departamento controlará el proceso de indemnización.
Con anterioridad al acuerdo conciliatorio, Fort Davis State Bank implementó políticas de precios uniformes que redujeron significativamente la libertad de sus agentes de crédito de variar la tasa de interés de un préstamo respecto del precio establecido con base en factores crediticios objetivos del prestatario. El acuerdo conciliatorio de hoy exige que Fort Davis State Bank mantenga sus políticas optimizadas como mínimo durante los próximos tres años, siga controlando su otorgamiento de préstamos de modo a evitar la discriminación y provea informes de sus controles a los Estados Unidos.
La Unidad de Préstamos Justos de la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles es responsable, en el departamento, de hacer valer las leyes de otorgamiento justo de préstamos. Desde su fundación en febrero de 2010, la Unidad de Préstamos Justos ha iniciado o resuelto 29 casos asociados a préstamos bajo la Ley de Vivienda Justa [Fair Housing Act], ECOA y la Ley de Amparo Civil para Militares [Servicemembers Civil Relief Act]. Los acuerdos conciliatorios logrados en estos casos consistieron en casi 700 millones de dólares en indemnizaciones a comunidades y prestatarios individuales afectados. Los informes anuales del Secretario de Justicia de EE.UU. al Congreso bajo ECOA destacan los logros del Departamento en el otorgamiento de préstamos justos y están disponibles en www.justice.gov/crt/publications.
La División de Derechos Civiles y la FDIC son miembros de la Fuerza de Tarea de Coacción contra el Fraude Financiero. El Presidente Obama estableció la fuerza de tarea interagencial para llevar a cabo una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar los delitos financieros. La fuerza de tarea incluye a representantes de una amplia gama de dependencias federales, autoridades reguladoras, inspectores generales y miembros de las fuerzas del orden público estatales y locales, quienes, trabajando unidos, aportan un poderoso espectro de recursos de coacción penal y civil. La fuerza de tarea está trabajando para mejorar la labor en todo el poder ejecutivo federal, y con asociados estatales y locales, para investigar y enjuiciar los delitos financieros importantes, asegurar un castigo justo y eficaz para quienes cometan delitos financieros, combatir la discriminación en los mercados de préstamos y financieros, y recuperar fondos para las víctimas de delitos financieros. Para obtener más información sobre la fuerza de tarea, visite www.StopFraud.gov.
Para obtener una copia de la demanda y la orden propuesta, así como también información adicional sobre la labor del Departamento de Justicia para hacer valer las leyes de otorgamiento justo de préstamos, visite el portal del Departamento de Justicia en www.justice.gov/fairhousing.
Eight People Indicted for $40 Million Mortgage FraudRead the Press Release
Eight people were indicted for their roles in a $40 million mortgage fraud conspiracy involving dozens of properties along Florida’s Gulf Coast, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office.
Named in the 45-count indictment are: Ileana E. Osborne, 44, of Santa Rosa Beach, Fla.; Kyle F. Conrad, 63, and Linda K. Conrad, 62, both of Hartville, Ohio; John J. Dubay, 48, of Delray Beach, Fla.; Jon R. Jacobson, 50, of North Canton, Ohio; Harry S. Kaplan, 50, of Hillsboro Beach, Fla.; David B. Romsey, 67, of Uniontown, Ohio, and Grace M. Wollerman, 49, of Mentor, Ohio.
Also named but not charged in the indictment is Jack R. Coppenger, of Akron. Coppenger is currently serving 10 years in federal prison for his role in the schemes.
The indictment details conduct that took place between 2004 and 2006, when Osborne owned and operated a mortgage brokerage company and a consulting company and Copppenger operated several businesses related to real estate development. The other seven people served as straw buyers, according to the indictment.
The defendants conspired to use straw buyers to make mortgage loan applications, to make false statements, misrepresentations and omissions in the mortgage loan applications and to conceal the scheme to avert detection from lending institutions, according to the indictment.
At Osborne and Coppenger’s request, a real estate agent or property finder located a property for sale. Osborne, Coppenger and others conviced the property owner to allow them and others to assist in the sale and purchase for a price satisfactory to the seller. Coppenger located a straw buyer with good credit and solicited his or her participation in the fraudulent scheme by promising payments of as much as $25,000 in return for using the straw buyer’s name and credit to purchase the property, according to the indictment.
In some instances, Osborne, the straw buyer, Coppenger and others agreed to a sales price of the property in excess of the asking price and divided the excess amount between Osborne and Coppenger, their respective companies and others, according to the indictment.
Coppenger represented to the straw buyer that his or her credit information was needed only to make the purchase, and once purchased the straw buyer would not be responsible for the payments on the mortgage loan. However, he also promised straw buyers a split on future profits from the investment developed in and development of the property, according to the indictment.
Osborne, as a licensed mortgage broker, along with the straw buyer, filled out a loan application for the straw buyer. She and the straw buyer included false information, including inflating income amounts, falsely representing that the property would be used as a second residence, failing to disclose that the straw buyer was not the source of the down payment for the property and other false statements, according to the indictment.
The indictment lists fraudulent transactions for nine properties on Ann Street in Santa Rosa, Fla.
Through their schemes, the defendants obtained numerous home mortgage loans under false and fraudulent pretenses with a total face value of approximately $40 million in order to illicitly enrich themselves and their co-conspirators. Many of these loans are now in default and/or foreclosure, according to the indictment.
Osborne was also indicted for her role in a bank fraud conspiracy involving Jason A. Herceg and Andrew D. Norman in 2006 in which all three used straw buyers to make mortgage loan applications, made false statements and misrepresentation in the mortgage loan applications and concealed the scheme from lending institutions. That scheme involved four properties in Santa Rosa Beach, Florida, and caused an additional loss of approximately $5 million.
Herceg and Norman were sentenced to federal prison after being found guilty of crimes related to their role in the conspiracy.
This case is being prosecuted by Assistant U.S. Attorneys Robert J. Patton and Om Kakani following an investigation by the Federal Bureau of Investigation.
If convicted, the defendants’ sentences will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal records, if any, the defendant’s role in the offenses and the characteristics of the violation.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Eight Charged Federally for Illegal Distribution of Bath Salts in Bradford CountyRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania, announced that a federal grand jury returned an indictment on December 10, 2013 charging a six Bradford County residents and two New York State residents with illegally importing and distributing bath salts in the Bradford County area.
According to United States Attorney Peter J. Smith, Seth Barnes,38 of Milan, PA; Brad Brown, 45, formerly of Towanda; Corey Dobbins, 39, formerly of Rome, PA; April Fuller,48 of Monroeton, PA; Robert Howe,26 of Elmira, NY; Patrick Russell, 48 of LeRaysville, PA; Kenneth Rider, 55 of Monroeton, PA and Chris Thompson, 41 of Cooper Plains, NY, were charged by the grand jury with importing and distributing Methylone, a Schedule I controlled substance and Alpha-PVP, a Schedule I controlled substance analogue. All eight individuals were arrested Wednesday and appeared before a U.S. Magistrate Karoline Mehalchick for their initial appearance and pled not guilty.
Chad McLinko, 31, of Towanda, who was charged by a Criminal Complaint with distributing methylone and a-pvp, was also arrested yesterday. McLinko is alleged to be associated with those individuals indicted on December 10, 2013.
Methylone and Alpha-PVP are among the group of substances commonly known as “bath salts”. Controlled substance analogues are substances with similar chemical properties and pharmacological effects on the human body. Federal law provides for controlled substances to be treated as Schedule I controlled substances for the purpose of criminal prosecution.This case was the result of a joint investigation between the Drug Enforcement Administration, the Pennsylvania State Police and the Athens Borough Police Department.
Prosecution is assigned to Assistant United States Attorney Amy C. Phillips.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is 20 years’ imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
Drywaller Sentenced in Tax Evasion ScamRead the Press Release
BOSTON - A Waltham man was sentenced today for a tax evasion scam in connection with his drywalling and plastering business.
Paul Landry, 47, was sentenced by U.S. District Court Judge Mark L. Wolf to three months in a halfway house, six months home detention, three years of probation, a $3,000 fine, and nearly $200,000 in restitution to the IRS. In February 2012, Landry pleaded guilty to three counts of tax evasion. At the hearing, Judge Wolf explained that he was not sentencing Landry to jail time because of Landry’s declining health and his record of good works in his community.
Landry, a drywall and plastering company owner from Waltham, who owns and operates P.L. Drywall, Inc., falsified tax returns in 2004-2006, failing to report more than $900,000 of income during that period, and failing to pay nearly $200,000 in federal income taxes. In addition, when Landry was being interviewed by an IRS inspector he lied about his income in an effort to conceal the crime.
United States Attorney Carmen M. Ortiz and John G. Collins, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The case was prosecuted by former Assistant U.S. Attorney Paul Levenson and current Assistant U.S. Attorney John T. McNeil of Ortiz’s Criminal Division.
Demolition Company Owner Sentenced to Prison for Improper Handling of Asbestos During Demolition of Piqua Medical CenterRead the Press Release
CONTACT: Fred Alverson
Public Affairs Officer
DAYTON, OHIO – Lamont P. Pryor, 47, of Lima, Ohio was sentenced to 13 months in prison for violating the Clean Air Act in connection with his company’s handling of asbestos during the demolition of the former Piqua Medical Center in 2008.
Carter M. Stewart, U.S. Attorney for the Southern District of Ohio, Randall K. Ashe, Special Agent in Charge of the U.S. Environmental Protection Agency (U.S. EPA), Ohio Attorney General Mike DeWine and Scott J. Nally, Director of the Ohio Environmental Protection Agency (Ohio EPA) announced the sentence handed down today by U.S. District Judge Timothy S. Black.
Pryor pleaded guilty on August 8, 2013 to three counts of violating the National Environmental Standards for Hazardous Air Pollutants (NESHAP) provisions of the Clean Air Act.
According to court documents, Pryor and his company, Avalon Commonwealth Inc., removed scrap metal from the hospital as part of the demolition process. The scrap metal was removed and sold, but the rest of the demolition debris, including friable asbestos, was piled in areas around the hospital, exposed to the wind and elements. Pryor knew that he was not supposed to leave the friable asbestos outside the hospital, exposed to the elements, but instead was supposed to properly deposit the asbestos that was generated as result of his renovation and demolition activities at the hospital at a licensed asbestos waste disposal facility. Pryor knowingly failed to do so.A representative of the Regional Air Pollution Control Agency (RAPCA), the local air pollution control agency serving Miami County and the city of Piqua, inspected the site in December 2008, saw the damaged asbestos outside the hospital, and asked that demolition be halted while the investigation took place.
“Knowingly cutting corners in handling asbestos is a threat to communities that cannot be tolerated,” Ohio Attorney General Mike DeWine said. “We will work with our task force partners to prosecute those who try to make a quick buck by endangering the health of Ohioans.”
“Asbestos can cause cancer and other serious respiratory diseases and must be handled legally and safely,” said Randall Ashe, Special Agent in Charge of EPA’s criminal enforcement program in Ohio. “The defendant directed his employees to remove scrap metal from the hospital without regard to the asbestos contained in the building and to pile asbestos contaminated debris outside the hospital where the material was left exposed. Mr. Pryor's actions threatened not only the environment but the safety of his untrained workers and the general public. This case should serve notice that EPA and its partner agencies will not abide by those who do not handle and dispose of asbestos properly.”U.S. Attorney Stewart commended the cooperative investigation conducted by the U.S. EPA's Criminal Investigation Division, Bureau of Criminal Investigation’s Environmental Enforcement Unit in Ohio Attorney General DeWine’s Office, the Ohio EPA Office of Special Investigations and RAPCA. It was prosecuted by Assistant U.S. Attorney Alex Sistla and Special Assistant U.S. Attorney Brad Beeson with the U.S. EPA.
# # #Dearborn Man Sentenced on Extortion Charges Involving Employees of DTE EnergyRead the Press Release
A Dearborn man was sentenced today by United States District Judge Denise Page Hood to 41 months in federal prison after having been convicted by a jury in September of extortion by threatening employees of DTE Energy, U.S. Attorney Barbara L. McQuade announced today.
Joining McQuade in the announcement were Paul M. Abbate, Special Agent in Charge of the of the Federal Bureau of Investigation in Detroit and Michael Lynch, Chief Security Officer for DTE Energy Corporate Security.
Sentenced was Sami William Mustafa, 28, of Dearborn, Michigan.
Evidence presented at trial established that on January 14, 2013, Mustafa was facing a shut-off from DTE Energy for failure to pay his power bill. Mustafa, who felt that DTE was not handling his bill properly, placed two calls to the customer service department and explained to the operators his intention to come down to their office to kill DTE’s employees. During these telephone conversations, Mustafa threatened “Do you want to get shot in the face over a couple of dollars” and “It’s going to be another Sandy Hook,” referring to the mass shooting that took place at an elementary school in Connecticut in December, 2012. Mustafa also used racially charged language.
In announcing the sentence, McQuade stated, “Mass shootings around the country have taught our society to take these kinds of threats very seriously. The public should be aware that threats of violence will be prosecuted criminally.”
Paul M. Abbate, Special Agent in Charge of the Detroit, Michigan, Division of the FBI, said, “ Violent threats like those made by the defendant in this case toward DTE Energy employees are taken very seriously, particularly when the threats make reference to other tragedies in an attempt to intimidate and instill fear. Those whose conduct violates federal law in this manner will be brought to justice.”
Michael Lynch, Chief Security Officer for DTE Energy, commended the FBI and U.S. Attorney's office, stating, "I'd like to recognize the efforts of the FBI and U.S. Attorney's office for their work to resolve this case and help keep DTE Energy employees safe."
This case was investigated by the Federal Bureau of Investigation and DTE Corporate Security.
Daytona Beach Felon Sentenced to 15 Years in Prison for Possessing A FirearmRead the Press Release
Orlando, Florida – Chief U.S. District Judge Anne C. Conway today sentenced Albert Nedd (41) to 15 years in federal prison for being a felon in possession of a firearm. Nedd pleaded guilty on September 13, 2013.
According to court documents, on December 8, 2012, Daytona Beach Police Department Officers responded to a complaint concerning a weapon and saw Nedd walking away from the scene and concealing what appeared to be a small handgun in his waistband. The officers commanded Nedd to stop, but he kept walking away. Nedd walked up a staircase attached to a building, placed the handgun at the top of the staircase, and then was stopped by officers once he walked down. Officers found a loaded .38 caliber revolver at the top of staircase. Nedd, a previously convicted felon, is prohibited from possessing a firearm or ammunition under federal law.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant United States Attorney James D. Mandolfo.
It is another case prosecuted as a part of the Department of Justice’s “Project Safe Neighborhoods” program - a nationwide, gun-violence reduction strategy. Acting 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.
This case is also part of ATF’s Frontline strategy to reduce violent crime and improve the quality of life in communities where law enforcement efforts are focused.
Custer Man Sentenced for Tax EvasionRead the Press Release
United States Attorney Brendan V. Johnson announced that a Custer, South Dakota, man convicted of Income Tax Evasion was sentenced on December 13, 2013, by Chief Judge Jeffrey L. Viken, U.S. District Court.
Dennis Wicks, age 71, was sentenced to 14 months in custody, 2 years of supervised release, and ordered to pay a $100 special assessment to the Federal Crime Victims Fund and $110,015 in restitution to the Internal Revenue Service.
Wicks was charged by an Information on August 15, 2013, and he pled guilty on August 22, 2013.
Wicks was the owner of Wicks International Network and knew that he was required to report all of his business gross receipts on his income tax return. In 2009, Wicks failed to file a tax return and instructed some of his patients to make payments to another entity in order to conceal a portion of his income. Wicks also attempted to evade or defeat taxes for the years 2001, 2002, 2005, 2006, 2007, 2008, and 2010.
The investigation was conducted by the Department of the Treasury, Internal Revenue Service. The case was prosecuted by Assistant U.S. Attorney Eric Kelderman.
Wicks was ordered to self-surrender to the U.S. Marshals Service on January 14, 2014.
Convicted Felon Who Hid Loaded Firearm Under His Minor Child Sentenced to 105 Months in PrisonRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announced that in federal court today United States District Judge Terrence W. Boyle sentenced VINCENT JAROD WILLIAMS, 30, of Spring Lake, to 105 months in prison, followed by 3 years of supervised release upon conviction for Possession of a Firearm by a Convicted Felon in and Affecting Commerce, in violation of Title 18, United States Code, Sections 922(g) and 924.
On December 9, 2010, officers with the Fayetteville Police Department observed WILLIAMS drive through a red light. As officers followed the vehicle they observed WILLIAMS making quick, rapid movements inside the vehicle and a traffic stop was conducted. The defendant’s five-year-old child was strapped in a child safety seat in the rear of the vehicle. When officers observed controlled substances in the passenger compartment they removed WILLIAMS to conduct a search. At that time, officers observed an empty gun holster attached to the defendant’s belt. WILLIAMS told officers that he did not have a gun because he was a felon.
For safety purposes, officers began to remove the defendant’s child from the car to search for the missing firearm and controlled substances. The child, who had been crying during the entire encounter, stated, “My daddy only gave me this gun,” and retrieved a .22 caliber handgun from under his leg. Officers safely took control of the handgun and found that its safety was disengaged with a live round in the chamber, and a further eight rounds in the magazine. Another 54 rounds of ammunition were located in the vehicle.
At the time of these events, WILLIAMS had several prior convictions, including two prior convictions for possessing a firearm while being a convicted felon.
Investigation of this case was conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) with the assistance of the Fayetteville Police Department. Assistant United States Attorney William M. Gilmore represented the Government.
Cleveland Heights Man Charged with Making Interstate ThreatsRead the Press Release
A federal grand jury sitting in returned an indictment charging Justin Michael Krueger, age 23, whose last known address was Cleveland Heights, Ohio, with two counts of threats to another by interstate communication, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
While in Kansas and California, Krueger made interstate threats against relatives in Ohio, threatening to injure and kill them, according to the indictment.
Krueger was arrested on December 6, 2013, by the FBI and Safe Streets Task Force on a federal arrest warrant. Assisting the FBI with the arrest was the Cleveland Heights Police Department.
If convicted, Krueger’s sentence will be determined by the Court after review of factors unique to this case, including his prior criminal record, if any, his role in the offenses and the unique characteristics of the violations. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The case is being prosecuted by Assistant U.S. Attorney Teresa Dirksen.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
Chinese National Sentenced to Federal Prison for Illegally Exporting to China Radiation-Hardened Computer Circuits Used in Satellite CommunicationsRead the Press Release
DENVER – Philip Chaohui HE, aka Philip Hope, who was residing in Oakland, California, at the time of his arrest, was sentenced yesterday, by Senior U.S. District Court Judge Wiley Y. Daniel to serve 36 months in federal prison for conspiracy to violate the Arms Export Control Act and to Smuggle Goods from the United States, United States Attorney John Walsh and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Kumar C. Kibble announced. Following his prison sentence, HE was ordered to serve 3 years on supervised release. HE was already in custody prior to the sentencing hearing, and was remanded at the hearing’s conclusion.
HE was indicted by a federal grand jury in Denver on December 15, 2011. He pled guilty before Senior Judge Daniel on September 3, 2013. He was sentenced yesterday, December 18, 2013.
According to court documents, including the stipulated facts contained in the plea agreement, HE attempted to illegally export to China radiation‑hardened computer memory circuits used in satellite communications with a value of almost $550,000. HE, the only employee of Oakland, California‑based Sierra Electronic Instruments (SEI), purchased 312 radiation‑hardened circuits from a Colorado manufacturer. The circuits purchased by HE are categorized as defense articles within the International Trafficking in Arms Regulations (ITAR). Lawfully exporting defense articles requires licensing from the U.S. State Department’s Directorate of Defense Trade Controls.
On April 28, 2011, an unindicted co‑conspirator caused two wire transfers totaling about $489,720 to be sent to HE’s bank account in California. On or about May 9, 2011, HE provided payment in full, $549,654, at the time HE placed the order with the Colorado manufacturer. According to the indictment, on or about May 17, 2011, HE provided false certification to the Colorado manufacturer that his company was purchasing the integrated circuits for end‑use in the United States only, and HE further acknowledged that the items were controlled by U.S. Export Laws and could not be transferred, transshipped or otherwise disposed of in any other country, without the prior written approval of the U.S. Department of State.
On December 11, 2011, HE drove to the Port of Long Beach, California, and met with two men in front of a docked ship bearing a Chinese flag. The Chinese‑flagged ship was registered to Zhenhua Port Machinery Company LTD, a subsidiary of the China state‑owned corporation China Communications Construction. The ship had recently arrived from Shanghai, China, and was scheduled to return on December 15, 2011.
HE concealed 200 integrated circuits in several plastic infant formula containers placed inside five boxes which were sealed and labeled as "milk powder" written in Chinese. HE transported the boxes in the trunk compartment of his vehicle. Neither HE, nor his company SEI had a license to export defense articles of any description.
“Exporting sensitive technology to foreign powers in violation of laws and regulations designed to protect our national security is a serious federal crime,” said U.S. Attorney John Walsh. “As in this aggravated case, illegal export of restricted technology can and will result in prison sentences.”
“This sentence represents the results of an extensive two-year HSI Investigation, following the solid lead we received from a responsible Colorado company,” said Kumar C. Kibble, special agent in charge of HSI Denver. “U.S. national security depends on every American’s diligence. If you see something, say something.”
The Defense Security Service (DSS) and the Defense Criminal Investigative Service (DCIS) provided critical assistance to HSI with this investigation. Assistance was also provided by the U.S. Attorneys Offices located in the Northern and Central Districts of California.
HE was prosecuted by Assistant U.S. Attorney Matthew Kirsch and Special Assistant U.S. Attorney John Canedy.
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Chicopee Man Charged with Failing to Register as Sex OffenderRead the Press Release
BOSTON – David Mullins, 47, of Chicopee was charged today in federal court with failure to register as a sex offender.
The indictment alleges that between Dec. 20, 2008 and Aug. 2, 2009, Mullins traveled from Vermont to Massachusetts and failed to update his registration with the sex offender registry.
If convicted, Mullins faces up to 10 years in prison, a lifetime of supervised release and a $250,000 fine.
United States Attorney Carmen M. Ortiz and John Gibbons, U.S. Marshal for the District of Massachusetts, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Alex J. Grant of Ortiz's Springfield Branch Unit.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Charleston Man Enters Guilty Plea to Federal Heroin Distribution ChargeRead the Press Release
Defendant Brandon “Fresh” Solomon charged as part of Charleston’s West Side Drug Market Intervention initiative
CHARLESTON, W.Va. – A Charleston man faces up to 20 years in prison after pleading guilty today in federal court to distribution of heroin, U.S. Attorney Booth Goodwin announced. Brandon Christopher Solomon, also known as “Fresh,” was charged with three counts contained in an indictment returned in October. Solomon, 19, admitted that he sold heroin to a police informant in exchange for cash.
Solomon is being prosecuted as part of the Charleston area’s Drug Market Intervention (DMI) initiative. He is scheduled to be sentenced on March 19, 2014 by United States District Judge John T. Copenhaver, Jr. Solomon was designated a member of the DMI A-list, which comprises the most serious offenders identified in the initiative.
The Charleston Police Department conducted the investigation. Assistant United States Attorney Haley Bunn is in charge of the prosecution.
The DMI initiative was launched in February 2012 by U.S. Attorney Booth Goodwin and Charleston Police Chief Brent Webster, in collaboration with other federal, state, local law enforcement agencies and leaders representing several West Side community development organizations. A continuation of the DMI initiative was announced earlier this month in Charleston.
Over the past several months, the Charleston Police Department and other law enforcement agencies have conducted undercover operations and completed investigations culminating in federal charges being filed against thirteen individuals.
Drug Market Intervention, first implemented in High Point, North Carolina, and replicated with success in several other cities, including Huntington, W.Va., is a strategic problem-solving initiative aimed at closing down drug markets that breed crimes of violence and disorder.
The DMI strategy also included a staged community intervention that was held last week at the New Covenant Missionary Baptist Church on Charleston’s West Side. The community intervention meeting offered a rare second chance for five low-level, non-violent offenders to end their criminal activity and avoid being prosecuted, if a strict set of guidelines set by law enforcement are obeyed. The Dec. 12 community intervention call-in meeting was attended by offenders’ relatives, concerned citizens, and faith-based leaders from the West Side community. The call-in meeting was coordinated and attended by federal, state and local law enforcement officials.
Ceo of Debt Collection Agency Sentenced to Four Years for Role in Multi Million Dollar Fraud SchemeRead the Press Release
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Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that PETER PINTO, 38, of East Quogue, N.Y., was sentenced today by U.S. District Judge Stefan R. Underhill in Bridgeport to 48 months of imprisonment, followed by five years of supervised release, for his role in a multimillion dollar fraud scheme at Oxford Collection Agency, where PINTO served as Chief Executive Officer.
According to court documents and statements made in court, Oxford Collection Agency (“Oxford”) was a private financial services company that engaged in accounts receivables management, primarily debt collecting, with offices in New York, Pennsylvania and Florida. Businesses and other entities contracted with Oxford to collect debts on their behalf. Oxford’s clients included, among others, an educational institution, a laboratory, a computer company and various banks. Oxford collected debts from consumers under the pretense that it would report all such collections to its clients and remit the appropriate amount to the client. However, PINTO and other Oxford executives routinely caused Oxford to collect debts that were never remitted to its clients. The co-conspirators referred to these unremitted collections as a client’s “backlog.” To hide the backlog, co-conspirators would make periodic fraudulent collection reports to certain clients that under-reported the amount of funds collected. PINTO and others diverted various funds from their client remittances and used them for their own ends.
Certain co-conspirators also transferred money from one client trust account to another client account, from Oxford’s operating account to a client account, or from a client account to Oxford’s operating account to cover various shortfalls and backlogs or to improperly use collections to directly fund Oxford’s operations.
Starting in April 2007, Oxford secured a line from credit from Connecticut-based Webster Bank, a bank that received funds through the Troubled Asset Relief Program (TARP), without informing Webster Bank about its significant client backlogs or outstanding payroll taxes. PINTO and others sent falsified financial statements to Webster Bank, eventually increasing the credit line to $6 million, and laundered funds from the credit line to promote the ongoing fraud scheme against their clients. During that same period, PINTO and others also solicited millions of dollars in investments from various investors, without ever disclosing to their investors the existence of their backlogs. Some of the investor funds into PINTO’s personal bank account without investor knowledge.
Oxford’s victims lost more than $10 million as a result of this scheme.
The investigation also has revealed that Oxford sometimes obtained and retained business with its banking clients by paying bribes and kickbacks to bank officials.
On May 11, 2012, PINTO pleaded guilty to one count of conspiracy to commit wire fraud, bank fraud and money laundering, and one count of wire fraud.
Five other Oxford executives have pleaded guilty, including PINTO’s father and Chairman of the Board, Richard Pinto, PINTO’s brother and Oxford Vice-President, Patrick Pinto, Vice-President of Finance and Chief Financial Officer Randall Silver, Executive Vice President Charles Harris, and Chief Operations Officer Carlos Novelli. Former Assistant Vice President at U.S. Bank, Wilbur Tate III, also pleaded guilty in relation to a conspiracy to accept bribes from executives at Oxford Collection Agency.
Richard Pinto was sentenced to five years of imprisonment. The other defendants await sentencing.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation, the Federal Bureau of Investigation, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Connecticut Securities, Commodities and Investor Fraud Task Force. The case is being prosecuted by Assistant U.S. Attorney Liam Brennan and Special U.S. Attorney John McReynolds.
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(203) 821-3722 [email protected]Canton Man Faces Cocaine ChargesRead the Press Release
A federal grand jury returned a three-count indictment charging Thomas Joseph Brown, age 42, of Canton, Ohio, with possession with intent to distribute approximately 446 grams of cocaine, possession of cocaine and attempted possession of cocaine, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Brown was arrested on a complaint on November 14, 2013 when Postal Inspectors in Cleveland were alerted to two suspicious packages. After further investigation and surveillance Brown was arrested by U.S. Postal Inspectors and members of the Ohio State Highway Patrol and Medway Drug Enforcement Agency.
If convicted, Brown’s sentence will be determined by the Court after review of factors unique to this case, including his prior criminal record, if any, his role in the offenses and the unique characteristics of the violations. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The case is being prosecuted by Kevin Culum, Trial Attorney.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
Canadian Citizen Arrested for Money Laundering in Connection with Illegal Importation and Trafficking of Narwhal TusksRead the Press Release
A Canadian man was arrested today in St. John, New Brunswick, Canada, on an extradition warrant requested by the United States for money laundering crimes related to the illegal importation and illegal trafficking of narwhal tusks, announced Robert G. Dreher, Acting Assistant Attorney General for the Environment and Natural Resources Division .
On Nov. 14, 2012, a federal grand jury sitting in Bangor, Maine, returned an indictment that was partially unsealed today upon the arrest of Gregory R. Logan of Grand Prairie, Alberta, Canada. The indictment also names Jay G. Conrad of Lakeland, Tenn., and Andrew L. Zarauskas of Union, N.J. Logan was arrested on charges in the indictment for money laundering conspiracy and substantive money laundering violations. The indictment also charges Conrad and Zarauskas with conspiracy to smuggle narwhal tusks, money laundering conspiracy, smuggling narwhal tusks and money laundering violations. According to the indictment, Logan illegally laundered the money earned from his illegal imports and sales of narwhal tusks in the United States. It further charges that Conrad and Zarauskas bought the narwhal tusks from Logan, knowing the tusks had been illegally imported into the United States, and sold or attempted to sell the tusks after their illegal importation.
The arrest of Logan on an extradition warrant in Canada begins the extradition process to the U.S. The extradition process is governed by a 1971 extradition treaty between the U.S. and Canada.
The charges contained in the indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty in a court of law. If convicted of these charges, the defendants each face up to twenty years in prison on each of the most serious charges, as well as fines up to $250,000.
The case was investigated by agents from National Oceanic and Atmospheric Administration Office of Law Enforcement and the U.S. Fish and Wildlife Service Office of Law Enforcement. The case is being prosecuted by Trial Attorney Todd S. Mikolop of the Justice Department’s Environmental Crimes Section, with assistance from the Justice Department's Office of International Affairs.Cambria County Man Sentenced to Probation for Conspiring to Assist Drug Distribution OrganizationRead the Press Release
JOHNSTOWN, Pa. - A resident of Carrolltown, Pa., has been sentenced in federal court to two years probation on his conviction of conspiracy to distribute controlled substances, United States Attorney David J. Hickton announced today.
United States District Judge Kim R. Gibson imposed the sentence on Matthew C. Bopp, 52.
According to information presented to the court, from July 2008 to May 9, 2011, Bopp conspired to distribute and possess with the intent to distribute quantities of oxycodone and methadone. Evidence presented to the court at the time of Bopp's sentencing reflected that Bopp conspired with George M. Lowmaster and others in order to facilitate and promote Lowmaster's drug distribution organization.
Assistant United States Attorney John J. Valkovci, Jr., prosecuted this case on behalf of the government.
A joint task force, headed by the Laurel Highlands Resident Agency of the Federal Bureau of Investigation, conducted the investigation that led to the prosecution of Bopp. Other agencies participating on the task force include the Internal Revenue Service-Criminal Investigation, Pennsylvania State Police, Pennsylvania Attorney General's Office, Cambria County District Attorney's Office, Carrolltown Police Department, Patton Police Department, Ebensburg Police Department, Portage Police Department and Paint Township Police Department.