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6 December 2013
Marietta Industrial Enterprises, Inc. Agrees to Pay $50,000 for Violating Clean Air ActRead the Press Release
CONTACT: Fred Alverson
Public Affairs Officer
COLUMBUS, OHIO -- Marietta Industrial Enterprises, Inc. (MIE) has agreed to pay a $37,500 fine and make a $12,500 community service payment after pleading guilty to a felony charge of failing to report violations of the company’s permit in connection with its mineral processing operation. Company president William Scott Elliott pleaded guilty to a misdemeanor charge of being an accessory after the fact for failing to notify Ohio Environmental Protection Agency of the violations.
Carter 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 pleas entered today before U.S. District Judge Algenon L. Marbley.
MIE’s plea agreement includes a recommendation that the company pay a fine of $37,500 and make a community service payment of $12,500 to the Warren Township Fire Department. Elliott’s plea agreement includes a recommended sentence of 48 consecutive hours in jail followed by five months and 28 days of home confinement with electronic monitoring. Judge Marbley will review the plea agreement before deciding whether or not to accept the terms and recommended sentences.
“The company has agreed to perform 200 hours of community service, with at least 100 hours being personally performed by Elliott, in addition to a three-year probation term for the company, which must conduct an environmental audit of their facilities and correct any deficiencies identified in that audit,” U.S. Attorney Stewart said. “These steps will ensure safety for the community and employees going forward.”
According to court documents, One of MIE’s manufacturing processes is crushing medium carbon ferromanganese alloy, referred to as medium carbon, in a mill line. Emissions from the mill lines are captured by equipment known as a baghouse using a large electric fan to ensure that air pollution from the facility is limited. According to court documents, company employees began turning off the fan when processing medium carbon sometime in 2006. In May 2009, Elliott learned that the baghouse fans were being turned off when medium carbon was crushed and put an end to the practice.MIE’s permit calls for the company to disclose any instances that the baghouse has not operated properly in its quarterly and annual reports to Ohio EPA. Between 2006 and 2009, MIE never reported that the baghouse fans were turned off during the processing of medium carbon. From July 19, 2009 through August 10, 2010, Elliott, on behalf of MIE, submitted reports to Ohio EPA. None of the reports stated that the baghouse fans were turned off during the processing of medium carbon.
“We will not tolerate an intentional failure to operate properly installed and permitted air pollution controls,” Ohio Attorney General Mike DeWine said. “This type of behavior threatens Ohioans with unnecessary pollutants.”
This case was jointly investigated by the Ohio Bureau of Criminal Investigation, Ohio EPA, and the U.S. EPA Criminal Investigation Division, all members of the Central Ohio Environmental Crimes Task Force. Special Assistant U.S. Attorney Brad Beeson and Assistant U.S. Attorney J. Michael Marous prosecuted the case.
Man Who Bought and Sold Stolen Personal Information Online Convicted of Participating in Racketeering OrganizationRead the Press Release
LAS VEGAS, Nev. – The first defendant to go to trial in “Operation Open Market,” an investigation of a sophisticated cybercrime organization that operated a world-wide online market place for stolen personal and financial information, was convicted today by a federal jury in Las Vegas, announced Daniel G. Bogden, United States Attorney for the District of Nevada and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.
David Ray Camez, 22, of Phoenix, Ariz., was convicted of one count of participating in a racketeer influenced corrupt organization and one count of conspiracy to participate in a racketeer influenced corrupt organization. Camez is scheduled to be sentenced on April 10, 2014, and faces up to 20 years in prison on each count and fines of up to $250,000. The trial began on Nov. 18, 2013.
“It is difficult to fathom the enormity and complexity of the Carder.su racketeering organization and its far-reaching tentacles across international borders,” said U.S. Attorney Bogden. “The Internet has provided sophisticated international criminals access to the United States and its citizens, and the ability and means to harm us. It has given new definition to reaching out and touching someone. This verdict and our charges against other members of this criminal organization demonstrate that we are likewise reaching out and touching them with our federal criminal justice system.”
“The actions of these computer hackers and identity thieves have harmed countless innocent Americans and seriously compromised our financial system and global commerce,” said Michael Harris, Assistant Special Agent in Charge of Homeland Security Investigations in Las Vegas. “These criminals may think they can escape detection by hiding behind their computer screens here and overseas, but as this verdict demonstrates, cyberspace is not a refuge from American justice.”
Camez was one of 39 charged in an indictment returned in January 2012. Five others have pleaded guilty, seven are scheduled for trial in February 2014, and the rest are fugitives. There were also 16 other defendants charged in the scheme in three separate indictments. Most of those defendants are also scheduled to go to trial in February.
The target of the investigation was an organization which called itself “Carder.su.” Investigation of the Carder.su organization began in March 2007, after the United States Secret Service, operating in conjunction with Homeland Security Investigations and other federal, state and local law enforcement agencies who participate in the Southwestern Identity Theft and Fraud Task Force (SWIFT), began investigating a pattern of credit and debit card fraud. A special agent initiated an undercover investigation called Open Market and assumed the identity as a member of the organization when it was in its infancy.
The investigation determined that members of the Carder.su organization, known as “carders,” were involved in large scale trafficking of compromised credit card account data and counterfeit identifications and credit cards, as well as money laundering, narcotics trafficking, and various types of computer crime. The organization operated an internet web portal called a forum, where members could purchase the illicitly obtained data and share knowledge of various fraud schemes. A second forum was also created to vet incoming new members. The forums were generally hosted within the former Soviet Union and the upper echelon of the organization resides within the former Soviet Union. It was estimated that in July 2011, there were over 5,500 members of the organization.
It was determined that members of the organization had different roles, including moderators who directed other members in carrying out activities; reviewers who examined and tested products, services, and contraband; vendors who advertised and sold products, services and contraband; and members. Members were required to successfully complete a number of security features designed to protect the organization from infiltration by law enforcement or members of rival criminal organizations. Camez became a member of the organization under the name “Bad Man” on June 22, 2008. Camez also used the name “doctorsex.” During 2009 and 2010, the undercover special agent had multiple contacts with Camez in which Camez purchased counterfeit Nevada and Arizona driver’s licenses. Investigators also intercepted and seized a package shipped to Camez from Pakistan which contained counterfeit credit and gift cards. During a search of Camez’ home in Phoenix in May 2010, agents recovered counterfeit credit cards, equipment used to manufacture counterfeit credit cards, counterfeit U.S. currency, and counterfeit identification documents. A search of Camez’ computer revealed software used to encode counterfeit credit cards and stolen identity information.
In addition to the U.S. Secret Service, Homeland Security Investigations and members of the SWIFT Task Force in Las Vegas, NASA’s Jet Propulsion Laboratory, Computer Crimes Division, also provided assistance in the investigation. The case was prosecuted by Assistant U.S. Attorneys Kimberly M. Frayn and Andrew W. Duncan, and Trial Attorney Jonathan Ophardt of the U.S. Department of Justice Organized Crime and Gang Section.
This law enforcement action is sponsored by 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.
Man Held Without Bond on Armed Robbery ChargesRead the Press Release
Indictment Charges Armed Robberies of East St. Louis Pawn Shop and Belleville Liquor Store
Timothy R. Collier, 47, has been ordered detained, that is held without bond, by a magistrate judge following a hearing, Stephen R. Wigginton, United States Attorney for the Southern District of Illinois, announced today.
Collier was indicted on November 20, 2013, in two counts of Interference with Commerce by Robbery, which is a violation of the Hobbs Act, and two counts of Use of a Firearm During a Crime of Violence, in connection with the armed robbery of East St. Louis Jewelry and Loan that occurred on April 25, 2013, and the armed robbery that occurred at Arena Liquor in Belleville on July 12, 2013.
The offenses charged in the indictment allege that on April 25, 2013, Collier took numerous items of jewelry and a firearm from the presence of the owner of East St. Louis Jewelry and Loan, by means of actual and threatened force, by brandishing and discharging a firearm and shooting the owner of East St. Louis Jewelry and Loan in the chest and head. The indictment also alleges that on July 12, 2013, Collier took United States Currency from the presence of an employee of Arena Liquor, by means of actual and threatened force, by brandishing a firearm.
If convicted of a violation of the Hobbs Act, Collier faces a term in prison of up to 20 years on each count, a fine of up to $250,000, or both, and a term of supervised release of up to 3 years. If convicted of the offense of Use of a Firearm During a Crime of Violence for the armed robbery of the East St. Louis Jewelry and Loan, Collier faces a minimum term in prison of 10 years up to a maximum term of Life, consecutive to, meaning in addition to, any term of imprisonment imposed on the Hobbs Act violations, as well as a fine of up to $250,000 and a term of supervised release of up to 5 years. Additionally, if convicted of a second offense of Use of a Firearm During a Crime of Violence for the armed robbery of Arena Liquor, Collier faces a term in prison of 25 years up to a maximum of Life, consecutive to the term of imprisonment imposed on the counts of conviction.
A trial date is currently set for January 27, 2014.
This case is being investigated by the Illinois State Police, the Federal Bureau of Investigation, the Belleville Police Department, and the East St. Louis Police Department as part of the Metro East Armed Robbery Initiative. The case is assigned to Assistant United States Attorney Ali Summers for prosecution.
Man from Mexico Sentenced for Conspiracy to Distribute MarijuanaRead the Press Release
United States Attorney Brendan V. Johnson announced that a man from Mexico convicted of Conspiracy to Distribute a Controlled Substance was sentenced on December 2, 2013, by U.S. Chief Judge Jeffery L. Viken.
Reyes Chavez-Rojo, age 25, was sentenced to 97 months in custody, 4 years supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
Chavez-Rojo was indicted for Conspiracy to Distribute a Controlled Substance by a federal grand jury on May 15, 2012. He pled guilty on August 16, 2013.
Beginning no later than 2010 until May 15, 2012, Chavez-Rojo distributed in excess of 100 kilograms of marijuana to Abraham Romero, and Romero would then engage in further distribution within the District of South Dakota. Chavez-Rojo was involved in this conspiracy with more than five participants and was acting as an organizer or leader. Romero was previously sentenced to 120 months in custody.
This case was investigated by the Northern Plains Safe Trails Drug Enforcement Task Force, the Federal Bureau of Investigation, the Bureau of Indian Affairs Office of Justice Services, and the South Dakota Division of Criminal Investigation. Assistant U.S. Attorney Ted L. McBride prosecuted the case.
Chavez-Rojo was immediately turned over to the custody of the U.S. Marshals Service.
Lower Brule Man Charged with Assaulting, Resisting and Impeding A Federal OfficerRead the Press Release
United States Attorney Brendan V. Johnson announced that a Lower Brule, South Dakota, man has been indicted by a federal grand jury for Assaulting, Resisting and Impeding a Federal Officer.
Dru Peterson, age 26, was indicted on November 14, 2013. He appeared before U.S. Magistrate Judge Mark A. Moreno on December 3, 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 on September 3, 2013, Peterson interfered with several officers while they were engaged in the performance of their official duties as federal law enforcement officers.
The charge is merely an accusation and Peterson is presumed innocent until and unless proven guilty.The investigation is being conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney Meghan N. Dilges is prosecuting the case.
Peterson was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set.
Local Member of Violent Take-Over Style Bank Robbery Ring Sentenced to 13 Years in PrisonRead the Press Release
A Tacoma, Washington gang member was sentenced today to 13 years in prison for his role in a violent, take-over style bank robbery ring, announced U.S. Attorney Jenny A. Durkan. ANTHONY V. MOSLEY, 46, joined with six other defendants in a series of bank robberies in Washington, Ohio, and Michigan. Sometimes MOSLEY was the get-away driver, sometimes he was in the robbery team threatening and demanding money in the banks. He played a key role in the Western Washington robberies providing a place for the LA-based gang to stay, and obtaining rental cars in the names of an innocent associate. MOSLEY entered into the robbery ring just six weeks after getting out of federal prison for a supervised release violation in connection with a previous bank robbery conviction. At sentencing U.S. District Judge Richard A. Jones said the ring was “highly sophisticated… operating with military precision” and he noted that MOSLEY was a “utility player… whatever role was necessary, you fulfilled that role.”
“The robberies victimized bank tellers and bank customers – people who are forever changed just because they stood in the way of the defendant and his gang,” said U.S. Attorney Jenny A. Durkan. “I commend the FBI and the South Sound Gang Task Force for their innovative work to identify and arrest this bank robbery ring.”
According to records filed in the case, various members of the seven member ring participated in one or more of a string of takeover-style bank robberies in Washington, Ohio and Michigan. During the robberies, subjects entered the banks in groups, covered head to toe in loose clothing and gloves, and demanded money while jumping over teller counters. The four robberies in Washington were: the May 25, 2012 robbery of a Wells Fargo branch on Pacific Avenue South in Tacoma; the September 6, 2012, robbery of a U.S. Bank Branch on Bridgeport Way in Lakewood; and the December 20, 2012, robbery of a Wells Fargo Bank branch on 132nd Avenue NE in Kirkland. In their plea agreements, various members of the gang admitted to participating in different robberies in Saline, Ypsilanti, Ann Arbor, Temperance, and Jackson, Michigan, and Toledo, Ohio.
The other defendants in this case are Jeanine M. Daniels, 32; Charles A. Williams, 40; Kevin L. Brown, 38; Curtis W. Smith, 22; and Douglas L. Smith, 22, all of Los Angeles, California; and Janalisa Estrada, 33, of Hollywood, California. All have entered guilty pleas and have been sentenced, or will be sentenced by U.S. District Judge Richard A. Jones over the next few months.
The South Sound Gang Task Force (SSGTF) in Washington arrested five of the subjects on December 22, 2012 on state bank robbery charges. The SSGTF arrested the subjects as they prepared to board a Greyhound bus to Los Angeles, California. Investigators were waiting at the bus station, based upon information that the group frequently traveled to Los Angeles by Greyhound bus within days of a bank robbery.
The Tacoma-based SSGTF investigated the robberies in Washington in partnership with the Lakewood Police Department’s Gang Unit and the FBI Seattle Safe Streets Task Force. The SSGTF is composed of members of the FBI Seattle Division, Lakewood and Tacoma Police Departments, the Washington State Patrol, the Washington State Department of Corrections, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). FBI entities nationwide collaborated in the investigation, including the Los Angeles Field Office and the Ann Arbor, Denver, and Toledo Resident Agencies.
The case is being prosecuted by Assistant United States Attorneys Michael Dion and Kate Crisham.
Lebanon Man Sentenced for Unlawful Possession of ExplosivesRead the Press Release
The United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today that Thomas Lee Stanton, 18, of Lebanon, Illinois, was sentenced in United States District Court in East St. Louis to 30 months in prison, to be followed by 3 years of supervised release, a $200 fine, and a $100 special assessment for the charge of unlawfully possessing destructive devices.
“Remember that these devices, despite the name, could maim or kill anyone nearby. Clearly, the Court was sending a message that there is no reason to fool with do-it-yourself explosive devices.” said United States Attorney Wigginton.
Stanton had previously admitted that on April 17, 2013, he possessed destructive devices including four “cricket” bombs, two Molotov cocktails, and other explosive making materials. Evidence at sentencing indicated that Stanton had hoarded and concealed other bomb-making components. Stanton had also made racist writings in his journals and school notes.
The case was investigated by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Illinois State Police, the St. Clair County Sheriff’s Department, the O’Fallon Police Department, the Lebanon Police Department, the Illinois Secretary of State Police Bomb Squad, the Scott Air Force Base Explosive Ordnance Disposal K-9 Unit, and O’Fallon Township High School Security Officers. The case is being prosecuted by Assistant United States Attorney Liam Coonan.
Lebanon County Man Charged with Million Dollar Investment Fraud SchemeRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced the filing of an Information in U.S. District Court in Harrisburg Thursday charging Christopher Burhans, age 64, of Lebanon County, Pennsylvania, with conspiracy to commit mail fraud.
According to United States Attorney Peter J. Smith, in or about 2003, Burhans started a private mortgage company known as Angelic Ventures. The stated business purpose of Angelic Ventures was to solicit private investors to provide money for private mortgages. Later, in about 2006, Burhans started a business known as Home Buyers Solutions, Inc. ("HBSI"). HBSI, like Angelic Ventures, was in the business of making private real estate loans financed with private investor funds. Burhans operated both businesses out of his home located at 847 Maple Street, Lebanon, Pa.
Burhans carried out the scheme to defraud the individuals who invested in Angelic Ventures and HBSI by placing advertisements in several farming newspapers, including "Fish Wrapper," "Die Botschaft," and "Lancaster Farming," announcing an investment opportunity with Angelic Ventures and HBSI. In the advertisement, Burhans represented that the investments were insured, secured, and promised rates of return as high as 12%.
Burhans falsely represented to investors that their money would be solely used to make loans for the purchase of real estate.Between on or about April 1, 2005, to on or about May 1, 2007, Burhans received and deposited into the Angelic Ventures Real Estate Escrow Account approximately $1,880,150.00 received from investors.
Between on or about November 2006, to on or about April 2008, Burhans received and deposited into the HBSI bank account approximately $450,000 received from HBSI investors.
In December 2009, Burhans wrote to Angelic Ventures and HBSI investors stating that due to the downturn in the economy, Angelic Ventures and HBSI were no longer in business. In the December 2009 letter, Burhans misrepresented to investors that the business losses "ate up even our reserves and all our own personal belongings." As of December 2009, Burhans owed Angelic Ventures and HBSI investors in excess of $1,000,000.
Burhans misappropriated much of the money he received form investors. He diverted money to other businesses he owned and for his own personal needs and expenses, including payment of a salary for himself, his wife and son. Burhans also used investor money to purchase multiple timeshares he used for vacation.
The investigation was conducted by the Federal Bureau of Investigations. The case is being prosecuted by Assistant U.S. Attorney Joseph J. Terz.
The U.S. Attorney’s Office also filed a plea agreement which must be approved by the District Court.
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 five 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 ‘Ghost Riders’ Motorcycle Gang Sentenced to Prison for Illegal Weapons PossessionRead the Press Release
A leader of the Ghost Riders motorcycle gang in Pierce County was sentenced today in U.S. District Court in Tacoma to five years in prison for possession of an unregistered short-barreled shotgun and being a felon in possession of explosives, announced U.S. Attorney Jenny A. Durkan. KARL TWILLEAGER, a/k/a “King Karl”, 66, of Spanaway, Washington, has been in custody since his property was searched on June 13, 2013 and the weapons were discovered. The explosives were being stored for a retaliatory attack on a rival gang. U.S. District Judge Ronald B. Leighton imposed the sentence.
“The possession of illegal firearms and explosives by violent felons endangers a whole community,” said U.S. Attorney Jenny A. Durkan. “This defendant and his gang planned a violent attack on rivals that could have caused serious injuries or deaths. Innocent bystanders could have been caught up in the carnage. The very act of storing those explosives illegally in the storage locker posed risks to the community should they be stolen or ignite accidently.”
According to the plea agreement signed in September 2013, ATF agents searched a Spanaway storage locker belonging to TWILLEAGER and found more than two sticks of Emulsion explosives and four blasting caps. They also recovered six firearms, including three rifles, two shotguns, and a handgun, as well as additional ammunition and empty ammunition magazines. Two days later they searched TWILLEAGER’s home and a shed on the property that was used as the Ghost Riders clubhouse. They seized multiple rounds of different calibers of ammunition, and six more firearms, including four handguns, a rifle, and a J.C. Higgins model 20 12-gauge short-barreled shotgun, with a barrel length of approximately 15.5 inches with no serial number. TWILLEAGER was convicted of second degree murder in Grant County, Washington in 1994 and is therefore prohibited from possessing firearms and explosives.
In asking for a five year sentence, prosecutors noted that the ‘Ghost Riders’ motorcycle gang was preparing for a violent attack. “The government believes that the gel explosives and at least some of the firearms were gathered for the purpose of a planned violent attack on ‘Uncle Sam’s Bar and Grill’ in Spanaway, known to be a favored hangout of a rival motorcycle gang, the Bandidos. This attack was to be in retaliation for Defendant Twilleager and about eight of his “brother” Ghost Riders having been tricked and assaulted at that very location on June 2, 2012 (almost exactly a year earlier),” prosecutors wrote in their sentencing memo.The case was investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), with assistance from the Pierce County Sheriff’s Office Bomb Squad, the Washington State Patrol SWAT Team, the South Sound Gang Task Force, and the Seattle Police Department, and was prosecuted by Assistant United States Attorney Gregory A. Gruber.
Leader of Quarter-Billion Dollar Tax Fraud Scheme, Already Sentenced to 14 Years, Ordered to Pay $2.9 Million in RestitutionRead the Press Release
During Past 2 Years, 43 Defendants Linked to Inland Empire’s Old Quest Foundation Have Been Convicted, Including Attorney and 7 Tax Return Preparers.
SANTA ANA, California – Concluding sentencing proceedings in which he was already previously to serve a 14-year prison term, the former leader of the Fontana-based Old Quest Foundation was ordered this afternoon to pay $2,925,620 in restitution in relation to a tax fraud scheme that resulted in more than 400 fraudulent federal income tax returns being filed with the IRS that cumulatively sought more than $250 million in fraudulent refunds.
Arturo S. Ruiz, 55, of Moreno Valley, was sentenced by United States District Judge Josephine L. Staton, who issued the 168-month prison sentence on September 20.
The scheme run out of Old Quest was the largest tax refund fraud in history involving misuse of Original Issue Discount tax forms. The case against Ruiz and the other Old Quest defendants stems from Operation Stolen Treasures, an investigation conducted by Special Agents with IRS Criminal Investigation that led to 55 people being indicted by a federal grand jury in the fall of 2011.
Ruiz, who was the chief executive officer of Old Quest, was convicted at trial in January 2013 of one count of conspiracy to defraud the United States and 41 counts of filing false claims against the United States, including four of his own false federal tax returns. Old Quest’s president and second-in-command, Francisco J. Mendoza, also was convicted during the January trial, but died shortly before he was scheduled to be sentenced in November 2013.
Old Quest promoter Arturo Villarreal-Alba, 45, of Whittier, who was previously sentenced to eight years in prison, was ordered today to pay $462,239 in restitution to the IRS.
Also sentenced today was Old Quest promoter Ricardo Bonilla, 52, of Fontana , who received a prison term of 33 months.
The evidence presented at Ruiz and Mendoza’s trial and in court documents showed that Ruiz fraudulently told Old Quest customers they each could receive hundreds of thousands of dollars in tax refunds by accessing “secret government accounts” through a process that included the filing of IRS Forms 1099-OID. During presentations made across Southern California, members of the Old Quest conspiracy promoted the secret account theory and other “tax defier” arguments. In an attempt to give legitimacy to the scheme, Ruiz falsely told customers who attended seminars that Old Quest had employees who were attorneys, accountants, CPAs, and former IRS employees. Taxpayers who signed up were required to pay Old Quest fees as high as $10,000, and they were required to promise to “donate” to Old Quest 25 percent of any tax refunds they received.
In exchange for the payments, Old Quest prepared and filed false income tax returns, which routinely sought hundreds of thousands of dollars – and sometimes millions of dollars – in income tax refunds. In some cases, Old Quest filed multiple false tax returns on behalf of customers. During a search warrant executed at Old Quest’s offices, special agents with IRS Criminal Investigation seized several unfiled tax returns, including one signed tax return that falsely reported $10,500,106 in federal income tax had been withheld and fraudulently claimed a $6,868,675 tax refund. Although the IRS stopped most of the false refunds before they issued, several very large refunds issued, including one for $1,192,653.
Bank records and other evidence showed that Old Quest received approximately $2 million from customers who used the fraudulent OID scheme, as well as from tax refunds erroneously issued by the IRS. The evidence also showed that while IRS agents were searching Old Quest’s offices, Mendoza emptied more than $250,000 from one of Old Quest’s bank accounts, and then Ruiz hid those funds from authorities by depositing them into another bank account in a different name.
When customers received IRS letters warning that their tax returns were frivolous, Old Quest employees assured customers that the IRS sent letters only to “intimidate” them because the “IRS did not want to pay.” After several refund checks were erroneously issued and the IRS froze the bank accounts of the customers who had received them, Ruiz instructed their employees to open new accounts for customers at different banks in an attempt to avoid further IRS scrutiny. The IRS search of the Old Quest offices and computers in September 2009 revealed numerous emails and printouts of IRS publications warning of the exact same scheme that Ruiz was promoting.
Prior to the tax refund scheme, Ruiz had promoted a “land patent” program to many of the same customers, according to the evidence introduced at his trial. Under this fraudulent program, Ruiz promised to eliminate the customers’ mortgages through an obscure and mysterious process, again in exchange for substantial fees. The land patent program quickly failed, and dozens of customers lost their homes to foreclosure.
In addition to selling the fraudulent schemes to customers across the Southland, Ruiz and Mendoza failed to report hundreds of thousands of dollars of their own income, and Ruiz filed several false federal income tax returns for himself that fraudulently sought refunds. The evidence at trial showed that Ruiz bragged about not paying taxes for more than 25 years.Of the 55 defendants indicted as part of Operation Stolen Treasures, seven have been convicted at trial (which includes Mendoza), 36 have pleaded guilty, two have agreed to plead guilty, and eight are pending trial. One defendant remains a fugitive, and one defendant was acquitted.
Release No. 13-140
Kansas City Man Sentenced in Carjacking CaseRead the Press Release
KANSAS CITY, KAN. - A man from Kansas City, Kan., has been sentenced on federal charges arising from a carjacking and armed robbery, U.S. Attorney Barry Grissom said today.
Anthony L. Irvin, 19, Kansas City, Kan., was sentenced Friday to 207 months in federal prison. He pleaded guilty to one count of carjacking and one count of using a firearm in a crime of violence.
In his plea, Irvin admitted that on May 26, 2013, he and his co-defendants walked to a Stop Shop gas station at 6865 State Avenue in Kansas City, Kan., where they stole a 2004 Ford Freestar minivan. Irvin held the driver of the minivan at gunpoint while co-defendants Derrick Freeman and Terry Tillman took the driver’s wallet and keys. The defendants drove away in the minivan, with Irvin at the wheel.
When the defendants realized officers had spotted their vehicle, they led police on a 17-minute chase at speeds up to 112 miles per hour. The minivan wrecked in a plowed field near Leavenworth Road and North 184th Street in Basehor, Kan., where the defendants fled on foot. Freeman fired a handgun at a law enforcement officer before being arrested.
Co-defendant Derrick Freeman is awaiting sentencing.
Co-defendant Terry Tillman was sentenced to 10 years.Grissom commended the Kansas City, Kan., Police Department, the Wyandotte County Sheriff’s Department, the Kansas Highway Patrol, the Basehor Police Department, the Edwardsville Police Department, the Bonner Springs Police Department, the Leavenworth County Sheriff’s Department and Special Assistant U.S. Attorneys Erin Tomasic and Trent Krug for their work on the case.
Justice Department Reaches Settlement with Newseum to Improve Access for People with DisabilitiesRead the Press Release
The Department of Justice announced today that it has reached a settlement with Newseum Inc., which owns and operates the Newseum, to address alleged violations of the Americans with Disabilities Act (ADA). The settlement agreement resolves allegations that the Newseum, a museum of news and history in Washington, D.C., was operating exhibits and providing facilities that were not accessible to people with disabilities.
Under the settlement, the Newseum must take steps to ensure that all of its programs, exhibits and facilities are accessible to people with disabilities, including:
· Providing additional wheelchair spaces and companion seats in the Walter and Leonore Annenberg Theater;
· Providing assistive listening devices for patrons who are deaf or hard of hearing in the Newseum’s 15 theaters, and providing captioning and other auxiliary aids and services throughout its more than 20 galleries of exhibitions and interactive programs;
· Ensuring that the operating controls of all Newseum interactive programs are within the reach-range of people who use wheelchairs;
· Providing museum tours that are audio described and include tactile experiences for individuals who are blind or have impaired vision ; and
· Providing printed materials and maps in alternate formats (e.g., audio, large print and Braille).
“This agreement ensures that people with disabilities will have an equal opportunity to enjoy the Newseum as other visitors,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Justice Department is committed to knocking down these types of barriers, and we commend the Newseum for its innovative efforts to improve accessibility for all visitors.”
The agreement resolves a compliance review under the ADA. People interested in finding out more about the ADA, the Standards for Accessible Design or this agreement can call the department’s toll-free ADA Information Line at 1-800-514-0301 or 1-800-514-0383 (TTY) or visit its ADA website at www.ada.gov.
Justice Department Files Lawsuit to Stop Tennessee Man from Preparing Tax ReturnsRead the Press Release
The Department of Justice filed a civil lawsuit today in Memphis federal court to stop Grady Smith, who does business as One Price Refunds, from preparing federal tax returns. According to the complaint, Smith and One Price Refunds have prepared over 2,000 tax returns since 2009.
The complaint filed with the U.S. District Court for the Western District of Tennessee alleges that Smith understates his customers’ federal tax liabilities by reporting false or inflated business expenses, reporting false or inflated educational expenses and improperly claiming the earned income tax credit. In addition, the complaint alleges that Smith has prepared tax returns using fictitious taxpayer identification numbers, thereby obscuring his identity as the tax return preparer. According to the complaint, Smith’s activities may have caused a total of over $800,000 in harm to the government.
Return preparer fraud is one of the Internal Revenue Service’s Dirty Dozen Tax Scams for 2013, which can be viewed at www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013 . The Internal Revenue Service has some tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional . In the past decade, the department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website at www.justice.gov/tax/taxpress2013.htm .
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Jury Finds Two New Haven Men Guilty of Narcotics Distribution OffensesRead the Press Release
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Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that a federal jury in New Haven today found MICHAEL THOMPSON, 34, and TYLON VAUGHN, also known as “Bucky B,” 35, both of New Haven, guilty of narcotics distribution offenses.
THOMPSON and VAUGHN and more than one hundred other individuals were charged as a result of “Operation Bloodline,” a joint law enforcement investigation targeting narcotics trafficking and gang violence in the Dwight-Kensington and Fair Haven sections of New Haven. Led by the DEA New Haven Task Force and the New Haven and Hamden Police Departments, the year-long investigation included the use of court-authorized wiretaps on numerous telephones, extensive physical surveillance, controlled purchases of narcotics, execution of search warrants, and seizures of narcotics and firearms.
According to the evidence at trial, THOMPSON received kilogram quantities of cocaine from suppliers, including co-defendant Christopher “White Boy Chris” Morley, which THOMPSON converted into crack cocaine and then sold to other narcotics distributors and customers. Morley also provided THOMPSON with quantities of oxycodone, which THOMPSON redistributed to others. At times, THOMPSON supplied powder cocaine to Morley.
The trial evidence further established that VAUGHN received distribution quantities of crack cocaine from co-defendant Britt Martin, also known as “Big Baby,” and that he distributed crack and marijuana, among other controlled substances, to customers in Fair Haven. In May and June 2011, investigators made two controlled purchases of crack from VAUGHN.
The jury found THOMPSON guilty of one count of conspiracy to possess with intent to distribute, and to distribute, five kilograms or more of cocaine, 280 grams or more of cocaine base (“crack cocaine”), and a quantity of oxycodone. VAUGHN was found guilty of one count of conspiracy to possess with intent to distribute, and to distribute, 280 grams of more of cocaine base and a quantity of marijuana. On these convictions, both defendants face a mandatory minimum term of imprisonment of 10 years and a maximum term of imprisonment of life. VAUGHN also was found guilty of two counts of distributing cocaine base, which carries a maximum term of imprisonment of 20 years, on each count.
Senior U.S. District Judge Ellen Bree Burns scheduled sentencing for both defendants for February 28, 2014.
THOMPSON and VAUGHN have been detained since May 22, 2012.
Morley and Martin have pleaded guilty and await sentencing.
This matter is being investigated by the Drug Enforcement Administration’s New Haven Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the New Haven, Hamden, West Haven, North Haven, Branford, Ansonia and Meriden Police Departments. The United States Marshals Service, the Connecticut State Police, the Connecticut Department of Correction, Parole and Community Services and the Milford, Hartford, New Britain, North Branford and Stratford Police Departments have provided valuable assistance to the investigation.
This case is being prosecuted by Assistant U.S. Attorneys S. Dave Vatti and Marc Silverman.
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(203) 821-3722 [email protected]Jury Convicts Two Los Angeles Sheriff's Deputies of Mortgage FraudRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that two deputies of the Los Angeles County, Calif., Sheriff’s Department were convicted in federal court today for their roles in an $11 million mortgage fraud scheme.
James Arthur Nash, Jr., 43, and Arman Nshanian, 37, both of Corona, Calif., were each found guilty of conspiracy to commit wire fraud. In addition to the criminal conspiracy, Nash was convicted of four counts of wire fraud and Nshanian was convicted of two counts of wire fraud related to fax transmissions and emails that were sent across state lines during the mortgage application process.
Nash and Nshanian are among nine defendants who participated in a mortgage fraud scheme from early 2005 through Aug. 4, 2006. Mortgage lenders made loans of approximately $11,092,886 on 16 residential properties in Lee’s Summit, Liberty, Blue Springs, Parkville, Independence and Oak Grove, Mo. From that total, unbeknownst to the lenders, buyers received approximately $2,006,845 from the loan proceeds. The scheme resulted in a financial loss to mortgage lenders of nearly $5 million.
Co-defendants Leann Raejeana Turner, 44, of Blue Springs, Bruce Q. Williams, 44, of Kansas City, Kan., Carole L. Colson, 71, of Lake Worth, Fla., Anthony E. Hicks, 41, of Little Rock, Ark., Mark P. Billey, 40, of Buena Park, Calif., Zelda Ann Jackson, 40, of Newbury Park, Calif., and Linda Joyce Henry Johnson, 65, all of Corona, Calif., have all pleaded guilty to their roles in the conspiracy.
Turner and Jackson were real estate agents. Williams and Hicks were mortgage loan officers. Colson was a real estate broker. Billey and Johnson each purchased properties and Jackson assisted her husband in the purchase of a property.
Conspirators submitted fraudulent mortgage loan applications to purchase residential properties at inflated prices. The purchases were structured in such a way that the buyers would receive $100,000 cash back from the loan proceeds. The buyers obtained mortgage loans in excess of the actual sales prices to be paid to the seller, in order to receive the difference between the actual sales price and the inflated loan amount.
Turner and Colson listed and arranged for the sale of the homes at inflated prices and solicited buyers. In order to obtain the loan proceeds without the lenders’ knowledge, the buyers created fictitious businesses that issued false invoices that claimed the businesses had provided work and services for which they were entitled to receive loan proceeds.
Nash fraudulently purchased two residential properties in Blue Springs, Mo. He received $100,000 from each property. Nshanian fraudulently purchased a residential property in Lee’s Summit, Mo., and received $100,000.
Under federal statutes, Nash and Nshanian are each subject to a sentence of up to five years in federal prison without parole for the conspiracy, and up to 20 years in prison on each count of wire fraud. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Linda Parker Marshall. It was investigated by the FBI and IRS-Criminal Investigation.Jury Convicts Normal Illinois Man for Crack Cocaine and Marijuana Distribution ConspiracyRead the Press Release
Peoria, Ill. – A Normal, Ill., man, Richard George Martin, 34, faces mandatory life in prison following his conviction today in federal court in Peoria. Trial in the case began on Monday, Dec. 2, 2013. The jury deliberated for approximately three hours before finding Martin guilty of conspiracy to distribute and possess with the intent to distribute at least five kilograms of cocaine and 50 kilograms of marijuana from 1999 to 2011.
Martin’s conviction is the latest as a result of "Operation Prairie Eagle," a cooperative investigation targeting distribution of crack cocaine and marijuana in the Bloomington‑Normal area. The Organized Crime Drug Enforcement Task Force (OCDETF) investigation was led by the Normal Police Department and the Federal Bureau of Investigation. Assistant U.S. Attorney Greggory R. Walters is prosecuting the defendants charged as a result of the “Prairie Eagle” investigation, and was joined at trial by Assistant U.S. Attorney John H. Campbell. Since 2011, “Operation Prairie Eagle” has resulted in the conviction of 22 defendants for conspiracy to distribute and the distribution of controlled substances in the Bloomington-Normal area.
Martin is scheduled to be sentenced on Apr. 7, 2014, before U.S. District Judge Michael M. Mihm. Martin remains detained in the custody of the U.S. Marshals Service.
Jesus Sablan Palacios Found Guilty on Federal Firearm ChargesRead the Press Release
United States Attorney ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that Jesus Sablan Palacios was found guilty on Wednesday, December 5, 2013, of the following charges: three counts of Felon in Possession of Firearm and/or Ammunition, and three counts of Unlawful User of a Controlled Substance in Possession of Firearm and/or Ammunition, in violation of Title 18 U.S.C. §§ 922(g)(1) and (3).
Defendant Palacios will be sentenced on March 14, 2014 in the U.S. District Court for the Northern Mariana Islands. Palacios is facing a mandatory minimum of 15 years imprisonment and a maximum sentence of life, under the armed career criminal sentencing enhancement.
The Indictment filed on August 22, 2013 charged that Defendant Palacios, after having been convicted of a crime, knowingly possessed six .22 caliber bullets, ten Winchester 38SPL .38 caliber bullets, eight .9 mm caliber bullets and one Ruger, Model 10/22, .22 caliber rifle, one .22 caliber rifle with its barrel and stock sawed off, and three .22 caliber bullets, all items that had been shipped and transported in interstate and foreign commerce. Defendant Palacios was also charged with being an unlawful user of a controlled substance while knowingly possessing these items.
U.S. Attorney Limtiaco stated, “The possession of firearms and drugs is a potentially deadly combination. Innocent civilians and law enforcement are unnecessarily placed at great risk of harm by the exposure to firearms in the wrong hands. Those who use firearms to protect their illegal activities must know that they will face hard time.” U.S. Attorney Limtiaco also stated, “Methamphetamine has been linked to an increase in violent crimes and results in devastating effects to individuals and to the community. Those who engage in the use of this illegal drug and found to be in possession of firearms will be prosecuted and face severe penalties.”
This case was investigated by Special Agents from the Bureau of Alcohol, Tobacco, Firearms and explosives (ATF), and the Drug Enforcement Administration (DEA), and officers from the CNMI
Department of Public Safety. Assistant United States Attorneys Rami Badawy and Ross Naughton prosecuted the case.Jamaican National Sentenced to 5 Years in Prison for Defrauding Hundreds of Senior Citizens in Jamaican Lottery ScamRead the Press Release
James L. Santelle, the United States Attorney for the Eastern District of Wisconsin, announced that O’Brain J. Lynch (age 28) of Jamaica was sentenced to 5 years in prison for his role in a Jamaican lottery scam. Lynch is believed to be the first Jamaican national charged in the United States for this type of fraud.
A Jamaican Lottery Scheme is a form of mass-marketing fraud committed via the internet, telemarketing, or mass mailings. Jamaican criminal organizations contact victims and identify themselves as lawyers, government officials, law enforcement agents, or lottery company officials. The potential victims are led to believe they won an international multi-million dollar lottery. The fraudulent telemarketers then inform the victims that in order to receive their winnings the victim needs to pay an advance fee. This fee is usually described as a tax, insurance payment, or customs duty that must be paid to release the winnings. The victims are instructed to send the funds via mail or wire transfer.
The scammers routinely involve victims to help facilitate the laundering of financial transactions by receiving and withdrawing funds from prepaid cards and receiving and sending wire transfers. In an attempt to conceal and layer the proceeds from the lottery scams, the scammers direct victims to send funds, knowingly and unknowingly, to other victims and associates of the scammers within the United States. These victims and co-conspirators then transfer the proceeds of this fraud to the scammers in Jamaica by wire transfers. The Jamaican criminal organizations have modified the lottery scam into other variations of telemarketing schemes to include redirecting individuals Social Security Administration (SSA) benefits, direct deposit, automatic debit, re-routing schemes and other identity theft schemes.
According to documents filed in court, in March 2012, the SSA learned that a social security recipient, from Glendale, Wisconsin, was receiving social security benefits in the name of other recipients and cashing in these benefits. Special Agents from the SSA - Office of Inspector General (OIG) discovered the recipient was sending this money to Jamaica because he believed he had won “The Jamaican Lottery.” He said he was contacted by an official from Global International who informed him that he won $2.5 million and two (2) Mercedes Benz vehicles in a sweepstakes. He was then advised that in order for him to collect the money and the cars, he had to pay taxes, customs duty, and other fees. He initially sent his own money to Jamaica, and, once he had depleted his own assets, he was directed, by telephone, to accept checks, Direct Express cards, and other cash value cards in the names of other people (who were also victims), cash them out and then send the money to Jamaica. As a result, numerous victims did not receive their social security benefits, and instead they were mailed to Jamaica. Investigators from SSA discovered that hundreds of victims throughout the United States were losing their social security benefits and their life savings either because they believed that they had won “The Jamaican Lottery” or because, as part of another telemarketing scheme, they revealed enough information about themselves that allowed the thieves to fraudulently divert their money.
SSA -OIG, the Postal Inspection Service (USPS) and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) joined forces, and were able to identify O’Brain Lynch, as being one of the principal individuals involved in this scheme in Jamaica. HSI reported that Lynch is a resident of Montego Bay, Jamaica, and formerly was a lawful permanent resident of the United States. HSI learned that Lynch and his girlfriend were coming to the United States for a vacation. Lynch was arrested in February 2013.
Numerous records showed that Lynch and his co-actors were involved in a massive telemarketing scheme involving hundreds of victims. They would identify vulnerable victims, and change the recipients’ addresses to a third party. They then had the third party send the money to Jamaica or to others in the United States, who would then wire the money to Jamaica. At the direction of Lynch (and other working with him) numerous victims received SSA Direct Express, netSpend, Green Dot, and other types of cash value cards in the names of other victims. In addition, items were ordered in the United States by Lynch and his co-actors and were paid for using money fraudulently obtained through the scheme. These items, including jewelry, cell phones, a computer tablet, various electronics and other items were received by victims or other co-actors in the United States, and then sent to Jamaica where they could not be traced or recouped. Many of these items have now been linked directly to Lynch.
United States Attorney James L. Santelle commented: "The significant, five-year prison term that O'Brain Lynch will serve reflects, first, the calculated, pernicious nature and scope of his victimization of more than 50 people, many of whom suffered substantial losses of social security benefits monies on which they relied to live. Second, it responds with clarity and force to Lynch's criminal purpose and a-social intent in orchestrating a sophisticated scheme of fraudulent representations, false promises, and deceptive international financial transaction mechanisms. The United States Department of Justice--along with its highly professional and vigilant investigative partners in the Social Security Administration, Office of the Inspector General, the United States Postal Inspection Service, and the United States Immigration and Customs Enforcement Service, Homeland Security Investigations--has been and will remain highly focused on identifying, stopping, and prosecuting the perpetrators of these kinds of malevolent scams; those who take advantage of innocent people here in Eastern Wisconsin and throughout our nation through schemes like this will be charged and called to account for their crimes."
Santelle continued: "Our successful investigation and effective prosecution of this case should also serve an educational purpose to all of the good, law-abiding citizens we serve and protect: Offers and solicitations through the regular mail, telemarketing, or the internet that purport to confirm winnings or the recovery of large amounts of money--especially but not limited to those with international trappings--are virtually always fraudulent, especially when they contemplate the transfers or payments of monies to "recover" lottery or similar monetary awards. The best response to these types of notifications and requests is no response at all--aside from prompt reporting of them to local, state, and federal law enforcement authorities for follow-up action, domestic or international. In that connection, I commend not only the attorney and professional staff of my office for this important result but also the extremely timely, tenacious, and exhaustive work of the agents of the Social Security Administration, the Postal Inspection Service, and Homeland Security Investigations--all of whom are, in partnership and collaboration, responsible for shutting down Lynch's scam and bringing him to justice."
Special Agent in Charge William Cotter of the Social Security Administration, Office of Inspector General said, "The arrest and conviction of OBrain Lynch is a significant breakthrough in our investigation into this Jamaican Lottery Scheme, which has redirected millions of dollars in senior citizens' retirement benefits to thieves' accounts opened for the purpose of stealing this money. Lynch was a major organizer of this scam and he personally received or was responsible for defrauding hundreds of thousands of dollars from very vulnerable senior citizens. The Inspector General's Office for the Social Security Administration has worked very closely in this case with Homeland Security Investigations and the Postal Inspection Service and we will continue our collaborative effort to arrest and prosecute additional people involved with this scheme.""Jamaican lottery scammers like Mr. Lynch think nothing of fleecing older Americans of large amounts of money, often leaving their victims destitute and ashamed,” said HSI Chicago Special Agent in Charge Gary Hartwig. "In collaboration with our law enforcement partners, HSI will continue to use our unique cross-border authorities to combat this devastating crime and bring those responsible to justice."
"Americans have lost millions of dollars to criminals from countries around the world in foreign lottery scams, said Pete Zegarac, Inspector in Charge, Chicago Division U.S. Postal Inspection Service. When one family member is harmed by a foreign lottery scam, the impact is felt by all. Losses can be monumental, sometimes entire life savings are wiped out. The United States Postal Inspection Service will continue to partner with the Inspector General's Office for the Social Security Administration and Homeland Security Investigations, as well as other law enforcement agencies, regulatory agencies and the financial industry to combat cross border fraud targeting U.S. consumers, particularly the elderly. The Postal Inspection Service will continue to aggressively investigate these crimes and arrest people like Lynch, who ruthlessly exploit American consumers."
This matter was investigated by special agents from the Social Security Administration - Office of Inspector General, the Postal Inspection Service and Homeland Security Investigations. The case was prosecuted by Assistant United States Attorney Karine Moreno Taxman.
Iowa City Man Sentenced for Conspiracy to Distribute Crack CocaineRead the Press Release
DAVENPORT, IA - On December 5, 2013, Ricardo Ibarra Toscano, a 39 year-old citizen of Mexico, was sentenced by United States District Court Judge John A. Jarvey to 60 months in prison, after pleading guilty to illegal re-entry into the United States as an aggravated felon, announced United States Attorney Nicholas A. Klinefeldt. After serving his sentence, Ibarra Toscano will be turned over to immigration authorities. If he is not deported, then he will be subject to a term of supervised release of three years. Ibarra Toscano was also ordered to pay $100 to the Crime Victims Fund. Ibarra Toscano had been deported on four prior occasions and had five prior drug convictions, including one in 2002 for manufacturing methamphetamine. Ibarra Toscano was found in Muscatine County, Iowa, in March 2013, after pleading guilty to interference with official acts.
This case was investigated by the United States Department of Homeland Security-Immigration and Customs Enforcement and the Muscatine County Sheriff’s Office, and was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
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Iowa City Man Sentenced for Conspiracy to Distribute Crack CocaineRead the Press Release
DAVENPORT, IA - On December 5, 2013, Norman Dudley, age 22, from Iowa City, Iowa, was sentenced by United States District Court Judge John A. Jarvey to 26 months in prison, after pleading guilty to distribution of cocaine base (“crack”), announced United States Attorney Nicholas A. Klinefeldt. Dudley was also ordered to serve three years of supervised release, following the period of imprisonment, and to pay $100 towards the Crime Victims Fund.
In a related case, John Mulbah, age 22, from Iowa City, Iowa, was also sentenced by United States District Court Judge John A. Jarvey to 72 months in prison, after pleading guilty to conspiracy to distribute cocaine base (“crack”), announced United States Attorney Nicholas A. Klinefeldt. Mulbah was also ordered to serve four years of supervised release following the period of imprisonment, and to pay $100 towards the Crime Victims Fund.
As part of the investigation, law enforcement officers made controlled purchases of crack cocaine from Mulbah on August 10, August 13 and August 14. During the purchase on August 14, 2012, both Dudley and Mulbah distributed crack cocaine as part of a controlled transaction with law enforcement officers. Mulbah admitted as part of the plea proceedings that between August 14 and August 17, 2012, he was involved with Norman Dudley and others in an agreement to distribute crack cocaine.
This case was investigated by the Iowa Department of Public Safety-Division of Narcotics Enforcement, Iowa Division of Criminal Investigation, the Iowa City, Iowa, Police Department and the Johnson County Sheriff’s Office. This case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
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Informational: Federal Court Initial AppearancesRead the Press Release
The United States Attorney's Office announced that during a federal court session in Great Falls, on December 6, 2013, before U.S. Magistrate Judge Keith Strong, the following individuals were arraigned:
BRUCE JOHN DENNY, a 55-year-old resident of Box Elder, appeared on a charge of sexual abuse. He is currently detained. If convicted of this charge, DENNY faces possible penalties of life in prison, a $250,000 fine, and lifetime supervision. Assistant U.S. Attorney Danna R. Jackson is the prosecutor for the United States. The investigation was conducted by the Federal Bureau of Investigation.
GARRETT KIRBY LAFROMBOISE, age 21, and CECILIA ROSE GARDIPEE, age 22, residents of Box Elder, appeared on charges of second degree murder and assault resulting in serious bodily injury. They are currently detained. If convicted of these charges, they each face possible penalties of life in prison, a $250,000 fine, and 5 years supervised release. Assistant U.S. Attorney Danna R. Jackson is the prosecutor for the United States. The investigation was conducted by the Federal Bureau of Investigation.
ZACKARIA JULY CRAWFORD, a 22-year-old resident of Browning, appeared on charges of strangulation and assault resulting in serious bodily injury. He is currently detained. If convicted of these charges, CRAWFORD faces possible penalties of 10 years in prison, a $250,000 fine, and 3 years supervised release on each charge. Assistant U.S. Attorney Ryan G. Weldon is the prosecutor for the United States. The investigation was conducted by the Federal Bureau of Investigation.
The defendants pled not guilty to the charges.
The charge, an indictment, information or complaint, is merely an accusation and all persons named as defendants are presumed innocent until proven guilty. A pre-trial conference and a trial date will be set and the United States will be required to prove the allegations set forth in the indictment beyond a reasonable doubt.
Informational: Federal Court ArraignmentRead the Press Release
The United States Attorney's Office announced that during a federal court session in Great Falls, on December 6, 2013, before U.S. Magistrate Judge Keith Strong, the following individual was arraigned:
KEVIN LEWIS JOUBERT, a 43-year-old resident of Bozeman, appeared on a charge of receipt of child pornography. He is currently detained. If convicted of this charge, JOUBERT faces possible penalties of a mandatory minimum of 15 years in prison and could be sentenced to 40 years, a $250,000 fine, and lifetime supervision. Assistant U.S. Attorney Cyndee L. Peterson is the prosecutor for the United States. The investigation was a cooperative effort between the Montana Internet Crimes Against Children Task Force (ICAC), the Bozeman Police Department, and the U.S. Department of Homeland Security - Homeland Security Investigations.
The defendant pled not guilty to the charge.
The charge, an indictment, information or complaint, is merely an accusation and all persons named as defendants are presumed innocent until proven guilty. A pre-trial conference and a trial date will be set and the United States will be required to prove the allegations set forth in the indictment beyond a reasonable doubt.
Information Technology Specialist at <br /> National Science Foundation <br /> Pleads Guilty to Stealing $90,000 from GovernmentRead the Press Release
An information technology specialist working for the National Science Foundation (NSF) pleaded guilty late yesterday to theft of government property totaling more than $90,000, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Acting U.S. Attorney Dana J. Boente of the Eastern District of Virginia.
According to court records, James Troy Clark, 51, of Fredericksburg, Va., was responsible for purchasing information technology supplies and services for his office at NSF using government-issued purchase cards. From 2010 through July 2013, Clark used these purchase cards to purchase items for his personal use and the personal use of others, including cellular telephones and the attendant monthly service charges for those phones; multiple laptop computers and tablets; thousands of dollars in movies, music, and other content from the Apple iTunes store; and numerous other electronic devices and accessories.
The total amount of purchases made by Clark for his and others’ personal use was approximately $94,493. Clark faces a maximum penalty of 10 years in prison when he is sentenced on Feb. 21, 2014.
The case was investigated by National Science Foundation’s Office of Inspector General. The case was prosecuted by Trial Attorneys Kevin Driscoll and Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Mark D. Lytle of the U.S. Attorney’s Office for the Eastern District of Virginia.Information Technology Specialist at National Science Foundation Pleads Guilty to Stealing $90,000 from GovernmentRead the Press Release
WASHINGTON – An information technology specialist working for the National Science Foundation (NSF) pleaded guilty late yesterday to theft of government property totaling more than $90,000, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Acting U.S. Attorney Dana J. Boente of the Eastern District of Virginia.
According to court records, James Troy Clark, 51, of Fredericksburg, Va., was responsible for purchasing information technology supplies and services for his office at NSF using government-issued purchase cards. From 2010 through July 2013, Clark used these purchase cards to purchase items for his personal use and the personal use of others, including cellular telephones and the attendant monthly service charges for those phones; multiple laptop computers and tablets; thousands of dollars in movies, music, and other content from the Apple iTunes store; and numerous other electronic devices and accessories.
The total amount of purchases made by Clark for his and others’ personal use was approximately $94,493. Clark faces a maximum penalty of 10 years in prison when he is sentenced on Feb. 21, 2014.
The case was investigated by National Science Foundation’s Office of Inspector General. The case was prosecuted by Trial Attorneys Kevin Driscoll and Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Mark D. Lytle of the U.S. Attorney’s Office for the Eastern District of Virginia.
Grant County Man Pleads Guilty to Federal Firearms ChargesRead the Press Release
ALBUQUERQUE – Javier J. Reyes, 19, of the Village of Santa Clara in Grant County, N.M., pleaded guilty in Las Cruces federal court today to firearms charges. Reyes entered his guilty plea without the benefit of a plea agreement.
Reyes and his co-defendant Gabriel Saiz, 20, of Silver City, N.M., were charged with possession of an unregistered firearm in a criminal complaint filed on March 1, 2013. The two subsequently were indicted and charged with possession of an unregistered short-barreled rifle, and possession of a firearm with an obliterated serial number. According to the indictment, Saiz and Reyes possessed a firearm made from a Mossberg .22 caliber rifle with a barrel length of less than 16 inches and an obliterated serial number on Nov. 27, 2012, in Grant County, N.M.
According to court filings, Reyes and Saiz were arrested on local charges by the Silver City Police Department on Nov. 27, 2012, in Silver City after they robbed a woman at gunpoint at approximately 7:30 p.m. that day and allegedly assaulted four individuals by brandishing a firearm at them approximately an hour later. The officers were able to apprehend Reyes and Saiz at approximately 9:00 p.m. that night because the victim of the armed robbery provided the license plate number for the vehicle in which Reyes and Reyes were driving. When the officers arrested the men, they observed a firearm on the floor board under the front passenger seat.
Reyes was released pending trial following his arrest. While on release, Reyes was arrested again on Oct. 25, 2013, on a criminal complaint charging him with receiving a firearm while under indictment. According to the complaint, Reyes was arrested on Oct. 4, 2013, on state charges at a dormitory of the Western New Mexico University campus by officers who responded to reports of a man with a gun. At the time of his arrest, Reyes had a firearm in the front waistband of his pants. Reyes has been in custody since this second arrest.
During today’s proceedings, Reyes pled guilty to the indictment charging him with possession of the unregistered short-barreled rifle with the obliterated serial number. He also pled guilty to a felony information charging him with receiving a firearm while under indictment. At sentencing, Reyes faces a maximum penalty of ten years in prison for possession of an unregistered firearm, five years in prison for possession of a firearm with an obliterated serial number, and five years in prison for receiving a firearm while under indictment. He remains in custody pending his sentencing hearing, which has yet to be scheduled.
Saiz, Reyes’ co-defendant, pleaded guilty in Sept. 2013 to both counts of the indictment. He faces a maximum penalty of ten years in prison for possession of an unregistered firearms and a maximum penalty of five years in prison for possession of a firearm with an obliterated serial number. He remains detained pending his sentencing hearing, which has not been scheduled.
This case was investigated by the Las Cruces office of the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Silver City Police Department and is being prosecuted by Assistant U.S. Attorney Maria Y. Armijo of the U.S. Attorney’s Las Cruces Branch Office.
Georgia Man Accused of Discharging Waste into Potomac River- Indicted on Conspiracy, Clean Water Act, False Claims, and Related Charges -Read the Press Release
WASHINGTON - Patrick Brightwell, 47, of Bogart, Ga., has been indicted by a federal grand jury on charges that he orchestrated the discharge of waste into the Potomac River at Hains Point from 2009 through 2011, during the same period his company was hired by the National Park Service to clean out the storm water sewer system on the National Mall.
The indictment was announced by Acting Assistant Attorney General Robert G. Dreher of the Environment and Natural Resources Division of the Department of Justice; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia, David G. McLeod, Jr. Special Agent in Charge of the Environmental Protection Agency’s criminal enforcement program for the Middle Atlantic States, and Teresa Chambers, Chief of the U.S. Park Police.
The eight-count indictment of Brightwell was unsealed following his arrest in Georgia on Dec. 5, 2013. It was filed on Nov. 15, 2013, by a grand jury in the U.S. District Court for the District of Columbia. It charges Brightwell with conspiracy, a Clean Water Act violation, false claims, and obstructing the investigation of these offenses by tampering with witnesses and making false statements.
“This indictment alleges that Patrick Brightwell ripped off the taxpayer and polluted the Potomac River by illegally dumping waste he was being paid to dispose of properly,” said U.S. Attorney Machen. “According to the indictment, Brightwell tried to cover up his crimes by lying to the police and encouraging someone else to lie as well. This prosecution demonstrates our commitment to enforcing criminal laws designed to protect our precious natural resources.”
“Illegally discharged wastewater presents a danger to public health and a threat to our environment,” said Special Agent in Charge McLeod. “This indictment demonstrates EPA’s resolve to collaborate with our partners to vigorously investigate any credible allegation that a company or individual is treating our nation's environmental laws with contempt.”
“We are pleased to have taken part in the initial discovery and investigation of this crime,” said Chief Chambers. “It is through collaborative efforts such as this that law enforcement sends a strong message that we take environmental crimes seriously and that violators will be prosecuted.”
According to the indictment, from in or about 2008 through 2011, Brightwell’s company had a contract with the National Park Service to clean the storm water sewer system on the National Mall. The contract required that waste removed from the Mall’s storm drains and oil-water separators be disposed of at a proper disposal facility in compliance with District of Columbia regulations and federal law. Brightwell hired employees to work under the contract in 2008, 2009, and 2010, and hired a subcontractor, B&P Environmental LLC, to perform the work in 2011. Each year, Brightwell supervised the work: collecting waste in a vacuum truck, a vehicle designed to gather, store, and transport such waste.
As alleged in the indictment, in 2009, 2010, and 2011, Brightwell directed his employees and subcontractors to discharge waste from the vacuum truck at a storm drain on Hains Point, where the waste would flow into the Potomac River; Brightwell also directed his employees to conceal these discharges from the National Park Service and police.
During this period, Brightwell continued to invoice the National Park Service for cleaning services, but concealed and did not disclose that Brightwell’s company was not properly disposing of the waste, as required by the contract. Brightwell’s company received approximately $533,000 between 2008 and 2011, according to the indictment.
The indictment further alleges that, on June 6, 2011, after the U.S. Park Police stopped the vacuum truck at Hains Point, Brightwell sought to obstruct the investigation by making false statements himself, by telling a subcontractor to make false statements to the police, and by telling an employee to leave the area to prevent police from interviewing him.
If convicted, Brightwell faces a maximum sentence of five years in prison on each of the conspiracy and false claims charges, as well as a $250,000 fine; a maximum sentence of three years in prison on the Clean Water Act violation and a fine of up to $50,000 per day; a maximum sentence of twenty years in prison on the witness tampering counts; and a maximum sentence of up to five years in prison on the false statement count. The case is assigned to the Honorable James E. Boasberg of the U.S. District Court for the District of Columbia.
Earlier this year, the subcontractor, B&P Environmental LLC, and a B&P employee working on June 6, 2011, both pled guilty to violations of the Clean Water Act before the U.S. District Court. As part of their pleas, both the company and employee agreed to cooperate with the government’s investigation. Both the company and employee are awaiting sentencing.
An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and is not evidence of guilt. Every defendant is presumed innocent until, and unless, proven guilty.
The case is being investigated by Special Agent Socrates Michael of the EPA and Detective Jon Crichfield of the U.S. Park Police. It is being prosecuted by Senior Trial Attorney Lana Pettus of the Department of Justice’s Environmental Crimes Section and Assistant U.S. Attorney Jonathan P. Hooks of the U.S. Attorney’s Office for the District of Columbia. Assistance was provided by Paralegal Specialist Ashleigh Nye of DOJ’s Environmental Crimes Section and Paralegal Specialist Krishawn Graham of the U.S. Attorney’s Office.
13-414Gambia Man Pleads Guilty to Misuse of Passport and Aggravated Identity TheftRead the Press Release
BUFFALO, N.Y. – U.S. Attorney William J. Hochul, Jr., announced today that Bakusa Dukaray, 38, of Gambia, pleaded guilty to misuse of passport and aggravated identity theft before U.S. District Chief Judge William M. Skretny. The misuse of passport charge carries a maximum sentence of 10 years in prison, a $250,000 fine, or both. The aggravated identity theft charge carries a mandatory two year consecutive sentence to the misuse of passport charge.
Assistant U.S. Attorney Marie P. Grisanti, who is handling the case, stated that on May 5, 2013, Dukaray attempted to enter the U.S. at the Lewiston Bridge Port of Entry in Lewiston, N.Y. At that time, the defendant presented a Canadian passport issued to his friend.
The conviction is the result of an investigation on the part of Enforcement Officers of the U.S. Customs and Border Protection under the direction of Randy Howe, Acting Director of Field Operations.
Sentencing is scheduled for March 5, 2014, at 9:00 am before Judge Skretny.Fort Thompson Man Charged with Failure to Register as A Sex OffenderRead the Press Release
United States Attorney Brendan V. Johnson announced that a Fort Thompson, South Dakota, man has been indicted by a federal grand jury for Failure to Register as a Sex Offender.
Stuart Dion, age 30, was indicted on November 14, 2013. He appeared before U.S. Magistrate Judge Mark A. Moreno on December 3, 2013, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 10 years in custody and/or a $250,000 fine, a mandatory minimum period of at least 5 years of supervised release, with a violation of a condition of release possibly resulting in 2 years of additional incarceration on any such revocation. If Dion commits a new felony violation of sexual abuse, sexual exploitation and other abuse of children, transportation for illegal sexual activity and related crimes, kidnapping, or sex trafficking of children by force, fraud, or coercion, while on supervised release, he may be incarcerated for a mandatory minimum term of 5 years up to life for each violation. He may also be required to pay $100 to the Federal Crime Victims Fund, and restitution may also be ordered.
The Indictment alleges that between September 17, 2013 and October 21, 2013, Dion knowingly failed to register and update his registration.
The charge is merely an accusation and Dion is presumed innocent until and unless proven guilty.
The investigation is being conducted by the U.S. Marshals Service. Assistant U.S. Attorney Meghan N. Dilges is prosecuting the case.
Dion was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set.
Former USDA Employee Sentenced to 40 Months for Lying in Order to Secure Loans to Hide More Than $600,000 in Thefts from Federally Funded Non-profitRead the Press Release
MONROE, La. –United States Attorney Stephanie A. Finley announced today that Donna Jean Remides, 52, of Winnsboro, La., was sentenced by U.S. District Judge Robert G. James to 40 months in prison and five years of supervised release for lying on loan applications in order to receive loans used to hide the theft of $640,000 from a federally funded non-profit. She was also ordered to pay $450,000 in restitution. Remides pleaded guilty June 24, 2013 during the course of a trial.
Witness testimony and documents admitted at trial and the guilty plea revealed that Remides was employed as a project coordinator by the U.S. Department of Agriculture (USDA) through the Natural Resource Conservation Service (NRCS) to work for the non-profit Northeast Delta Resource Conservation and Development Council (NDRC&DC) in Winnsboro. From January 2001 to December 2010, Remides used the NDRC&DC accounts to pay herself $640,000 without authorization from the NDRC&DC. She wrote herself and her private business checks during the nearly 10-year period. She also obtained loans in the name of the council to cover the thefts. Loan documents were filled out stating that the council members had authorized loans at meetings when in fact they had not.
The USDA, Office of Inspector General in Jackson, Miss., and the Federal Bureau of Investigation investigated the case. Assistant U.S. Attorney Cytheria D. Jernigan prosecuted the case.
Former Top Officers of Vitesse Semiconductor Corporation Sentenced in Manhattan Federal Court for Conspiring to Obstruct an Impending Federal InvestigationRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that LOUIS TOMASETTA, the founder and former CEO of Vitesse Semiconductor Corporation (“Vitesse”), a publicly-traded company, and EUGENE HOVANEC, the former Chief Financial Officer and Vice President of Vitesse, were sentenced today in Manhattan federal court to three years of probation for conspiring to destroy, alter, or falsify records relating to Vitesse’s April and October 2001 stock option grants with the intent to obstruct a contemplated investigation by the U.S. Securities and Exchange Commission (“SEC”). TOMASETTA and HOVANEC pled guilty in August 2013, and were sentenced today by U.S. District Judge Jed S. Rakoff.
According to the Superseding Information and evidence in court proceedings:
During 2001 to 2006, Vitesse’s Board of Directors, specifically the Compensation Committee of the Board (the “Compensation Committee”), administered shareholder-approved stock options plans (the “Plans”) and had the authority under the Plans to grant stock option awards. Vitesse’s public filings for the 2001 to 2005 year-end period indicated that the exercise price of all stock options was at least equal to the fair market value of Vitesse’s stock price on the date of the grant. During this time period, TOMASETTA, HOVANEC, and others generally initiated and oversaw the option grant process.
In November 2005, Yatin Mody, then Vitesse’s Chief Financial Officer, contacted Vitesse’s then-outside law firm (“Law Firm-1”) concerning a press inquiry about Vitesse’s stock option practices. After reviewing documents related to stock option grants in April 2001 and October 2001, Law Firm-1 advised Mody and TOMASETTA that it had concerns about those option grants, and specifically concern about whether Vitesse had properly accounted for these option grants. For example, Vitesse’s April 12, 2001, Compensation Committee meeting minutes memorialized option grants with an exercise price at the April 6, 2001, closing price of Vitesse’s stock, which was lower than the April 12 closing price. These minutes raised a question about whether the options were in fact granted on the day of the meeting (April 12) or on the earlier date (April 6), and potentially affected the accounting treatment of the options in a way that would require adjustments to Vitesse’s financial reports. Similarly, the Compensation Committee meeting minutes from October 25, 2001, memorialized option grants with an exercise price at the October 2, 2001, closing price, which was lower than the October 25 closing price.
In late November 2005, after discussions with TOMASETTA and HOVANEC, Mody created minutes of the Compensation Committee meetings allegedly held on April 6, 2001, and October 2, 2001. Mody then provided copies of these minutes to Law Firm-1, and specifically advised Law Firm-1 that they were prepared in November 2005 to reflect what had actually occurred at those meetings.
Tomasetta and Hovanec Alter and Fabricate Records Regarding the 2001 Option Grants
On March 18, 2006, the Wall Street Journal published an article that raised questions about stock option practices at various companies, including Vitesse. Following the article, Law Firm-1 raised concerns to Vitesse’s directors and management, including TOMASETTA and HOVANEC, about Vitesse’s option grants and specifically about the fact that Compensation Committee minutes had been created years after the fact. Law Firm-1 informed TOMASETTA and HOVANEC that because of the Wall Street Journal article, there was a significant possibility of an SEC investigation into Vitesse’s option practices and disclosures.
At a meeting on April 11, 2006, Law Firm-1 also advised Vitesse’s directors and management, including TOMASETTA and HOVANEC, that Mody’s after-the-fact creation of Compensation Committee meeting minutes raised questions about whether the meetings had actually occurred. That same day, Vitesse’s Audit Committee retained a law firm (“Law Firm-2”) to conduct an independent investigation into Vitesse’s stock option grants. Law Firm-2 requested that Vitesse provide it with access to the computer used by the Vitesse employee who was responsible for actually typing the minutes of the Compensation Committee meetings when they occurred (the “Assistant’s Computer”).
With an understanding that Law Firm-2 would access the Assistant’s Computer, on April 12, 2006, TOMASETTA, HOVANEC, and Mody created documents that purported to be minutes of meetings of Vitesse’s Compensation Committee on April 6, 2001 and October 2, 2001, authorizing option grants at those meetings. After creating these documents, they transferred electronic copies of the documents containing the two recently created sets of minutes to the Assistant’s Computer and, in an effort to make it appear that the minutes were created at an earlier time, TOMASETTA, HOVANEC, and Mody reset the computer’s internal clock to backdate the creation date of these purported minutes. TOMASETTA and HOVANEC engaged in this action to obstruct Law Firm-2’s internal investigation, knowing that there was likely to be an SEC investigation of Vitesse’s option grant practices and disclosures.
In addition to their sentences, TOMASETTA, 64, of Ojai, California, and HOVANEC, 61, of Westlake Village, California, were each fined $30,000.
Yatin Mody, 50, of Westlake Village, California, pled guilty in December 2010, before U.S. District Judge John G. Koeltl, to securities fraud, making false entries in the financial records of a corporation, and conspiracy, pursuant to a cooperation agreement with the Government. Mody awaits sentencing.
Mr. Bharara praised the investigative work of the U.S. Postal Inspection Service and the Criminal Investigators of the U.S. Attorney’s Office, which jointly investigated this case. He also thanked the SEC for its assistance.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it 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.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys John J. O’Donnell, Katherine R. Goldstein, and David I. Miller are in charge of the prosecution.
Former State Department Contract Employee and Husband Sentenced for $53 Million FraudRead the Press Release
ALEXANDRIA, Va. – Kathleen D. McGrade, age 64, and Brian C. Collinsworth, age 47, of Stafford, Va., were sentenced today to 24 and 18 months incarceration, respectively, by U.S. District Judge Liam O’Grady in the Eastern District of Virginia for committing major fraud against the government, conspiracy to launder monetary instruments, and engaging in unlawful monetary transactions.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Steve A. Linick, Inspector General for the Department of State; and Thomas J. Kelly, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Section, Washington, D.C. Field Office, made the announcement following the sentencing hearing.
According to Court records, McGrade and Collinsworth admitted that McGrade was a contract employee for the Department of State and performed the role of a contract specialist for an office that awarded construction contracts for work done at U.S. embassies worldwide. Collinsworth worked at one of the companies that received contracts. In 2006, the defendants married, but did not tell others at the Department of State. The defendants started a company, the Sterling Royale Group, or SRG, with McGrade being the president and Collinsworth the vice-president and project manager.
In late 2007, McGrade caused a State Department contracting officer to sign a contract between the Department of State and SRG, when McGrade failed to disclose her role in SRG, her marriage, or that proper contracting competitive procedures had not been followed. The contract made SRG eligible to receive task orders for work to be done at embassies and McGrade began steering work to the company. She acted as the contract negotiator between the Department of State engineers responsible for getting the jobs done, on the one hand, and Collinsworth, who was acting on behalf of SRG and the subcontractors, on the other. Between 2008 and 2011, McGrade caused Department of State contracting officers to sign 17 task orders awarding work worth almost $53 million. In 2010, the defendants also lied about their marriage to investigators conducting McGrade’s background investigation regarding renewal of her security clearance.
In the summer of 2011 a news article disclosed the defendants’ marriage, and the Department of State terminated her employment. The Department of State, however, had paid SRG about $39 million, and after the defendants had paid their subcontractors, they still had millions of dollars. Among other things, they bought houses, a condominium, a yacht, a Lexus automobile, jewelry, and a Steinway piano with the fraudulently obtained money. The defendants were ordered to forfeit all of those items in the amount of $7,864,795.
This case was investigated by the Department of State, Office of Inspector General, and the Global Illicit Financial Team, a task force led by the Criminal Investigation Section of the Internal Revenue Service. Assistant United States Attorneys Jack Hanly and Mark D. Lytle are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Former Sea Star Line President Sentenced to Serve Five Years in <br /> Prison for Role in Price-Fixing Conspiracy Involving Coastal <br /> Freight Services Between the Continental United States and <br /> Puerto RicoRead the Press Release
The former president of Sea Star Line LLC, a Jacksonville, Fla.-based water freight carrier, was sentenced to serve five years in prison and to pay a $25,000 criminal fine for his participation in a conspiracy to fix rates and surcharges for freight transported by water between the continental United States and Puerto Rico, the Department of Justice announced today.
Frank Peake was sentenced today by Judge Daniel R. Dominguez in U.S. District Court for the District of Puerto Rico in San Juan. Peake’s two-week trial took place in January 2013.
“The sentence imposed today reflects the serious harm these conspirators inflicted on American consumers, both in the continental United States and in Puerto Rico,” said Bill Baer, Assistant Attorney General in charge of Department of Justice’s Antitrust Division. “The Antitrust Division will continue to vigorously prosecute executives who collude to fix prices at the expense of consumers.”
According to court documents and evidence presented at trial, Peake and his co-conspirators conspired through meetings and other communications in the continental United States and Puerto Rico to fix, stabilize and maintain rates and surcharges for Puerto Rico freight services, to allocate customers of Puerto Rico freight services between and among the conspirators and to rig bids submitted to customers of Puerto Rico freight services. Peake was involved in the conspiracy from at least late 2005 until at least April 2008.As a result of the ongoing investigation, the three largest water freight carriers serving routes between the continental United States and Puerto Rico, including Peake’s former employer Sea Star, have pleaded guilty and been ordered to pay more than $46 million in criminal fines for their roles in the conspiracy. Sea Star pleaded guilty on Dec. 20, 2011, and was sentenced by Judge Dominguez to pay a $14.2 million criminal fine. Sea Star transports a variety of cargo shipments, such as heavy equipment, perishable food items, medicines and consumer goods, on scheduled ocean voyages between the continental United States and Puerto Rico.
Peake and five other individuals have been ordered to serve prison sentences ranging from seven months to five years. Additionally, Thomas Farmer, the former vice president of price and yield management of Crowley Liner Services, was indicted in March 2013 for his role in the conspiracy and is scheduled to go to trial in May 2014.This case is part of an ongoing investigation being conducted by the Antitrust Division’s National Criminal Enforcement Section and the Defense Criminal Investigative Service. Anyone with information concerning price fixing or other anticompetitive conduct in the coastal water freight transportation industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694.
Former Newton County Deputy Sheriff Pleads Guilty to Firearms ChargeRead the Press Release
ATLANTA - Darrell Mathis has pleaded guilty to a charge of possessing a firearm in furtherance of a drug trafficking crime.
“The defendant dealt drugs while armed with a gun while he was a deputy sheriff,” said United States Attorney Sally Quillian Yates. “He was sworn to uphold the law and to protect the public from the crimes that he committed himself. Today’s guilty plea provides important reassurance to the community that corrupt law enforcement officers have no place in our community and will be held accountable for their actions.”
Ricky Maxwell, Acting Special Agent in Charge, FBI Atlanta Field Office, stated: “A career in law enforcement comes with not only immense responsibilities but also temptations to stray from those responsibilities. Former Deputy Mathis unfortunately gave in to those temptations, the results of which ended his career and damaged the public’s trust in those others serving honorably. The FBI will continue its efforts to identify, investigate, and present for prosecution, those individuals who engage in similar such corrupt and criminal conduct.”
According to United States Attorney Yates, the charges and other information presented in court: In April 2013, it came to the attention of the Federal Bureau of Investigation that Mathis, a deputy sheriff with the Newton County Sheriff’s Office, was engaged in distributing marijuana. From May through September 2013, Mathis sold various quantities of marijuana to a confidential source who was working with the FBI, as well as to an undercover FBI agent. On at least two occasions, Mathis sold marijuana from his marked patrol vehicle while wearing his Newton County Sheriff’s Office uniform.
On August 8, 2013, Mathis sold one pound of marijuana to an undercover FBI agent. Following that sale, Mathis and the undercover FBI agent went to meet with another undercover FBI agent to discuss the sale of additional quantities of marijuana. Mathis brought his NCSO badge and his firearm to the meeting. Mathis told the undercover agent that he was bringing his firearm to the meeting “just in case.” During the meeting, Mathis told the second undercover FBI agent, who Mathis believed to be a marijuana and cocaine trafficker, that he was a police officer, pulled out his badge, and stated, “Don't worry, I'm on your side.” Mathis was arrested on September 19, 2013, when he met with the undercover FBI agent while in possession of one pound of marijuana.
The charge in this case carries a maximum sentence of life imprisonment and a mandatory minimum sentence of five years' incarceration, as well as a maximum fine of $250,000. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.
Darrell Mathis, 41, of Lithonia, Ga., is scheduled to be sentenced on March 5th, at 2:00 p.m. before United States District Judge Orinda D. Evans.
This case is being investigated by the Federal Bureau of Investigation.
Assistant United States Attorney Jamie L. Mickelson is prosecuting the case.
The U.S. Attorney’s Office in Atlanta recommends parents and children learn about the dangers of drugs at the following web site: www.justthinktwice.com.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao/gan/.
Former Madison County Treasurer Sentenced for Structuring Property Tax Sales to Reward Campaign ContributorsRead the Press Release
The former treasurer of Madison County, Illinois, was sentenced to thirty months in prison by the U.S. District Court in East St. Louis, Illinois, on December 6, 2013, for violating the Sherman Antitrust Act, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. Fred Bathon, 58, had pleaded guilty on February 5, 2013, to a violation of the Sherman Antitrust Act for his role in structuring Madison County property tax sales in a way that increased prices and rewarded campaign contributors. In addition to the thirty month sentence, Bathon was ordered to pay a $20,000 fine and will serve two years supervised release after his sentence of incarceration.
In imposing sentence, the Court noted the impossibility of making the individualized determination of loss as to each victim which is required by law before the Court can impose an order of restitution on a defendant. There were thousands of homeowners who were impacted by the tax auctions and each homeowner's situation was legally unique making calculation of individual losses impossible.
At Illinois tax lien auctions, investors bid to purchase tax lien certificates issued against delinquent tax payers. Investors are supposed to compete to purchase these tax liens by bidding on the interest rate the property owner will be required to pay prior to redeeming the tax lien attached to the owner's property. The bid opens at no more than the statutory maximum of 18% and through a competitive bidding process can be driven as low as 0 percent. The bidder offering the least penalty percentage rate, i.e., the bidder who is willing to allow the owner to redeem his property for the smallest penalty, is allowed to purchase the tax lien. As such, competitive bidding benefits financially distressed homeowners by reducing the amount of money that they have to pay to save their home from foreclosure; however, that same system reduces the profit made by tax buyers. Tax buyers prefer to receive high interest rates, which corresponds to higher profits.
For the tax sales conducted in 2005-2008, Fred Bathon structured the tax sales in a way that eliminated competitive bidding and allowed the tax buyers to engage in price fixing by only bidding the statutory maximum interest rate of 18%. In addition to awarding properties at non-competitive interest rates, Bathon also utilized a seating chart to ensure that his largest campaign contributors were recognized by the auctioneer as the winning bidder.
By 2007 and 2008, the bid rigging and price fixing was so pervasive that distressed homeowners were charged the statutory maximum interest rate on nearly every property tax lien sold. During the tax auction occurring November 14-15, 2007, 2,549 out of 2,574 property tax liens were awarded to bidders for the statutory maximum interest rate of 18%, which represented 99.03% of the property tax liens auctioned. During the tax auction occurring November 13-14, 2008, 2,290 out of 2,364 property tax liens were awarded to bidders for the statutory maximum interest rate of 18%, which represented 96.86% of the property tax liens auctioned.
Under Illinois law, Bathon will also forfeit his entire public pension as a result of his conviction. The Illinois Pension Code provides that “[n]one of the benefits herein provided for shall be paid to any person who is convicted of any felony relating to or arising out of or in connection with his or her service as a member.” This provision of Illinois law is oftentimes referred to as the “Ryan Rule,” following the Illinois Supreme Court’s decision in Ryan v. Bd. of Trustees of Gen. Assembly Ret. Sys., 236 Ill. 2d 315, 924 N.E.2d 970 (2010), which determined former Governor George Ryan forfeited all of his public pension benefits following his conviction on federal corruption charges. The state pension forfeiture provision reaches all public pension benefits, including those earned while serving in public positions with no connection or nexus to the federal conviction.
The investigation was conducted through the Metro East Public Corruption Task Force by agents from the Internal Revenue Service, and the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorneys Steven D. Weinhoeft and Norman R. Smith.
Former Goldman Sachs Vice President Sentenced in Manhattan Federal Court to Nine Months in Prison for Fraudulently Amassing and Concealing Trading PositionRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that MATTHEW TAYLOR, formerly a vice president at Goldman, Sachs & Co. (“Goldman Sachs”) and a trader on Goldman Sachs’s Capital Structure Franchise Trading (“CSFT”) desk, was sentenced today in Manhattan federal court to nine months in prison for fraudulently amassing and concealing an approximately $8.3 billion trading position in an account that TAYLOR managed at Goldman Sachs. TAYLOR pled guilty in April 2013 to one count of wire fraud in connection with the scheme, and was sentenced by U.S. District Judge William H. Pauley III.
According to the Information to which TAYLOR pled guilty, and statements made in court proceedings:
While employed at Goldman Sachs as a vice president, TAYLOR was a member of the CSFT desk and was responsible for a trading account called the CSFT Equity Volatility Portfolio (the “Trading Account”), which included trading in equity derivatives products. Among the products that TAYLOR traded on the CSFT desk were Standard & Poor’s E-mini futures contracts (“S&P E-mini futures”), which are futures contracts tied to the S&P 500 stock index. TAYLOR traded in S&P E-mini futures using an electronic trading platform called “Globex.”
In November 2007, TAYLOR had lost a significant portion of the profits that he had accumulated in the Trading Account earlier that year. As a result, he was instructed by his supervisors to reduce the overall risk in the Trading Account. These supervisors had previously informed TAYLOR and other traders on the CSFT desk about risk limits for the CSFT desk and acceptable risk levels and trading limits.
Despite these instructions to reduce the risk in the Trading Account, on December 13, 2007, TAYLOR significantly increased the notional value of his long position in S&P E-mini futures by entering a series of electronic trades through Globex. In so doing, he amassed a position that far exceeded all trading and risk limits set by Goldman Sachs, not only for individual traders, but for the entire CSFT desk. TAYLOR increased the profitability of the Trading Account in order to restore his professional reputation within Goldman Sachs and to increase his performance-based compensation.
At the same time that TAYLOR increased his S&P E-mini futures position, he actively concealed this position from others at Goldman Sachs. He recorded multiple false entries for S&P E-mini futures trades that he never made in a manual trade entry system (the “Manual Trade Entry System”), which was typically intended to be used by traders for recording trades that – unlike S&P E-mini futures – could not be executed through the Globex electronic trading platform. TAYLOR recorded multiple false trading entries in the Manual Trade Entry System that were in the opposite direction of the electronic trades he made in the Trading Account. Where TAYLOR purchased S&P E-mini futures in the Trading Account via Globex, he then manually entered fictitious S&P E-mini futures sales in the Manual Trade Entry System. The purpose of entering these fabricated trades was to conceal and understate the true size of the S&P E-mini futures position within the Trading Account, as the fictitious sales functioned to offset portions of TAYLOR’s actual purchases.
In addition, at the end of the trading day on December 13, 2007, TAYLOR prepared a false profit and loss report for the Trading Account (the “December 13, 2007, P&L Report”) that served to conceal his actual oversized position and market risk. He then forwarded the December 13, 2007, P&L Report to his supervisors and others at Goldman Sachs. By the morning of December 14, 2007, however, various employees at Goldman Sachs had detected a significant discrepancy between TAYLOR’s actual position in the Trading Account and what TAYLOR had falsely reported in the December 13, 2007, P&L Report. In response to questioning from these employees, TAYLOR made various false statements about his position and risk in the Trading Account. His fraudulent scheme resulted in significant losses to Goldman Sachs.
In addition to his prison term, TAYLOR, 34, of West Palm Beach, Florida, was also sentenced to three years of supervised release and ordered to pay $118 million in restitution.
The United States Attorney’s Office for the Southern District of New York first learned of the Taylor matter on November 10, 2012. Less than five months later, on April 3, 2013, Taylor was charged in an Information and pled guilty.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Commodity Futures Trading Commission. This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Steve Lee is in charge of the prosecution.
Former Chief of Remington, Virginia Fire Department Sentenced for Fraud, EmbezzlementRead the Press Release
ALEXANDRIA, Va. – Douglas G. “Bo” Taylor, age 52, of Remington, Va., the former Chief of the Remington Volunteer Fire & Rescue Department (“RVFD”), was sentenced today to 24 months incarceration, to be followed by a term of 3 years of supervised release by U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia for his role in a wire fraud scheme that defrauded the RVFD and the Prince William County School System and the filing of false individual income tax returns. Taylor was also ordered to pay restitution of $70,833 to the Remington Fire Department, $59,419 to the Prince William County Schools, and $79,576 to the Internal Revenue Service.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; and Thomas J. Kelly, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Section, Washington, D.C. Field Office made the announcement today after the sentencing.
According to court records, Taylor served as the Chief of the RVFD from 1994 through 2011, during a time when the RVFD fire station underwent major renovations and reconstruction with funding, in significant part, from the U.S. Department of Agriculture. Taylor, a licensed Master Electrician, offered to do some of the renovations at the fire station and only seek reimbursement for his out of pocket expenses. Taylor then submitted false invoices which contained charges for materials Taylor did not purchase and charges for labor that, at times, was never performed or was inflated from the hours that were actually performed. Taylor also used a Prince William County Public Schools System (“PWCS”) credit card to purchase some of the materials used at the fire station project (and elsewhere). In total, Taylor defrauded the RVFD of more than $80,000 and the PWCS of approximately $60,000. Finally, Taylor did not disclose the money he fraudulently obtained from the RVFD and winnings from the Virginia lottery on two individual income tax returns filed with the IRS.
This case was investigated by the Federal Bureau of Investigation’s Washington Field Office and the Internal Revenue Service, Criminal Investigation. Assistant United States Attorney Mark D. Lytle is prosecuting the case on behalf of the United States. The Office of the U.S. Attorney thanks the following agencies for their assistance in the investigation and prosecution of this matter: United States Department of Agriculture; United States Department of Education, Office of Inspector General; and the Prince William County School System.
Any person who believes they may have information regarding public corruption in the Northern Virginia area is encouraged to call the FBI’s Northern Virginia Public Corruption Hotline at 703-686-6225.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Former AAU Coach Pleads Guilty to Wire FraudRead the Press Release
LYNCHBURG, VIRGINIA – A former AAU coach and mentor to a local college basketball star pled guilty earlier this week in the United States District Court for the Western District of Virginia in Lynchburg to a wire fraud charges.
Thomas Patric Boggs, 60, of Brookneal, Va., pled guilty on Tuesday to one count of wire fraud. At sentencing, he faces a maximum possible penalty of up to 20 years in prison and/or a fine of up to $250,000.
“Mr. Boggs exploited the trust placed in him by Travis Watson and turned it into a vehicle for fraud,” United States Attorney Timothy J. Heaphy said today. “This defendant stole hundreds of thousands of dollars from a man who considered him a father figure and caused harm that extends well beyond the victim’s financial loss.”
Boggs admitted Tuesday in U.S. District Court that he met Travis Watson when Watson was a freshman in high school in Texas. During a trip to Lynchburg, Va. to play in an AAU tournament, Watson met the defendant, who welcomed Watson into his home. The two soon became close and through Boggs’ efforts, Watson was able to attend Oak Hill Academy where he continued to develop his basketball skills. Watson considered Boggs a mentor, coach and father figure.
Following high school, Watson attended and played basketball at the University of Virginia before playing professionally in Greece, Italy, Lithuania and other places in Europe.
The Government’s evidence established, and Boggs admitted, that during Watson’s time overseas, Boggs approached him and offered to invest a portion of Watson’s earnings to ensure financial security post-basketball. Boggs knew that due to the close personal nature of their relationship, Watson would trust him to invest his money wisely. Boggs instructed Watson how to wire money into a pair of accounts, and that Watson expected Boggs to invest that money for Watson’s benefit.
Between 2009 and 2011, Watson wired $357,965 to the accounts controlled by Boggs, who admitted that he used nearly all of the money sent by Watson to pay the personal expenses of Boggs and to pay family members. In addition, throughout the process, Boggs assured Watson that he was making sound investments and that he was going to make Watson a “millionaire.”
The investigation of the case was conducted by the Federal Bureau of Investigation. Assistant United States Attorneys Anthony Giorno and Laura Rottenborn prosecuted the case for the United States.
Fishing Boat Captain Pleads Guilty and Is Fined for Attempted Sale of Shark FinsRead the Press Release
HONOLULU – Matthew Brian Case, age 46, a fishing boat captain formerly based in Hawaii, pled guilty on December 6, 2013 in federal court for attempting to sell shark fins to a Honolulu restaurant, a violation of the federal Lacey Act. Case entered the plea before United States Magistrate Judge Kevin S.C. Chang, who sentenced him to a $100 fine.
Florence T. Nakakuni, United States Attorney for the District of Hawaii, said it is a violation of federal law to sell, or attempt to sell, shark fins, if a person knows that the fins were removed from the bodies of sharks at sea, and then possessed aboard a fishing vessel. According to information produced in court, Case was the captain of the “Hokuao,” a long-line fishing vessel which operated out of Honolulu. During a month-long fishing trip that began in February 2013, Case instructed his crew to engage in “shark finning,” which involved catching sharks, removing their fins aboard the vessel, and disposing of the carcasses in the ocean. Case concealed approximately 100 shark fins in a hidden compartment in the vessel, and transported them back to Honolulu.
During court proceedings, Case admitted trying to sell the shark fins to a restaurant in the Ala Moana area on March 8, 2013. According to Nakakuni, Case thought the fins could be sold for approximately $600, but the restaurant declined to buy the illegal fins. Case, who now lives in Mexico, voluntarily appeared in Honolulu to answer the criminal charge. During arguments presented to the court, the government recommended a $100 fine, based on various factors, including Case’s immediate and continued cooperation with authorities, lack of profit, and willingness to return from Mexico to enter the plea.
United States Attorney Nakakuni said that “shark finning” is prohibited not only by the Lacey Act, but also by the Federal Shark Conservation Act of 2010. That act prohibits persons subject to the jurisdiction of the United States to remove fins from sharks at sea, to possess such unattached fins in their vessels, and then bring the fins to land.
The prosecution resulted from an investigation conducted by the National Oceanic & Atmospheric Administration, Office of Law Enforcement, with assistance from the Coast Guard, Immigration and Customs Enforcement -- Homeland Security Investigations, and the State of Hawaii Department of Conservation and Resources Enforcement. The prosecution was handled by Assistant U.S. Attorney Thomas Brady.
Federal Agent Pleads Guilty to $800,000 Mortgage FraudRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a special agent for U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) pleaded guilty in federal court today to making false statements to FBI agents in regard to a more than $800,000 mortgage fraud scheme.
Jeffrey Morriss, 48, of Kansas City, Mo., pleaded guilty before U.S. District Judge Howard F. Sachs to the charge contained in a Feb. 5, 2013, federal indictment. Morriss was employed as a special agent for ICE HSI since 1997.
Morriss submitted four separate home loan applications for three houses between August 10, 2007, and March 6, 2012. Morriss admitted that he made at least 12 material misrepresentations and omissions to obtain $811,917 in home loans. Morriss failed to make full payments on these loans, resulting in three defaults and foreclosures.
Morriss admitted that, on each loan application, he omitted the full amount of his debt, and on other occasions he provided other inaccurate and false information, which improved his debt-to-income ratio and assisted him to qualify for the loans. Morriss did not disclose debt for property he purchased in Colorado, did not disclose monthly child support liability and did not disclose that his property in Pleasant Hill, Mo., had been foreclosed. On a $161,150 loan application for residential property in Kansas City, Morriss falsely inflated his monthly income by about $2,600.
Morriss lied to FBI agents during an interview about the loan applications that was held on Nov. 18, 2012.
Under the terms of today’s plea agreement if it is accepted by the court at his sentencing hearing, Morriss will be sentenced to three years of probation and pay $12,794 in restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by the FBI and HUD-Office of Inspector General.
Dunkirk Man Sentenced for Filing Tax Returns for more than 120 Dead PeopleRead the Press Release
BUFFALO, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that John M. Berry, Jr., 42, of Dunkirk, N.Y., who was convicted of making a false claim against the United States, was sentenced to 41 months in prison by U.S. District Court Judge Richard J. Arcara. The defendant was also ordered to pay restitution in the amount of $92,462.12 to the Internal Revenue Service.
Assistant U.S. Attorney Aaron J. Mango, who handled the case, stated that between September 3, 2008 and March 25, 2009, the defendant filed 122 false income tax returns for the tax years 2007 and 2008 with the Internal Revenue Service. During that time, Berry obtained the personal and identifying information for 122 recently deceased individuals and then used that information to file federal tax returns on behalf of the deceased. The defendant created fraudulent income and withholding information for the deceased and filed the returns electronically.
The 122 tax returns sought refunds totaling $217,520 from the Internal Revenue Service, of which the defendant received $92,462.12. The refunds were deposited directly into Berry’s bank account.
“Identity theft is something that our Office, working with our law enforcement partners, takes very seriously,” said U.S. Attorney Hochul. “The defendant in this case not only stole the identities of recently deceased individuals which may have caused further grief to their loved ones, but he also cheated the taxpayers of this country. Such behavior will not be tolerated.”
The sentencing is the culmination of an investigation on the part of Special Agents of the Internal Revenue Service - Criminal Investigations, under the direction of Toni M. Weirauch, Special Agent in Charge.
Colorado Man Indicted for Conspiracy to Distribute Marijuana and Distribution of MethamphetamineRead the Press Release
United States Attorney Brendan V. Johnson announced that a Colorado man has been indicted by a federal grand jury for Conspiracy to Distribute a Controlled Substance and Distribution of a Controlled Substance.
Christopher Luke, age 28, was indicted on November 19, 2013. He appeared before U.S. Magistrate Judge Veronica Duffy on December 2, 2013, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 20 years in custody and/or a $1,000,000 fine, 3 years of supervised release, and $100 to the Federal Crime Victims Fund.
Beginning no later than the summer of 2012, Luke conspired with others to distribute methamphetamine in the District of South Dakota.
The charge is merely an accusation and Luke is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Unified Narcotic Enforcement Team and the Drug Enforcement Administration. Assistant U.S. Attorney Ted L. McBride is prosecuting the case.
Luke was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set yet.
Church Youth Leader Sentenced for Sexual Exploitation of ChildrenRead the Press Release
Project Safe Childhood
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that an Ava, Mo., man who volunteered as a church youth leader was sentenced in federal court today for enticing minors for illegal sexual activity.
Brent “Pete” Turley, 23, of Ava, was sentenced by U.S. District Judge Gary Fenner to 10 years in federal prison without parole.
On July 23, 2013, Turley pleaded guilty to using the Internet and a cell phone to attempt to entice a 14-year-old child victim to engage in illegal sexual activity. Turley, a youth leader at the church his victim attended, had been sending sexually explicit text messages. A law enforcement officer was using the child victim’s phone to investigate after the parents contacted authorities. Turley made arrangements with the undercover officer to meet the child victim at a local park, where he was arrested on March 19, 2012. Condoms were located in Turley’s pocket and a firearm was found in his truck.
Turley also pleaded guilty to a separate count of using the Internet and a cell phone to entice a second child victim to engage in illegal sexual activity. Turley admitted that he engaged in illicit sexual activity with a 15-year-old victim. Turley used Facebook text messages to arrange a meeting with the child victim at a softball field in Mansfield, Mo. During the meeting, which occurred in February 2012, the child victim performed oral sex upon Turley in his vehicle. The child victim was later interviewed at the Child Advocacy Center and confirmed Turley’s admission.
According to court documents, Turley also admitted to law enforcement officers that he took a third child victim, whom he believed to be as young as 12 years old (but who was actually 14 years old) to see the “Yogi Bear” movie at a theater in Mountain Grove, Mo., in late 2010 or early 2011. During the movie, Turley digitally penetrated the child’s vagina. The victim was later interviewed and confirmed the illicit sexual conduct.
This case was prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the Southwest Missouri Cybercrimes Task Force and the Missouri State Highway Patrol.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."Cancer Researcher Sentenced to 18 Months in Prison for Tax EvasionRead the Press Release
A southwest Washington cancer researcher was sentenced today in U.S. District Court in Tacoma to 18 months in prison, three years of supervised release and $376,679 in restitution for tax evasion, announced U.S. Attorney Jenny A. Durkan. PETER D. URREA, 74, of Washougal, Washington made a variety of phony documents to avoid paying $376,679 he owed in income taxes for years 2005-2009. At sentencing U.S. District Judge Ronald B. Leighton said, “this crime is unique because of its depth, and the tenacity and persistence” involved.
“Instead of devoting all his energies to his cancer research, this defendant schemed to avoid paying his fair share of taxes – the very income that the government uses to fund trials and approval processes for the drugs he works to develop,” said U.S. Attorney Jenny A. Durkan. “No one enjoys paying taxes, but it is an obligation we all share to keep our country strong and our safety nets in place.”
According to records filed in the case, URREA began his scheme in 2004 by creating and filing W-2C forms on behalf of his employer Taiho Pharma USA. These forms he created and filed, falsely indicated that Taiho Pharma paid him less than half his actual salary. URREA created other forms to indicate some of the funds were paid to a company he controlled – then URREA falsified the business expenses associated with the company to reduce his tax obligation. URREA engaged in this scheme for four years, from 2004-2008. Because URREA failed to file all of the documents required when a company amends a W-2 form, the IRS started looking into the filings in 2009. Taiho Pharma questioned why URREA was filing a W-2C, since those forms are only to be filed by the employer. URREA attempted to blame a different employee at Taiho Pharma, claiming he had been acting on that person’s advice. When the IRS asked for records related to expenses in tax years 2004-2008, URREA created a letter from a fictitious Vice President at Taiho Pharma indicating URREA would be responsible for all his research expenses – the company confirmed no such person ever worked there.
“Those who engage in dishonesty and deceit to cheat the tax system will be held accountable”, said Tamera Cantu, Assistant Special Agent in Charge of IRS Criminal Investigation in Seattle.
URREA pleaded guilty to an information charging tax evasion in July 2013.
The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI) and was prosecuted by Assistant United States Attorney Arlen Storm.
Brothers from Thoreau Plead Guilty Fedral Assault ChargesRead the Press Release
ALBUQUERQUE – Two members of the Navajo Nation who reside in Thoreau, N.M., have entered guilty pleas to federal assault charges under plea agreements with the U.S. Attorney’s Office. Aldo Jones, 30, entered his guilty plea on Dec. 4, 2013, and his brother Eddie Jones, Jr., III, 23, entered his guilty plea yesterday afternoon.
Aldo and Eddie Jones were arrested in early Aug. 2013, based on a criminal complaint charging them with assault charges arising out of an attack on a 21-year-old Navajo man in Crownpoint, N.M., on July 28, 2013. According to court filings, Aldo and Eddie Jones assaulted the victim for failing to pay a $50 debt. Aldo repeatedly stabbed the victim in the head, upper back and right hand with a screwdriver, and both he and Eddie pummeled the victim with their fists. The victim sustained a life-threatening injury to his head where his skull was punctured. He also sustained stab wounds to his upper back and right hand and a broken nose.
Aldo and Eddie Jones subsequently were charged in a four-count indictment with assault resulting in serious bodily injury and assault with a dangerous weapon arising from the assault on the 21-year-old victim. Aldo Jones also was charged with two assault charges arising out of an attack on a second victim on July 28, 2013, in Littlewater, N.M.
On Dec. 4, 2013, Aldo Jones pled guilty to two assault charges and admitted assaulting the two victims on July 28, 2013. He admitted assaulting the first victim at approximately 5:00 p.m. by stabbing him with a screwdriver. Aldo Jones also admitted stabbing the second victim with a knife approximately two hours later when the second victim confronted him about stabbing his cousin, the first victim. At sentencing, Aldo Jones faces a maximum penalty of ten years in prison on each assault charge. He remains in custody pending his sentencing hearing, which has yet to be scheduled.
During yesterday’s proceedings, Eddie Jones entered a guilty plea to assaulting the first victim. In his plea agreement, Eddie Jones admitted beating the victim who also was stabbed by Aldo Jones. At sentencing, Eddie Jones faces a maximum penalty of ten years in prison for each assault charge. He remains in custody pending his sentencing hearing, which has yet to be scheduled.
The case was investigated by the Crownpoint office of the Navajo Nation Division of Public Safety and is being prosecuted by Assistant U.S. Attorney Paul H. Spiers.Batesland Man Sentenced for Conspiracy to Distribute MarijuanaRead the Press Release
United States Attorney Brendan V. Johnson announced that a Batesland, South Dakota, man convicted of Conspiracy to Distribute a Controlled Substance was sentenced on December 2, 2013, by U.S. Chief Judge Jeffery L. Viken.
Richard Marshall, age 46, was sentenced to 60 months in custody, 4 years of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
Marshall was indicted for Conspiracy to Distribute a Controlled Substance by a federal grand jury on May 15, 2012. He pled guilty on August 23, 2013.
Beginning no later than 2010 until May 15, 2012, Marshall received and stored marijuana, in excess of 100 kilograms, from Abraham Romero and then engaged in further distribution within the District of South Dakota. Marshall was acting as an organizer or leader in this drug conspiracy. Romero was previously sentenced to 120 months in custody.
This case was investigated by the Northern Plains Safe Trails Drug Enforcement Task Force, the Federal Bureau of Investigation, the Bureau of Indian Affairs Office of Justice Services, and the South Dakota Division of Criminal Investigation. Assistant U.S. Attorney Ted L. McBride and Special Assistant U.S. Attorney Laura A. Shattuck prosecuted the case.
Marshall was immediately turned over to the custody of the U.S. Marshals Service.
10th Street Member Sentenced on Drug ChargesRead the Press Release
BUFFALO, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Ben Medina, 25, of Buffalo, N.Y., who was convicted of conspiracy to possession with intent to distribute crack cocaine, cocaine and marijuana, was sentenced to 46 months in prison by U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorney Joseph M. Tripi, who handled the case, stated that the defendant was a member of the 10th Street Gang. Between 2004 and July 2010, Medina along with other members and associates of the 10th Street Gang distributed illegal narcotics, including crack cocaine, cocaine and marijuana, on the West Side of Buffalo.
To date 26 members and associates of the 10th Street Gang have been convicted in connection with the investigation which began in 2009.
The sentencing is the culmination of an investigation on the part of Investigators of the New York State Police, under the direction of Major Michael Cerretto, the Buffalo Police Department, under the direction of Commission Daniel Derenda, and Special Agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Brian P. Boetig.
5 December 2013
“Investment Advisory Firm” Owner Convicted of FraudRead the Press Release
GALVESTON – Kimberly Fontenot, a Brazoria County resident, has been convicted of defrauding clients of her so-called investment advisory firm, Stellar Grants Inc., announced United States Attorney Kenneth Magidson.
As outlined in documents filed with the court and admitted by Fontenot during her guilty plea today, from at least January through December 2012, Fontenot lured potential clients by falsely claiming to know numerous wealthy investors located throughout the United States. She offered access to these wealthy investors, whom she called her “angel investors,” to potential Stellar Grants clients in exchange for money. Specifically, Fontenot misrepresented that in exchange for money, she could put Stellar Grants clients in contact with the “angel investors” and would help them seek investments from the angel investors.
In addition to claiming personal and business relationships with them, Fontenot used the web-based email services Yahoo.com and Gmail.com to create fake email accounts in the names of the investors. She used these accounts to send emails to Stellar Grants clients, making it seem as if the emails were coming to and from the “angel investors” when, in reality, they were coming from Fontenot.Fontenot also hired a voice actor to impersonate the “angel investors” or their representatives during telephone calls with Stellar Grants clients. She also instructed the actor how to act and what to say during the calls. Fontenot then held fake conference calls in which she pretended to represent the Stellar Grants client and the voice actor pretended to be the angel investor or a representative of the angel investor, all in an attempt to justify the consulting fees paid by the Stellar Grants clients.
To avoid detection, Fontenot arranged for Stellar Grants clients or their representatives to sign “Master Consulting Agreements.” These agreements included a penalty clause which imposed heavy financial penalties if the clients contacted any of the angel investors.
U.S. District Judge Gregg Costa accepted Fontenot’s plea and has set sentencing for Feb. 24, 2013. At that time, she faces a maximum penalty of 20 years in federal prison and a $250,000 maximum fine or twice the pecuniary gain or loss. She was permitted to remain on bond pending that hearing.
The case is being investigated by the FBI and prosecuted by Assistant U.S. Attorney John Pearson.
Wyoming Woman Sentenced for Negligent Homicide by VehicleRead the Press Release
U.S. Attorney for the District of Wyoming Christopher A. Crofts announced that on December 4, 2013, Robin Neubauer, a 29 year old tribal descendant, was sentenced for negligent homicide by vehicle in connection with an incident on August 10, 2012 in which she struck and killed Rex Coando, a 61 year old member of the Eastern Shoshone Tribe. Ms. Neubauer was sentenced by United States Magistrate Judge Teresa McKee to one year supervised probation with three months home confinement; work release; $2,866.00 restitution; a $2,000.00 fine and a $25.00 special assessment. This case was investigated by the Federal Bureau of Investigation.
Wyoming Pill Dealer with $570,000 in Illegal Drug Proceeds Sentenced to 7 Years in Federal PrisonRead the Press Release
Police seized hundreds of thousands in cash, firearms and pills during investigation
BECKLEY, W.Va. – A 55-year-old Wyoming County pill dealer who had hundreds of thousands in cash, illegal prescription pain pills and two firearms hidden at his residences was sentenced yesterday to seven years in prison on a federal drug charge, announced U.S. Attorney Booth Goodwin. Delbert Lester, of McGraws, Wyoming Co., W.Va., previously pleaded guilty in August to possession of oxycodone with intent to distribute. Lester’s sentence was handed down by United States District Judge Irene C. Berger in Beckley.
From January 11, 2011 through May 4, 2013, Lester illegally sold prescription pills to a confidential informant working in cooperation with law enforcement authorities on eight separate occasions. Lester, who maintained two residences in McGraws, lived at one residence and ran his illegal pill business out of the other.
On May 9, 2013, law enforcement agents executed search warrants on Lester’s two residences. During the searches, agents recovered 190 30-milligram oxycodone pills and 155 10-milligram oxycodone pills.
Agents also recovered a total of $570,000 in cash and several firearms including two loaded .22 caliber semi-automatic pistols.
According to his plea agreement, Lester will forfeit the $570,000 in illegal drug proceeds that was seized from his residence.
The investigation was conducted by the Wyoming County Sherriff’s Department, the West Virginia State Police, the Southern Regional Drug and Violent Crime Task Force, and the Internal Revenue Service. Assistant United States Attorney Haley Bunn handled the prosecution.
This case was prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers in communities across the Southern District.
Woman Pleads Guilty to Tax ConspiracyRead the Press Release
BUFFALO, N.Y. – U.S. Attorney William J. Hochul, Jr. announced today that Emma Mills, 38, of Buffalo, N.Y., pleaded guilty to conspiracy to file false claims with the Internal Revenue Service before U.S. District Court Judge Richard J. Arcara. The charge carries a maximum sentence of 10 years in prison, a $250,000 fine, or both.
Assistant U.S. Attorney Trini E. Ross, who is handling the case, stated that the defendant conspired with others to defraud the Internal Revenue Service by creating false and fictitious W-2 forms. The forms were created by obtaining identification information from other persons. The fabricated W-2’s were submitted to the IRS with false tax returns, on which undeserved refunds and tax credits were claimed.
As part of her plea agreement, the defendant agreed to pay $35,519.00 in restitution to the Internal Revenue Service, and $6,976.00 to the New York State Department of Taxation and Finance.
Sentencing is scheduled for April 14, 2014 before Judge Arcara.
The conviction is the result of an investigation on the part of Special Agents of the Internal Revenue Service, under the direction of Toni Weirauch, Special Agent in Charge.