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27 November 2013
Camden County, N.J., Man Convicted for $1.2 Million Phony Pizza Shop Investment Scam, Other OffensesRead the Press Release
CAMDEN, N.J. — A federal jury convicted a Camden County, N.J., man today for allegedly defrauding an investor out of approximately $1.2 million he claimed would be invested in a pizza shop, then laundering that money, failing to report it to the IRS and threatening the victim to keep quiet about his crimes, U.S. Attorney Paul J. Fishman announced.
Giovanni Arena, 58, of Laurel Springs, N.J., was found guilty of 15 counts of mail fraud, eight counts of money laundering, three counts of failure to file income tax returns and one count of tampering with witnesses following a seven-day trial before Chief U.S. District Judge Jerome B. Simandle in Camden federal court. The jury deliberated less than four hours before delivering the guilty verdicts. Arena was acquitted on seven counts of mail fraud and one count of money laundering.
According to documents filed in this case and the evidence at trial: Arena’s scheme defrauded a single investor of approximately $1.2 million from 2004 through 2008. Arena, who had operated pizza restaurants in the past, enticed the victim to send checks and cash through the U.S. mail to invest in the purchase of a pizza shop in southern New Jersey. Rather than using the money to buy a restaurant, Arena purchased luxury automobiles – including a Maserati Coupe and Chevrolet Camaro – gambled at Atlantic City Casinos and paid his living expenses.
The jury reviewed casino records that showed the defendant spent many hours at the gaming tables, losing more than $700,000 in four years of Atlantic City gambling. During the trial, the jury watched surveillance video of the defendant buy in at a black jack table using $81,000 in cash he brought to the table in a shopping bag.
In addition, Arena willfully did not file his individual tax returns for tax years 2006, 2007 and 2008, failing to report hundreds of thousands of dollars in income to the IRS. After federal agents served search warrants on Arena’s property during the course of the investigation, Arena instructed the victim investor to lie to federal investigators and made threatening statements, saying, “you better not put me in trouble because if you put me in trouble, I’ll put you in trouble.”
Each mail fraud count carries a maximum potential penalty of 20 years in prison and a $500,000 fine. Each money laundering count carries a maximum potential penalty of 10 years in prison and a $250,000 fine or twice the value of the property involved in the transaction. Each failure to file tax returns count carries a maximum potential of one year in prison and a $100,000 fine or twice the gain resulting from the offense or twice the loss to any victim. The tampering with a witness or victim count carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled for March 18, 2014.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen in Newark, and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge David W. Bosch, Philadelphia Division, with the investigation leading to today’s verdict.
The government is represented by Assistant U.S. Attorney Jason M. Richardson of the U.S. Attorney’s Office Criminal Division in Camden.13-453
Defense counsel: Brian S. O’Malley Esq., Haddon Heights, N.J.
Bristol, Tennessee, Couple Sentenced in Connection with Meth Lab ExplosionRead the Press Release
GREENEVILLE, Tenn. – James Hulon Steadman, 41, and Amanda Beth Kiser Steadman, 32, both of Bristol, Tenn., were sentenced on Nov. 26, 2013, by the Honorable J. Ronnie Greer, U.S. District Court Judge, to serve 77 months in prison, to be followed by four years of supervised release, for conspiring to manufacture methamphetamine and creating a substantial risk of harm to human life while manufacturing methamphetamine. The Steadmans were also ordered to pay $98,911.13 in restitution for clean-up costs and damage to an apartment building as a result of multiple explosions and a fire caused by a methamphetamine laboratory.
The Steadmans and Jason Anthony Carter were indicted in November 2012 for conspiring to manufacture methamphetamine, possessing equipment, chemicals, materials, and products to be used in the manufacture of methamphetamine, and creating a substantial risk of harm to human life. Carter was convicted on Oct. 31, 2013, following a two-day jury trial, and is scheduled for sentencing on Mar. 3, 2014. He faces a possible sentence of up to 40 years in federal prison and up to $1,500,000 in fines.
According to the evidence presented at Carter’s trial, the Steadmans and Carter planned to manufacture methamphetamine at an apartment building where the Steadmans resided in Bristol, Tenn., in August 2012. They purchased the supplies needed to manufacture methamphetamine at various businesses in Bristol before returning to the apartment to begin cooking methamphetamine utilizing the “one-pot” or “shake and bake” method. Once at the apartment, they prepared the materials to manufacture methamphetamine and began cooking methamphetamine. The evidence further reflected that while the methamphetamine was cooking, several explosions occurred, resulting in a fire in the apartment, extensive damage to the apartment building, and serious injuries to Amanda Steadman.
“Manufacturing methamphetamine is an inherently dangerous process and can result in explosions, fires, and serious injuries, as evidenced by this case. Our office takes cases involving the manufacture of methamphetamine very seriously and will continue aggressively prosecute these offenses. Public safety is our highest priority,” stated United States Attorney William C. Killian.
This investigation was a joint effort of the Bristol Tennessee Police Department, Tennessee Methamphetamine Task Force, Drug Enforcement Administration, 2nd Judicial District Drug Task Force, and Sullivan County Sheriff’s Office. Assistant U.S. Attorney Suzanne Kerney-Quillen represents the United States.
Berks County Man Charged with Distribution of Child PornographyRead the Press Release
Edward Hill, 27, of Robesonia, PA, was charged today by information with distribution of child pornography and possession of child pornography, announced United States Attorney Zane David Memeger. According to the information, between May 3, 2013 and July 10, 2013, Hill distributed over the Internet pictures that depicted children being sexually abused, and he possessed in excess of 600 images of child pornography.
If convicted, Hill faces a maximum possible sentence of 30 years’ imprisonment, which includes a mandatory minimum 5 year term of imprisonment, a mandatory minimum 5 years up to a lifetime of supervised release, a $500,000 fine and a $200 special assessment.
The case was investigated by Immigration and Customs Enforcement Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Jeffery W. Whitt.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division=s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
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An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Bahamian National Arrested After Boat Capsizes and Marijuana Bales Wash AshoreRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Alysa D. Erichs, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), Mark R. Trouville, Special Agent in Charge, U.S. Drug Enforcement Administration (DEA), Miami Field Division, announce the arrest of Quinton Mitchell, 31, from Sweeting’s Cay Settlement, Green Turtle Cay, Bahamas. Mitchell made his initial appearance today before U.S. Magistrate Judge Frank J. Lynch, Jr. A pre-trial detention hearing is scheduled for December 6, 2013.
Mitchell is charged with importation of controlled substances involving 100 kilograms or more of marijuana, in violation of with Title 21, United States Code, Sections 952 (a) and 960(b)(2)(G). If convicted, Mitchell faces a mandatory minimum of five years in prison and up to a maximum of 40 years, four years to a lifetime of supervised release, and a maximum fine of $5,000,000.
According to the allegations in the criminal complaint, a vessel capsized in the waters off Jupiter Island, Florida, and three males swam to shore, including Mitchell. Upon arriving to shore, Mitchell ran away from the scene. A second male, later identified as LeRoy Edwards, a Jamaican national, was rescued from the surf and resuscitated by a good samaritan. Quinton Mitchell, was identified as the boat captain. Before running off, Mitchell told the good samaritan that there had been a total of four males on the boat.
Mitchell was later captured by Jupiter Island Police Department Officers and Martin County Sheriff’s Office Deputies, who responded to the area and found the beach littered with white bales and blue gas cans, and the partially submerged boat approximately 200 feet from the shoreline.
Martin County Sheriff’s Office Crime Scene investigators found that the recovered bales contained marijuana, weighing approximately 236 kilograms. Authorities are still searching for the other passengers that were on-board the boat.
Mr. Ferrer commended the investigative efforts of ICE-HSI, DEA, the Jupiter Island Police Department, the Martin County Sheriff’s Office, U.S. Customs and Border Protection, and Florida Fish and Wildlife. The case is being prosecuted by Assistant U.S. Attorney Carmen Lineberger.
A complaint is only an accusation, and a defendant is presumed innocent unless and until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Allen Man Charged with Burglarizing A HomeRead the Press Release
United States Attorney Brendan V. Johnson announced that an Allen, South Dakota, man has been indicted by a federal grand jury for First Degree Burglary.
George Cortier, age 26, was indicted on November 19, 2013. He appeared before U.S. Magistrate Judge Veronica L. Duffy on November 26, 2013, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 25 years in custody and/or a $250,000 fine, 5 years of supervised release, and a $100 assessment to the Federal Crime Victims Fund. Restitution may also be ordered.
The indictment charges that in July 2013, near Allen, Cortier broke into a man’s home and stole three television sets.
The charge is merely an accusation and Cortier is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Bureau of Indian Affairs Office of Justice Services and the Oglala Sioux Tribe Department of Public Safety. Assistant U.S. Attorney Eric Kelderman is prosecuting the case.
Cortier was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set.
26 November 2013
Woodstock Man Charged with Producing and Collecting Child PornographyRead the Press Release
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Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that RYAN HARDING, 28, of Woodstock, was arrested today on a federal criminal complaint charging him with production, receipt, and possession of child pornography.
The criminal complaint alleges that, on October 14, 2013, HARDING drove a male child to a convenience store, accompanied the child into the store’s restroom, and then used his iPhone to take sexually explicit photographs of the child. The victim is autistic and was approximately 13 years old when the pictures were taken. The defendant had access to the child through his employment at an organization that provides services to people with intellectual and developmental disabilities.
In addition, the complaint alleges that between July 16, 2013 and October 30, 2013, HARDING received and possessed other images and videos of child pornography that he downloaded from individuals via the Internet using a peer-to-peer file sharing program. Through a forensic examination of HARDING’s computer equipment, law enforcement officers found approximately 1,043 images and 144 videos of child pornography on HARDING’s laptop and thumb drive.
HARDING appeared today before U.S. Magistrate Judge Donna F. Martinez in Hartford and was ordered detained.
If convicted of the charge of production of child pornography, HARDING faces a mandatory minimum term of imprisonment of 15 years, a maximum term of imprisonment of 30 years and a fine of up to $250,000. If convicted of the charge of receiving child pornography, HARDING faces a mandatory minimum term of imprisonment of five years, a maximum term of imprisonment of 20 years and a fine of up to $250,000. If convicted of the charge of possession of child pornography, HARDING faces a maximum term of imprisonment of 20 years and a fine of up to $250,000. The penalties for the possession charge are enhanced because it is alleged that the defendant possessed depictions of prepubescent minors and minors under the age of 12.
Acting U.S. Attorney Daly stressed that a complaint is only a charge and is not evidence of guilt. Charges are only allegations, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by Homeland Security Investigations and the Connecticut State Police Computer Crimes Unit. The case is being prosecuted by Assistant U.S. Attorney Neeraj N. Patel.
This prosecution is part of the U.S. Department of Justice’s Project Safe Childhood Initiative, which is aimed at protecting children from sexual abuse and exploitation. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
To report cases of child exploitation, please visit www.cybertipline.com.
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U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]Waco Couple Admit to Robbing Local BankRead the Press Release
In Waco, 32-year-old Wendy Chudej (pronounced “Hoo-jay”) faces up to 20 years in federal prison after pleading guilty this afternoon to robbing a Waco bank in August 2013 announced United States Attorney Robert Pitman and Federal Bureau of Investigation Special Agent In Charge Armando Fernandez, San Antonio Division.
Appearing before United States District Judge Walter S. Smith, Chudej pleaded guilty to one count of bank robbery. By pleading guilty, Chudej admitted that she wrote the demand note and served as the getaway driver for her husband who robbed the First National Bank of Central Texas branch on North Valley Mills Drive in Waco on August 9, 2013. According to court records, 26-year-old Matthew Chudej entered the bank and presented a note to a teller demanding cash. The teller complied with Chudej’s request and handed him approximately $8,000 in U.S. currency.
Both Wendy and Matthew Chudej remain in federal custody pending sentencing. Wendy Chudej is scheduled to be sentenced on January 22, 2014. Matthew Chudej, who pleaded guilty to the same charge on October 17, 2013, is scheduled to be sentenced on December 4, 2013.
This investigation was conducted by the Federal Bureau of Investigation and the Waco Police Department. This case is being prosecuted by Assistant United States Attorney Greg Gloff.
United States Attorney William C. Killian Participates in Awareness and Knowledge Building Conference on Counterfeit Household Products and Fake Automotive Parts in Alicante, SpainRead the Press Release
U.S. Attorney William C. Killian, Eastern District of Tennessee, was featured on a panel discussing counterfeit automotive parts at the Awareness and Knowledge Building Conference on Counterfeit Household Products and Fake Automotive Parts, held November 4-6, 2013, in Alicante, Spain.
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Union County, N.J., Man Sentenced to 33 Months in Prison for Impersonating A Federal Officer to Defraud Illegal AliensRead the Press Release
NEWARK, N.J. - A Union County, N.J., man was sentenced today to 33 months in prison for pretending to be an Immigration and Customs Enforcement officer to defraud illegal aliens seeking to apply for legal status in the United States, U.S. Attorney Paul J. Fishman announced.
Ruben Alvarado, 28, of Elizabeth, N.J. previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with impersonation of a federal officer and identity fraud. Judge Hayden imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court: From September 2009 through May 2011, and again from February 2013 through March 2013, Alvarado pretended to be an employee and officer of the Department of Homeland Security, Immigration and Customs Enforcement (DHS-ICE), and the Transportation Safety Administration (TSA). Alvarado demanded and obtained money from his victims after promising to help them, through his purported government employment at DHS-ICE, to obtain legal, or more permanent, status in the United States. He wore clothing bearing the letters “I.C.E.,” carried handcuffs, what appeared to be a holstered gun, a false photo identification card identifying him as a “TSA Air Marshall” and a badge that read, “Official Court Officer.” Alvarado recruited victims in New Jersey through in-person contact and victims in Florida via Facebook.
When Alvarado’s “customers” realized he was a fraud and demanded their money back, he would threaten and intimidate them, claiming to have the power to have them and their children deported. After his initial appearance on these charges in October 2012, Alvarado was released on bail. During a routine vehicle stop in March 2013, the Elizabeth Police Department found Alvarado again to be in possession of false immigration applications, a fingerprinting kit, clothing bearing the letters “I.C.E.,” a holster and blank pistol, and a fake “I.C.E.” badge.
Alvarado admitted in court that he has never been employed by any federal agency, but had produced false identification badges for himself and worn clothing and accessories suggestive of employment at ICE in order to solicit payments from illegal aliens for immigration assistance. He also admitted to having defrauded 33 victims in both New Jersey and Florida out of a total of $33,459, both before his federal arrest and while on pretrial release for these charges.
In addition to the prison term, Judge Hayden sentenced Alvarado to serve three years of supervised release and ordered him to pay $33,459 in restitution to his victims.
U.S. Attorney Fishman credited special agents of the Department of Homeland Security, Office of Professional Responsibility, under the direction of Special Agent in Charge Terence S. Opiola; the Department of Homeland Security, Office of Inspector General in Miami, Fla., under the direction of Special Agent in Charge David Nieland; the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Grace H. Park; and the Elizabeth Police Department, under the direction of Police Director James Cosgrove, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Danielle Alfonzo Walsman of the U.S. Attorney’s Office Healthcare and Government Fraud Unit in Newark.
13-451Defense counsel: Kevin Carlucci Esq., Assistant Federal Public Defender, Newark
Two Michigan Hunters sentenced for illegally taking Grizzly Bear in closed season on Arctic National Wildlife RefugeRead the Press Release
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that two Michigan residents were sentenced in U. S. District Court in Fairbanks for a 2009 unlawful taking of a grizzly bear during closed season, making false records to conceal the illegal kill, and transporting the bear parts out of Alaska.
Mark A. Peyerk, 40, of Mio, Michigan, and his mother, Charlotte M. Peyerk, 66, of Shelby Township, Michigan, pled guilty in September 2013 to charges of conspiracy to violate federal wildlife laws, taking grizzly bear out of season in the Arctic National Wildlife Refuge, and making a false record of wildlife shipped interstate. Both defendants were sentenced yesterday by U.S. Magistrate Judge Scott A. Oravec, in Fairbanks, Alaska. The court fined each defendant $20,000, ordered defendants M. Peyerk and C. Peyerk to pay $10,000 and $5,000 dollars respectively in community service payments to the National Fish and Wildlife Foundation, required each defendant to write a public letter of apology to Safari Club International for submitting the fraudulent entry of the illegally taken bear, and ordered forfeiture of the hunting rifle and the bear. The court also prohibited the defendants from hunting during Mark Peyerk’s 5-year and Charlotte Peyerk’s 4-year terms of probation.
In imposing sentence, Magistrate Judge Oravec commented that besides the illegal taking of wildlife, the more aggravated criminal conduct was the defendants’ multiple written false statements to cover up the illegal kill. According to Assistant U. S. Attorney Stephen Cooper, who prosecuted the case, Mark and Charlotte Peyerk admitted in their plea agreements that they and their assistant guides agreed they should take the bear the day before the season opened. The Peyerks’ cameras had the date indicator altered to make it appear the bear was killed on opening day. They also falsified the date of kill on a State of Alaska record and on a Safari Club International trophy entry form. Believing the false statements, Safari Club International awarded Charlotte Peyerk the “Diana Award” for “ethics in hunting.” The court ordered Ms. Peyerk to offer the return of the award to the Safari Club International.
This hunt was commercially guided by Fair Chase Hunts operated by Registered Guide Christopher Cassidy and Master Guide Joe Hendricks. Investigation of Fair Chase Hunts led to convictions of Cassidy, Hendricks and nearly a dozen other Fair Chase Hunts’ employees and clients for conduct described by Stan Pruszenski, Special Agent in Charge, U. S. Fish &Wildlife Service, Office of Law Enforcement in Alaska, as examples of “illegal commercialization of wildlife resources.”
Ms. Loeffler commends the United States Fish & Wildlife Service Office of Law Enforcement for Northern Alaska, Arctic National Wildlife Refuge officials, and the Alaska Wildlife Troopers for the investigation of this case.Twenty-Two Individuals Sentenced During the Months of September, October and November for Federal Supervised Release ViolationsRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-7725 ● Contact: Chris Zumpetta-Parr, Public Affairs SpecialistFollow us on Twitter @NDWVnews
WHEELING, WEST VIRGINIA - United States Attorney William J. Ihlenfeld, II, announced that during the months of September, October and November twenty-two individuals had their supervised release revoked for violating terms and conditions imposed by the United States District Court.
CLARKSBURG DIVISION REVOCATIONS
(Judge Irene M. Keeley)
STEVE HALLER, age 45, of Fairmont, West Virginia, was sentenced to 24 months in prison for attempting to defeat drug tests and failure to submit fine payments. HALLER was originally sentenced on June 18, 1996, to 188 months in prison and five years of supervised release for distribution of cocaine within 1,000 feet of a school. On October 19, 2011, HALLER’s supervised release was revoked and he was sentenced to 6 months in prison and 54 months of supervised release for testing positive for the use of a controlled substance. HALLER self-reported to the designated Federal institution on November 18, 2013.
FRANK LAWRENCE, age 38, of Fairmont, was sentenced to 24 months in prison for testing positive for the use of controlled substances, failure to report for drug screens, unauthorized contact with a convicted felon, and failure to report income. LAWRENCE was originally sentenced on August 4, 2005, to 77 months in prison and 3 years of supervised release for conspiracy to possess oxycodone and morphine. LAWRENCE self-report to the designated Federal institution on September 30, 2013.
HARRY PAUL HERSHMAN, age 57, of Tunnelton, West Virginia, was sentence to 24 months in prison for convicting a new offense of burglary. HERSHMAN was originally sentenced on March 1, 2011, to 21 months in prison and 3 years of supervised release for felon in possession of a firearm. HERSHMAN was remanded to the custody of the United States Marshal pending designation to a Federal institution.MARK WILLIAM CANO, age 56, of Clarksburg, was sentenced to 12 months and 1 day in prison for testing positive for the use of cocaine. CANO was originally sentenced on May 22, 2007, to 57 months in prison and 6 years of supervised release. In February of 2009, CANO’s sentence was reduced to 46 months in prison pursuant to the crack resentencing guidelines. CANO was remanded to the custody of the United States Marshal pending designation to a Federal institution.
DEBRA LYNN BOLDEN, age 43, of Morgantown, West Virginia, was sentenced to 10 months in prison for failure to provide urine tests, failure to attend counseling session, failure to enroll in a treatment program, possession of a controlled substance and use of a controlled substance. BOLDEN was originally sentenced on October 4, 2011, to 3 years probation for the distribution of heroin. On December 8, 2011, BOLDEN’s supervised release was revoked and she was sentenced to 10 months in prison and 3 years of supervised release for testing positive for the use of controlled substances. BOLDEN was remanded to the custody of the United States Marshal pending designation to a Federal institution.
NANCY JO NICHOLAS, age 48, of Clarksburg, was sentenced to 6 months in prison and 66 months of supervised release for possession of a controlled substance and testing positive for the use of a controlled substance. NICHOLAS was originally sentenced on October 11, 2011, to 12 months and 1 day in prison and 6 years of supervised release for the distribution of heroin within 1,000 feet of a protected location. NICHOLAS will self-report to the designated Federal institution.
SHAWN LONG, age 45, of Clarksburg, was sentenced to 6 months in prison and 66 months of supervised release for possession of marijuana, testing positive for the use of marijuana, and a new arrest for driving on a revoked license for DUI and no proof of insurance. LONG was originally sentenced on September 21, 2011, to 12 months and 1 day in prison and 6 years of supervised release for the distribution of cocaine within 1,000 feet of a protected location. LONG will self-report to the designated Federal institution on January 3, 2014.
RYAN DREW TAYLOR, age 33, of Morgantown, was sentenced to 6 months in prison for possession of a controlled substance, use of a controlled substance and possession of a weapon. TAYLOR was originally sentenced on October 17, 2003, for distribution of crack cocaine. In February of 2009, TAYLOR’s sentence was reduced to 87 months in prison pursuant to the crack resentencing guidelines. TAYLOR self-report to the designated Federal institution on October 9, 2013.
TIMOTHY ROBERT WILSON, age 27, of Clarksburg, was sentenced to 4 months in prison and 48 months of supervised release for possession and use of controlled substances and alcohol. WILSON was originally sentenced on October 8, 2009, to 71 months in prison and 6 years of supervised release for the distribution of crack cocaine within 1,000 feet of a protected location. In October of 2011, WILSON’s sentence was reduced to 46 months in prison pursuant to the crack resentencing guidelines. WILSON self-report to the designated Federal institution on October 11, 2013.
BOBBY JAMES VANNOY, age 39, of Philippi, West Virginia, was sentenced to 58 days in prison and lifetime supervision for failure to file reports with the probation office, failure to truthfully answer inquiries of the probation officer; and, associating with persons engaged in criminal activity. VANNOY was originally sentenced on March 18, 2009, to 37 months in prison and lifetime supervision for possession of child pornography. VANNOY will self-report to the designated Federal institution on January 6, 2014.
The United States was represented at the Clarksburg revocation hearings by Assistant
U.S. Attorneys Shawn A. Morgan, Andrew R. Cogar, Brandon S. Flower and Zelda E. Wesley.MARTINSBURG DIVISION REVOCATIONS
(Judge Gina M. Groh)
WILLIAM GREENE, age 40, of Martinsburg, was sentenced to 36 months in prison for new arrest for the distribution of crack cocaine. GREENE was originally sentenced on September 20, 2000, to 140 months in prison and 3 years of supervised release for conspiracy to distribute crack cocaine. In April of 2008, GREENE’s sentence was reduced to 116 months pursuant to the crack resentencing guidelines. GREENE was remanded to the custody of the United States Marshal pending designation to a Federal institution.
DWAYNE DANA LEWIS, age 37, of Charles Town, West Virginia, was sentenced to 18 months in prison for the distribution of heroin, possession of suboxone and being untruthful with the probation office. LEWIS was originally sentenced on January 25, 2011, to 33 months in prison and 3 years of supervised release for the distribution of crack cocaine. LEWIS was remanded to the custody of the United States Marshal pending designation to a Federal institution.
JAVIER HOWARD, age 31, of Martinsburg, was sentenced to 13 months in prison for testing positive for the use of heroin and oxycodone. HOWARD was originally sentenced on August 9, 2006, to 84 months in prison and 3 years of supervised release. In June of 2009, HOWARD’s sentence was reduced to 68 pursuant to the crack resentencing guidelines. On November 9, 2012, HOWARD was sentenced to 9 months in prison and 18 months of supervised release for violations of his supervised release. HOWARD was remanded to the custody of the United States Marshal pending designation to a Federal institution.
CHALDIN POINT DU JOUR, age 27, of Shepherdstown, West Virginia, was sentenced to 9 months in prison and 26 months of supervised release for failure to perform work release, failure to pay restitution, being untruthful with the probation office, and failure to timely file monthly reports. DU JOUR was originally sentenced on October 19, 2011, to 10 months in prison and 3 years of supervised release the unauthorized use of access devices. DU JOUR was remanded to the custody of the United States Marshal pending designation to a Federal institution.
ROBERT KENNETH KACKLEY, age 41, of Martinsburg, was sentenced to 8 months in prison and 52 months of supervised release for possession of controlled substances, testing positive for the use of controlled substances, failure to follow probation officer’s instructions and associating with known felons. KACKLEY was originally sentenced on July 6, 2011, to 27 months in prison and 6 years of supervised release for the distribution of crack cocaine. KACKLEY was remanded to the custody of the United States Marshal pending designation to a Federal institution.
CHARLES COLLIN PETTY, age 32, of Martinsburg, was sentenced to 8 months in prison and 40 months of supervised release for associating with known felons, use of suboxone and a DUI conviction. PETTY was originally sentenced on October 22, 2008, to 60 months in prison and 4 years of supervised release for possession with intent to distribute crack cocaine. PETTY was remanded to the custody of the United States Marshal pending designation to a Federal institution.
JARRED BARCLAY, age 29, of Martinsburg, was sentenced to 8 months in prison and 25 months of supervised release for associating with known felons, DUI conviction, failure to submit monthly reports, testing positive for the use of marijuana and failure to be truthful with probation office. BARCLAY was originally sentenced on February 7, 2012, to 6 months in prison and 3 years of supervised release for the distribution of crack cocaine. BARCLAY was remanded to the custody of the United States Marshal pending designation to a Federal institution.
BRIDGET DEMINDS, age 28, of Martinsburg, was sentenced to 4 months in prison and 32 months of supervised release for use of suboxone, shoplifting and failure to be truthful with probation officer. DEMINDS was originally sentenced on July 28, 2010, to 37 months in prison and 3 years of supervised release for the possession with intent to distribute heroin. DEMINDS was remanded to the custody of the United States Marshal pending designation to a Federal institution.
BRANDY NETZ, age 28, of Martinsburg, was sentenced to 4 months in prison and 18 months of supervised release for possession of cocaine, destruction of property, traffic violations and failure to follow probation officer’s instructions. NETZ was originally sentenced on August 5, 2008, to 18 months in prison and 3 years of supervised release for possession with intent to distribute crack cocaine. NETZ was remanded to the custody of the United States Marshal pending designation to a Federal institution.
ANDREW SEMAN, age 58, of Martinsburg, was sentenced to 4 months in prison and 12 months of supervised release for failure to report police contact to probation office, failure to submit monthly reports to probation office, and leaving the district without permission from the probation office. SEMAN was originally sentenced on October 26, 2010, to 18 months in prison and 3 years of supervised release for the distribution of heroin. SEMAN will self-report to the designated Federal institution on December 2, 2013.
The United States was represented at the Martinsburg revocation hearings by Assistant U.S. Attorneys Paul T. Camilletti and Jarod J. Douglas.
WHEELING DIVISION REVOCATIONS
(Judge Frederick P. Stamp, Jr.)
MATTHEW IAN HAUGHT, age 31, of Colliers, West Virginia, was sentenced to 9 months in prison for possession and use of a controlled substance, failure to report to the probation office as instructed, failure to report for scheduled drug treatment and absconding. HAUGHT was originally sentenced on August 14, 2009, to 33 months in prison and 3 years of supervised release for possession of a firearm by a drug addict. On April 15, 2013, HAUGHT’s supervised release was revoked and he was sentenced to 3 months in prison and 33 months of supervised release for use and possession of heroin and alcohol and failure to report for scheduled drug screens. HAUGHT was remanded to the custody of the United States Marshal pending designation to a Federal institution.
STEVEN KLOH, age 36, of Columbus, Ohio, was sentenced to 8 months in prison and 16 months of supervised release for possession of drug paraphernalia. KLOH was originally sentenced on October 22, 2012, to 24 months in prison and 2 years of supervised release for interstate transportation of controlled substances. KLOH was remanded to the custody of the United States Marshal pending designation to a Federal institution.
The United States was represented at the Martinsburg revocation hearings by Assistant U.S. Attorneys Randolph J. Bernard and John C. Parr.
The United States Probation Office carries out probation and pretrial services functions throughout the Northern District of West Virginia. With locations in Wheeling, Clarksburg, Martinsburg, and Elkins, the office works to assist the federal courts in the fair administration of justice, to protect the community, and to bring about long-term positive change in individuals under supervision. Jeff Givens is the Chief Probation Officer for the Northern District.
Toyo Tire & Rubber Co. Ltd. Agrees to Plead Guilty to <br /> Price Fixing on Automobile Parts Installed in U.S. CarsRead the Press Release
Osaka, Japan-based Toyo Tire & Rubber Co. Ltd. has agreed to plead guilty and to pay a $120 million criminal fine for its role in two separate conspiracies to fix the prices of automotive components involving anti-vibration rubber and driveshaft parts installed in cars sold in the United States and elsewhere, the Department of Justice announced today.
According to a two-count felony charge filed today in U.S. District Court for the Northern District of Ohio in Toledo, Toyo engaged in a conspiracy to allocate sales of, to rig bids for, and to fix the prices of automotive anti-vibration rubber parts it sold to Toyota Motor Corp., Nissan Motor Corp., Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries, affiliates and suppliers, in the United States and elsewhere. According to the charge, Toyo and its co-conspirators carried out the anti-vibration rubber parts conspiracy from as early as March 1996 until at least May 2012.
In addition, according to the charge, Toyo engaged in a separate conspiracy to allocate sales of, and to fix, raise and maintain the prices of automotive constant-velocity-joint boots it sold to U.S. subsidiaries of GKN plc, a British automotive parts supplier . According to the charge, Toyo and its co-conspirators carried out the constant-velocity-joint boots conspiracy from as early as January 2006 until as late as September 2010.
Toyo, which has subsidiaries based in Franklin, Ky., and White, Ga., has agreed to cooperate with the department’s ongoing investigation. The plea agreement is subject to court approval.
“Today’s charge is the latest step in the Antitrust Division’s effort to hold automobile part suppliers accountable for their illegal and collusive conduct,” said Renata B. Hesse, Deputy Assistant Attorney General for the Department of Justice’s Antitrust Division. “The division continues to vigorously prosecute companies and individuals that seek to maximize their profits through illegal and anticompetitive means.”
Automotive anti-vibration rubber parts are comprised primarily of rubber and metal, and include engine mounts and suspension bushings. They are installed in automobiles for the purpose of reducing road and engine vibration. Automotive constant-velocity-joint boots are composed of rubber or plastic, and are used to cover the constant-velocity-joints of an automobile to protect the joints from contaminants.
The department said the company and its co-conspirators carried out the conspiracies through meetings and conversations, discussed and agreed upon bids, price quotations and price adjustments, and agreed to allocate among the companies certain sales of the anti-vibration rubber and constant-velocity-joint boots parts sold to automobile and component manufacturers.
Including Toyo, 22 companies and 26 executives have been charged in the Justice Department’s ongoing investigation into the automotive parts industry. All 22 companies have either pleaded guilty or have agreed to plead guilty and have agreed to pay more than $1.8 billion in criminal fines. Of the 26 executives, 20 have been sentenced to serve time in U.S. prisons or have entered into plea agreements calling for significant prison sentences.
Toyo is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the Antitrust Division’s Chicago Office and the FBI’s Cleveland Field Office, with the assistance of the FBI headquarters’ International Corruption Unit and the U.S. Attorney’s Office for the Northern District of Ohio. Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1–888–647–3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Cleveland Field Office at 216-522-1400.Toyo Tire & Rubber Co. Ltd. Agrees to Plead Guilty to Price Fixing on Auto Parts and to Pay $120 Million Criminal FineRead the Press Release
Osaka, Japan-based Toyo Tire & Rubber Co. Ltd. has agreed to plead guilty and to pay a $120 million criminal fine for its role in two separate conspiracies to fix the prices of automotive components involving anti-vibration rubber and driveshaft parts installed in cars sold in the United States and elsewhere, the Department of Justice announced today.
According to a two-count felony charge filed today in U.S. District Court for the Northern District of Ohio in Toledo, Toyo engaged in a conspiracy to allocate sales of, to rig bids for, and to fix the prices of automotive anti-vibration rubber parts it sold to Toyota Motor Corp., Nissan Motor Corp., Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries, affiliates and suppliers, in the United States and elsewhere. According to the charge, Toyo and its co-conspirators carried out the anti-vibration rubber parts conspiracy from as early as March 1996 until at least May 2012.
In addition, according to the charge, Toyo engaged in a separate conspiracy to allocate sales of, and to fix, raise and maintain the prices of automotive constant-velocity-joint boots it sold to U.S. subsidiaries of GKN plc, a British automotive parts supplier. According to the charge, Toyo and its co-conspirators carried out the constant-velocity-joint boots conspiracy from as early as January 2006 until as late as September 2010.
Toyo, which has subsidiaries based in Franklin, Ky., and White, Ga., has agreed to cooperate with the department’s ongoing investigation. The plea agreement is subject to court approval.
“Today’s charge is the latest step in the Antitrust Division’s effort to hold automobile part suppliers accountable for their illegal and collusive conduct,” said Renata B. Hesse, Deputy Assistant Attorney General for the Department of Justice’s Antitrust Division. “The division continues to vigorously prosecute companies and individuals that seek to maximize their profits through illegal and anticompetitive means.”
Automotive anti-vibration rubber parts are comprised primarily of rubber and metal, and include engine mounts and suspension bushings. They are installed in automobiles for the purpose of reducing road and engine vibration. Automotive constant-velocity-joint boots are composed of rubber or plastic, and are used to cover the constant-velocity-joints of an automobile to protect the joints from contaminants.
The department said the company and its co-conspirators carried out the conspiracies through meetings and conversations, discussed and agreed upon bids, price quotations and price adjustments, and agreed to allocate among the companies certain sales of the anti-vibration rubber and constant-velocity-joint boots parts sold to automobile and component manufacturers.
Including Toyo, 22 companies and 26 executives have been charged in the Justice Department’s ongoing investigation into the automotive parts industry. All 22 companies have either pleaded guilty or have agreed to plead guilty and have agreed to pay more than $1.8 billion in criminal fines. Of the 26 executives, 20 have been sentenced to serve time in U.S. prisons or have entered into plea agreements calling for significant prison sentences.
Toyo is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the Antitrust Division’s Chicago Office and the FBI’s Cleveland Field Office, with the assistance of the FBI headquarters’ International Corruption Unit and the U.S. Attorney’s Office for the Northern District of Ohio. Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1–888–647–3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Cleveland Field Office at 216-522-1400.
Three Subsidiaries of Weatherford International Limited<br /> Agree to Plead Guilty to FCPA and Export Control ViolationsRead the Press Release
Three subsidiaries of Weatherford International Limited (Weatherford International), a Swiss oil services company that trades on the New York Stock Exchange, have agreed to plead guilty to anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and export controls violations under the International Emergency Economic Powers Act (IEEPA) and the Trading With the Enemy Act (TWEA). Weatherford International and its subsidiaries have also agreed to pay more than $252 million in penalties and fines.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.
Weatherford Services Limited (Weatherford Services), a subsidiary of Weatherford International, today agreed to plead guilty to violating the anti-bribery provisions of the FCPA. As part of a coordinated FCPA resolution, the department today also filed a criminal information in U.S. District Court for the Southern District of Texas charging Weatherford International with one count of violating the internal controls provisions of the FCPA. To resolve the charge, Weatherford International has agreed to pay an $87.2 million criminal penalty as part of a deferred prosecution agreement with the department.
“Effective internal accounting controls are not only good policy, they are required by law for publicly traded companies – and for good reason,” said Acting Assistant Attorney General Raman. “This case demonstrates how loose controls and an anemic compliance environment can foster foreign bribery and fraud by a company’s subsidiaries around the globe. Although Weatherford’s extensive remediation and its efforts to improve its compliance functions are positive signs, the corrupt conduct of Weatherford International’s subsidiaries allowed it to earn millions of dollars in illicit profits, for which it is now paying a significant price.”“When business executives engage in bribery and pay-offs in order to obtain contracts, an uneven marketplace is created and honest competitor companies are put at a disadvantage,” said Assistant Director in Charge Parlave. “The FBI is committed to investigating corrupt backroom deals that influence contract procurement and threaten our global commerce.”
In a separate matter, Weatherford International and four of its subsidiaries today agreed to pay a combined $100 million to resolve a criminal and administrative export controls investigation conducted by the U.S. Attorney’s Office for the Southern District of Texas, the Department of Commerce’s Bureau of Industry and Security, and the Department of the Treasury’s Office of Foreign Assets Control. As part of the resolution of that investigation, Weatherford International has agreed to enter into a deferred prosecution agreement for a term of two years and two of its subsidiaries have agreed to plead guilty to export controls charges.
“The resolution today of these criminal charges represents the seriousness that our office and the Department of Justice puts on enforcing the export control and sanctions laws,” said U.S. Attorney Magidson.
In a related FCPA matter, the U.S. Securities and Exchange Commission ( SEC) filed a settlement today in which Weatherford International consented to the entry of a permanent injunction against FCPA violations and agreed to pay $65,612,360 in disgorgement, prejudgment interest, and civil penalties. Weatherford International also agreed with the SEC to comply with certain undertakings regarding its FCPA compliance program, including the retention of an independent corporate compliance monitor.
The combined investigations resulted in the conviction of three Weatherford subsidiaries, the entry by Weatherford International into two deferred prosecution agreements and a civil settlement, and the payment of a total of $252,690,606 in penalties and fines.
FCPA Violations
According to court documents filed by the department, prior to 2008, Weatherford International knowingly failed to establish an effective system of internal accounting controls designed to detect and prevent corruption, including FCPA violations. The company failed to implement these internal controls despite operating in an industry with a substantial corruption risk profile and despite growing its global footprint in large part by purchasing existing companies, often themselves in countries with high corruption risks. As a result, a permissive and uncontrolled environment existed within which employees of certain of Weatherford International’s wholly owned subsidiaries in Africa and the Middle East were able to engage in corrupt conduct over the course of many years, including both bribery of foreign officials and fraudulent misuse of the United Nations’ Oil for Food Program.
Court documents state that Weatherford Services employees established and operated a joint venture in Africa with two local entities controlled by foreign officials and their relatives from 2004 through at least 2008. The foreign officials selected the entities with which Weatherford Services would partner, and Weatherford Services and Weatherford International employees knew that the members of the local entities included foreign officials’ relatives and associates. Notwithstanding the fact that the local entities did not contribute capital, expertise or labor to the joint venture, neither Weatherford Services nor Weatherford International investigated why the local entities were involved in the joint venture. The sole purpose of those local entities, in fact, was to serve as conduits through which Weatherford Services funneled hundreds of thousands of dollars in payments to the foreign officials controlling them. In exchange for the payments they received from Weatherford Services through the joint venture, the foreign officials awarded the joint venture lucrative contracts, gave Weatherford Services inside information about competitors’ pricing, and took contracts away from Weatherford Services’ competitors and awarded them to the joint venture.
Additionally, Weatherford Services employees in Africa bribed a foreign official so that he would approve the renewal of an oil services contract, according to court documents. Weatherford Services funneled bribery payments to the foreign official through a freight forwarding agent it retained via a consultancy agreement in July 2006. Weatherford Services generated sham purchase orders for consulting services the freight forwarding agent never performed, and the freight forwarding agent, in turn, generated sham invoices for those same nonexistent services. When paid for those invoices, the freight forwarding agent passed at least some of those monies on to the foreign official with the authority to approve Weatherford Services’ contract renewal. In exchange for these payments, the foreign official awarded the renewal contract to Weatherford Services in 2006.
Further, according to court documents, in a third scheme in the Middle East, from 2005 through 2011, employees of Weatherford Oil Tools Middle East Limited (WOTME), another Weatherford International subsidiary, awarded improper “volume discounts” to a distributor who supplied Weatherford International products to a government-owned national oil company, believing that those discounts were being used to create a slush fund with which to make bribe payments to decision-makers at the national oil company. Between 2005 and 2011, WOTME paid approximately $15 million in volume discounts to the distributor.
Weatherford International’s failure to implement effective internal accounting controls also permitted corrupt conduct relating to the United Nations’ Oil for Food Program to occur, according to court documents. Between in or about February 2002 and in or about July 2002, WOTME paid approximately $1,470,128 in kickbacks to the government of Iraq on nine contracts with Iraq’s Ministry of Oil, as well as other ministries, to provide oil drilling and refining equipment. WOTME falsely recorded these kickbacks as other, seemingly legitimate, types of costs and fees. Further, WOTME concealed the kickbacks from the U.N. by inflating contract prices by 10 percent.
According to court documents, these corrupt transactions in Africa and the Middle East earned Weatherford International profits of $54,486,410, which were included in the consolidated financial statements that Weatherford International filed with the SEC .
In addition to the guilty plea by Weatherford Services, the deferred prosecution agreement entered into by Weatherford International and the Department requires the company to cooperate with law enforcement, retain an independent corporate compliance monitor for at least 18 months, and continue to implement an enhanced compliance program and internal controls designed to prevent and detect future FCPA violations. The agreement acknowledges Weatherford International’s cooperation in this matter, including conducting a thorough internal investigation into bribery and related misconduct, and its extensive remediation and compliance improvement efforts.
Export Control Violations
According to court documents filed today in a separate matter, between 1998 and 2007, Weatherford International and some its subsidiaries engaged in conduct that violated various U.S. export control and sanctions laws by exporting or re-exporting oil and gas drilling equipment to, and conducting Weatherford business operations in, sanctioned countries without the required U.S. Government authorization. In addition to the involvement of employees of several Weatherford International subsidiaries, some Weatherford International executives, managers, or employees on multiple occasions participated in, directed, approved, and facilitated the transactions and the conduct of its various subsidiaries.
This conduct involved persons within the U.S.-based management structure of Weatherford International participating in conduct by Weatherford International foreign subsidiaries, and the unlicensed export or re-export of U.S.-origin goods to Cuba, Iran, Sudan, and Syria. Weatherford subsidiaries Precision Energy Services Colombia Ltd. (PESC) and Precision Energy Services Ltd. (PESL), both headquartered in Canada, conducted business in the country of Cuba. Weatherford’s subsidiary Weatherford Oil Tools Middle East (WOTME), headquartered in the United Arab Emirates (UAE), conducted business in the countries of Iran, Sudan, and Syria. Weatherford’s subsidiary Weatherford Production Optimisation f/k/a eProduction Solutions U.K. Ltd. (eProd-U.K.), headquartered in the United Kingdom, conducted business in the country of Iran. Weatherford generated approximately $110 million in revenue from its illegal transactions in Cuba, Iran, Syria and Sudan.
To resolve these charges, Weatherford and its subsidiaries will pay a total penalty of $100 million, with a $48 million monetary penalty paid pursuant to a deferred prosecution agreement, $2 million paid in criminal fines pursuant to the two guilty pleas, and a $50 million civil penalty paid pursuant to a Department of Commerce settlement agreement to resolve 174 violations charged by Commerce’s Bureau of Industry and Security. Weatherford International and certain of its affiliates are also signing a $91 million settlement agreement with the Department of the Treasury to resolve their civil liability arising out of the same underlying course of conduct, which will be deemed satisfied by the payments above.
The FCPA case was investigated by the FBI’s Washington Field Office and its team of special agents dedicated to the investigation of foreign bribery cases. The case is being prosecuted by Trial Attorney Jason Linder of the Criminal Division’s Fraud Section, with the assistance of Assistant U.S. Attorney Mark McIntyre of the Southern District of Texas. The case was previously investigated by Fraud Section Trial Attorneys Kathleen Hamann and Allan Medina, with assistance from the Criminal Division’s Asset Forfeiture and Money Laundering Section. The Justice Department also acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s FCPA Unit.
The export case was investigated by the Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement, and the Department of the Treasury’s Office of Foreign Assets Control. The case is being prosecuted by Assistant U.S. Attorney S. Mark McIntyre and was previously investigated by Assistant U.S. Attorney Jeff Vaden.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa .Three Subsidiaries of Weatherford International Limited Agree to Plead Guilty to FCPA and Export Control ViolationsRead the Press Release
Weatherford International and Subsidiaries Agree to Pay $252 Million in Penalties and Fines
HOUSTON – Three subsidiaries of Weatherford International Limited (Weatherford International), a Swiss oil services company that trades on the New York Stock Exchange, have agreed to plead guilty to export controls violations under the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) and anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). Weatherford International and its subsidiaries have also agreed to pay more than $252 million in penalties and fines.
U.S. Attorney Kenneth Magidson of the Southern District of Texas, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.
Weatherford International and four of its subsidiaries today agreed to pay a combined $100 million to resolve a criminal and administrative export controls investigation conducted by the U.S. Attorney’s Office for the Southern District of Texas, the Department of Commerce’s Bureau of Industry and Security and the Department of the Treasury’s Office of Foreign Assets Control. As part of the resolution of that investigation, Weatherford International has agreed to enter into a deferred prosecution agreement for a term of two years and two of its subsidiaries have agreed to plead guilty to export controls charges.
“The resolution today of these criminal charges represents the seriousness that our office and the Department of Justice puts on enforcing the export control and sanctions laws,” said U.S. Attorney Magidson.
In a separate matter, Weatherford Services Limited (Weatherford Services), a subsidiary of Weatherford International, today agreed to plead guilty to violating the anti-bribery provisions of the FCPA. As part of a coordinated FCPA resolution, the department today also filed a criminal information in U.S. District Court for the Southern District of Texas charging Weatherford International with one count of violating the internal controls provisions of the FCPA. To resolve the charge, Weatherford International has agreed to pay an $87.2 million criminal penalty as part of a deferred prosecution agreement with the department.
“Effective internal accounting controls are not only good policy, they are required by law for publicly traded companies – and for good reason,” said Acting Assistant Attorney General Raman. “This case demonstrates how loose controls and an anemic compliance environment can foster foreign bribery and fraud by a company’s subsidiaries around the globe. Although Weatherford’s extensive remediation and its efforts to improve its compliance functions are positive signs, the corrupt conduct of Weatherford International’s subsidiaries allowed it to earn millions of dollars in illicit profits, for which it is now paying a significant price.”
“When business executives engage in bribery and pay-offs in order to obtain contracts, an uneven marketplace is created and honest competitor companies are put at a disadvantage,” said Assistant Director in Charge Parlave. “The FBI is committed to investigating corrupt backroom deals that influence contract procurement and threaten our global commerce.”
In a related FCPA matter, the U.S. Securities and Exchange Commission (SEC) filed a settlement today in which Weatherford International consented to the entry of a permanent injunction against FCPA violations and agreed to pay $65,612,360 in disgorgement, prejudgment interest and civil penalties. Weatherford International also agreed with the SEC to comply with certain undertakings regarding its FCPA compliance program, including the retention of an independent corporate compliance monitor.
The combined investigations resulted in the conviction of three Weatherford subsidiaries, the entry by Weatherford International into two deferred prosecution agreements and a civil settlement and the payment of a total of $252,690,606 in penalties and fines.
Export Control Violations
According to court documents filed today in a separate matter, between 1998 and 2007, Weatherford International and some its subsidiaries engaged in conduct that violated various U.S. export control and sanctions laws by exporting or re-exporting oil and gas drilling equipment to, and conducting Weatherford business operations in, sanctioned countries without the required U.S. government authorization. In addition to the involvement of employees of several Weatherford International subsidiaries, some Weatherford International executives, managers or employees on multiple occasions participated in, directed, approved and facilitated the transactions and the conduct of its various subsidiaries.
This conduct involved persons within the U.S.-based management structure of Weatherford International participating in conduct by Weatherford International foreign subsidiaries and the unlicensed export or re-export of U.S.-origin goods to Cuba, Iran, Sudan and Syria. Weatherford subsidiaries Precision Energy Services Colombia Ltd. (PESC) and Precision Energy Services Ltd. (PESL), both headquartered in Canada, conducted business in the country of Cuba. Weatherford’s subsidiary Weatherford Oil Tools Middle East (WOTME), headquartered in the United Arab Emirates (UAE), conducted business in the countries of Iran, Sudan and Syria. Weatherford’s subsidiary Weatherford Production Optimisation f/k/a eProduction Solutions U.K. Ltd. (eProd-U.K.), headquartered in the United Kingdom, conducted business in the country of Iran. Weatherford generated approximately $110 million in revenue from its illegal transactions in Cuba, Iran, Syria and Sudan.
To resolve these charges, Weatherford and its subsidiaries will pay a total penalty of $100 million, with a $48 million monetary penalty paid pursuant to a deferred prosecution agreement, $2 million paid in criminal fines pursuant to the two guilty pleas and a $50 million civil penalty paid pursuant to a Department of Commerce settlement agreement to resolve 174 violations charged by Commerce’s Bureau of Industry and Security. Weatherford International and certain of its affiliates are also signing a $91 million settlement agreement with the Department of the Treasury to resolve their civil liability arising out of the same underlying course of conduct, which will be deemed satisfied by the payments above.
FCPA Violations
According to court documents filed by the department, prior to 2008, Weatherford International knowingly failed to establish an effective system of internal accounting controls designed to detect and prevent corruption, including FCPA violations. The company failed to implement these internal controls despite operating in an industry with a substantial corruption risk profile and despite growing its global footprint in large part by purchasing existing companies, often themselves in countries with high corruption risks. As a result, a permissive and uncontrolled environment existed within which employees of certain of Weatherford International’s wholly owned subsidiaries in Africa and the Middle East were able to engage in corrupt conduct over the course of many years, including both bribery of foreign officials and fraudulent misuse of the United Nations’ Oil for Food Program.
Court documents state that Weatherford Services employees established and operated a joint venture in Africa with two local entities controlled by foreign officials and their relatives from 2004 through at least 2008. The foreign officials selected the entities with which Weatherford Services would partner, and Weatherford Services and Weatherford International employees knew that the members of the local entities included foreign officials’ relatives and associates. Notwithstanding the fact that the local entities did not contribute capital, expertise or labor to the joint venture, neither Weatherford Services nor Weatherford International investigated why the local entities were involved in the joint venture. The sole purpose of those local entities, in fact, was to serve as conduits through which Weatherford Services funneled hundreds of thousands of dollars in payments to the foreign officials controlling them. In exchange for the payments they received from Weatherford Services through the joint venture, the foreign officials awarded the joint venture lucrative contracts, gave Weatherford Services inside information about competitors’ pricing and took contracts away from Weatherford Services’ competitors and awarded them to the joint venture.
Additionally, Weatherford Services employees in Africa bribed a foreign official so that he would approve the renewal of an oil services contract, according to court documents. Weatherford Services funneled bribery payments to the foreign official through a freight forwarding agent it retained via a consultancy agreement in July 2006. Weatherford Services generated sham purchase orders for consulting services the freight forwarding agent never performed, and the freight forwarding agent, in turn, generated sham invoices for those same nonexistent services. When paid for those invoices, the freight forwarding agent passed at least some of those monies on to the foreign official with the authority to approve Weatherford Services’ contract renewal. In exchange for these payments, the foreign official awarded the renewal contract to Weatherford Services in 2006.
Further, according to court documents, in a third scheme in the Middle East, from 2005 through 2011, employees of Weatherford Oil Tools Middle East Limited (WOTME), another Weatherford International subsidiary, awarded improper “volume discounts” to a distributor who supplied Weatherford International products to a government-owned national oil company, believing that those discounts were being used to create a slush fund with which to make bribe payments to decision-makers at the national oil company. Between 2005 and 2011, WOTME paid approximately $15 million in volume discounts to the distributor.
Weatherford International’s failure to implement effective internal accounting controls also permitted corrupt conduct relating to the United Nations’ Oil for Food Program to occur, according to court documents. Between in or about February 2002 and in or about July 2002, WOTME paid approximately $1,470,128 in kickbacks to the government of Iraq on nine contracts with Iraq’s Ministry of Oil, as well as other ministries, to provide oil drilling and refining equipment. WOTME falsely recorded these kickbacks as other, seemingly legitimate, types of costs and fees. Further, WOTME concealed the kickbacks from the U.N. by inflating contract prices by 10 percent.
According to court documents, these corrupt transactions in Africa and the Middle East earned Weatherford International profits of $54,486,410, which were included in the consolidated financial statements that Weatherford International filed with the SEC.
In addition to the guilty plea by Weatherford Services, the deferred prosecution agreement entered into by Weatherford International and the Department requires the company to cooperate with law enforcement, retain an independent corporate compliance monitor for at least 18 months and continue to implement an enhanced compliance program and internal controls designed to prevent and detect future FCPA violations. The agreement acknowledges Weatherford International’s cooperation in this matter, including conducting a thorough internal investigation into bribery and related misconduct, and its extensive remediation and compliance improvement efforts.
The export case was investigated by the Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement and the Department of the Treasury’s Office of Foreign Assets Control. The case is being prosecuted by Assistant U.S. Attorney S. Mark McIntyre and was previously investigated by Assistant U.S. Attorney Jeff Vaden.
The FCPA case was investigated by the FBI’s Washington Field Office and its team of special agents dedicated to the investigation of foreign bribery cases. The case is being prosecuted by Trial Attorney Jason Linder of the Criminal Division’s Fraud Section, with the assistance of Assistant U.S. Attorney Mark McIntyre of the Southern District of Texas. The case was previously investigated by Fraud Section Trial Attorneys Kathleen Hamann and Allan Medina, with assistance from the Criminal Division’s Asset Forfeiture and Money Laundering Section. The Justice Department also acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s FCPA Unit.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Three Hostage Takers Sentenced to at Least A Decade in PrisonRead the Press Release
PHOENIX – On Nov. 25, 2013, Francisco Javier Astorga-Velarde, 23, and Jose Pedro Soto-Valdez, 24, were sentenced by U.S. District Judge Susan R. Bolton to 12 years imprisonment. The third co-defendant, Noel Galindez-Marmolejo, 33, received a sentence of 10 years. All three defendants are citizens of Mexico and pleaded guilty in August 2013 to using a firearm during a crime of violence which, in this case, was hostage taking.
In late 2012, the defendants held undocumented aliens hostage at a residence in Phoenix while waiting for the aliens’ smuggling fees to be paid. The defendants increased the aliens’ smuggling fees and held them at gun point. The captors beat, pistol whipped and threatened to kill the hostages as well as broke one of the hostage’s fingers. One hostage stated a sexual assault occurred at the house.
The investigation in this case was conducted by the U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations and the Phoenix Police Department. The prosecution was handled by Lisa E. Jennis, Assistant U.S. Attorney, District of Arizona, Phoenix.
CASE NUMBER: CR-12-02104-PHX-SRB
RELEASE NUMBER: 2013-089_Astorga-VelardeFor more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Tampa Man Pleads Guilty to Stolen Identity Refund FraudRead the Press Release
Tampa, FL – Acting United States Attorney A. Lee Bentley, III announces that Brian E. Simmons today pleaded guilty to wire fraud and aggravated identity theft. He has also agreed to forfeit $790,421.28 to the United States, as proceeds of the offense. Simmons faces up to 22 years in prison. He is scheduled to be sentenced on February 13, 2014. A co-defendant Tressa V. Guy pleaded guilty to conspiracy to commit wire fraud and aggravated identity theft on October 16, 2013. She is scheduled to be sentenced on January 9, 2014.
According to the plea agreement, Simmons, a resident of the Tampa area, and others, including Tressa V. Guy, orchestrated a scheme to defraud the United States Treasury by causing fraudulent federal income tax returns to be filed. To facilitate the scheme, they used stolen identities, solicited personal identifying information and addresses from co-conspirators in Florida and Georgia, and coordinated the withdrawal of fraudulently obtained tax refund amounts from prepaid debit cards.
In April 2012, Monroe County Sheriff's Office ("MCSO") conducted a traffic stop of a car driven by Simmons, in which Guy was the only passenger. MCSO discovered medical office patient roster screen prints and handwritten notes containing at least twenty-eight names, social security numbers (SSN) and dates of birth (DOB), cash in the amount of $10,818.00, and nine prepaid debit cards in the names of individuals other than Guy or Simmons. Deputies also discovered three cell phones; two apparently belonging to Simmons and one belonging to Guy. Photos of personal identifying information and hundreds of text messages between Guy, Simmons, and others discussing the fraudulent scheme were discovered on these cell phones. Photos of approximately thirty-three names, SSNs and DOBs were found on one of Simmons' cell phones.
In May 2012, the Tampa Police Department performed a traffic stop of a vehicle driven by Brian Simmons. Tressa Guy and another individual were passengers in the vehicle. In the vehicle were fourteen prepaid debit cards in the names of individuals other than Guy or Simmons, cash in the amount of $1,300, and multiple Walmart receipts. Guy’s purse contained one Turbo Tax debit card in the name of another individual.
This case was investigated by the Internal Revenue Service – Criminal Investigation, the Tampa Police Department, and the Monroe County, Georgia Sheriff’s Office, with assistance from the Hillsborough County Sheriff’s Office. It is being prosecuted by Assistant United States Attorney Matthew J. Mueller and Trial Attorney Jason H. Poole of the Department of Justice, Tax Division.
St. Francis Man Sentenced for LarcenyRead the Press Release
United States Attorney Brendan V. Johnson announced that a St. Francis, South Dakota, man convicted of Larceny was sentenced on November 25, 2013, by U.S. District Judge Roberto A. Lange.
John Swift, age 55, was sentenced to 2 years’ probation, a $500 fine, $9,458.49 in restitution, and $100 to the Federal Crime Victims Fund.
Swift was indicted by a federal grand jury on February 13, 2013, and pled guilty to the charge on July 23, 2013.
The conviction stems from incidents that took place between August 2009 and December 2010, when Swift was the Chief of the St. Francis Volunteer Fire Department. Swift wrote himself 9 checks from the St. Francis Volunteer Fire Department’s checking account totaling $5,200, which he had countersigned by co-defendant Harvey LaPointe. Swift countersigned 12 checks for other members of the fire department totaling $2,800. These 21 checks were issued to Swift and others who were not entitled to those funds, which were designated by the Todd County Treasurer to pay for insurance premiums for the fire department. Swift also took and carried away property that belonged to the St. Francis Volunteer Fire Department.
The investigation was conducted by the Federal Bureau of Investigation and the Rosebud Sioux Tribe Law Enforcement Services. The case was prosecuted by Assistant U.S. Attorney Marie H. Ruettgers.
Sioux Falls Man Sentenced in Methamphetamine Conspiracy CaseRead the Press Release
United States Attorney Brendan V. Johnson announced that a Sioux Falls, South Dakota, man convicted of conspiracy to distribute 500 grams or more of methamphetamine was sentenced on November 25, 2013, by U.S. District Judge Karen E. Schreier.
Steven Michael Schumm, age 48, was sentenced to 240 months in custody to be followed by 10 years of supervised release. He was also fined $2,000 and ordered to pay a $100 special assessment to the Federal Crime Victims Fund.
Schumm was indicted by a federal grand jury on May 8, 2013, for Conspiracy to Distribute a Controlled Substance. He pled guilty on September 3, 2013.
On April 16, 2013, a federal search warrant was executed on Schumm’s Sioux Falls residence. Packages of methamphetamine, over $30,000 in cash, and a loaded handgun were located and seized.
This case was investigated by the Sioux Falls Police Department, the South Dakota Division of Criminal Investigation, and the U.S. Drug Enforcement Administration. Assistant U.S. Attorney John E. Haak prosecuted the case.
Schumm was immediately turned over to the custody of the U.S. Marshals Service.Shiprock Man Sentenced to More Than Fourteen Years for Conviction on Involuntary Manslaughte, Assault and Firearms ChargesRead the Press Release
ALBUQUERQUE – Clay O’Brien Mann, 29, an enrolled member of the Navajo Nation who resides in Shiprock, N.M., was sentenced this afternoon to 171 months in federal prison followed by three years of supervised release for his conviction on involuntary manslaughter, assault and firearms charges. Mann also was ordered to pay $40,003.00 in restitution to the victims of his crimes.
Mann’s sentence was announced by Acting U.S. Attorney Steven C. Yarbrough, Special Agent in Charge Carol K.O. Lee of the Albuquerque Division of the FBI, and Director John Billison of the Navajo Nation Division of Public Safety.
Mann was arrested in July 2010, on a criminal complaint alleging that he killed a Navajo man and assaulted another Navajo man and a Navajo woman with a dangerous weapon on the Navajo Indian Reservation, on July 24, 2010. Mann subsequently was indicted and charged with first degree murder, two counts of assault with a dangerous weapon with intent to do bodily injury, two counts of assault resulting in serious bodily injury, and three counts of discharging a firearm in furtherance of an act of violence. Proceedings in the case were delayed by competency proceedings.
Trial of the case began on July 8, 2013, and concluded five days later when the jury returned a verdict finding Mann not guilty on the first degree murder charge but guilty on the lesser included charge of involuntary manslaughter. The jury also found Mann guilty on two counts of assault resulting in serious bodily injury and two counts of discharging a firearm in furtherance of an act of violence. It acquitted Mann on two counts of assault with a dangerous weapon with intent to do bodily injury and the third firearms charge. The court subsequently vacated the conviction on one of the firearms counts.
The evidence at trial established that, at approximately 4:00 a.m. on July 24, 2010, an inebriated Mann drove his car to his neighbor’s property and launched an artillery shell into the neighbor’s property where the neighbor and his friends were socializing. When Ames Joseph Jim and another man and a woman walked over to see what was going on, Mann fired a semi-automatic rifle at them, shooting Mr. Jim in the face and heart, the other man in the face and the woman in the neck. Mr. Jim died as a result of his injuries and the other two victims were seriously injured.
This case was investigated by the Farmington office of the FBI and the Shiprock office of the Navajo Nation Division of Public Safety and was prosecuted by Assistant U.S. Attorney Presiliano A. Torrez.
Sean Michael Vaira Pleads Guilty in U.S. Federal CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Billings, on November 26, 2013, before U.S. Magistrate Judge Carolyn S. Ostby, SEAN MICHAEL VAIRA, a 30-year-old resident of Billings, pled guilty to possession with intent to distribute methamphetamine. Sentencing has been set for March 13, 2014. He is currently detained.
In an Offer of Proof filed by Assistant U.S. Attorney Joseph E. Thaggard, the government stated it would have proved at trial the following:
In early 2013, the Montana Division of Criminal Investigation (MDCI), the Drug Enforcement Administration (Drug Enforcement Administration), and Sidney Police Department began to investigate a drug trafficking network operating in Sidney and Fairview. That investigation revealed VAIRA was involved in the drug trafficking network;
On August 7, 2013, when interviewed by MDCI agents, VAIRA stated that, in approximately December 2012, he met a methamphetamine dealer based in Sidney.a VAIRA stated that between approximately late December 2012 or early January 2013 and mid-March 2013, he drove that drug dealer to meetings in Butte and Missoula at which the drug dealer obtained a total of approximately one and one-half pounds of methamphetamine and which the drug dealer then distributed in Big Timber and Sidney.
VAIRA stated that in approximately mid-April 2013, he obtained approximately seven grams of methamphetamine from a drug dealer in Fairview and distributed the methamphetamine.
VAIRA stated that, several days later, at the behest of that drug dealer, he drove to Butte and obtained one-half pound of methamphetamine. VAIRA stated he drove that methamphetamine to Sidney and distributed some of the drugs to the Fairview-based drug dealer and some of the drugs to others he knew in the Sidney area.
VAIRA stated that several days later, he drove to Butte and obtained another half-pound of methamphetamine, which he later distributed to the Fairview-based drug dealer and other drug dealers in the Sidney area.
VAIRA faces possible penalties of a mandatory minimum of 10 years in prison and could be sentenced to life, a $1,000,000 fine, and 3 years supervised release. .
Today's change of plea is a product of diligent work by the very dedicated agents who have been joined together under the banner of Project Safe Bakken. As the work of this team - which includes law enforcement professionals from all branches of local, state, and federal law enforcement - goes forward, the people of Montana and North Dakota can expect more cases from affected communities. That is the mission and commitment of Project Safe Bakken." said U.S. Attorney Michael W. Cotter.
This investigation was a part of Project Safe Bakken, which is a cooperative effort between the Drug Enforcement Administration (DEA), the Federal Bureau of Investigation (FBI), the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), the Bureau of Indian Affairs (BIA), the U.S. Border Patrol, the U.S. Marshals Service, the Environmental Protection Agency Criminal Investigation Division (EPA-CID), the Department of Homeland Security (DHS), the Montana Division of Criminal Investigation (MDCI), the Montana Highway Patrol, the North Dakota Bureau of Criminal Investigation (BCI), the Billings Police Department, the Yellowstone County Sheriff's Office, the Sidney Police Department, and the Idaho State Police.
Schenectady Man Charged with Receipt and Possession of Child PornographyRead the Press Release
Defendant Alleged to Have Received and Possessed
Approximately 600 Child Pornography FilesALBANY, NEW YORK – A two-count criminal complaint has been filed in the Northern District of New York charging HARRY GATES, age 47, of Schenectady, New York, with receipt and possession of child pornography, announced United States Attorney Richard S. Hartunian and Nicholas DiNicola, Assistant Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations.1 If convicted, GATES faces at least five years of imprisonment and up to twenty years of imprisonment on the receipt of child pornography charge and up to ten years of imprisonment on the possession of child pornography charge as well as a maximum fine of $250,000. GATES is held without bond pending his preliminary hearing which has been scheduled for December 10, 2013 at 1:30 p.m. before the Honorable Christian F. Hummel, United States Magistrate Judge.
According to the complaint, between February 2012 and November 22, 2013, GATES searched for and downloaded several hundred still image and video files of child pornography onto his home computer using the Internet and file sharing programs.
This case is being investigated by Homeland Security Investigations. This case is being prosecuted by Assistant United States Attorney Rick Belliss.
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1The charge is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
Rosebud Man Sentenced for Assaulting, Resisting, or Impeding Federal OfficersRead the Press Release
United States Attorney Brendan V. Johnson announced that a Rosebud, South Dakota, man convicted of Assaulting, Resisting, or Impeding Federal Officers was sentenced on November 25, 2013, by U.S. Magistrate Judge Mark A. Moreno.
Lawrence Gary, age 36, was sentenced to 90 days in custody with credit for time served and $25 to the Federal Crime Victims Fund.
Gary was indicted by a federal grand jury on June 12, 2013, and pled guilty to the charge on September 19, 2013.
The charge relates to an incident that occurred on July 25, 2012, when Rosebud Sioux Tribe Law Enforcement Officers responded to a complaint that the Defendant was driving while intoxicated. As a result, Gary was asked to step out of the car and perform sobriety tests. He refused to comply and the officers had to pull Gary from the car and place handcuffs on him. Gary was non-compliant, spun away from the officers, and lunged toward one of the officers before being restrained again and placed in a patrol car.
The investigation was conducted by the Rosebud Sioux Tribe Law Enforcement Services. The case was prosecuted by Assistant U.S. Attorney Marie H. Ruettgers.
Rosebud Man Sentenced for Assaulting, Resisting, or Impeding A Federal OfficerRead the Press Release
United States Attorney Brendan V. Johnson announced that a Rosebud, South Dakota, man convicted of Assaulting, Resisting, or Impeding a Federal Officer was sentenced on November 25, 2013, by U.S. Magistrate Judge Mark A. Moreno.
Anthony One Star, age 26, was sentenced to 60 days in custody and a $25 special assessment to the Federal Crime Victims Fund.
One Star was indicted for Assaulting, Resisting, Opposing, and Impeding a Federal Officer by a federal grand jury on September 17, 2013. He pled guilty on November 25, 2013.
The conviction stems from an incident in Mission on August 19, 2013, when One Star was intoxicated and walked into a home where he didn't belong. The home owner summoned law enforcement officers, and a Rosebud Sioux Tribe Law Enforcement Services Officer responded and found One Star sleeping on the kitchen floor. The officer awoke One Star, who apologized for being intoxicated but said that he just wanted to sleep, and he also indicated he was on probation and was not supposed to be drinking. The Officer attempted to take the One Star to jail for the violations, but One Star did not cooperate and he spat upon the officer.
This case was investigated by Rosebud Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Tim Maher prosecuted the case.
One Star was immediately turned over to the custody of the U.S. Marshals Service.
Ringleader Sentenced to 35 Years in Prison on Sex Trafficking ChargesRead the Press Release
Threatened to Assault Prostitutes and Competitor Pimps, and Made Death Threats to Protect and Maintain Prostitution Businesses in Annapolis and Easton
Baltimore, Maryland – U.S. District Judge William D. Quarles, Jr. sentenced German de Jesus Ventura, age 35, a citizen of El Salvador and an illegal alien residing in Capitol Heights, Maryland, to 35 years in prison, followed by five years of supervised release, for conspiring to transport and entice females to travel interstate for prostitution; transporting females for prostitution; enticing females to travel interstate for prostitution; sex trafficking by force, fraud and coercion; and possessing a gun in furtherance of sex trafficking.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Chief Michael Pristoop of the Annapolis Police Department; and Easton Police Department Chief David A. Spencer.
“Since 2008, HSI Baltimore special agents have been investigating the illicit activities of German Ventura’s brothel organization, which operated in Maryland, the District of Columbia, Virginia and New York,” said William Winter, special agent in charge of HSI Baltimore. “As a result of this investigation, a total of five individuals were arrested for federal violations and 14 were arrested for state violations. This sentencing sends a message that HSI and other law enforcement members of the Maryland Human Trafficking Task Force are committed to working together to investigate human trafficking and combating the violence that sex trafficking organizations are bringing to our communities, as well as working with our local non-governmental, community-based and faith-based organizations to identify, rescue and assist victims of trafficking.”
According to evidence presented during his two week trial, since at least March 2008 through November 2010, Ventura and Kevin Garcia Fuertes ran brothels in Annapolis and Easton, Maryland. Ventura, the ringleader, employed Fuertes to advertise and manage the brothels, and the two men shared the cash proceeds of the prostitution business. The defendants recruited and employed prostitutes, many of whom were aliens present in the U.S. unlawfully. Ventura arranged for vans and other vehicles to transport females within Maryland and across state lines to engage in prostitution. Ventura assaulted and threatened to use violence against one prostitute to coerce her continued participation in prostitution, from which Fuertes financially benefitted.
Ventura and Fuertes also threatened to use violence against competitor pimps. On August 3, 2010, Ventura used a cell phone to send three threatening multi-media messages depicting a semi-automatic pistol, the pistol’s magazine and an angel of death statue to a competitor pimp. On November 3, 2010, Ventura arranged for the assault of a competitor pimp with a pistol grip shotgun. In addition to these threats, Ventura reported criminal activity of the pimps in order to divert the attention of law enforcement and facilitate his own prostitution activities. On March 13, 2010, Ventura falsely reported a kidnaping and rape to the police in order to falsely implicate another pimp with the crimes. Ventura also claimed responsibility for the murder of competitor pimp Ricardo Ramirez Riva on September 13, 2008, in order to intimidate the competition, as well as his own employees and prostitutes.
Ventura also sought to intimidate members of the community who assisted his prostitutes. On September 1, 2009 Ventura called and threatened to kill a family who provided temporary housing to one of his prostitutes after she was arrested. He also poured gasoline on their apartment door and smashed windows from their vehicle.
On July 7, 2010, law enforcement executed a search warrant at one of Ventura’s brothels located at 318 E. Dover Street in Easton and arrested Isidro Jimenez-Sanchez and Wibert Herrera-Aranda who were working at the brothel.
On September 10, 2013, Judge Quarles sentenced Kevin Garcia Fuertes, a/k/a Kerlin Esquivel-Feuntes, age 26, a citizen of Honduras and an illegal alien residing in Annapolis, Maryland, and Richmond, Virginia, to 19 years in prison. Fuertes was also convicted at trial of the conspiracy and sex trafficking charges.Jose Antonio Reyes-Maradiaga, age 30; Isidro Jiminez-Sanchez and Wibert Alejandro Herrera-Aranda, both age 34, of Easton, Maryland, previously pleaded guilty to their participation in the scheme. These defendants advertised Ventura’s brothels, made appointments for the prostitutes and collected money. Reyes also helped to transport the women to the brothel locations, and purchased supplies. Jiminez-Sanchez, a Mexican citizen who entered the United States illegally, was sentenced to a year and day for transporting prostitutes, and upon completion of his sentence, was deported from the U.S. to Mexico. Herrera-Aranda was sentenced to 18 months in prison and Reyes was sentenced to time served. Both were also deported.
This case originated with the Annapolis Police Department and was subsequently investigated by members of the Maryland Human Trafficking Task Force formed in 2007 to discover and rescue victims of human trafficking while identifying and prosecuting offenders. Members include federal, state and local law enforcement, as well as victim service providers and local community members. For more information about the Maryland Human Trafficking Task Force, please visit www.justice.gov/usao/md/Human-Trafficking/index.html.
United States Attorney Rod J. Rosenstein praised the Annapolis and Easton Police Departments and HSI Baltimore for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys P. Michael Cunningham and Rachel M. Yasser, who prosecuted the case.
Richmond Man Pleads Guilty to Investment FraudRead the Press Release
Novmber 26, 2013RICHMOND, Va. –Stephen Maurice Burks, 64, of Richmond, Va., pleaded guilty today to Mail Fraud, involving a $1.2 million investment scheme.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia, made the announcement after the plea was accepted by United States Magistrate Judge M. Hannah Lauck.
Burks was indicted on August 20, 2013, by a federal grand jury. He faces a maximum penalty of 20 years of imprisonment when he is sentenced by Senior United States District Court Judge Robert E. Payne on February 20, 2014.
In a statement of facts filed with the plea agreement, Burks admitted to acting as the Chief Executive Officer of Chelsea Financial Group, LLC (CFG), which operated from locations in Maryland and Richmond, Virginia. Burks admitted that from at least as early as January 2008 through January 2013, both individually and through CFG, he offered and sold investments in several different investment schemes. These schemes included, but were not limited to: Forex (foreign currency exchange) trading; stock market investments; oil investments; payday lending franchises; and group homes. Burks admitted that he made material misrepresentations and omissions to investors about his background, including false claims that he was an investment professional, registered investment advisor, and commodities trading advisory. Burks also failed to disclose to investors that he was a convicted felon. Throughout all of the various schemes, Burks obtained at least $1.2 million in investor funds and failed to disclose that he retained at least 25% of funds for personal and/or non-investment-related use.
This case was investigated by the United States Postal Inspection Service, Federal Bureau of Investigation, and Internal Revenue Service – Criminal Investigative Division, with significant assistance from the U.S. Commodities Futures Trading Commission, Virginia State Corporation Commission, and the U.S. Department of State, Diplomatic Security Service. Assistant United States Attorney Jessica D. Aber is prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Providence Felon Detained on Federal Drug and Firearm ChargesRead the Press Release
PROVIDENCE, R.I. – Darren Monteiro, 26, of Providence, has been ordered detained in federal custody on drug and firearm charges following an investigation into Monteiro’s alleged drug trafficking activities by the Providence Police Department’s Narcotics and Organized Crime Bureau, with the assistance of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), announced United States Attorney Peter F. Neronha, Providence Police Chief Hugh T. Clements, Jr., and Daniel J. Kumor, Special Agent in Charge of ATF’s Boston Field Division.
According to an affidavit in support of a federal criminal complaint and arrest warrant filed with the U.S. District Court, it is alleged that on four occasions, between November 8 and November 19, 2013, Monteiro sold packets of heroin for $40 each to an undercover Providence Police detective. In addition, it is alleged that Monteiro arranged with the undercover detective to purchase a firearm and ammunition he allegedly intended to use to commit an armed robbery. Monteiro was arrested on November 21, 2013, moments after he allegedly took possession of a semi-automatic handgun and ammunition.
Monteiro, who was ordered detained on Friday by U.S. District Court Magistrate Judge Lincoln D. Almond, is charged by way of a criminal complaint with four counts of heroin distribution and one count each of possession with the intent to distribute heroin, being a felon in possession of a firearm and possession of a firearm in furtherance of a drug trafficking crime of violence.
A criminal complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
If convicted as charged, Monteiro faces statutory penalties of up to 20 years imprisonment followed by a minimum of 3 years up to lifetime supervised release and a fine of up to $2,000,000 on each count of heroin distribution; up to 20 years imprisonment followed by a minimum of 3 years up to lifetime supervised release and a fine of up to $2,000,000 for possession with the intent to distribute heroin; up to 10 years imprisonment followed by up to 3 years supervised release and a fine of up to $250,000 for being a felon in possession of a firearm; and a sentence of 5 years to life imprisonment, to be served consecutive to all other sentences imposed, followed by up to 3 years supervised release and a fine of up to $250,000 for possession of a firearm in furtherance of a drug trafficking crime of violence.
The case is being prosecuted by Assistant U.S. Attorney Milind M. Shah.
To assist the media and the public, a glossary of federal judicial terms and procedures is available at http://www.justice.gov/usao/justice101/
Contact: 401-709-5357
[email protected]Pocatello Man Pleads Guilty to Assaulting an Officer on the Fort Hall Indian ReservationRead the Press Release
POCATELLO – Lyle Plentywounds, Sr., 58, of Pocatello, Idaho, pleaded guilty today in United States District Court to assaulting an officer, U.S. Attorney Wendy J. Olson announced.
According to the plea agreement, on May 2, 2013, a Fort Hall Police officer responded to a report that Plentywounds was intoxicated and creating a disturbance at a residence on the reservation. After making contact and determining that Plentywounds was in fact intoxicated, the officer attempted to gain entry to the residence but was blocked by the defendant. Plentywounds told the officer he was a martial artist and an ex-convict and that he “hated cops. He then kicked the officer in the chest. When the officer attempted to arrest him, Plentywounds struck him in the face with his hand.
The charge of assault on an officer is punishable by up to eight years in prison, a maximum fine of $250,000, and up to three years of supervised release.
Plentywounds is scheduled to be sentenced on February 18, 2014, before Chief U.S. District Judge B. Lynn Winmmill at the federal courthouse in Pocatello.
The case was investigated by the Fort Hall Police Department.
Phoenix Man Found Guilty of Conspiring to Distribute Methamphetamine and HeroinRead the Press Release
DES MOINES, IA - On November 26, 2013, Ismael Corrales Portillo, a 42 yearold resident of Phoenix, Arizona, was found guilty of conspiracy to distribute 500 grams or more of methamphetamine, and one kilogram or more of heroin; possession with intent to distribute 500 grams or more of methamphetamine; and possession with intent to distribute one kilogram or more of heroin, announced Nicholas A. Klinefeldt, U.S. Attorney for the Southern District of Iowa. The trial was presided over by United States District Court Judge John A. Jarvey. All three charges carry a potential sentence of up to life in prison, a fine up to $10 million, and at least five years of supervised release. All three charges also carry a mandatory minimum sentence of ten years in prison. A sentencing date has not yet been set.
The evidence produced at trial showed that Corrales Portillo worked together with his brother, Jose Corrales Portillo, to transport from Phoenix, Arizona, approximately three pounds of methamphetamine and seventeen pounds of heroin. On July 13, 2013, the brothers stopped in Des Moines, Iowa to deliver three pounds of methamphetamine.
While in Des Moines, the Narcotics Section of the Des Moines Police Department conducted an operation that resulted in the seizure of the heroin and methamphetamine, which were concealed inside the gas tank of a vehicle.
Jose Corrales Portillo pled guilty on November 20, 2013, and the sentencing proceeding is scheduled for March 27, 2014.
The investigation was conducted by the Des Moines, Iowa, Police Department, with assistance from the Drug Enforcement Administration and the Mid-Iowa Narcotics Enforcement Task Force. The case was prosecuted by the U.S. Attorney's Office for the Southern District of Iowa.
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Panama City Woman Sentenced for Theft of Government FundsRead the Press Release
TALLAHASSEE, FLORIDA– Selena Noblit, 43, of Panama City, Florida, was sentenced today by U.S. District Judge Robert L. Hinkle to a one-year term of probation, 192 hours of community service, and a $100 special monetary assesment for the theft of over $11,000 in government funds belonging to the Apalachicola Housing Authority.
The defendant pleaded guilty June 4, 2013, to a charge of theft of government funds. Noblit was charged after an investigation and audits conducted by the U.S Department of Housing and Urban Development (HUD) and the Apalachicola Housing Authority (AHA), which revealed that from June 2011 through May 2012, she had improperly used a government credit card for personal purchases of more than $11,000. The purchases included charges for clothing, auto repairs, personal travel, and food, none of which were authorized or for business expense. The credit card bill, including the defendant’s personal purchases, was then paid from HUD federal funds allocated to the AHA.
The case was prosecuted by Assistant U.S. Attorney Eric Mountin.
Oregon Man Sentenced for Conspiracy and Possession with Intent to Distribute A Controlled SubstanceRead the Press Release
United States Attorney Brendan V. Johnson announced that a Bend, Oregon, man convicted of Conspiracy and Possession with Intent to Distribute a Controlled Substance was sentenced on November 25, 2013, by U.S. District Judge Roberto A. Lange.
Glenn Shea, age 21, was sentenced to two years of probation with four months home confinement concurrent on each count, a $1,000 fine on each count, and a $100 special assessment to the Federal Crime Victims Fund on each count.
Shea was indicted for the above charges by a federal grand jury on March 13, 2013. He pled guilty on November 25, 2013.
Between September 1, 2012 and September 15, 2012, Shea, along with two others, transported several pounds of marijuana for distribution. Shea was aware that the vehicle he traveled in contained marijuana and shared in the proceeds of the sale.
This case was investigated by the Northern Plains Safe Trails Drug Enforcement Task Force. Assistant U.S. Attorney Jay Miller prosecuted the case.
New York Man Sentenced in Manhattan Federal Court to Three Months in Prison for Exporting High-Grade Carbon Fiber to ChinaRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that PETER GROMACKI, a U.S. citizen, was sentenced in Manhattan federal court to three months in prison for exporting high-grade carbon fiber to China. GROMACKI pled guilty in July 2013 before United States District Judge Edgardo Ramos to one count of conspiracy to violate the International Emergency Economic Powers Act (“IEEPA”), one count of violating the IEEPA, and one count of making false statements. Judge Ramos also imposed today’s sentence.
According to the Indictment, statements made during GROMACKI’S guilty plea proceeding, and the Government’s sentencing submission:
From at least 2006 through 2012, GROMACKI conspired to transship carbon fiber from the United States to China, including a shipment of U.S.-made, high-grade T-700 carbon fiber. T-700 carbon fiber has applications in aerospace and nuclear engineering. High-grade carbon fiber is particularly well-suited for gas centrifuges used for uranium enrichment.
In order to evade United States restrictions on export of this type of carbon fiber to China, GROMACKI enlisted the help of co-conspirators in Europe and China and made false statements on U.S. customs forms.
GROMACKI, 54, resides in Orange County, New York.
Mr. Bharara praised the investigative work of the New York Offices of the Federal Bureau of Investigation; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and the Office of Export Enforcement, Bureau of Industry and Security, of the U.S. Department of Commerce. Mr. Bharara also thanked the U.S. Department of Justice’s National Security Division.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Jason P.W. Halperin and Andrea L. Surratt are in charge of the prosecution.
Nashville Gang Member Convicted of Drug Trafficking and Firearms Offenses Near Elementary SchoolRead the Press Release
Christopher Ray Moody, 29, of Nashville, Tenn., was found guilty yesterday by a federal jury of multiple drug trafficking and firearms offenses, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Moody’s crimes were committed from 2008 – 2011 and many were committed in and around specially protected areas around schools and public housing.
“This case is an example of an individual who apparently has no intention of turning away from a lifestyle of crime, as evidenced by his plans to continue dealing drugs after being released from jail,” said U.S. Attorney David Rivera. "The defendant faces a substantial sentence that, if imposed, should reduce the threat of drug dealing and illegal gun possession in this community."
According to the proof at trial, Moody was a street gang member and repeatedly cooked multiple ounces of crack cocaine for distribution at a residence near Jones Paideia Elementary School, in Nashville. Moody kept firearms at this location, including a compact semi-automatic style firearm which he had previously obtained in a drug transaction.
Moody was arrested on unrelated state charges in April 2009. While he was incarcerated on these charges, investigators determined that Moody had instructed his girlfriend to hold his drugs and a gun for him so that he could start drug trafficking again when he completed his state sentence. Moody was released from custody in May 2010 and the evidence showed he went back to drug trafficking at the same residence.
A federal search warrant was issued in February 2011 and resulted in the Moody’s arrest, as well as the seizure of evidence showing that he cooked crack cocaine. Shotgun shells were also found at the home and the trial proof showed that Moody possessed a shotgun at that location during drug deals. Moody was also a previously convicted felon, and was found to be illegally in possession of firearms and ammunition.
Moody will be sentenced on February 14, 2014, by Chief Judge William Haynes, Jr. Because of Moody’s prior felony record involving multiple drug trafficking felonies and a robbery-related conviction, he is exposed to a sentence of up to life in prison. The investigation was conducted by the FBI and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant U.S. Attorneys Sunny A.M. Koshy and Lynne T. Ingram represented the United States.
Mission Man Indicted on Assault ChargesRead the Press Release
United States Attorney Brendan V. Johnson announced that a Mission, South Dakota, man has been indicted by a federal grand jury for Assault with a Dangerous Weapon and Assault Resulting in Serious Bodily Injury.
Celso Estrada, Jr., age 49, was indicted on November 19, 2013. He appeared before U.S. Magistrate Judge Mark A. Moreno on November 25, 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, 3 years of supervised release, and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
Estrada is accused of stabbing two people at an apartment complex in Mission on November 16, 2013. The charges are merely accusations and Estrada is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Federal Bureau of Investigation and the Rosebud Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Tim Maher is prosecuting the case.
Estrada was remanded to the custody of the U.S. Marshals Service pending trial. A trial date has not been set.
McLaughlin Woman Sentenced for Assaulting, Resisting and Impeding A Federal OfficerRead the Press Release
United States Attorney Brendan V. Johnson announced that a McLaughlin, South Dakota, woman convicted of Assaulting, Resisting and Impeding a Federal Officer was sentenced on November 21, 2013, by U.S. Magistrate Judge William D. Gerdes.
Rhonda Brown, age 41, was sentenced to four months, 1 year of supervised release and a $25 special assessment to the Federal Crime Victims Fund.
Brown was indicted for the above charge by a federal grand jury on July 17, 2013. She pled guilty to a Superseding Information on November 21, 2013.
The conviction stems from an incident occurring on July 10, 2013, in which Brown’s car was stuck in a ditch. When law enforcement arrived, she became belligerent and fled the scene. A Bureau of Indian Affairs Officer Lieutenant located Brown in a field, but Brown ignored his commands and began to run away. The Lt. gave pursuit on foot and after a short chase, caught up to Brown who was lying face down with her hands underneath her. He ordered Brown to place her hands behind her back, but she continued to resist. The Lt. then grabbed Brown’s elbow, and she rolled on her left side, exposing a knife in her right hand. After several failed attempts to get Brown to comply, the Lt. deployed his taser, striking Brown on the shoulder.
The investigation was conducted by the Bureau of Indian Affairs. Assistant U.S. Attorney Troy R. Morley prosecuted the case.
Man Who Stole Expensive Jewelry and Sold It to Las Vegas Shops Sentenced to Two Years in PrisonRead the Press Release
LAS VEGAS – A man who stole hundreds of thousands of dollars of expensive jewelry from persons at golf courses and sold it at trade shows, jewelry stores and pawn shops, has been sentenced to two years in prison, three years of supervised release, and ordered to pay $300,895 in restitution, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Jeffrey Cochran, 47, of Las Vegas, was sentenced on Monday, Nov. 25, 2013, by U.S. District Judge Jennifer A. Dorsey. Cochran pleaded guilty in July to two counts of possession and sale of stolen goods. He must self-report to prison by Feb. 25, 2014.
The case was investigated by the FBI and the Las Vegas Metropolitan Police Department Special Investigations Section, and was part of a federal and local law enforcement effort to combat organized retail theft. The case was prosecuted by Assistant United States Attorney Christina M. Brown.
From about Sept. 15, 2010, to March 10, 2012, Cochran stole expensive jewelry, particularly Tag Heuer and Rolex watches, from individuals at golf courses in other states and transported the goods to Las Vegas for sale at jewelry and pawn stores. Cochran also stole jewelry from individuals at golf courses in Las Vegas and transported the stolen jewelry to other states to sell at trade shows and jewelry and pawn stores.Man Sentenced for Bribing Federal OfficialRead the Press Release
ATLANTA – Hakeem Omar has been sentenced on charges arising out of a scheme to bribe an immigration official.
“Many dream of obtaining their United States citizenship and pursue that dream lawfully,” said United States Attorney Sally Quillian Yates. “This defendant attempted to subvert the immigration process by offering bribes to a federal agent. Now, after paying thousands of dollars in bribes, he is headed to prison and has been stripped of his fraudulently obtained citizenship.”
“Quite simply, America's immigration system is not for sale," said David P. D’Amato, special agent in charge of ICE’s Office of Professional Responsibility (OPR) for the Southeast Region. "OPR works closely with partners like the U.S. Attorney’s Office to ensure that those who seek to compromise the integrity of our nation's legal immigration system pay a price for their crimes."
According to United States Attorney Yates, the charges and other information presented in court: Beginning in September 2010, and continuing until at least July 2012, Omar and co-defendant Ibrahim Barrie paid a series of bribes to a special agent with the Department of Homeland Security who was working undercover. Over a two-year period, Omar paid thousands of dollars to the undercover special agent for what he believed was assistance with his immigration status in the United States, including obtaining United States citizenship through naturalization.
Hakeem Omar, 31, of Atlanta, Ga., was sentenced by United States District Judge Steve C. Jones to two years in federal prison and was stripped of his fraudulently obtained United States citizenship. He will serve three years of supervised release following his prison term and will be turned over to a duly-authorized immigration official for appropriate removal proceedings.
Omar is the second conspirator to be sentenced in this case. On October 21, 2013, co-conspirator Ibrahim Barrie, 32, of Atlanta, Ga., was sentenced to 24 months in prison. Upon completion of his sentence, Barrie will be turned over to a duly-authorized immigration official for appropriate removal proceedings.
This case was investigated by Special Agents of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.Assistant United States Attorney Skye Davis prosecuted the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.
Mahomet Man Sentenced to 15 Years in Prison for Child PornographyRead the Press Release
Urbana, Ill. – A Mahomet, Ill., man, Michael L. Denight, 59, has been ordered to serve 15 years in federal prison for photographing minor-aged victims and possession of child pornography. U.S. District Judge Michael P. McCuskey sentenced Denight on Nov. 25, 2013. Denight was also ordered to remain on supervised release for the remainder of his life following completion of his prison sentence. Denight has been detained in the custody of the U.S. Marshals Service since his arrest on federal charges in early 2012.
On May 17, 2013, Denight pled guilty to six counts of sexual exploitation of a minor and one count of possession of child pornography. Denight admitted that he had video-recorded minors in the bathrooms of his home beginning in 2000 and continuing through 2007.
According to court documents, the investigation began after a customer at a Champaign coffee shop reported to an employee that she believed there was a video recording device mounted in the ladies’ restroom. A man, later identified as Denight, was observed approaching the ladies’ restroom and then quickly leaving the coffee shop. When the customer and employee entered the restroom, the device was gone, and the man had left behind several personal items, including a cell phone, at the coffee shop. The cell phone was provided to the Champaign Police Department. At the time of his arrest, on Feb. 17, 2012, Denight was employed by the U.S. Army Corps of Engineers, Construction Engineering Research Laboratory, in Champaign.
The charges were investigated by the Champaign Police Department and the U.S. Immigration and Customs Enforcement (ICE) Office of Homeland Security Investigations (HSI). The case was prosecuted by the U.S. Attorney’s Office, Central District of Illinois, Urbana Division, with the cooperation of the Champaign County State’s Attorney’s Office.
The case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Lubbock Man Admits Producing Child PornographyRead the Press Release
LUBBOCK, Texas — Nicholas Lee Blair, 31, appeared yesterday afternoon before U.S. District Judge Sam R. Cumming and pleaded guilty to an indictment charging one count of production of child pornography. Blair, who is in custody, faces a statutory penalty of not less than 15 years or more than 30 years in federal prison, up to a $250,000 fine and up to a lifetime of supervised release. Judge Cummings ordered a presentence investigation report with a sentencing date to be set after the completion of that report. The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
According to the factual resume filed in the case, on or about December 25, 2012, when he resided in Lubbock, Texas, Blair persuaded a minor female, “Jane Doe,” to engage in sexually explicit conduct while he used his cellphone camera, aimed at her while she was in the bathroom of his home, to record a video of her.
The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 2006 by the Department of Justice, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/. For more information about Internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”
The investigation is being conducted by the Lubbock Police Department and the FBI. Assistant U.S. Attorney Steven M. Sucsy is in charge of the prosecution.
Lincoln Man Sentenced for Conspiracy to Distribute MethamphetamineRead the Press Release
On November 26, 2013, Ricardo Omar Hernandez, 37, of Lincoln, was sentenced to 27 years in federal prison for conspiracy to distribute methamphetamine between January of 2011 and February 23, 2013. Hernandez was ordered to serve 10 years of supervised release following the prison term, and he was also ordered to forfeit $12,914 in cash to the United States of America. Hernandez was convicted by a federal jury on August 29, 2013.
Witnesses testified at trial that Hernandez was involved in distributing methamphetamine in the Lincoln, Beatrice, and Omaha areas. On February 23, 2013, a search warrant was served by the Lincoln Police Department at his Lincoln apartment. During that search, officers found 17.41 grams of methamphetamine which was determined to be at least 95% pure along with $12,914 in cash.
The matter was investigated by the Lincoln/Lancaster County Narcotics Task Force, the Nebraska State Patrol, and the Federal Bureau Investigation, (FBI).
Las Cruces Man Sentenced to Fifteen in Years in Federal Prison for Being an Armed Career CriminalRead the Press Release
ALBUQUERQUE – Christopher Albert Apalategui, 45, of Las Cruces, N.M., was sentenced earlier today to 15 years in federal prison followed by five years of supervised release for his conviction for being a felon in possession of a firearm and ammunition. Apalategui received an enhanced sentence because of his status as an armed career criminal.
Apalategui’s sentence was announced by Acting U.S. Attorney Steven C. Yarbrough, 3rd Judicial District Attorney Mark D’Antonio, Special Agent in Charge Bernard J. Zapor of the Phoenix Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives, and Doña Ana County Sheriff Todd Garrison.
Acting U.S. Attorney Steven C. Yarbrough said that Apalategui was prosecuted as part of a federal anti-violence initiative that targets “the worst of the worst” offenders for federal prosecution. Under this initiative, the U.S. Attorney’s Office and federal law enforcement agencies work with New Mexico’s District Attorneys and state, local and tribal law enforcement agencies to target violent or repeat offenders for federal prosecution with the goal of removing repeat offenders from communities in New Mexico for as long as possible.
Apalategui was arrested in May 2012, on a federal criminal complaint charging him with being a felon in possession of a firearm and ammunition. He subsequently was indicted on that same charge in Nov. 2012. According to court filings, Apalategui was unlawfully in possession of a firearm and ammunition on April 8, 2012, in Doña Ana County, N.M. At the time, Apalategui was prohibited from possessing firearms or ammunition because he previously had been convicted of several felony offenses, including burglary in Oregon and burglary, aggravated robbery and illegal possession of firearms in Arizona.
Court filings reflect that, in the early hours of April 8, 2012, Doña Ana County Sheriff’s deputies executed a traffic stop of a vehicle driven pulled Apalategui after learning that there was an outstanding arrest warrant for the registered owner of the vehicle. The deputies determined that Apalategui was not the owner of the vehicle, but arrested Apalategui after learning that there were three outstanding warrants for his arrest. During an inventory search of the vehicle, the deputies found a loaded .45 caliber handgun with a 10-round clip in a gun box and two plastic baggies containing a substance later determined to be heroin.
Apalategui was prosecuted by federal authorities on firearms charges and by state authorities on a heroin possession charge. In Sept. 2012, Apalategui pled guilty to a possession of a controlled substance charge in the 3rd Judicial District Court for the State of New Mexico, and is scheduled for sentencing on Dec. 3, 2013.
"Our partnership with the U. S. Attorney’s Office is integral to reducing the violence in southern New Mexico. It is imperative to remove armed felons from our community," said 3rd Judicial District Attorney Mark D’Antonio.
Special Agent in Charge Bernard J. Zapor of the Phoenix Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives, said, “Today’s sentencing of Apalategui should serve as a harsh reminder to habitual criminals that gun crime will equal hard time. ATF will not tolerate the illegal possession of firearms by prohibited persons. I want to commend Acting U.S. Attorney Yarbrough and Doña Ana County Sheriff Todd Garrison for their partnership and support.”“Today’s sentencing reinforces the efforts of all law enforcement to work together for a common cause – to remove threats in our communities who clearly cannot function in society and obey the law,” said Doña Ana County Sheriff Todd Garrison. “Hopefully this send a message that in New Mexico, career criminals will be put out of business and in Doña Ana County, we will continue to do our part to ensure that.”
This case was investigated by the Las Cruces office of the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Doña Ana County Sheriff’s Office and was prosecuted by Assistant U.S. Attorney Luis A. Martinez of the U.S. Attorney’s Las Cruces Branch Office.
Judge Sentences Woman in Smuggling Scheme That Left A Man DeadRead the Press Release
HOUSTON – Demi Mishel Muniz has been ordered to prison for more than seven years following her conviction of conspiracy to transport and harbor aliens resulting in the death of a 38-year-old illegal alien from Mexico, United States Attorney Kenneth Magidson announced today. A Houston federal jury returned a guilty verdict against Muniz following a three-day trial on Thursday, Jan. 31, 2013.
Today, U.S. District Judge Lee H. Rosenthal, who presided over the trial, handed the Los Angeles, Calif., resident a term of 85 months in federal prison. At the hearing, further evidence was provided including that had the victim received proper and timely medical care, he likely would have survived. The judge also found that the Muniz obstructed justice by lying about her role in the offense to federal agents and also to the jury during her trial testimony. Muniz will also serve a three-year-term of supervised release following completion of her prison term.
During trial, testimony revealed that on Aug. 18, 2010, the Oldham County Sheriff’s Office was notified there was a body on the side of Interstate 40 outside of Vega, approximately 20 miles west of Amarillo. The identity of the deceased was discovered following receipt of an inquiry from the alien’s son.
The deceased was in the process of being smuggled from Mexico into the United States, being transported from Houston to Los Angeles. During the course of the journey, Muniz contacted the wife of the deceased and provided a bank account number for the deposit of $650 in smuggling fees. Subsequently, Muniz contacted the wife again and informed her he was ill. The wife told Muniz her husband was a diabetic and required insulin and requested he be taken to a hospital. Muniz refused and stated she had other people in the van and had to keep moving. A few hours later, the wife was called and told not to deposit the money into the bank account because her husband had been “left behind.”
An autopsy on the body of the deceased determined he had died of a combination of pneumonia and diabetes. A co-defendant testified Muniz and others were heavily involved in alien smuggling and that during the course of the trip Muniz refused to provide help to the deceased.
The bank accounts of Muniz were extensively reviewed and it was determined that approximately $84,000 in the account was derived from unknown sources. Agents determined many of the deposits were from various other states and that this was a characteristic consistent with alien smuggling operations.
Although Muniz previously said she was not involved in the smuggling venture and was not in the van with the deceased, Muniz elected to testify in the trial and admitted to being in the van, but said she did not know the aliens were illegal. She further denied having talked to the widow and also denied being told the deceased was diabetic and required insulin. The jury disagreed and found her guilty.
The case was investigated by the Oldham County Sheriff’s Office, Texas Rangers, Texas Department of Public Safety and Homeland Security Investigations. Assistant United States Attorneys Julie Searle and Douglas Davis prosecuted the case.
Iowa Man Sentenced in Methamphetamine CaseRead the Press Release
United States Attorney Brendan V. Johnson announced that a Paullina, Iowa, man convicted of Distribution of a Controlled Substance was sentenced on November 25, 2013, by U.S. District Court Judge Karen E. Schreier.
Dustin William Coates, a/k/a “DC,” age 27, was sentenced to 108 months in custody and four years of supervised release. He was also ordered to pay a $100 special assessment to the Federal Crime Victims Fund.
Coates was indicted by a federal grand jury on March 6, 2013. He pled guilty on September 3, 2013.
On January 23, 2013, Coates agreed to sell methamphetamine to a drug customer. Unknown to Coates, the customer had begun to cooperate with law enforcement. Later the same day, Coates and the customer met in the parking lot of a Sioux Falls business where Coates sold him over 50 grams of methamphetamine for $3,800. Law enforcement recorded the transaction.
This case was investigated by the South Dakota Division of Criminal Investigation and the U.S. Drug Enforcement Administration. Assistant U.S. Attorney John E. Haak prosecuted the case.
Coates was immediately turned over to the custody of the U.S. Marshals Service.Illegal Alien Sentenced for Passport Fraud, False Claim of U.S. Citizenship and Aggravated Identity TheftRead the Press Release
An illegal alien who attempted to obtain a U.S. passport using fraudulent and illegally obtained documents was sentenced November 25, 2013, to three years in federal prison.
Eduardo Rodriguez-Ayala, age 39, a citizen of Mexico, living in Waterloo, Iowa, received the prison term after an August 14, 2013, jury verdict finding him guilty of one count of unlawful possession of an identity document, one count of making false statements in a passport application, two counts of making a false claim of United States citizenship, and two counts of aggravated identity theft.
The evidence at trial showed that on August 10, 2012, Rodriguez-Ayala, claiming to be a U.S. citizen, used a fraudulent Arizona birth certificate in his brother=s name to obtain an Iowa identification card and to register to vote. Three days later, on August 13, 2012, Rodriguez-Ayala used the falsely procured Iowa identification card and the fraudulent birth certificate to apply for a U.S. passport. Rodriguez-Ayala later gave a false name and date of birth to State Department agents investigating the passport application. Rodriguez-Ayala eventually admitted he used false documents and his brother=s identity to apply for the U.S. passport.
Rodriguez-Ayala was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Rodriguez-Ayala was sentenced to 36 months’ imprisonment. A special assessment of $600 was imposed. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Rodriguez-Ayala is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Daniel C. Tvedt and was investigated by agents from the United States Department of State and the Department of Homeland Security, Immigration and Customs Enforcement.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is CR 13-2009.
Guilty Plea from Nevada Man Arrested in Seattle with Stolen Truck, Weapons and Homemade ExplosivesRead the Press Release
A 22-year-old man who was arrested in July 2013 by University of Washington Police in a stolen truck with stolen firearms, body armor and gasoline incendiary devices, pleaded guilty today in U.S. District Court in Seattle, announced U.S. Attorney Jenny A. Durkan. JUSTIN MILES JASPER pleaded guilty to transportation of a stolen vehicle, possession of a stolen firearm and possession of destructive devices. He is scheduled for sentencing by U.S. District Judge Ricardo S. Martinez on February 20, 2014.
JASPER was arrested on July 3, 2013 near the UW campus in Seattle. He was driving a 1998 Dodge Ram 2500 pick-up truck with Montana plates. The truck had been reported stolen by the owner in Butte, Montana. Inside the truck police found a Stevens Model 311A double-barrel 12-gauge shotgun, with no serial number, and a Mauser Model 1895 bolt-action rifle. Both guns had been stolen from the same owner as the truck. According to the plea agreement, the truck also contained six destructive devices commonly referred to as “Molotov cocktails.”
Under the terms of the plea agreement, both the prosecution and defense will recommend a sentence of three years in prison and three years of supervised release. Both sides will recommend that Judge Martinez require mental health counseling while JASPER is on supervised release and will recommend the Bureau of Prisons place JASPER at a facility with mental health treatment while he is incarcerated.
The case is being investigated by the FBI, the UW Police Department, and the Seattle Police Department. The case is being prosecuted by Assistant United States Attorney Todd Greenberg.
Get Away Driver in Armed Robbery Spree Exiled to over 15 Years in PrisonRead the Press Release
Gun Brandished In Each of the 22 Robberies and a Customer Shot In One of the Robberies
Baltimore, Maryland – U.S. District Judge Ellen L. Hollander sentenced Rico Bias, age 34, of Baltimore, Maryland, today to 185 months in prison, followed by three years of supervised release, for a series of armed commercial robberies committed from January through June, 2012.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Baltimore City State’s Attorney Gregg L. Bernstein; Chief James W. Johnson of the Baltimore County Police Department; and Baltimore Police Commissioner Anthony W. Batts.
According to Bias' plea agreement, from January 22, 2012 through June 11, 2012, Bias conspired with Hatratico Smith, Monzell Lee and others, to commit 22 robberies of convenience stores, fast food restaurants, and other businesses. Smith brandished a gun during the robberies, and on two occasions fired the gun, with one resulting in the shooting of a customer on February 21, 2012. Bias admitted that in addition to checking out the stores prior to his codefendants entering the businesses to commit the robberies, he obtained and drove the get away car in each of the robberies. The defendants have been in federal custody since their arrests.
Hatratico Smith, age 48, and Monzell Lee, age 20, both of Baltimore, pleaded guilty to their roles in the robberies. Lee was sentenced to nine years in prison for the four robberies in which he participated. Smith is scheduled to be sentenced on January 14, 2014, at 10:00 a.m.
United States Attorney Rod J. Rosenstein commended the FBI, Baltimore Police Department, Baltimore County Police Department and Baltimore City State’s Attorney's Office for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney A. David Copperthite, who prosecuted the case.
Founder and Leader of Newburgh Latin Kings Sentenced to Life Plus 85 Years in Prison for Murder, Racketeering, Drug Distribution, and Other CrimesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that WILSON PAGAN, 27, the founder and top leader of the Latin Kings gang in Newburgh, New York (the “Newburgh Latin Kings”), was sentenced today by U.S. District Judge Cathy Seibel in White Plains federal court to life plus 85 years in prison. PAGAN was convicted of murder; racketeering; conspiracy to distribute crack, cocaine, and heroin; assault, and using and carrying firearms in connection with violent crimes. PAGAN is one of 35 members and associates of the gang who were charged in the case, all of whom have been convicted, 28 of whom have thus far been sentenced.
U.S. Attorney Preet Bharara stated: “Mr. Pagan was a gang leader, and what he led his followers to was a gang member’s life filled with death, blood, guns, drugs, and jail – and for him the gangster life in the street has become the inmate’s life in prison, forever. Gang leaders, members, associates, and wannabes in Newburgh and throughout the Hudson Valley need to understand: We will not tolerate gang violence. You will go to prison for it, potentially for the rest of your life.”
According to the Indictment and evidence presented at trial:
PAGAN founded the Newburgh Latin Kings, and grew the gang from roughly a dozen members in 2008 to more than 50 members and associates by early 2010. On May 6, 2008, PAGAN ordered aspiring gang members to go on a so-called mission, during which they committed a drive-by shooting and killed, mistakenly, Jeffrey Zachary, a 15-year old boy who was an innocent bystander. PAGAN sold crack and heroin, and helped other members and associates of his gang sell drugs, including at spots the Latin Kings controlled, such as the corner of Benkard Avenue and William Street in Newburgh. PAGAN also assaulted rivals of his gang, and carried guns and instructed others to carry guns to protect PAGAN and the Newburgh Latin Kings’ drug turf. In leading the gang, PAGAN recruited and inducted new members, instructed the members how to behave in order to protect and conceal the gang’s criminal activities, and issued orders to gang members to shoot and assault others. PAGAN organized and led gang meetings for this purpose. During one such meeting, according to papers filed with the court, PAGAN told more than 20 assembled gang members: “[W]e don’t even live by rules of society. . . .”
Mr. Bharara thanked the Hudson Valley Safe Streets Task Force for their work on the Latin Kings investigation. The Task Force is led by the Federal Bureau of Investigation (“FBI”), and combines the resources of dozens of law enforcement officers from federal, state, and local agencies and departments, including: agents and officers of the FBI; the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives; the City of Newburgh Police Department; Immigration and Customs Enforcement’s Homeland Security Investigations; the Middletown Police Department; the Orange County Sheriff’s Office, and the New York State Police.
The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Benjamin Allee, Abigail Kurland, and Nicholas McQuaid are in charge of the prosecution.
Former Soldier Sentenced to 30 Years in Federal Prison for Aggravated Sexual Abuse of A ChildRead the Press Release
In Waco this afternoon, former U.S. Army Sergeant David J. Adams, age 38, was sentenced to 30 years in federal prison followed by five years of supervised release and fined $1,000 for the aggravated sexual abuse of a child announced United States Attorney Robert Pitman.
On September 30, 2013, a federal jury convicted Adams of one count of aggravated sexual abuse of a child. Evidence presented during trial revealed that on multiple occasions in 2006, after Adams returned from active duty in Iraq, Adams engaged in sexually explicit activity with a child at his residence located on Fort Hood.
This investigation was conducted by the United States Army Criminal Investigation Division and the Federal Bureau of Investigation. This case was prosecuted by Assistant United States Attorney Mary Kucera.
Former Real Estate Agents Plead Guilty to Bank FraudRead the Press Release
LAS VEGAS, Nev. – A husband and wife who worked as real estate agents in southern Nevada have pleaded guilty to bank fraud charges in connection with several residential short sale transactions that resulted in over $350,000 in losses to Wells Fargo and Freddie Mac, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Cynthia Hosbrook, 41, and Robert Hosbrook, 52, both of Henderson, Nev., pleaded guilty before U.S. District Judge Jennifer A. Dorsey to one count of bank fraud. They face up 30 years in prison and a fine of up to $1 million, as well as mandatory restitution. Sentencing for both defendants is scheduled for March 3, 2014, at 10:00 a.m.
According to their guilty plea agreements, Cynthia Hosbrook had been an active real estate salesperson in Nevada since April 17, 2000, and Robert Hosbrook was licensed as a real estate salesperson in Nevada from Oct. 20, 2009, to Oct. 31, 2010. In 2010, the Hosbrooks engaged in a short-sale fraud scheme involving the sale of their personal residence to Cynthia Hosbrook’s mother. The Hosbrook’s defrauded Wells Fargo Bank and the Federal Home Loan Mortgage Corporation (Freddie Mac) by falsely representing that the short sale was due to personal hardship, that the transaction was an arm’s length transaction, that the sellers and buyers were not family members, and that the seller would not remain in the property subsequent to the sale. In fact, the Hosbrooks made a cash sale of the residence to Cynthia Hosbrook’s mother, and then continued to reside in the home after the sale even though they were not suffering from a personal hardship. The scheme resulted in a loss to Wells Fargo Bank and Freddie Mac of approximately $173,559. The Hosbrooks were also involved in two other fraudulent short-sale fraud transactions involving homes in Las Vegas and North Las Vegas during 2008 and 2009.
The case was investigated by the Federal Housing Finance Agency Office of the Inspector General, and is being prosecuted by Assistant U.S. Attorney J. Gregory Damm.
Today's announcement is part of efforts underway by President Obama's Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys' offices and state and local partners, it's the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Former President and Chief Executive Officer of Software Company Pleads Guilty in Manhattan Federal Court to Perpetrating Multimillion-Dollar Fraud SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that SCOT ZARKIEWICZ, the co-founder, President, Chief Executive Officer, Treasurer, and principal owner of SingleClick Systems Corp. (“SingleClick”), a Delaware-incorporated, New Jersey-based software company, pled guilty today in Manhattan federal court to charges arising from a scheme to defraud SingleClick investors. From mid-2009 through June 2013, ZARKIEWICZ solicited several investors to purchase millions of dollars of privately-held SingleClick stock based on fraudulent misrepresentations about the company’s operations and financial performance. ZARKIEWICZ was arrested on these charges on October 9, 2013. He pled guilty today before U.S. District Judge Denise L. Cote.
Manhattan U.S. Attorney Preet Bharara said: “For four years Scot Zarkiewicz told the investors of his software company one lie after another and swindled them out of millions of dollars. But his fraud scheme was ultimately exposed for the sham that it was, and now he will be punished for his crimes.”
Assistant Director-in-Charge George Venizelos said: “Scot Zarkiewicz brought a whole new meaning to cooking the books. He often exaggerated and sometimes totally made up numbers on his company’s balance sheet. Like we’ve seen time and time again, Zarkiewicz ripped off dozens of unwitting victims to fund his lavish lifestyle. Today, Mr. Zarkiewicz finds himself guilty, under his own admission, of these crimes.”
According to the Information filed in this case, statements made during the defendant’s guilty plea, and other court documents:
SingleClick is a privately-held software company that was engaged in the business of providing individuals and businesses with network software products that facilitate content access and network and systems management from any internet-connected device. From mid-2009 through June 2013, ZARKIEWICZ solicited investor contributions to, and caused investors to maintain their investment in, SingleClick based on fraudulent misrepresentations.
Specifically, during the relevant period, ZARKIEWICZ told SingleClick investors, in both oral and written communications, that SingleClick had several large corporate clients, millions of dollars in annual revenue, and millions of dollars in cash in bank and brokerage accounts, when, in truth and in fact, and as ZARKIEWICZ well knew, SingleClick conducted minimal business operations, collected significantly less than a million dollars in annual revenue, and did not have more than approximately $513,000 in cash on hand. ZARKIEWICZ made these misrepresentations to induce potential investors to purchase SingleClick shares, and to induce existing investors to purchase additional shares and/or refrain from requesting redemptions of their investments. ZARKIEWICZ made these misrepresentations by, among other means, distributing fabricated bank, brokerage, financial, and tax statements to investors. As a result of his fraudulent scheme, ZARKIEWICZ collected and maintained approximately $5.5 million from approximately 30 victims.
In May and June 2013, investors learned that SingleClick had very little cash available and confronted ZARKIEWICZ. ZARKIEWICZ admitted to investors that he lied about SingleClick’s business performance, fabricated records, and misled investors about the number of investors in, and operation of, SingleClick. Notwithstanding representations made in preceding years by ZARKIEWICZ that SingleClick had millions of dollars in revenue – including representations that SingleClick had generated $48 million in revenue in 2012 – since mid-2009, SingleClick has actually been generating thousands of dollars in revenue, not millions, and SingleClick’s total aggregate bank account balances have not exceeded approximately $513,000. In August 2013, after admitting his fraudulent conduct, ZARKIEWICZ resigned as CEO of SingleClick.
ZARKIEWICZ, 41, of Toms River, New Jersey, pled guilty to a two-count Information charging him with securities fraud and wire fraud. Each of the charges carries a maximum term of 20 years in prison. In addition, ZARKIEWICZ agreed to forfeit $5.5 million as well as any remaining proceeds in SingleClick bank accounts, and pay restitution as ordered by the Court. ZARKIEWICZ is scheduled to be sentenced by Judge Cote on March 28, 2014, at 11:00 a.m.
Mr. Bharara praised the investigative work of the FBI.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney David I. Miller is in charge of the prosecution. Assistant U.S. Attorney Paul Monteleoni is in charge of the asset forfeiture related to the prosecution.