Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
20 November 2013
Carl Junction Man Sentenced to 25 Years in Prison for Internet Child PornRead the Press Release
Project Safe Childhood
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Carl Junction, Mo., man was sentenced in federal court today for receiving child pornography over the Internet.
James Lee Hagerman, 51, of Carl Junction, was sentenced by U.S. District Judge Greg Kays to 25 years in federal prison without parole. The court also sentenced Hagerman to 20 years of supervised release following his prison term.
On Feb. 7, 2013, Hagerman pleaded guilty to two counts of receiving child pornography.
An officer with the Southwest Missouri Cybercrimes Task Force was conducting an online investigation into the sharing of child pornography on April 24, 2012, when he identified Hagerman’s computer as sharing over 100 files of child pornography through a peer-to-peer file-sharing program. The officer downloaded three of the files and determined that they contained depictions of children as young as two to four years of age engaged in sexually explicit conduct.
Law enforcement officers executed a search warrant at Hagerman’s apartment and seized his computer. Hagerman told officers that he had approximately 1,000 child pornography videos stored on his computer.
This case was prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the FBI and the Southwest Missouri Cybercrimes Task Force.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."Blayne Kyle Brady Sentenced in U.S. District CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Billings, on November 20, 2013, before U.S. District Judge Donald W. Molloy, BLAYNE KYLE BRADY, a 22-year-old resident of Lame Deer and an enrolled member of the Northern Cheyenne Tribe, was sentenced to a term of:
- ison: 30 months
- ecial Assessment: $100
- stitution: $534
- pervised Release: 3 years
BRADY was sentenced in connection with his guilty plea to assault resulting in serious bodily injury.
In an Offer of Proof filed by Assistant U.S. Attorney Lori Harper Suek, the government stated it would have proved at trial the following:
On October 18, 2012, the victim was found by a motorist on the side of Highway 212 near mile marker 8 on the Crow Indian Reservation. He was seriously injured. Police and medical personnel arrived and transported him to the Crow/Northern Cheyenne Indian Health Service Emergency Room, and then transferred him to the Billings Clinic due to the severity of the injuries to his eyes.
Law enforcement conducted interviews and learned that the assault occurred after BRADY and the victim started arguing as they were sitting in the backseat of a car. BRADY and the victim then got out of the car and started fighting on the side of the road.
When interviewed, BRADY admitted that, although his memory of the assault is sketchy because he was intoxicated, he does remember that he hurt the victim badly. BRADY indicated that there was some tension between his family and the victim's family. Because of his level of intoxication, though, the victim has no memory of how he was injured.
The victim suffered serious injuries to both of his eyes. He lost some vision in one eye and is blind in the other. The injuries are consistent with BRADY gouging the eyes of the victim with his thumbs.
Because there is no parole in the federal system, the "truth in sentencing" guidelines mandate that BRADY will likely serve all of the time imposed by the court. In the federal system, BRADY does have the opportunity to earn a sentence reduction for "good behavior." However, this reduction will not exceed 15% of the overall sentence.
The investigation was conducted by the Bureau of Indian Affairs.
Birch Tree Man Sentenced to 25 Years for Illegal Firearm, MethRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Birch Tree, Mo., man has been sentenced in federal court for illegally possessing a firearm and for possessing methamphetamine with the intent to distribute.
Raymond Doyle Smotherman, 48, of Birch Tree, was sentenced by U.S. District Judge Greg Kays on Tuesday, Nov. 19, 2013, to 25 years in federal prison without parole.
On July 3, 2013, Smotherman pleaded guilty to possessing a firearm in furtherance of a drug-trafficking crime and to possessing 50 grams or more of methamphetamine with the intent to distribute.
A Missouri State Highway Patrol trooper conducted a traffic stop of Smotherman’s vehicle on Dec. 30, 2011. The trooper noticed a rifle concealed in Smotherman’s vehicle on a shelf above the sun visors. The trooper searched Smotherman’s vehicle; in addition to the loaded Remington .270-caliber rifle on the shelf above the sun visor, he found a loaded Remington .22-caliber rifle, a loaded Ruger .22-caliber pistol, various rounds of ammunition and a bag that contained methamphetamine. In total, troopers discovered 17.04 grams of methamphetamine in the vehicle.
On March 12, 2012, law enforcement officers received information from a confidential source that Smotherman and another person were traveling to Kansas City to purchase methamphetamine. The next day, a state trooper spotted the vehicle Smotherman was driving on U.S. Highway 60 and conducted a traffic stop. Troopers located a WD-40 can under the front passenger seat. Inside the can were plastic baggies that contained methamphetamine. Another bag of methamphetamine was found in the battery compartment of a Dewalt cordless drill and caulking tube. In total, troopers discovered 110.03 grams of methamphetamine in the vehicle.
This case was prosecuted by Special Assistant U.S. Attorney Ami Harshad Patel Miller and Assistant U.S. Attorney Cynthia J. Hyde. It was investigated by the Missouri State Highway Patrol, the South Central Drug Task Force and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Bank Robber Sentenced to 18 Years in PrisonRead the Press Release
Baltimore, Maryland – U.S. District Judge James K. Bredar sentenced Gregory Steven Horn, age 38, of Glen Burnie, Maryland, today to 18 years in prison, followed by five years of supervised release, for conspiracy to commit armed bank robbery and armed bank robbery. Judge Bredar also ordered Horn to pay restitution of $802.50 for counseling for bank employees. Horn was on supervised release at the time of the offense for a 2001 federal bank robbery conviction in Tennessee.
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; Chief James W. Johnson of the Baltimore County Police Department; and Chief Jeffrey Spaulding of the Westminster Police Department.
According to Horn’s plea agreement, in October 2011, Horn’s half-sister, Kelly Nicole Smith, told Horn that she was having financial problems. Horn suggested that they rob banks together in order to make money and Smith eventually agreed. On November 2 and December 1, 2011, Horn and Smith attempted to rob banks in Parkville and Reisterstown, Maryland, respectively. In each attempt, Horn provided Smith with a wig and hat to disguise herself and Smith entered the bank and demanded money from the bank teller, but in each instance left the bank without obtaining any money.On December 2, 2011, Horn and Smith conspired to rob a third bank, the Farmers and Merchants Bank on Clifton Boulevard in Westminster, Maryland. Horn drove Smith to the bank and directed her to go inside, conduct surveillance to determine the presence of security and whether there was bullet proof glass on the teller station, then return to the car with a report. Smith did as Horn directed and shortly thereafter, Horn entered the bank wearing a black hoodie with the hood pulled up over his head and a black mask covering his face. Horn demanded money, displaying what appeared to be a small black handgun and placed a black bag on the counter. The teller put the money in the bag and Horn left, stealing $1,800. Horn and Smith fled in Horn’s vehicle, driven by Horn. Law enforcement attempted to stop the vehicle, but Horn refused to stop. Law enforcement pursued Horn’s vehicle from Carroll County into Frederick County, where Horn threw something – believed to be his weapon – from the car window. Eventually, the vehicle was stopped and Horn and Smith were arrested. The vehicle was searched and law enforcement recovered $1,800 stolen from the bank, the hat and wig worn by Smith, and clothing consistent with the clothing worn by Horn and Smith during the robbery of the Farmers and Merchants bank. No firearm was recovered.
Kelly Nicole Smith, age 23, of Middle River, Maryland, pleaded guilty to her role in the conspiracy and was sentenced to two years in prison.
United States Attorney Rod J. Rosenstein praised the FBI, Baltimore County Police Department and the Westminster Police Department for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Rachel M. Yasser, who prosecuted the case.
Baldwin Man Pleads Guilty to Child Pornography OffensesRead the Press Release
A Baldwin man pled guilty on November 20, 2013, to a three-count Indictment charging him, in Count 1, with Receipt of Visual Depictions of Minors Engaged in Sexually Explicit Conduct, in Count 2, with Access with Intent to View Visual Depictions of Minors Engaged in Sexually Explicit Conduct, and, in Count 3, Possession of Visual Depictions of Minors Engaged in Sexually Explicit Conduct, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
Michael A. Nieweglowski, Jr., a/k/a “Tony,” 47, of Baldwin, Illinois, is subject to enhanced penalties due to a 2000 conviction for Predatory Criminal Sexual Assault in Randolph County. On Count 1 of the Indictment, Nieweglowski faces a term of imprisonment of not less than fifteen (15) but not more than forty (40) years, a fine up to $250,000, and a term of supervised release of five (5) years to life. On Counts 2 and 3 of the Indictment, Nieweglowski faces a term of imprisonment of not less than ten (10) but not more than twenty (20) years, a fine up to $250,000, and a term of supervised release of five (5) years to life. Nieweglowski will also have to register as a sex offender when he is released from prison. Sentencing is scheduled for March 21, 2014, in East St. Louis, Illinois.
The investigation began on January 14, 2011, when the defendant, who had been on mandatory supervised release for the Predatory Criminal Sexual Assault conviction since at least September 10, 2010, was turned over to his parole officer after suspected child pornography was found on a printer in Nieweglowski’s parents’ home on December 30, 2011. On January 15, 2011, a Special Federal Officer with the Federal Bureau of Investigation’s Springfield Child Exploitation Task Force seized numerous media devices from Nieweglowski’s camper trailer which was parked next to his parents’ home, including a laptop computer that Nieweglowski could access in his parents’ home and a PNY thumb drive.
A forensic review of the laptop revealed approximately 79 visual depictions of minors engaged in sexually explicit conduct that had been downloaded via the internet. The PNY thumb drive was found to contain approximately 80 visual depictions of minors engaged in sexually explicit conduct that had been transferred to the thumb drive from the laptop computer. Several of the visual depictions contained images of prepubescent minors engaged in sexually explicit conduct as well as images of minors that depicted sadistic behavior.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
The case was investigated by the Illinois Department of Corrections and the Federal Bureau of Investigation=s Springfield Child Exploitation Task Force (SCETF). The case is assigned to Assistant United States Attorney Angela Scott.
Arizona Man Pleads Guilty to Conspiracy to Launder Money in Scheme to Defraud NissanRead the Press Release
Adrian Franklin, 40, of Chandler, Arizona, pleaded guilty on November 18, 2013, to participating in a scheme to defraud Nissan North America, announced David Rivera, United States Attorney for the Middle District of Tennessee. Franklin pleaded guilty to one count of conspiracy to commit money laundering, which carries a maximum penalty of 20 years in prison and a fine of $500,000.
According to the plea agreement, Franklin admitted to participating in a conspiracy to launder money derived from a scheme to defraud Nissan by recruiting others to obtain the names of Nissan owners and the corresponding Vehicle Identification Numbers (“VINs”), to submit false claims for repair to Nissan. When Nissan issued a check to the vehicle owner for the bogus repair claim, the owner would deposit the check into his or her bank account and then pay a portion of the funds to Franklin and a portion to others involved in the scheme.
Franklin was charged in an indictment that also named five other defendants: Kenneth Carter, 44, of Corona, CA; Francisco DeLaRosa, 40, of West Covina, CA; Bruce Young, 49, of Compton, CA; Tracey Young, 45, of Los Angeles, CA; and Wendell Young, 34, of Inglewood, CA. The indictment charged conspiracy, mail fraud, and conspiracy to commit money laundering, and alleged that Nissan lost approximately $571,500 as a result of the scheme.
An indictment is merely an accusation and is not evidence of guilt. All remaining defendants are presumed innocent unless and until proven guilty in a court of law. The trial of the remaining defendants is set for February 25, 2013, in U.S. District Court, before Chief Judge William Haynes.
The case was investigated by the IRSB Criminal Investigation and the Tennessee Bureau of Investigation. Assistant United States Attorney Kathryn B. Ward represents the government.
Alabama Man Sentenced to 188 Months in Federal Prison for Attempted Online Enticement and Traveling to Engage in Sexual Activity with a MinorRead the Press Release
PANAMA CITY, FLORIDA – Jeffrey Monroe Roy, 48, of Mobile, Alabama, was sentenced today to serve 188 months in federal prison for using the Internet in an attempt to persuade, induce, and entice a minor to engage in sexual activity and traveling across state lines with the intent to engage in sexual activity with a minor.
Evidence presented during trial proved that on June 13, 2012, law enforcement officers, acting in an undercover capacity, posted an advertisement on Craigslist posing as a 13-year-old female. Roy responded to the posting, and over the next three days, he engaged in email chats and telephone calls that were sexual in nature with a person he believed to be a 13-year-old female named Jaz. During his communications with Jaz, Roy discussed numerous sexual situations and attempted to entice the 13-year-old female to engage in sexual activity with him. After making arrangements to meet Jaz, Roy drove from Mobile, Alabama, on June 16, 2012, to meet with her at a predetermined location, where he was arrested and found to be in possession of Viagra, condoms, a camera, a knife, handcuffs, a first aid kit, and a deck of 52 sex-position cards.
Roy was also sentenced to a lifetime term of supervised release, and ordered to pay a $200 special monetary assessment.
In announcing the sentence imposed by the court, Pamela C. Marsh, United States Attorney for the Northern District of Florida, credited the success of this prosecution to the joint efforts of the agencies participating in the North Florida Internet Crimes Against Children Task Force Program, particularly U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Marshals Service, Bay County Sheriff’s Office, and the Gainesville Police Department.
The case was prosecuted by Assistant United States Attorney Kathryn Risinger.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched by the Department of Justice in May 2006 to combat the growing epidemic of child sexual exploitation and abuse. 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 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.Aiport Operator Charged with Flying an Airplane Without A Proper Lincense and Lying to the Federal Aviation Administration About His QualificationsRead the Press Release
CHARLOTTE, N.C. – Paul Douglas Tharp, 53, of Greensboro, N.C., was arrested today on a federal criminal indictment charging him with lying to the Federal Aviation Administration (FAA) about his qualifications as mechanic and a pilot and for flying an airplane without the proper pilot’s license, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The five-count criminal indictment was unsealed today following the arrest of Tharp by law enforcement in Winston-Salem, N.C.
Kathryn A. Jones, U.S. Department of Transportation, Office of Inspector General (DOT-OIG) regional Special Agent-In-Charge, joins U.S. Attorney Tompkins in making today’s announcement.
According to allegations contained in the criminal indictment:
From in or around 2011, Tharp was hired by Warriors and Warbirds, a group based in Monroe, N.C., to repair and refinish a multi-engine Curtiss Wright C-46F (C-46F) airplane that the group had purchased from an aviation museum in Midland, Texas. The Warriors and Warbirds group planned to feature the C-46F airplane at the museum located at the Charlotte-Monroe Executive Airport. Tharp currently operates an airport in Davidson County, N.C., and at the time he was certified to fly only single-engine aircrafts. Tharp did not have a multi-engine pilot license and did not hold an FAA Mechanic Certificate with an Airframe and Powerplant (A&P) rating. The Warriors and Warbirds hired Tharp to repair and fly their aircraft, after Tharp told a group representative that he was an A&P mechanic and could get the C-46F in good condition, and that he was licensed to operate a multi-engine plane like the C-46F.
As part of his services to the group, Tharp regularly traveled to Midland, Texas, where he performed maintenance on the C-46F, knowing he was not certified to do so. In addition to providing mechanic services, on several occasions Tharp acted as second in command during flights, even though he lacked the proper authorization to fly this type of airplane. On or about June 4, 2011, Tharp, acting again as second in command pilot, and other persons traveled via the C-46F from Monroe to an air show in Reading, Penn. Because the airplane still needed additional mechanical work to improve its airworthiness, the FAA required a special ferry permit before the plane could be flown back to Monroe. On or about June 5, 2011, an FAA inspector asked Tharp if someone had inspected the airplane’s condition to determine if the C-46F was safe for the return flight from Pennsylvania to North Carolina, and Tharp falsely represented he was an A&P mechanic who could make that determination. When the FAA inspector asked Tharp about his A&P certificate, Tharp lied and told the inspector that he had forgotten his A&P certificate in a rush to prepare the C-46F for the flight to Pennsylvania. Tharp then gave the FAA inspector the A&P certificate number of another A&P certificate holder who Tharp knew. This person did not give permission to Tharp to use his certificate number, and he became upset when he learned about Tharp’s unauthorized use of his number.
Based upon Tharp’s false representation about his status as an A&P mechanic and his unauthorized use of another person’s certificate number, the FAA inspector issued a special ferry permit that allowed the C-46F and its passengers to fly from Pennsylvania back to Monroe. Tharp again acted as second in command of the multi-engine C-46F even though he should not have been flying this airplane.
After Tharp completed the return trip to North Carolina, the FAA inspector who issued the special ferry permit checked on the certificate number Tharp had provided and learned that Tharp had lied about having an A&P certificate. The FAA opened an investigation and when Tharp received a letter from the FAA inquiring whether he was an A&P mechanic and whether he had a pilot’s certificate that allowed him to fly a multi-engine airplane like the C-46F, Tharp sent a reply letter to the FAA falsely stating, “I have been putting a time line of when I received my multi engine rating,” despite knowing he had never had this rating.
“Tharp knowingly and repeatedly lied about his qualifications to his clients and the FAA and in the process put lives at risk. Tharp’s lack of proper certification as a pilot and a mechanic is a serious safety hazard and now Tharp must face the legal consequences of these dangerous lies,” said U.S. Attorney Tompkins.
“The arrest today is a clear signal that safety of the Nation’s air transportation system remains a high priority for both OIG and DOT,” said Kathryn A. Jones, DOT-OIG regional Special Agent-In-Charge. “Working with the FAA, and our law enforcement and prosecutorial colleagues, we will continue our vigorous efforts to prevent and detect unlawful use of, and false statements related to, pilot and mechanic certificates; and punish to the fullest extent of the law those who would seek to compromise the integrity of DOT’s safety programs.”
Tharp had his initial appearance today in U.S. District Court in Winston-Salem. At sentencing he faces a maximum of five years in prison and a $250,000 fine for each of the two criminal counts of making false statements to the FAA, and a maximum of three years in prison and a $250,000 fine for each of the three counts of flying without proper authorization.
The charges contained in the indictment are allegations. The defendant is presumed innocent unless and until he is proven guilty beyond a reasonable doubt in a court of law.
U.S. Attorney Tompkins credited the special agents of the U.S. Department of Transportation, Office of Inspector General for the investigation leading to Tharp’s indictment.
Assistant United States Attorney Kenneth M. Smith of the U.S. Attorney’s Office in Charlotte is prosecuting the case.
26 People Charged in Drug Conspiracy, Accused of Distributing Heroin, Cocaine and Marijuana-Drugs Trafficked from Texas to Washington, D.C. Area-Read the Press Release
WASHINGTON – Seventeen people were arrested today following their indictments on federal charges in connection with an ongoing investigation by the FBI/Metropolitan Police Department Safe Streets Task Force into a network that trafficked heroin, cocaine, and marijuana from Texas to the Washington, D.C. area. The drugs were then distributed in the Washington, D.C. area.
In addition to the arrests today, in the Washington, D.C. area, two defendants already were in custody. Seven others were apprehended in McAllen, Texas on Nov. 18, 2013.
The arrests and charges were announced by U.S. Attorney Ronald C. Machen Jr., Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, and Cathy L. Lanier, Chief of the Metropolitan Police Department (MPD).
The defendants are among those named in two indictments returned on Nov. 7, 2013, in the U.S. District Court for the District of Columbia. The indictments, partially unsealed, charge the defendants with conspiracy to distribute and possess with intent to distribute heroin, cocaine, and marijuana. Some of the defendants also are charged with conspiracy to launder monetary instruments. Both indictments also include a forfeiture allegation seeking all proceeds derived from the crimes, as well as assets used to commit the offenses. If convicted, the defendants face a minimum of 10 years in prison and a maximum of life in prison.
The FBI’s Washington Field Office and MPD were joined in the law enforcement action this week by the FBI San Antonio Field Office’s McAllen Resident Agency; the U.S. Park Police; the U.S. Marshals Service; the U.S. Bureau of Prisons; the Prince George’s County, Md. Police Department; the Hidalgo County, Texas Sheriff’s Office, and the San Juan, Texas Police Department.
A total of 17 locations and four vehicles locations were searched today in the District of Columbia and Maryland. Authorities seized 18 guns, heroin, PCP and cash.The indictments allege that the defendants conspired to carry out the drug operation from October 2012 through October of this year, when it was broken up by law enforcement. The network allegedly operated in the District of Columbia, Maryland, and Texas.
“These indictments were designed to dismantle a drug ring that trafficked heroin and cocaine from Texas into the District of Columbia,” said U.S. Attorney Machen. “We all owe a debt of gratitude to the more than 200 agents and officers whose courage today resulted in 17 arrests and the seizure of more than a dozen firearms and heroin and PCP. The District of Columbia is a safer place today with these guns and drugs off the street.”
“The arrests that were carried out this week in the Washington, D.C., region and in Texas once again show that we will not tolerate drug dealers who attempt to root their network within our communities and afflict our neighborhoods with their illegal trade,” said Assistant Director in Charge Parlave. “Along with our partners on the Safe Streets Task Force, the FBI is focused on pursuing those who pose a threat to our communities through the sale of illegal drugs.”
“These are significant arrests, and the volume of drugs and weapons seized highlight the potentially devastating impact this criminal enterprise had on the D.C. metropolitan area and various communities across the country,” said Chief Lanier. “The Metropolitan Police Department along with our local and federal law enforcement partners continue to work together to make our communities safer by locating and disrupting criminal organizations intent on wreaking havoc on our neighborhoods for their own personal gain. We are sending a message to criminals nationwide that we will find you and arrest you.”
A total of 12 men and five women were arrested in the area today.
Those arrested in the Washington, D.C. area include several members of one family: Juan Floyd, 45, of Temple Hills, Md., an alleged leader of the enterprise; his brother, John Floyd, 51, of Washington, D.C., and his daughter, Juanita N. Culbreth, 27, of Oxon Hill, Md.
Others arrested today include: Lisa Adona, 50, of Fort Washington, Md.; Rodney Kirk Carter, 50, of Washington, D.C.; Derek L. Gadsden, 54, of Washington, D.C.; Donald Johnson, 51, of Washington, D.C.; Mike Johnson, 30, of Deale, Md.; Albert P. Jones, 44, of Temple Hills, Md.; Vincent J. Jones, 45, of Washington, D.C.; Roxanne Matthews-Baker, 47, of Washington, D.C.; Maurice P. Mercer, 38, of Washington, D.C.; Lawrence E. Proctor, 54, of Washington, D.C.; Darnell S. Rogers, 50, of Fort Washington, Md.; Bruce Settles, 48, of Washington, D.C.; Delshawn A. Wrice, 53, of Washington, D.C., and Jeri Wright, 60, of Suitland, Md.
Jeffrey Coachman, 39, and Gary Price, 47, already were in custody.
An indictment is merely a formal charge that a defendant has committed a violation of criminal law and is not evidence of guilt. Every defendant is presumed innocent until, and unless, proven guilty.
This prosecution grew out of a long-term FBI/MPD alliance called the Safe Streets Task Force that targets violent drug trafficking gangs in the District of Columbia. The Safe Streets Initiative is funded in part by the Baltimore Washington High Intensity Drug Trafficking Area as well as the Organized Crime Drug Enforcement Task Force. The initiative involves more than 150 Safe Streets Task Forces across the country that combat street gangs by combining federal, state and local police resources. The task forces, which began in 1992 in Los Angeles and the District of Columbia, address gang activity, including drug-related crimes.
This investigation also was sponsored and supported by the Department of Justice’s Organized Crime Drug Enforcement Task Force.
U.S. Attorney Machen, Assistant Director in Charge Parlave and Chief Lanier thanked those who pursued the investigation from the FBI/MPD Safe Streets Task Force and other agencies. They also expressed appreciation to the Prince George’s County Police Department, the U.S. Park Police, the U.S. Marshals Service, and the Maryland State Police, as well as the U.S. Attorney’s Office for the District of Maryland and the McAllen Division of the U.S. Attorney’s Office for the Southern District of Texas, for their assistance in the investigation.
Finally, they acknowledged the efforts of those who worked on the investigation from the U.S. Attorney’s Office for the District of Columbia, including Paralegal Specialists Catherine O’Neal, Jeannette Litz, Reagan Gibson, Rommel Pachoca, Teesha Tobias, Kim Hall, Niya Attucks, and Mary Downing, and Legal Assistants Priscilla Hutson and Jessica Moffatt.
They also commended the work of Assistant U.S. Attorneys Karla-Dee Clark and Thomas A. Gillice, who are prosecuting the case; Assistant U.S. Attorneys Zia Faruqui of the Asset Forfeiture and Money Laundering Section, which is assisting with the forfeiture action, and Assistant U.S. Attorneys Debra Long-Doyle and Suzanne Clement Libby who assisted with the investigation and prosecution.
13-40117 Ventura County Gang Members Linked to Mexican Mafia Charged for Roles in Mexican-Based Drug Trafficking Organization Operation “SuperNova” Targeted Gang-Related Drug TraffickingRead the Press Release
LOS ANGELES – In the third phase of Operation “SuperNova,” a multi-agency task force investigation that targeted Mexican Mafia-affiliated street gangs in Ventura County, 17 people have been charged following an investigation by a task force comprised of the FBI, the Ventura Police Department and the Oxnard Police Department. Following arrests this morning, 14 of 17 defendants named in a federal criminal complaint unsealed this morning are now in custody.
Several teams of police officers and federal agents executed arrest and search warrants early this morning and took six defendants into custody without incident. Eight of the 17 defendants charged were already in custody based on unrelated charges and soon will be brought into federal custody. The remaining three defendants charged in the complaint are fugitives, some believed to be residing in Mexico, where they allegedly direct the narcotics-trafficking activity alleged in the complaint.
The criminal complaint details a year-long undercover investigation and outlines a series of narcotics transactions that led to the seizure of more than two pounds of methamphetamine and quantities of heroin that were being sold on the streets of Ventura County. The complaint alleges that the drugs were supplied by a Mexican drug trafficking organization controlled by Mexican Mafia member Martin Madrigal-Cazares. Local street gangs allegedly communicated with the head of the organization in Mexico, while controlling narcotics sales and collecting “taxes” on behalf of the Mexican Mafia in Ventura County.
This case targeted the "shotcallers" of Ventura County and Oxnard street gangs -- including Lemonwood, Surtown and Ventura Avenue Gangsters -- whose members control the drug trade in their respective territories. The defendants charged in the complaint (with the exception of Cazares) are residents of Ventura, Oxnard, Camarillo and Moorpark. Those named are: David Acosta, 33, in custody;
Daniel Armendariz, 38, arrested today;
Pedro Arrieta, 42, arrested today
Robert De La Cerda, 35, in custody
Lina Fuentes, 35, fugitive;
Daniel Gonzales, 40, in custody;
Philip Guerra, 28, arrested today;
Ruben Hernandez, 20, in custody;
Alejandro Herrera, 38, in custody;
David Leal, David, 44, arrested today;
Martin Madrigal-Cazares, 38, a fugitive believed to be residing in Mexico;
Dillon Mansell, 21, in custody;
Armando Molina, 30, arrested today;
Edwin Mora, 29, in custody;
Librado Navarrete, 27, a fugitive;
Frank Ruiz, 32, arrested today; and
Javier Tamayo, 35, in custody
As a result of the first phase of Operation Supernova in 2011(see: http://www.justice.gov/usao/cac/pressroom/pr2011/018.html), 11 defendants were convicted and received sentences of up to 25 years in prison. In the second phase of Operation Supernova in 2012 (see: http://www.fbi.gov/losangeles/press-releases/2011/oxnard-gang-members-arrested-on-federal-drug-and-gun-trafficking-charges-in-second-part-of-operation-supernova), six defendants were charged in connection with conspiracy to distribute methamphetamine and illegally sell firearms. The total seizure for the three-phase operation totals 18 pounds of methaphetamine, five kilograms of cocaine, six pounds of heroin and 46 firearms.
The defendants named in the complaint are charged conspiring to distribute methamphetamine and, if they are convicted, each would face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life in prison.
The defendants arrested today will make their initial appearances this afternoon in United States District Court in Los Angeles. The federal defendants will be prosecuted by the United States Attorney’s Office.
The investigation was conducted jointly by the Ventura Police Department; the Oxnard Police Department; and the FBI.
The Ventura Gang Task Force is one of many FBI Safe Streets Task Forces throughout the United States, funded for the purpose of assisting local police in identifying and addressing violent crime in America.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in a court of law.
Release No. 13-133
10 Indicted in Central New York Isynthetic Marijuana ConspiracyRead the Press Release
Syracuse, NY- United States Attorney Richard S. Hartunian announced the indictment of ten (10) individuals in connection with a large synthetic marijuana distribution organization in Central New York. Those arrested in the synthetic marijuana distribution conspiracy this morning include the following:
ABDALQADER MANSOUR, age 44, Syracuse, New York; RASHEED MANSOUR, age 23, Camillus, New York; JOE AREF, age 28, Nederland, Texas; ARAFAT KHOUDOUR, age 29, Beaumont, Texas; ALI BEDWAN, age 25, Port Arthur, Texas; ABED ZAHRAN, age 55, North Syracuse, New York; AMJAD MANSOUR, age 25, Syracuse, New York; and
ZIAD MANSOUR, age 33, Camillus, New York.All of these individuals have been indicted by a federal grand jury with conspiring to possess with the intent to distribute and distributing synthetic marijuana. If convicted, the defendants face up to a twenty (20) years imprisonment, up to a $1 million fine, and at least three (3) years of supervised release following any period of incarceration.1 Arraignments are scheduled in U.S. District Court in Syracuse for 1:30 p.m. today before Magistrate Judge David E. Peebles.
These prosecutions resulted from an investigation undertaken in the fall of 2012 by the Syracuse Resident Office of the Drug Enforcement Administration (DEA), the Onondaga County Sheriff’s Office (OCSO), the Syracuse Police Department (SPD), the New York State Police (NYSP), the United States Marshals Service, and the U.S. Attorney’s Office.
The investigation, which included wiretaps on one of the defendant’s telephones, revealed that this synthetic marijuana trafficking organization was responsible for the manufacture and distribution of approximately 100 to 200 pounds of synthetic marijuana per month. The synthetic marijuana was manufactured in clandestine locations in and around Syracuse by members of the conspiracy. The defendants utilized chemicals such as UR-144 (a Schedule I controlled substance), which they imported from China and elsewhere; they sprayed the chemicals on leafy plant material, added flavoring, and then placed the synthetic marijuana product in packages labeled “Scooby Snax,” “WTF,” “Blue Caution,” and other names. The packages were then distributed to local convenience stores, as well as shipped to co-conspirators in Texas, Ohio, and South Carolina for distribution to customers.
Search warrants were executed in Texas and at the following locations this morning:
202 Van Rensselaer Street, Apartment #1, Syracuse, NY, 1500 Elm Circle, Apartment #7, Camillus, NY, 430 Spencer Street, Storage Unit D-151, Syracuse, NY, 104 Lorian Drive, Syracuse, NY, 344 North Salina Street, Syracuse, NY, 1805 S. Geddes Street, Syracuse, NY, 300 Otisco Street, Syracuse, NY, 1504 South Avenue, Syracuse, NY, 1000 Butternut Street, Syracuse, NY, 1223 Butternut Street, Syracuse, NY, 500 Oakwood Avenue, Syracuse, NY, 1215 Lodi Street, Syracuse, NY, 359 S. Salina Street, Syracuse, NY, 2002 E. Fayette Street, Syracuse, NY, and
801 Butternut Street, Syracuse, NY.To date, the following items have been recovered: An AR-15 rifle; Ruger handgun, approximately 10 kilograms of synthetic chemicals, several thousand packets of prepackaged synthetic marijuana; approximately $75,000 in U.S. currency; two vehicles; and equipment used to manufacture the synthetic marijuana.
U.S. Attorney Richard S. Hartunian stated, “This case is an example of the challenges faced by law enforcement in combatting the ever changing methods utilized by drug dealers to create synthetic drugs. Today’s arrests demonstrate that our dedicated local, state and federal law enforcement agencies are up to this task. We will continue to aggressively investigate and prosecute those who seek to profit from the sale of these illegal poisons to the youth of our community.”
Drug Enforcement Administration, Special Agent in Charge of the New York Division Brian R. Crowell said, “Synthetic marijuana is nothing more than poison sprayed on poison,” stated DEA Special Agent in Charge Brian R. Crowell. “This organization was manufacturing and distributing100 to 200 pounds of synthetic marijuana per month. They packaged the synthetic marijuana in distribution bags labeled 'Scooby Snax,’ to target our youth. Synthetic drugs are poison. Over the past two years, there were 7,452 exposures of synthetic marijuana reported to the American Association of Poison Control Centers. Kids need to stay away from this and these traffickers have our undivided attention.” SAC Crowell would like to commend the DEA Syracuse Resident Office, the Onondaga County Sheriff’s Office, the Syracuse Police Department, the New York State Police, the United States Marshals Service, the Onondaga District Attorney’s Office, the New York Attorney General’s Office, the Camillus Police Department, and the U.S. Attorney’s Office, Northern District of New York. Further questions or inquiries may be directed to Assistant United States Attorney Carla Freedman, the prosecutor handling the case, at (315) 448-0672.
________________________
1The charge announced today is merely an allegation and the defendants are presumed innocent unless and until proven guilty in a court of law.
19 November 2013
Woman Sentenced to Prison, Ordered to Pay Restitution for Obtaining Fraudulent Student LoansRead the Press Release
PITTSBURGH - A Cranberry Township woman has been sentenced in federal court to 15 months imprisonment, five years of supervised release and ordered to pay $632,613.75 in restitution on her conviction of bank fraud and mail fraud, United States Attorney David J. Hickton announced today.
United States District Judge Mark R. Hornak imposed the sentence yesterday on Meredith Shuster, 36.
According to information presented to the court, Shuster fraudulently obtained $729,000 in private lender student loans through using the identities and financial information of her parents.
Assistant United States Attorney Robert S. Cessar prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the United States Postal Inspection Service, as well as Pennsylvania Higher Education Assistance Agency and the Department of Education for the investigation leading to the successful prosecution of Shuster.
Vernon Parish Man Sentenced to 72 Months in Prison for Downloading Child PornographyRead the Press Release
LAFAYETTE, La. – U.S. Attorney Stephanie A. Finley announced today that Francis M. Buckner Jr., 41, of New Llano, La., was sentenced by U.S. District Judge Richard T. Haik, to 72 months in prison and 10 years of supervised release for possession of child pornography. He was also required to register as a sex offender. Buckner pleaded guilty on July 17, 2013.
According to evidence presented at the guilty plea, Buckner admitted to possessing 36 videos and 144 images of child pornography. Law enforcement officers identified the defendant as a collector of child pornography. He used a software sharing program to download the pornography. A search warrant was obtained for his residence, and the investigation revealed that Buckner had downloaded sadistic material depicting bondage and other sexually explicit scenes involving prepubescent children onto his computer. At the time of his arrest, the defendant admitted he had been downloading child pornography.
The Department of Homeland Security Investigations and the Louisiana State Police conducted the investigation. Assistant U.S. Attorney John Luke Walker prosecuted the case.
This case is part of Project Safe Childhood, a U.S. Department of Justice nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. 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.
The U.S. Attorney’s Office and the U.S. Department of Homeland Security/Homeland Security Investigations/Immigration & Customs Enforcement (ICE) encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at (866) DHS-2ICE. Investigators are available at all hours to answer hotline calls. Tips or other information can also be submitted to ICE online at www.ice.gov/exec/forms/hsi-tips/tips.asp. Tips may be reported anonymously.
Two Convicted Felons Sentenced for Federal Firearms ChargesRead the Press Release
Tampa, Florida– U.S. District Judge Steven D. Merryday today sentenced David P. Lawrence (26, Bradenton) to 11 years and 8 months in federal prison for being a felon in possession of a firearm. Previously, on November 6, 2013, co-defendant Mark Alan Finehout (37, Sarasota) was sentenced to 21 months in federal prison for being a felon in possession of a firearm.
Lawrence and Finehout were indicted on June 12, 2013. Both men pleaded guilty to the charges in August 2013.
According to court documents, on April 17, 2013, Lawrence and Finehout purchased a .40 caliber Taurus pistol from another man. During the transaction, Lawrence and Finehout took pictures of the Taurus pistol, and a Norinco model SKS rifle that they were interested in purchasing. A search warrant executed on Lawrence’s cellphone recovered pictures of the Taurus pistol, the SKS rifle, and text messages sent to an individual regarding the potential re-sale of both the Taurus pistol and the SKS rifle. Lawrence and Finehout are previously convicted felons and prohibited from possessing a firearm or ammunition under federal law.
This case was jointly investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Sarasota County Sheriff’s Office, and the Manatee County Sheriff’s Office. It was prosecuted by Assistant United States Attorney Mark E. Bini.
It is another case prosecuted as a part of the Department of Justice’s “Project Safe Neighborhoods” program - a nationwide, gun-violence reduction strategy. Acting United States Attorney A. Lee Bentley, III, along with Julie Leon, Special Agent in Charge, ATF, is coordinating the Project Safe Neighborhoods effort here in the Middle District of Florida in cooperation with federal, state, and local law enforcement officials.
Toledo Man Sentenced to Nine Years in Prison for Heroin and Firearms CrimesRead the Press Release
A Toledo man was sentenced to more than nine years in prison for drug and firearms convictions, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland office.
United States Senior District Judge James G. Carr sentenced Rashaad J. Doyle, age 30, to 100 months imprisonment, for possessing with intent to distribute approximately 350 grams of heroin and for being a felon in possession of a firearm.
A federal grand jury returned a two-count indictment against Doyle on October 17, 2012 stemming from the seizure of the heroin and a rifle recovered from Doyle’s residence on September 21, 2012.
Doyle was forbidden by law from having a firearm due to previous convictions in Lucas County Common Pleas Court for possession of marijuana, aggravated assault and having weapons while under disability.
This case is being prosecuted by Assistant United States Attorneys Thomas P. Weldon and Matthew Spaulding. The case was investigated by the Federal Bureau of Investigation, the Toledo Police Department and the Toledo Metro Drug Task Force.
Toledo Man Sentenced to Nine Years for Firearms ConvictionRead the Press Release
A Toledo man was sentenced to more than nine years in prison for a firearms conviction, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland office.
Robert Leal, 62, was sentenced to 100 months in prison by U.S. District Judge James Carr after pleading guilty earlier this year to being a felon in possession of a firearm.
On Jan. 25, 2013, law enforcement officers searched Leal’s home and was found to have a Raven 25-caliber handgun and a Mossberg 12-gauge pistol grip shotgun. He was forbidden by law from having a firearm due to previous convictions Michigan related to drug and firearms crimes, according to court documents.
This case is being prosecuted by Assistant United States Attorney Alissa P. Sterling. The case was investigated by the Federal Bureau of Investigation, the Toledo Police Department and the Toledo Metro Drug Task Force.
To Georgia Men Sentenced for Gift Card SchemeRead the Press Release
LAFAYETTE, La. – United States Attorney Stephanie A. Finley announced today that Derrick Nathaniel Hartfield, 46, of Smyrna, Ga., and Rico Carty Clemons, 48, of Riverdale, Ga., were sentenced by U.S. District Judge Richard T. Haik for defrauding Wal-Mart and other retail businesses nationwide out of hundreds of thousands of dollars through identity theft and wire fraud. Hartfield received 60 months in prison, four years of supervised release, and a $10,000 fine for wire fraud. He also received 24 months in prison, two years of supervised release, and a $5,000 fine for aggravated identity theft. The two prison terms will be served consecutively and the supervised release will be served concurrently. Clemons received 10 months in prison and two years of supervised release for wire fraud. Both defendants were also ordered to pay $14,869 in restitution. Hartfield and Clemons pleaded guilty on May 13, 2013.
According to evidence presented at the guilty plea, Hartfield and Clemons admitted that they used illegally obtained retail store gift cards and applied for credit/debit cards using other peoples’ identities. Hartfield acknowledged during the entry of his guilty plea that he had advised law enforcement officers he may have obtained approximately $1 million since 2005 as a result of the scheme. A Calcasieu Parish Sheriff’s Office deputy working a security detail at a Lake Charles Wal-Mart on July 7, 2012, apprehended Hartfield in the store. The officer then identified Clemons who was in a parked vehicle outside. The two men were in possession of $2,000 and numerous debit and credit cards that were not in their names.
The Calcasieu Parish Sheriff’s Office and the U.S. Secret Service conducted the investigation. Assistant U.S. Attorney Brett L. Grayson prosecuted the case.
Texas Man Sentenced for Distribution of A Controlled SubstanceRead the Press Release
United States Attorney Brendan V. Johnson announced that a Pearsall, Texas, man convicted of Distribution of a Controlled Substance was sentenced on November 18, 2013, by U.S. District Judge Roberto A. Lange.
Ricardo Avila, age 53, was sentenced to 33 months of imprisonment, a $1,000 fine, 3 years of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
Avila was indicted for the above charge by a federal grand jury on November 19, 2012. He pled guilty on August 19, 2013.
The conviction stems from an incident occurring on or about April 12, 2012, when an undercover officer was introduced to Avila, and a purchase of cocaine was arranged. Avila delivered to the undercover officer a substance that was confirmed to be 28.3 grams of powder cocaine, a Schedule II controlled substance.
The investigation was conducted by the Northern Plains Safe Trails Drug Enforcement Task Force. Assistant U.S. Attorney Kathryn N. Rich prosecuted the case.
Avila was immediately turned over to the custody of the U.S. Marshals Service.
Tampa Woman Sentenced to 4 Years in Prison for Tax Refund FraudRead the Press Release
Tampa, Florida – U.S. District Judge James D. Whittemore yesterday sentenced Porscha Williams to four years in federal prison for theft of government property and aggravated identity theft. As part of her sentence, the court also entered a money judgment in the amount of $9,116.00, the proceeds of the charged criminal conduct.
Porscha Williams was found guilty on September 17, 2013.
According to court documents, Williams engaged in stolen identity tax refund fraud from at least as early as March of 2011. She was responsible for the filing of more than 30 fraudulent tax returns and refunds totaling in excess of $175,000.
Porscha Williams’ sister, Nikia Williams, was sentenced to 6 ½ years in prison for her role in the scheme on June 4, 2013. Another co-defendant, Quincy Wimberly, is scheduled to be sentenced on December 2, 2013.
This case was investigated by the Internal Revenue Service - Criminal Investigation, the U.S. Postal Inspection Service, and the Tampa Police Department. It is being prosecuted by Assistant United States Attorneys Sara C. Sweeney and Amanda L. Riedel.
Statement of the United States Attorney Regarding the U.S. District Court’s Ruling in United States vs. Anthony Lupas, Jr.Read the Press Release
Yesterday, Judge Mariani ruled that Lupas was not competent to stand trial at the present time and ordered that Lupas be placed in the custody of the Attorney General to determine whether there is a substantial probability Lupas will attain the capacity to permit proceedings in this case to go forward in the future.
The ruling came after a hearing and the consideration of reports and conclusions of health care professionals. The government had full opportunity to present evidence and arguments in support of its position. The Court’s 43 page ruling is very detailed. There is no legal or factual basis for the government to appeal the decision, or to ask the Court to reconsider it, at this time.
The charges in this case are extremely serious; the matter is of great concern to the alleged victims and the general public in Luzerne County; the defendant is a prominent lawyer. At the same time, under the law, the mental competency of a defendant to stand trial is a basic requirement of our system. The law provides for a careful and lengthy process to determine a defendant’s mental competency. As Judge Mariani noted in his ruling, the decision is not the final step in the criminal justice process or the final word on whether or not Lupas will be competent to stand trial. After further hospitalization and examination of the defendant while he is in the custody of the Attorney General, the government will have the opportunity to review the results and present its position to the Court. This is the procedure mandated by law in these situations within the federal system.
Southern Oregon Couple Pleads Guilty to Fraud and Tax ChargesRead the Press Release
MEDFORD, Ore. – Kenneth Johnson, 62 and Diana Arredondo, 56 pled guilty to federal charges stemming from their work at the Super 8 Hotel in Central Point, Oregon. Johnson pled guilty to wire fraud and filing a false tax return. Arredondo pled guilty to filing a false tax return. The maximum penalty for wire fraud is 20 years imprisonment and a $1,000,000 fine. The maximum penalty for filing a false tax return is 3 years imprisonment and $100,000 fine. Johnson is scheduled to be sentenced Febuary 10, 2014, and Arredondo is scheduled to be sentenced on February 24, 2014, both before the Honorable Owen M. Panner in Medford, Oregon.
Johnson was a partner in the Super 8 Hotel in Central Point Oregon since it opened in October 2005. He was in charge of the hotel’s daily operations and reported the financial figures to his co-parters in Montana. Johnson hired his girlfriend, Arredondo, as the hotel manager. They worked at the hotel from October 2005 through 2011.
Johnson defrauded his partners by providing them false information regarding the cash collected by the hotel. The scheme diverted approximately $500,000 in cash and checks from the Super 8 Hotel in Central Point for Johnson’s personal use.
In addition, Johnson and Arredondo each filed fraudulent income tax returns, knowingly underreporting the cash they took from the hotel.
The case is being prosecuted by Assistant U.S. Attorney Judith Harper. The case was investigated by the Internal Revenue Service and Federal Bureau of Investigation.
Six Investors Indicted for Their Roles in Bid-Rigging Scheme at Municipal Tax Lien Auctions in New JerseyRead the Press Release
Note: The defendants in this case, Joseph Wolfson; Gregg Gehring; Robert Jeffrey; Betty Simon, Trustee LLC.; and Richard Simon, Trustee, were acquitted by a jury of the charges alleged in the indictment.
A federal grand jury in Newark, N.J., returned an indictment against six investors for their roles in a conspiracy to rig bids at auctions conducted by New Jersey municipalities for the sale of tax liens, the Department of Justice announced.
The indictment, filed today in U.S. District Court for the District of New Jersey in Newark, charges four individuals, Joseph Wolfson, Gregg Gehring, James Jeffers Jr. and Robert Jeffrey, and two entities, Betty Simon Trustee LLC and Richard Simon Trustee, with participating in a conspiracy to rig bids at tax lien auctions in New Jersey. According to the indictment, from at least as early as 1998 and continuing until as late as February 2009, the investors participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on. The indictment alleges that the investors proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.
Joseph Wolfson, of Margate, N.J., was a part-owner of two entities that invested in municipal tax liens, Betty Simon Trustee and Richard Simon Trustee, both of Northfield, N.J. Gregg Gehring, of Newton, N.J., was employed by a major tax lien investment company as a vice president. James Jeffers Jr., of Burlington, N.J., was a bidder for Crusader Servicing Corp., which pleaded guilty to its role in the conspiracy in September 2012, and also a bidder for Crusader’s successor corporation. Robert Jeffrey, of Bradenton, Fla., was a bidder for both Crusader and its successor corporation.
“The individuals and entities charged today demonstrated a blatant disregard for the competitive process by allocating the purchase of certain municipal tax liens by, from time to time, flipping a coin, drawing numbers out of a hat or drawing from a deck of cards,” said Leslie C. Overton, Deputy Assistant Attorney General for the Antitrust Division. “The Antitrust Division remains committed to prosecuting those who thwart the competitive bidding process.”
The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.
The indictment alleges, among other things, that from at least as early as 1998 and continuing until as late as February 2009, prior to the commencement of certain tax lien auctions in New Jersey, the investors and their co-conspirators agreed not to compete for the purchase of certain municipal tax liens.
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.Including today’s charges, 20 individuals and entities have been charged as part of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions in New Jersey. To date, 11 individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby, David Butler, Norman T. Remick, Robert U. Del Vecchio Sr., and Michael Mastellone – and three companies, DSBD LLC, Crusader Servicing Corp., and Mercer S.M.E. Inc., have pleaded guilty as part of this investigation.
Today’s charge 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.
This ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.
Shamokin Dam Resident Charged with Providing Contraband to Allenwood InmateRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania, announced that charges have been filed against Andrea Gemberling, of Shamokin Dam, Pennsylvania.
According to United States Attorney Peter J. Smith, Gemberling, age 39, is charged in a one-count Information with providing contraband – tobacco and a cell phone to an inmate serving a sentence at the Allenwood Federal Penitentiary, White Deer, Pennsylvania.
The investigation was conducted by the U.S. Department of Justice Office of Inspector General, and Special Investigation Service. Assistant United States Attorney Wayne P. Samuelson is assigned to prosecute the case.Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is one year imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
Sells Man Sentenced to 6 ½ Years in Prison for Voluntary ManslaughterRead the Press Release
TUCSON, Ariz. – Alrick Michael Escalante, 21, of Sells, Ariz., and a member of the Tohono O’odham Nation, was sentenced to 6 ½ years prison on Monday, Nov. 18, 2013, following a guilty plea to voluntary manslaughterby U.S. District Judge David C. Bury. Escalante pled guilty to voluntary manslaughter on May 16, 2013.
As part of the plea agreement, Escalante admitted that in the early morning hours of July 24, 2011, in Sells, Ariz., on the Tohono O’odham Indian Nation, he stabbed the 22 year old victim, who died from a single stab wound.
The investigation in this case was conducted by the Federal Bureau of Investigation and the Tohono O’odham Nation Police Department. The prosecution was handled by Raquel Arellano, Assistant U.S. Attorney, District of Arizona, Tucson.
CASE NUMBER: CR-12-1625-TUC-DCB (BGM)
RELEASE NUMBER: 2013-087_EscalanteFor more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az
SEC Compliance Examiner Charged in Manhattan Federal Court for Making False Statements Related to Prohibited Financial HoldingsRead the Press Release
Preet Bharara, United States Attorney for the Southern District of New York, and Carl W. Hoecker, Inspector General of the Securities and Exchange Commission, Office of the Inspector General (“SEC-OIG”), today announced charges against STEVEN GILCHRIST, a Securities and Exchange Commission (“SEC”) Compliance Examiner in the SEC’s New York Regional Office, for making false statements to the SEC regarding his ownership of various securities he was prohibited from holding under SEC ethical rules. GILCHRIST was arrested this morning and will be presented in Manhattan federal court before U.S. Magistrate Judge Kevin Nathaniel Fox this afternoon.
Manhattan U.S. Attorney Preet Bharara said: “As an SEC examiner, Steven Gilchrist had a duty to avoid conflicts of interest that might compromise or even appear to compromise his integrity. Instead, as alleged, he violated the SEC’s internal rules about stock ownership and repeatedly lied to the SEC about his holdings. We will not tolerate abuses of trust and violations of law by individuals tasked with safeguarding our markets.”
SEC Inspector General Carl Hoecker said: “Making false statements to government agencies undermines the foundation of public integrity. My office investigates these matters thoroughly and today’s arrest exemplifies our commitment to working with the SEC to improve and protect its programs and operations.”
According to the allegations contained in the Criminal Complaint unsealed today:
Among a Compliance Examiner’s duties in the SEC’s New York Regional Office are overseeing broker-dealers, investment advisers, investment companies, clearing agencies, and others regarding their compliance with the nation’s securities laws. As an SEC employee, Gilchrist is subject to rules promulgated by the SEC (“SEC Ethical Rules”) designed to prevent conflicts of interest between employees’ conduct and the SEC’s mission of enforcing the securities laws and regulating the markets.
Beginning in August 2010, changes to the SEC Ethical Rules prohibited SEC employees from purchasing or holding stock in entities directly regulated by the SEC, and required employees to submit any proposed personal transactions in securities to the SEC prior to executing them. The prohibited securities included those of several banks and broker-dealers, including banks with broker-dealer subsidiaries. Individuals who held such stock at the time the changes were implemented were directed to divest their holdings, and provided with instructions on how to do so.
GILCHRIST held stock in several such prohibited companies. As the rule changes took effect, GILCHRIST did not divest his holdings as required. Instead, he transferred his stocks into a new joint brokerage account he shared with a family member and over which he had complete control (the “Joint Account”). In addition, he purchased additional prohibited stock (the “Additional Stock”) without pre-clearing the purchase with the SEC.
On three occasions in 2013, GILCHRIST made false statements to the SEC regarding his stock holdings. First, in January 2013, he falsely certified through an electronic SEC compliance system that as of December 31, 2012, his holdings were in compliance with SEC regulations. Second, on February 13, 2013, he submitted an Executive Branch financial disclosure form that falsely stated that he “no longer held” certain of his prohibited stock holdings, and that omitted any mention of the Additional Stock. Third, on February 22, 2013, GILCHRIST falsely certified through an electronic SEC compliance system that he had sold certain other prohibited stocks. In reality, GILCHRIST continued to hold prohibited stock in six different companies at all relevant times throughout this period. Specifically, the stocks that GILCHRIST claimed he no longer held had only been transferred to the Joint Account, which he controlled.
GILCHRIST, 48, of Bethpage, New York, is charged with three counts of making false statements. He faces a maximum sentence of 15 years in prison.
Mr. Bharara praised the investigative work of the SEC-OIG, and the Criminal Investigators of the United States Attorney’s Office. He also thanked the SEC for its assistance in the investigation.
The case is being prosecuted by the Office’s Public Corruption Unit. Assistant United States Attorney Martin S. Bell is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
SEC Compliance Examiner Charged in Manhattan Federal Court for Making False Statements Related to Prohibited Financial HoldingsRead the Press Release
Preet Bharara, United States Attorney for the Southern District of New York, and Carl W. Hoecker, Inspector General of the Securities and Exchange Commission, Office of the Inspector General (“SEC-OIG”), today announced charges against STEVEN GILCHRIST, a Securities and Exchange Commission (“SEC”) Compliance Examiner in the SEC’s New York Regional Office, for making false statements to the SEC regarding his ownership of various securities he was prohibited from holding under SEC ethical rules. GILCHRIST was arrested this morning and will be presented in Manhattan federal court before U.S. Magistrate Judge Kevin Nathaniel Fox this afternoon.
Manhattan U.S. Attorney Preet Bharara said: “As an SEC examiner, Steven Gilchrist had a duty to avoid conflicts of interest that might compromise or even appear to compromise his integrity. Instead, as alleged, he violated the SEC’s internal rules about stock ownership and repeatedly lied to the SEC about his holdings. We will not tolerate abuses of trust and violations of law by individuals tasked with safeguarding our markets.”
SEC Inspector General Carl Hoecker said: “Making false statements to government agencies undermines the foundation of public integrity. My office investigates these matters thoroughly and today’s arrest exemplifies our commitment to working with the SEC to improve and protect its programs and operations.”
According to the allegations contained in the Criminal Complaint unsealed today:
Among a Compliance Examiner’s duties in the SEC’s New York Regional Office are overseeing broker-dealers, investment advisers, investment companies, clearing agencies, and others regarding their compliance with the nation’s securities laws. As an SEC employee, Gilchrist is subject to rules promulgated by the SEC (“SEC Ethical Rules”) designed to prevent conflicts of interest between employees’ conduct and the SEC’s mission of enforcing the securities laws and regulating the markets.
Beginning in August 2010, changes to the SEC Ethical Rules prohibited SEC employees from purchasing or holding stock in entities directly regulated by the SEC, and required employees to submit any proposed personal transactions in securities to the SEC prior to executing them. The prohibited securities included those of several banks and broker-dealers, including banks with broker-dealer subsidiaries. Individuals who held such stock at the time the changes were implemented were directed to divest their holdings, and provided with instructions on how to do so.
GILCHRIST held stock in several such prohibited companies. As the rule changes took effect, GILCHRIST did not divest his holdings as required. Instead, he transferred his stocks into a new joint brokerage account he shared with a family member and over which he had complete control (the “Joint Account”). In addition, he purchased additional prohibited stock (the “Additional Stock”) without pre-clearing the purchase with the SEC.
On three occasions in 2013, GILCHRIST made false statements to the SEC regarding his stock holdings. First, in January 2013, he falsely certified through an electronic SEC compliance system that as of December 31, 2012, his holdings were in compliance with SEC regulations. Second, on February 13, 2013, he submitted an Executive Branch financial disclosure form that falsely stated that he “no longer held” certain of his prohibited stock holdings, and that omitted any mention of the Additional Stock. Third, on February 22, 2013, GILCHRIST falsely certified through an electronic SEC compliance system that he had sold certain other prohibited stocks. In reality, GILCHRIST continued to hold prohibited stock in six different companies at all relevant times throughout this period. Specifically, the stocks that GILCHRIST claimed he no longer held had only been transferred to the Joint Account, which he controlled.
GILCHRIST, 48, of Bethpage, New York, is charged with three counts of making false statements. He faces a maximum sentence of 15 years in prison.
Mr. Bharara praised the investigative work of the SEC-OIG, and the Criminal Investigators of the United States Attorney’s Office. He also thanked the SEC for its assistance in the investigation.
The case is being prosecuted by the Office’s Public Corruption Unit. Assistant United States Attorney Martin S. Bell is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
Rochester Man Sentenced for ExtortionRead the Press Release
ROCHESTER, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that John L. Lyons, of Caledonia, N.Y., who was convicted of extortion through interstate commerce, was sentenced to eight months in prison by U.S. District Court Judge Frank P. Geraci, Jr.
Assistant U.S. Attorney Richard A. Resnick, who handled the case, stated that between November 30, 2012 and December 20, 2012, the defendant posed as a private investigator in text messages to the president of a local company in Rochester who was involved in a contentious battle over control and operations of the family owned business. Specifically, Lyons, using his text messaging, stated to the victim that he had obtained incriminating information about the victim. The defendant further stated that if the victim paid Lyons $25,000 in cash, he would give the incriminating information to the victim, rather than turn over the information to the entities that hired Lyons to gather the information about victim.
The sentencing is the culmination of an investigation on the part of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Brian P. Boetig.
Rochdale Securities Trader Sentenced to 30 Months in Prison for Scheme Involving Apple Stock PurchaseRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, announced that DAVID MILLER, 41, of Rockville Centre, N.Y., was sentenced today by U.S. District Judge Robert N. Chatigny in Hartford to 30 months of imprisonment, followed by three years of supervised release, for his role in a fraudulent scheme to make large purchases of stock in Apple Inc. while employed as an institutional sales trader for Rochdale Securities LLC of Stamford. Judge Chatigny also ordered MILLER to spend the first six months of his supervised release in home confinement, and to perform 200 hours of community service.
According to court documents and statements made in court, MILLER, while working as an institutional sales trader at Rochdale Securities LLC (“Rochdale”) in Stamford, conspired with another individual to execute a trade to buy 1,625,000 shares of stock in Apple Inc. (“Apple”) on behalf of a Rochdale customer whose account Miller handled. As part of the scheme, MILLER and his co-conspirator had agreed that the co-conspirator would submit an order for Apple stock on October 25, 2012, the day Apple was scheduled to announce its earnings for the quarter, and would write the order in such a way that MILLER could later claim he misinterpreted it. MILLER would then execute a trade for 1,000 times the number of shares written in the order. If the trade proved profitable, MILLER and his co-conspirator would share in the profits. If the trade proved unprofitable, MILLER would claim human error, leaving Rochdale holding the losing position.
At approximately 9:31 a.m. on October 25, 2012, MILLER’s co-conspirator submitted an order for Apple that read: “b 125 ok (per 1/2 hr).” MILLER then began executing orders to buy 125,000 shares of Apple stock, purportedly on behalf of the Rochdale customer. Over the course of the day, MILLER entered multiple, separate orders in Rochdale’s order management system in the amount of 125,000 shares. After Apple announced its earnings later that day, the stock price began dropping and it became clear that the trade would not be profitable. When confronted, MILLER falsely claimed that he had made a mistake in ordering many multiples of what was written in a client’s order.
As a result of this scheme, Rochdale was left holding approximately 1,623,375 shares of Apple. It promptly traded out of the position, but suffered a loss $5,292,202.50. Regulatory requirements subsequently prohibited Rochdale from continuing to trade securities, which led directly to its cessation of all business operations.
While he was executing the scheme at Rochdale, MILLER also defrauded another broker-dealer into taking on a significant short position in Apple stock. Through a series of misrepresentations made over the course of several weeks, MILLER convinced the broker-dealer to sell 500,000 shares of Apple stock, falsely claiming that he was trading for the account of a company, which he had no relationship with and for which he was not authorized to trade. MILLER engaged in this part of the scheme to hedge against the large purchase of Apple stock he was executing at Rochdale. As a result of the scheme, MILLER placed the broker-dealer at risk of sustaining substantial losses. In the end, the broker was able to trade out of the position at a profit.
MILLER was arrested on December 4, 2012. On April 15, 2013, he pleaded guilty to one count of conspiracy to commit wire fraud and securities fraud, and one count of wire fraud.
Judge Chatigny ordered MILLER to make full restitution to Rochdale.
This matter was investigated by the Federal Bureau of Investigation. Acting U.S. Attorney Daly acknowledged the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) for their substantial assistance and cooperation during the investigation.
The case was prosecuted by Assistant U.S. Attorney Paul A. Murphy.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]Record $13 Billion Global Settlement Reached with JPMorgan over Misleading InvestorsRead the Press Release
WASHINGTON – The Justice Department, along with federal and state partners, today announced a $13 billion settlement with JPMorgan - the largest settlement with a single entity in American history - to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009. As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public - including the investing public - about numerous RMBS transactions. The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country. The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges.
This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group.
“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder. “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior. The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability. I want to personally thank the RMBS Working Group for its tireless work not only in this case, but also in the investigations that remain ongoing.”
The settlement includes a statement of facts, in which JPMorgan acknowledges that it regularly represented to RMBS investors that the mortgage loans in various securities complied with underwriting guidelines. Contrary to those representations, as the statement of facts explains, on a number of different occasions, JPMorgan employees knew that the loans in question did not comply with those guidelines and were not otherwise appropriate for securitization, but they allowed the loans to be securitized – and those securities to be sold – without disclosing this information to investors. This conduct, along with similar conduct by other banks that bundled toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.
“Through this $13 billion resolution, we are demanding accountability and requiring remediation from those who helped create a financial storm that devastated millions of Americans,” said Associate Attorney General Tony West. “The conduct JPMorgan has acknowledged - packaging risky home loans into securities, then selling them without disclosing their low quality to investors - contributed to the wreckage of the financial crisis. By requiring JPMorgan both to pay the largest FIRREA penalty in history and provide needed consumer relief to areas hardest hit by the financial crisis, we rectify some of that harm today.”
Of the record-breaking $13 billion resolution, $9 billion will be paid to settle federal and state civil claims by various entities related to RMBS. Of that $9 billion, JPMorgan will pay $2 billion as a civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), $1.4 billion to settle federal and state securities claims by the National Credit Union Administration (NCUA), $515.4 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $4 billion to settle federal and state claims by the Federal Housing Finance Agency (FHFA), $298.9 million to settle claims by the State of California, $19.7 million to settle claims by the State of Delaware, $100 million to settle claims by the State of Illinois, $34.4 million to settle claims by the Commonwealth of Massachusetts, and $613.8 million to settle claims by the State of New York.
JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual. That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight. An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations. If JPMorgan fails to live up to its agreement by Dec. 31, 2017, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.
The U.S. Attorney’s Offices for the Eastern District of California and Eastern District of Pennsylvania and the Justice Department’s Civil Division, along with the U.S. Attorney’s Office for the Northern District of Texas, conducted investigations into JPMorgan’s, Washington Mutual’s and Bear Stearns’ practices related to the sale and issuance of RMBS between 2005 and 2008.
“Today’s global settlement underscores the power of FIRREA and other civil enforcement tools for combatting financial fraud,” said Assistant Attorney General for the Civil Division Stuart F. Delery, co-chair of the RMBS Working Group. “The Civil Division, working with the U.S. Attorney’s Offices and our state and agency partners, will continue to use every available resource to aggressively pursue those responsible for the financial crisis.”
“Abuses in the mortgage-backed securities industry helped turn a crisis in the housing market into an international financial crisis,” said U.S. Attorney for the Eastern District of California Benjamin Wagner. “The impacts were staggering. JPMorgan sold securities knowing that many of the loans backing those certificates were toxic. Credit unions, banks and other investor victims across the country, including many in the Eastern District of California, continue to struggle with losses they suffered as a result. In the Eastern District of California, we have worked hard to prosecute fraud in the mortgage industry. We are equally committed to holding accountable those in the securities industry who profited through the sale of defective mortgages.”
“Today's settlement represents another significant step towards holding accountable those banks which exploited the residential mortgage-backed securities market and harmed numerous individuals and entities in the process,” said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger. “These banks packaged and sold toxic mortgage-backed securities, which violated the law and contributed to the financial crisis. It is particularly important that JPMorgan, after assuming the significant assets of Washington Mutual Bank, is now also held responsible for the unscrupulous and deceptive conduct of Washington Mutual, one of the biggest players in the mortgage-backed securities market.”
This settlement resolves only civil claims arising out of the RMBS packaged, marketed, sold and issued by JPMorgan, Bear Stearns and Washington Mutual. The agreement does not release individuals from civil charges, nor does it release JPMorgan or any individuals from potential criminal prosecution. In addition, as part of the settlement, JPMorgan has pledged to fully cooperate in investigations related to the conduct covered by the agreement.
To keep JPMorgan from seeking reimbursement from the federal government for any money it pays pursuant to this resolution, the Justice Department required language in the settlement agreement which prohibits JPMorgan from demanding indemnification from the FDIC, both in its capacity as a corporate entity and as the receiver for Washington Mutual.
“The settlement announced today will provide a significant recovery for six FDIC receiverships. It also fully protects the FDIC from indemnification claims out of this settlement,” said FDIC Chairman Martin J. Gruenberg. “The FDIC will continue to pursue litigation where necessary in order to recover as much as possible for FDIC receiverships, money that is ultimately returned to the Deposit Insurance Fund, uninsured depositors and creditors of failed banks.”
“NCUA’s Board extends our thanks and appreciation to our attorneys and to the Department of Justice, who have worked closely together for more than three years to bring this matter to a successful resolution,” said NCUA Board Chairman Debbie Matz. “The faulty mortgage-backed securities created and packaged by JPMorgan and other institutions created a crisis in the credit union industry, and we’re pleased a measure of accountability has been reached.”
“JPMorgan and the banks it bought securitized billions of dollars of defective mortgages,” said Acting FHFA Inspector General Michael P. Stephens. “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from JPMorgan, Washington Mutual and Bear Stearns not knowing about those defects. Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit. We are proud to have worked with the Department of Justice, the U.S. attorneys in Sacramento and Philadelphia and the New York and California state attorneys general; they have been great partners and we look forward to our continued work together.”
The attorneys general of New York, California, Delaware, Illinois and Massachusetts also conducted related investigations that were critical to bringing about this settlement.
“Since my first day in office, I have insisted that there must be accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said New York Attorney General Eric Schneiderman, Co-Chair of the RMBS Working Group. “This historic deal, which will bring long overdue relief to homeowners around the country and across New York, is exactly what our working group was created to do. We refused to allow systemic frauds that harmed so many New York homeowners and investors to simply be forgotten, and as a result we’ve won a major victory today in the fight to hold those who caused the financial crisis accountable.”
“JP Morgan Chase profited by giving California’s pension funds incomplete information about mortgage investments,” California Attorney General Kamala D. Harris said. “This settlement returns the money to California’s pension funds that JP Morgan wrongfully took from them.”
“Our financial system only works when everyone plays by the rules,” said Delaware Attorney General Beau Biden. “Today, as a result of our coordinated investigations, we are holding accountable one of the financial institutions that, by breaking those rules, helped cause the economic crisis that brought our nation to its knees. Even as the American people recover from this crisis, we will continue to seek accountability on their behalf.”
“We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” said Illinois Attorney General Lisa Madigan. “Today’s settlement with JPMorgan will assist Illinois in recovering its losses from the dangerous and deceptive securities that put our economy on the path to destruction.”
“This is a historic settlement that will help us to hold accountable those investment banks that played a role in creating and exacerbating the housing crisis,” said Massachusetts Attorney General Martha Coakley. “We appreciate the work of the Department of Justice and the other enforcement agencies in bringing about this resolution and look forward to continuing to work together in other securitization cases.”
The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. attorney’s offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.
The RMBS Working Group is led by five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Acting Assistant Attorney General for the Criminal Division Mythili Raman, Co-Director of the SEC’s Division of Enforcement George Canellos, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.
Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov.
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, 215-861-8525RMV Project Manager Sentenced for Extortion and Mail FraudRead the Press Release
BOSTON – A Massachusetts Registry of Motor Vehicle (RMV) project manager was sentenced today for scheming to extort other service station owners who wanted to obtain a license to conduct motor vehicle safety inspections.
Mark C. LaFrance, 51, of Braintree, was sentenced by U.S. District Court Judge George A. O’Toole to three years in prison, two years of supervised release, a $12,500 fine and forfeiture of $50,000 in illegal proceeds. In August 2013, LaFrance pleaded guilty to mail fraud and conspiracy to extort money under color of official right.
LaFrance, project manager for Vehicle Safety and Compliance Services at the RMV, had oversight responsibilities for the entire motor vehicle inspection program within Massachusetts. His co-defendant, Simon Abou Raad, owned service stations in Tewksbury and Tyngsboro. In Massachusetts, applications to obtain a license to conduct motor vehicle safety inspections are intended to be granted off a waiting list with consideration given to geographic location. An applicant for a vehicle inspection license must pay a $100 fee and the actual equipment costs about $2,500. Because the inspection network was at its capacity, the RMV was not granting new licenses off the waiting list.
LaFrance and Abou Raad operated what was essentially “a black market” for such licenses through the use of LaFrance’s official position. LaFrance provided to Abou Raad a list of vehicle inspection stations that had a low volume of inspections and/or were planning to surrender their license and sell the inspection equipment. Abou Raad contacted the service station owner and offered to buy the inspection license and equipment for prices usually in the range of $5,000 to $6,000. Abou Raad offered for sale such licenses and equipment to service station owners desirous of acquiring a license for prices between $50,000 to $75,000. Abou Raad then arranged the transaction to appear as if the service station owners selling and buying the license were merging as a new business entity or with a change in ownership. Although he was aware that these purported mergers were not bona fide, LaFrance either approved the issuing of a new license or permitted others in the RMV to approve the new license. After the fraudulent transaction was completed and payment was made to Abou Raad, he split the illegal proceeds with LaFrance. Through this illegal scheme, Abou Raad sold at least 10 inspection licenses and/or machines for approximately $657,000.
Abou Raad pleaded guilty and is scheduled to be sentenced on December 12, 2013.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys S. Theodore Merritt and Robert Fisher of Ortiz’s Public Corruption Unit.Procurador General De Ee.Uu. Anuncia Acuerdo Historico De Liquidacion De $13 Mil Millones Con Jpmorgan Por La Venta De Valores Respaldados Por Hipotecas DefectuosasRead the Press Release
SACRAMENTO, California - El procurador general de los EE.UU., Eric Holder, el procurador general auxiliar Tony West y el procurador federal de los Estados Unidos Benjamin B. Wagner anunciaron que los Estados Unidos han llegado a un acuerdo de liquidación civil con JPMorgan Chase relacionado con la venta que hicieron JPMorgan y otros dos bancos que adquirió JPMorgan en el 2008, Bear Stearns y Washington Mutual, de valores respaldados por hipotecas residenciales.
El acuerdo resuelve las posibles reclamaciones de miles de millones de dólares por las sanciones civiles bajo la Ley de Reforma, Recuperación y Ejecución de Instituciones Financieras (FIRREA, por sus siglas en inglés), así como las reclamaciones por las compensaciones de pérdidas de la Agencia Federal de Crédito para la Vivienda (FHFA, por sus siglas en inglés), la Administración Nacional de Cooperativas de Crédito (NCUA, por sus siglas en inglés), la Corporación Federal de Seguros de Depósitos (FDIC, por sus siglas en inglés) y los estados de California, Nueva York, Illinois, Massachusetts y Delaware. Este requiere que JPMorgan le pague $2 mil millones al Departamento de Justicia de los EE.UU., màs un total de $7 mil millones a las agencias estatales y federales, y provea una compensación adicional de $4 mil millones para los propietarios de viviendas y vecindarios afectados por la crisis financiera que comenzó en el año 2008.
El acuerdo de liquidación, que es de $2 mil millones de dólares, constituye la sanción civil màs grande que jamàs se le haya impuesto a algún banco por emitir valores respaldados por hipotecas defectuosas. Este es el resarcimiento màs grande de la historia de un caso en que haya trabajado la Procuraduría General de los EE.UU. para el Distrito Este de California.
El acuerdo de liquidación fue producto en parte de una investigación que hiciera el procurador auxiliar de los EE.UU. y los agentes especiales de la FHFA-OIG en el Distrito Este de California sobre las posibles violaciones de FIRREA en la titulación y venta de valores respaldados por hipotecas residenciales (RMBS, por sus siglas en inglés) por parte de JPMorgan como tal (no Bear Stearns ni Washington Mutual) entre los años 2005 y 2007. Luego de la investigación, el procurador federal Wagner concluyó que JPMorgan vendió miles de millones de dólares de RMBS con tasa no preferencial respaldados por grupos de préstamos hipotecarios que el banco sabía contenían préstamos que no cumplían con las guías de aseguramiento del tramitador del préstamo, estaban garantizados por propiedades con tasaciones infladas, estaban respaldados por índices incorrectos de préstamo-valor o deuda-ingresos o se originaron en violación a las leyes y regulaciones federales y estatales, a la vez que les dio información falsa a los inversionistas sobre la calidad de los préstamos en los grupos y el riesgo de pérdida.
En el proceso de adquisición de los grupos de préstamos hipotecarios de los tramitadores de préstamos, JPMorgan actuó con la “debida diligencia” al contratar empresas de aseguramiento externas para inspeccionar una muestra de los archivos de préstamos, generalmente entre 20 y 30 por ciento de los préstamos en un grupo. Estas empresas externas examinaron si los préstamos se realizaron de acuerdo con los estàndares de aseguramiento del tramitador del préstamo y si la documentación del préstamo cumplía con las leyes federales y estatales aplicables. Las empresas externas también realizaron las revisiones de valores para garantizar que las propiedades que servían como colaterales de los préstamos hubiesen sido correctamente tasadas.
Los inversionistas de RMBS no pudieron evaluar completamente el riesgo de pérdida de los incumplimientos de los prestatarios porque no tenían acceso directo a los datos subyacentes de los préstamos. JPMorgan sabía esto y les promocionó su supuestamente estricto proceso de diligencia debida a los inversionistas de RMBS potenciales.
Como parte del acuerdo de liquidación, JPMorgan admitió que las empresas externas de diligencia debida le informaron a JPMorgan que varios préstamos en las muestras al azar de préstamos hipotecarios estaban violando las guías de aseguramiento sin factores de compensación para justificar los préstamos. A pesar de esta información, JPMorgan liberó muchos de los préstamos en incumplimiento a los grupos de titulación que compró y luego los vendió a los inversionistas. De acuerdo con un informe de prueba de una de las empresas externas de diligencia debida, el 27 por ciento de los préstamos de la muestra que revisó la empresa en 2006 y a principios de 2007 recibió la clasificación de préstamos hipotecarios en incumplimiento o “rechazados”. JPMorgan luego liberó la mitad de esos préstamos a los grupos que se vendieron a los inversionistas. Aunque la diligencia debida en las muestras al azar indicó que los grupos de titulación muy posiblemente contenían muchos màs préstamos con violaciones de aseguramiento, JPMorgan no identificó ni eliminó esos préstamos del grupo. Por lo tanto, tal y como lo admite JPMorgan en el acuerdo de liquidación, no les reveló a los inversionistas que los RMBS incluían préstamos hipotecarios que no cumplían con las guías de aseguramiento aplicables. El banco también admitió en el acuerdo de liquidación que no reveló que tenía una pràctica establecida de admitir préstamos en el grupo para los que los valores de la propiedad en garantía determinados en el proceso de diligencia debida diferían de la tasación del tramitador en hasta un 15 por ciento, incluso cuando el índice préstamo-valor era tan alta como 100 por ciento.
JPMorgan también admitió que en una ocasión un empleado de JPMorgan, quien participó en la adquisición de grupos de préstamos, les advirtió a sus supervisores que los grupos contenían préstamos hipotecarios de baja calidad que no deberían comprarse ni titularse. A pesar de la advertencia, JPMorgan compró el grupo y tituló muchos de los préstamos.
Entre otros asuntos civiles resueltos como parte del acuerdo de liquidación anunciado hoy se incluyen las reclamaciones relacionadas con la titulación y venta de valores respaldados por hipotecas por parte de Bear Stearns y Washington Mutual entre 2005 y 2007. Ademàs de las reclamaciones del Departamento de Justicia de los EE.UU., el acuerdo de liquidación resuelve las demandas que presentaron la FHFA, NCUA y el procurador general de Nueva York, y las posibles reclamaciones de la FDIC, el procurador general de California y los procuradores generales de los estados de Illinois, Massachusetts y Delaware. La parte de la FHFA del acuerdo de liquidación se anunció previamente. El acuerdo de liquidación solo libera las reclamaciones civiles monetarias en contra de JPMorgan y las corporaciones afiliadas. No libera ninguna posible responsabilidad penal ni a ningún individuo de demandas civiles ni penales. JPMorgan ha acordado cooperar con el Departamento de Justicia en la investigación actual de esta conducta.
“Los abusos en la industria de valores respaldados por hipotecas favorecieron el deterioro de los estàndares de aseguramiento entre muchos prestamistas hipotecarios, y alimentó la crisis financiera”, dijo el procurador federal Wagner. “Los efectos fueron sorprendentes. JPMorgan vendió màs de $25 mil millones en certificados de RMBS con tasa no preferencial respaldados por préstamos tóxicos. Las cooperativas de crédito, los bancos comerciales y muchos inversionistas en el país fueron víctimas, incluyendo algunos en el Distrito Este de California, y sufrieron pérdidas por miles de millones de dólares. Esta oficina, que sirve a un distrito que fue saqueado por la crisis financiera, tuvo una función importante en que se hiciera justicia en este caso. Quiero agradecer particularmente a Rich Elias, Colleen Kennedy y Kelli Taylor de esta oficina por su extraordinario trabajo en este caso”.
Michael P. Stephens, inspector general interino de la FHFA declaró: "JP Morgan y los bancos que compró, Bear Stearns y Washington Mutual, vendieron miles de millones de dólares de hipotecas defectuosas en los mercados de valores, lo que ayudó a precipitar la crisis financiera. Los inversionistas, incluyendo Fannie Mae y Freddie Mac, sufrieron pérdidas enormes al comprar RMBS de JPMorgan, Washington Mutual y Bear Stearns sin saber sobre esos defectos. El acuerdo de liquidación de hoy es significativo, pero no es de ninguna manera la última medida que tomaran la FHFA-OIG y sus asociados en el cumplimiento de la ley para que los responsables de los actos de fraude y engaño rindan cuentas. Estamos orgullosos de haber trabajado en este caso con el procurador general de los EE.UU. Benjamin Wagner y los abogados de su oficina en el Distrito Este de California y esperamos continuar trabajando juntos".
La investigación del Distrito Este de California fue realizada por los procuradores auxiliares de los EE.UU. Richard M. Elias y Colleen M. Kennedy, junto con Kelli L. Taylor, Jefe de la Unidad Ejecución Civil Afirmativa, y bajo la supervisión de David Shelledy, Jefe de la División Civil, con la asistencia de los agentes especiales de la FHFA OIG, en conjunto con el Grupo de Trabajo de Valores Respaldados por Hipotecas Residenciales, un componente de la Unidad de Ejecución contra el Fraude Financiero.
La unidad de ejecución la creó el presidente Obama en el 2009 para luchar con mano dura, coordinada y proactiva e investigar y procesar los delitos financieros. Con màs de 20 agencias federales, 94 oficinas de procuradores generales de los EE.UU. y socios estatales y locales, es la màs amplia colaboración de agencias de ejecución legal, investigación y regulación que se haya ensamblado nunca para combatir el fraude. Para obtener màs información sobre la unidad de ejecución, por favor visite:
www.StopFraud.gov.
Pine Ridge Man Guilty of Two AssaultsRead the Press Release
United States Attorney Brendan V. Johnson announced that Lee Larney, a/k/a “Southern Wind,” 32, of Pine Ridge, South Dakota, appeared before U.S. Magistrate Judge Veronica L. Duffy on November 14, 2013, and pled guilty to a charge of Assault Resulting in Serious Bodily Injury and a charge of Assault on a Federal Officer.
The maximum penalty for Assault Resulting in Serious Bodily Injury is 10 years of imprisonment and/or a $250,000 fine, and the maximum penalty for Assault on a Federal Officer is 8 years of imprisonment and/or a $250,000 fine.
In April 2012, at Porcupine, Larney struck a man several times in the face, causing injuries to the man’s jaw, teeth, and gums which required surgery. He also experienced ear pain and a temporary loss of hearing.
In August 2012, near Oglala, Larney punched an Oglala Sioux Tribe police officer in the face while the officer was attempting to arrest him for intoxication.
The investigations were conducted by the Federal Bureau of Investigation, the Bureau of Indian Affairs Office of Justice Services, and the Oglala Sioux Tribe Department of Public Safety. The cases are being prosecuted by Assistant U.S. Attorney Sarah Collins.
Presentence investigations were ordered and sentencing dates will be set. Larney was remanded to the custody of the U.S. Marshals Service pending sentencing.
Phoenix, Arizona Man Faces Federal Child Sexual Exploitation Charges in New MexicoRead the Press Release
ALBUQUERQUE – Noah John Carney, 19, of Phoenix, Ariz., made his initial appearance in federal court in Las Cruces, N.M., on a criminal complaint charging him with enticing a minor to engage in explicit conduct and attempting to induce a minor to produce child pornography.
According to the criminal complaint, in Aug. 2013, a 13-year-old child (child victim) began “chatting” with Carney on her cellular telephone after meeting him through an Internet game. Carney allegedly told the child victim that he was a 19-year-old man and learned that the child victim was 13-years-old. Over the next two weeks, Carney allegedly asked the child victim to send him naked photos of herself. Carney also allegedly emailed a nude photo of himself to the child victim. The complaint further alleges that Carney instructed the child victim on how to access and view pornography on the Internet. Carney also allegedly inquired about meeting the child victim at hotels near her home for the purpose of engaging in sexual conduct.
According to the complaint, the FBI performed a search of the child victim’s cellular telephone and Kindle device, and found Carney’s nude photo and some of the “chats” between Carney and the child victim. In mid-Sept. 2013, the Albuquerque Police Department (APD) joined the FBI’s investigation and an APD officer assumed the child victim’s on-line identity and began communicating with Carney. During an Oct. 3, 2013 “chat,” Carney allegedly asked the officer who was posing as the child victim for a sexually explicit photo, and on the following day, Carney allegedly sent the officer a video of an adult engaged in sexually explicit conduct.
Carney was arrested in Phoenix by the FBI on Oct. 24, 2013, and was transferred to Las Cruces yesterday. If convicted on the charges in the complaint, Carney faces a federal prison sentence of not less than 25 years and not more than 50 years. If convicted, Carney also would be required to register as a sex offender. Carney faces enhanced penalties because he previously was convicted of a sex-related offense. Charges in criminal complaints are merely accusations and criminal defendants are presumed innocent unless found guilty beyond a reasonable doubt.
This case was investigated by the Las Cruces office of the FBI and APD, and is being prosecuted by Special Assistant U.S. Attorney Anna Wright of the U.S. Attorney’s Las Cruces Branch Office. The case was filed as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice (DOJ) to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and DOJ’s 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 http://www.justice.gov/psc/.
Peruvian Woman Convicted of Running Sex Trafficking VentureRead the Press Release
ALEXANDRIA, Va. – Ruth Antuanet Miller, 35, originally from Peru but now a resident of Arlington, Va., pleaded guilty today to Conspiracy to Commit Sex Trafficking by Force, Fraud and Coercion.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia, Scott R. Rittenberg, Acting Special Agent in Charge of U.S. Immigration and Customs Enforcement, Homeland Security Investigations in Washington, D.C., and Colonel Edwin C. Roessler, Jr., Fairfax County Chief of Police, made the announcement after the plea was accepted by United States District Judge Claude M. Hilton.
Miller faces a maximum penalty of life imprisonment when she is sentenced on March 28, 2014.
In a statement of facts filed with the plea agreement, Miller admitted that from May 2011 through July 2013, she was the leader of a venture that prostituted women, including illegal aliens, at various hotels and motels in Arlington, Alexandria, Falls Church, and Fairfax County, Virginia.
Miller coerced some of the women to prostitute by claiming that she had ties to U.S. immigration agencies and that she could have the victims removed from the United States if they refused. Miller coerced other women by claiming that she had ties with local law enforcement agencies and that the victims would be arrested if they did not perform commercial sex acts. One victim incurred a debt to Miller and Miller used a form of debt bondage to induce this victim to perform sex acts. Miller also claimed to be affiliated with a criminal street gang and implicitly threatened victims with harm if they failed to comply with Miller’s demands.
Miller allowed the victims to keep 50% of the money they earned from prostitution, while victims were required to pay Miller the other 50%. Although the prices varied over time, Miller typically instructed the women to charge $60 for 10 to 15 minutes of sex, $80 for 20 minutes, and $100 for one hour. Miller’s co-conspirators assisted her in operating the venture by doing such things as booking hotel rooms, helping her post advertisements on the Internet, transporting the victims, and collecting money from the victims. Miller admitted that she trafficked at least five victims.
This case was investigated by Homeland Security Investigations and the Fairfax County Police Department with the assistance of the Arlington County Police Department and the City of Falls Church Police Department. Assistant United States Attorneys Michael J. Frank and Inayat Delawala are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Owner of Local Tax Preparation Franchise Sentenced on Tax Conspiracy ChargesRead the Press Release
St. Louis, MO – JIMI CLARK, owner of a Mo' Money Tax franchise, was sentenced to 20 months in prison for falsely claiming educational tax credits on 47 returns. The American Opportunity Credit (AO Credit) allows certain taxpayers with educational expenses to take a refundable credit on their income taxes.
Jimi Clark supervised the preparation of tax returns at his franchise, addressed specific questions about returns as they arose, and generally supervised all preparers working in his franchise including his co-defendants, Justin Buford, Leslie Chaney, Ray Reed and Mary Taylor.
The defendants were trained on educational tax credits, including the American Opportunity Credit (AO Credit). Clark abused the AO Credit program at the Mo' Money franchise during the 2009 filing season to attract and keep clients. The office filed at least 47 returns with false and inflated AO Credit line items. On the vast majority of the line items on which AO Credits were claimed on the false returns, Clark and his preparers claimed exactly $3,765 in qualified education expenses. Out of 494 tax returns prepared for the 2009 tax year at Clark's franchise, more than half, 288 returns, claimed AO credits. On each of the 47 returns, the taxpayers did not incur the educational expenses claimed and were, therefore, not entitled to the AO credits. Defendants Chaney, Reed and Buford went so far as to false claim educational expenses on their personal 2009 returns. The tax loss to the United States on just the 47 returns exceeds $50,000. The tax loss for all 288 returns on which educational credits were claimed for the office in 2009 exceeds $300,000.
Sybil Smith, Special Agent in Charge of IRS Criminal Investigation said, "While most return preparers provide excellent service to their clients, a few unscrupulous tax preparers file false and fraudulent returns to defraud the government, the tax-paying public and their own clients."
Jimi Clark, Memphis, Tennessee, pled guilty in July to conspiracy to commit tax fraud and aiding and abetting the preparation of false tax returns. He appeared today before U.S. District Judge Audrey Fleissig. Co-defendant Mary Taylor, Memphis, TN, was also sentenced today to 6 months prison for her part in the scheme.
Co-defendants Justin Buford, Memphis, Tennessee; Leslie Chaney, St. Louis, Missouri; Mary Taylor, Memphis, Tennessee; and Ray Reed, of St. Louis, Missouri, previously pled guilty to related charges and have been sentenced.
This case was investigated by Internal Revenue Service Criminal Investigation. Assistant United States Attorney Tom Albus is handling the case for the U.S. Attorney's Office.
Ohkay Owingeh Woman Pleads Guilty to Assaulting Tribal OfficerRead the Press Release
ALBUQUERQUE – Crystal Torres, 27, pleaded guilty this morning to an assault with a dangerous weapon charge under a plea agreement with the U.S. Attorney’s Office.
Torres, a member and resident of Ohkay Owingeh Pueblo, was arrested on Feb. 14, 2013, on an indictment charging her with (1) assaulting a woman with a hammer, and (2) assaulting a man with a knife. According to the indictment, both offenses occurred on Jan. 22, 2012, on Ohkay Owingeh Pueblo lands. Court filings reflect that the victim of the second assault was an officer of the Ohkay Owingeh Tribal Police Department.
This morning, Torres pled guilty to the second count of the indictment charging her with assault with a dangerous weapon, a knife. According to Torres’s plea agreement, on Jan. 22, 2012, tribal officers were dispatched to Torres’s residence on Ohkay Owingeh Pueblo. When the officers arrived, they observed Torres running towards a road and into traffic. When the victim attempted to catch Torres to get her out of the lane of traffic after three vehicles nearly struck her, Torres pulled out a hunting knife and advanced toward the victim, ignoring the victim’s commands that she drop the knife.
Under the terms of the plea agreement, Torres faces a sentence of 24 months in federal prison but retains the right to request a lower sentence. Torres remains on conditions of release pending her sentencing hearing, which has yet to be scheduled.
This case was investigated by the Northern Pueblos Agency of the BIA’s Office of Justice Services, and is being prosecuted by Assistant U.S. Attorney Elaine Y. Ramirez.
Ohio Men Indicted for Drug Trafficking in Harrison CountyRead 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
MARTINSBURG, WV – Two Chillicothe, Ohio, men were indicted by a federal grand jury today for conspiring to sell drugs in Harrison County earlier this month, and for using firearms in furtherance of the alleged drug distribution.
According to United States Attorney William J. Ihlenfeld, II, Dillon James BARILLARO, age 20, and Nicholas Stephen GARDNER, age 21, were charged with conspiring to distribute cocaine and heroin on November 4, 2013. Both men are alleged to have sold the drugs on that date to an informant near the Bridgeport Hampton Inn. Following the controlled purchase, a search of the room where the men were staying was conducted by officers from the Greater Harrison County Drug Task Force. Additional quantities of cocaine and heroin were found during the search, along with two firearms, ammunition, and $1,768 in United States Currency.
Both BARILLARO and GARDNER face charges of conspiracy to distribute drugs, the distribution of drugs, the possession of drugs with the intent to distribute, and maintaining a drug involved premise. BARILLARO faces one count of brandishing a firearm in connection with drug trafficking, and GARDNER is charged with possession of a firearm in connection with drug trafficking.
Both men face up to 20 years in prison on the drug charges. BARILLARO faces a minimum of 7 years in prison on the brandishing charge, consecutive to any other sentence he may receive. GARDNER faces a minimum of 5 years in prison on the gun possession charge, consecutive to any other sentence he may receive.
The case will be prosecuted by Assistant United States Attorney Shawn A. Morgan and was investigated by the Greater Harrison County Drug & Violent Crimes Task Force, consisting of officers and agents from the Clarksburg Police Department, the Bridgeport Police Department, the West Virginia State Police, and the Drug Enforcement Administration. Investigative support for the task force is provided by the Bureau of Alcohol, Tobacco, Firearms & Explosives, the U.S. Marshals Service, and the U.S. Postal Inspection Service.
Both men are presumed innocent until and unless they are proven guilty.
Ohio Man Who Assaulted State Trooper Gets 35-year Federal Prison SentenceRead the Press Release
Defendant Robin Slater ran one of region’s largest-ever marijuana distribution conspiracies
HUNTINGTON, W.Va. – An Ohio drug dealer who assaulted a West Virginia state trooper during a January 2012 traffic stop was sentenced yesterday to 35 years in federal prison for a large-scale marijuana distribution conspiracy, announced U.S. Attorney Booth Goodwin. Robin Earl Slater, 51, of Langsville, Ohio, previously pleaded guilty in August to four federal charges: conspiracy to distribute 100 kilograms or more of marijuana; possession of firearms in furtherance of a marijuana conspiracy; being a convicted felon in possession of firearms; and obstruction of justice. The massive marijuana conspiracy was discovered in the traffic stop in which Slater attacked the state trooper. Slater’s sentence was handed down by Chief United States District Judge Robert C. Chambers in Huntington.
Slater’s sentence is the longest in recent memory in a marijuana conspiracy case in the Southern District of West Virginia. Slater conspired to distribute between 3,000 and 10,000 kilograms of marijuana by supplying the drug to lower-level dealers in Putnam and Kanawha counties, as well as out of state.
On January 23, 2012, a West Virginia state trooper followed Slater’s vehicle into a store parking lot in St. Albans, W.Va., after observing the defendant commit several moving violations. During the traffic stop, Slater, who had six firearms, nearly $25,000 cash, and drug ledgers in his car, made a violent attempt to flee. He bit the state trooper on the arm, inflicting a deep wound, and then pepper sprayed him. Police ultimately were able to restrain Slater and arrest him. The evidence that they recovered from his car allowed them to crack his distribution ring.U.S. Attorney Goodwin said, “Mr. Slater’s attack on a state trooper was a brazen and dangerous attempt to protect his drug enterprise. We’ve seen far too many law enforcement tragedies in situations like this: routine encounters that quickly turn violent.” Goodwin continued, “Law enforcement officers risk their lives every day to keep the rest of us safe. I will continue to spare no effort in prosecuting anyone who attacks them.”
Slater told police that the money he had was from individuals to whom he had supplied marijuana. Slater also admitted that he possessed firearms to protect himself and the proceeds of his drug activity.
The defendant had two prior felony drug convictions related to the distribution of marijuana.
Slater was released on bond from his initial state charges prior to being indicted on federal charges. In August 2012, Slater, while a fugitive on the federal charges, again attempted to flee a traffic stop, led police in Pulaski, Ky., on a high-speed chase over several miles, at one point nearly striking a police officer on the side of the road.Chief United States District Judge Robert C. Chambers said at sentencing that Slater was a “danger to law enforcement,” and further stated that the severe sentence was, in part, to punish Slater for putting law enforcement at risk – both when he initially assaulted a West Virginia state trooper and when he fled from police at high speeds in Kentucky.
This case was brought as part of Project Safe Neighborhoods. Project Safe Neighborhoods is a nationwide commitment to reduce gun crime in the United States by networking existing local programs targeting gun crime.
The West Virginia State Police, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Homeland Security Investigations and the Putnam County Sheriff’s Department conducted the investigation. Assistant United States Attorney Steven Loew handled the prosecution.
Nursing Home Operator to Pay $48 Million to Resolve Allegations <br /> That Six California Facilities Billed for Unnecessary TherapyRead the Press Release
The Ensign Group Inc., a skilled nursing provider based in Mission Viejo, Calif., that operates nursing homes across the western U.S. has agreed to pay $48 million to resolve allegations that it knowingly submitted to Medicare false claims for medically unnecessary rehabilitation therapy services, the Justice Department announced today. Six of Ensign’s skilled nursing facilities in California allegedly submitted the false claims: Atlantic Memorial Healthcare Center, located in Long Beach; Panorama Gardens, located in Panorama City; The Orchard Post-Acute Care (a.k.a. Royal Court), located in Whittier; Sea Cliff Healthcare Center, located in Huntington Beach; Southland, located in Norwalk; and Victoria Care Center, located in Ventura.
“Skilled nursing facilities that place their own financial interests above the needs of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”
Between January 1, 1999, and August 31, 2011, these six Ensign skilled nursing facilities allegedly submitted false claims to the government for physical, occupational and speech therapy services provided to Medicare beneficiaries that were not medically necessary. Specifically, Ensign provided therapy to patients whose conditions and diagnoses did not warrant it, solely to increase its reimbursement from Medicare. The government further alleged that Ensign created a corporate culture that improperly incentivized therapists and others to increase the amount of therapy provided to patients to meet planned targets for Medicare revenue. These targets were set without regard to patients’ individual therapy needs and could only be achieved by billing at the highest reimbursement levels. The government also alleged that Ensign billed for inflated amounts of therapy it had not provided and that certain patients were kept in these facilities for periods of time exceeding what was medically necessary for treatment of their conditions.“The case against The Ensign Group involves a company that regularly bilked Medicare by submitting inflated bills that, in some cases, sought money for services that simply were never provided to patients,” said U.S. Attorney for the Central District of California André Birotte Jr. “This settlement – one of the largest Medicare fraud cases against a nursing home chain in U.S. history – demonstrates our commitment to protecting taxpayers who fund important programs that benefit millions of Americans, but don’t want to see their hard-earned money wasted on fraud or abuse.”
In addition to paying the settlement amount, Ensign also agreed that each of its skilled nursing facilities across the nation would be bound by the terms of a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG).
"Billing Medicare for costly, unnecessary skilled nursing services -- as the government alleged here -- inflates health care costs borne by taxpayers," said Special Agent in Charge for the Los Angeles Region of the HHS-OIG Glenn R. Ferry. “This settlement again puts on notice those who would consider defrauding federally funded health care programs."
This civil settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered more than $16.7 billion through False Claims Act cases, with more than $11.9 billion of that amount recovered in cases involving fraud against federal health care programs.
The allegations settled today arose from lawsuits filed by two former Ensign therapists under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring suit on behalf of the government and to share in any recovery. The dollar amount that the whistleblowers in this case, Gloria Patterson and Carol Sanchez, will receive has not been determined. The lawsuits are captioned as United States of America ex rel. Gloria Patterson v. Ensign Group Inc., Case No. SACV 06-6956 CJC (ANx) (C.D. Calif.) and United States of America ex rel. Carol Sanchez v. Ensign Group Inc., Case No. SACV 06-0643 CJC (ANx) (C.D. Calif.).
The case was handled by the U.S. Attorney’s Office for the Central District of California, with assistance from the Commercial Litigation Branch, Civil Division, U.S. Department of Justice and the U.S. Department of Health and Human Services Office of Inspector General. This action was supported by the Elder Justice and Nursing Home Initiative, which coordinates the department’s activities combating elder abuse, neglect and financial exploitation, especially as they impact beneficiaries of Medicare, Medicaid and other federal health care programs.
The claims settled by this agreement are allegations only; there has been no determination of liability.Nursing Home Operator Agrees to Pay $48 Million to Resolve Allegations That Six SoCal Facilities Billed for Unnecessary TherapyRead the Press Release
LOS ANGELES – A Mission Viejo-based corporation that operates nursing homes across the western United States has agreed to pay $48 million to resolve allegations that it knowingly submitted inflated bills to Medicare for therapy services that were medically unnecessary or were never provided to elderly patients at six of its Southern California skilled nursing facilities.
The settlement comes in a case against The Ensign Group, Inc. that was unsealed late Monday by a federal judge in Los Angeles.
The Ensign Group operated skilled nursing facilities that allegedly submitted false claims to Medicare. Between January 1, 1999, and August 31, 2011, the six Ensign facilities allegedly submitted false claims to the government for physical, occupational and speech therapy services provided to Medicare beneficiaries that were not medically necessary. The government alleged that certain patients were kept in these facilities for periods of time that exceeded what was medically necessary for the treatment of their conditions.
The six Ensign facilities named in two federal “whistleblower” lawsuits are the Atlantic Memorial Healthcare Center in Long Beach, Panorama Gardens in Panorama City, Orchard Post Acute Care (commonly called Royal Court) in Whittier, Sea Cliff Healthcare Center in Huntington Beach, Southland in Norwalk, and Victoria Care Center in Ventura.
The lawsuit specifically alleged that Ensign improperly incentivized therapists and others to increase the amount of therapy provided to patients to meet planned targets for Medicare revenue, which were set without regard to patients' individual therapy needs and could only be achieved by billing at the highest reimbursement levels.
The six facilities also allegedly submitted claims for services that were not provided.
“The case against The Ensign Group involves a company that regularly bilked Medicare by submitting inflated bills that, in some cases, sought money for services that simply were never provided to patients,” said United States Attorney André Birotte Jr. “This settlement – one of the largest of its kind in United States history – demonstrates our commitment to protecting taxpayers who fund important programs that benefit millions of Americans, but don’t want to see their hard-earned money wasted on fraud or abuse.”
Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the Office of Inspector General of the U.S. Department of Health and Human Services. “Billing Medicare for costly, unnecessary skilled nursing services – as the government alleged here – inflates health care costs borne by taxpayers,” said “This settlement again puts on notice those who would consider defrauding federally funded health care programs.”
Ensign has entered into a Corporate Integrity Agreement with the HHS Inspector General’s Office.
“Skilled nursing facilities that place their own financial interests above the needs of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division, Stuart F. Delery. “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”
The settlement resolves lawsuits filed by two former Ensign employees under the qui tam, – or whistleblower – provisions of the False Claims Act, which allow private citizens to bring suit on behalf of the government and share in any recovery. It has yet to be determined how much money the whistleblowers in this case, Gloria Patterson and Carol Sanchez, will receive in United States of America ex rel. Gloria Patterson v. Ensign Group, Inc., SACV 06-6956-CJC (Central District of California) and United States of America ex rel. Carol Sanchez v. Ensign Group, Inc., SACV 06-0643-CJC (Central District of California).
The case was resolved by the United States Attorney’s Office, with assistance from the Commercial Litigation Branch, Civil Division, U.S. Department of Justice; and the U.S. Department of Health and Human Services’ Office of Inspector General.
In settling these cases, Ensign did not admit liability.
Release No. 13-131
Nevada Man Pleads Guilty to Assaulting Fort Hall Correction Center OfficerRead the Press Release
POCATELLO – Clayton Amos Lossing, 53, of McDermitt, Nevada, pleaded guilty today in United States District Court to the indictment charging him with one count of assaulting an officer, U.S. Attorney Wendy J. Olson announced. Lossing was indicted by a federal grand jury in Pocatello on July 23, 2013.
According to the plea agreement, on May 5, 2013, Lossing was arrested for intoxication by Fort Hall Police and transported to the Fort Hall Correction Center. During the booking process, Lossing kneed an officer in the groin, causing the officer significant pain requiring medical attention.
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.
Lossing is scheduled to be sentenced on January 29, 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.
Murdo Man Sentenced for Possession of A Firearm by A Prohibited PersonRead the Press Release
United States Attorney Brendan V. Johnson announced that a Murdo, South Dakota, man convicted of Possession of a Firearm by a Prohibited Person was sentenced on November 7, 2013, by U.S. District Judge Roberto A. Lange.
Shaun Sporrer, age 42, was sentenced to 30 months of imprisonment, 18 months of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
Sporrer was indicted for the above charge by a federal grand jury on April 2, 2013. He pled guilty on August 13, 2013.
The conviction stems from an incident occurring on March 1, 2013, in which Sporrer pulled a revolver on a neighbor. Sporrer has previous domestic violence convictions, and as a result is prohibited from owning firearms.
The investigation was conducted by the Jones County Sheriff’s Office, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Northern Plains Safe Trails Drug Enforcement Task Force. Assistant U.S. Attorney Jay P. Miller prosecuted the case.
Sporrer was immediately turned over to the custody of the U.S. Marshals Service.
Mexican National Sentenced to 48 Months in Prison for Part in Drug Distribution ConspiracyRead the Press Release
LAFAYETTE, La. –United States Attorney Stephanie A. Finley announced today that Joel Sotomayer Cervantes, 36, of Mexico, was sentenced by U.S. District Judge Richard T. Haik, to 48 months in prison and three years of supervised release for conspiracy to possess with intent to distribute cocaine and heroin. The defendant pleaded guilty to charges on April 24, 2013.
According to evidence presented at the guilty plea, from January 1, 2008 until March 1, 2011, Joel Cervantes along with Jesus Silverio Cervantes, Ramon Gaudalupe Aldama-Rodriguez, Jose Manuel Mojica-Echeverria, Turon Ajure Leduff, Nora Myriam Monge, and Rene Omar Monge conspired to distribute more than one kilogram of heroin and possessed with intent to distribute more than five kilograms of cocaine. Jesus Cervantes ran the cocaine and heroin trafficking organization from an Abbeville residence that Joel Cervantes owned. The drugs were distributed in the Acadiana and Baton Rouge areas.
The defendant was arrested as part of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation. The Drug Enforcement Administration, the Baton Rouge Police Department, and the Vermillion Parish Sheriff’s Office participated in this OCDETF investigation. Assistant U.S. Attorney Brett L. Grayson prosecuted the case.
The OCDETF program is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional level drug trafficking organizations, and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.
Maryland Man Sentenced to 11 ½ Years in Prison for 2012 Shooting in Southeast Washington-He and Another Man Targeted Victims, Who Were in A Car-Read the Press Release
WASHINGTON - Delonte Smith, 20, of Capitol Heights, Md., was sentenced today to a prison term of 11 ½ years on charges stemming from a shooting that took place last year in Southeast Washington, U.S. Attorney Ronald C. Machen Jr. announced.
Smith, also known as “Unc,” was found guilty in July 2013 in the Superior Court of the District of Columbia of one count of conspiracy to commit a crime of violence, two counts of assault with a dangerous weapon, two counts of possession of a firearm during a crime of violence, and two counts of simple assault. The verdicts followed a two-week trial. Smith was sentenced by the Honorable Heidi M. Pasichow. Upon completion of his prison term, he will be placed on three years of supervised release.
According to the government’s evidence, at about 7:30 p.m. on Dec. 11, 2012, Smith approached a vehicle that was parked in the 5000 block of H Street SE and told the man in the driver’s seat, Christopher Ballard, to get out. When Mr. Ballard refused, Smith tried to open the car door, which was locked. He then walked around the vehicle to the passenger’s side and told the woman in the front passenger’s seat to get out of the car.
In the meantime, Smith’s best friend and accomplice, Jeffrey Ray Tyson, 20, also known as “Baby Boy,” approached the driver’s side door and produced a handgun. Tyson tapped several times on the driver’s side window with the handgun and ordered Mr. Ballard out of the car. Mr. Ballard refused, put the car into drive, and attempted to drive away from the area. Tyson fired six shots at the vehicle, at least two of which hit the car. Although neither of the people in the car was hit, the two rounds that struck the vehicle were in the direction of the driver’s head. The car’s occupants flagged down patrol officers just a few blocks away.
Tyson died as the result of a homicide five days later, in an unrelated incident.
In a related matter, Smith’s brother, Antoine Mayhand, 28, was sentenced Nov. 15, 2013 to a five-year prison term for obstruction of justice. According to the government’s evidence, on May 28, 2013, Mayhand confronted Mr. Ballard in Southeast Washington and stated, “I should put a knife on you and stab you.” Mr. Ballard called 911 and got away unharmed. Mayhand was arrested on the day of the threat and has been in custody ever since.
On July 8, 2013, less than 48 hours before he was scheduled to testify in the trial against Smith, Mr. Ballard, 38, was murdered in Southeast Washington. The murder of Mr. Ballard remains under investigation and no arrests have been made.
In announcing the sentence, U.S. Attorney Machen expressed appreciation for the work of the Metropolitan Police Department (MPD) which investigated the case. He also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Antoinette Sakamsa and Tony Griffith; Litigation Technology Specialists Leif Hickling and Claudia Gutierrez; Victim/Witness Advocate Jim Brennan, Victim/Witness Supervisor Michael Hailey, Victim/Witness Security Specialist Tanya Via, and Victim/Witness Services Coordinator David Foster. Finally, he praised the work of Assistant U.S. Attorney Richard E. DiZinno, who prosecuted the case.
13-399Man from Mexico Sentenced for Conspiracy to Distribute MethamphetamineRead the Press Release
United States Attorney Brendan V. Johnson announced that a man from Mexico convicted of Conspiracy to Distribute of a Controlled Substance was sentenced on November 15, 2013, by Chief Judge Jeffrey L. Viken, U.S. District Court.
Lorenzo Camacho Tarango a/k/a "Lencho", a/k/a "Lecho", age 43, was sentenced to 120 months of imprisonment, 5 years of supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
The charge relates to Tarango conspiring with Abraham Romero and others to distribute at least 500 grams or more of methamphetamine in the District of South Dakota between 2010 and 2012. Tarango would deliver methamphetamine to Romero, and Romero would then engage in further distribution within the state. Tarango pled guilty to the charge on July 23, 2013.
This case was investigated by the Federal Bureau of Investigation, Northern Plains Safe Trails Drug Enforcement Task Force, South Dakota Division of Criminal Investigation, and the Bureau of Indian Affairs Office of Justice Services. Assistant U.S. Attorney Ted L. McBride prosecuted the case.
Tarango remains in the custody of the U.S. Marshals Service.
Lumberton Man Sentenced for Violation of Clean Air ActRead the Press Release
Gene Cornell Smith, 46, of Lumberton, New Jersey, was sentenced today to 42 months in prison for violating the Clean Air Act. Smith bought a warehouse, in the Logan section of Philadelphia, and got a quote for the cost of removing asbestos from the site. Instead of paying to remove or stabilize the asbestos-containing material, Smith enlisted his co-conspirator, Clarence Cole, to hire unqualified day laborers, who ripped out the asbestos illegally, without taking the precautions, required by federal regulations, to keep asbestos out of the air. Smith and Cole did not provide any safety equipment to the workers. When a conscientious citizen tipped off the Asbestos Control Unit of the City Public Health Department's Air Management Services, city inspectors ordered all work to stop. Instead of closing up the site, however, and hiring a qualified contractor to remediate the building as he was ordered to do, Smith continued to dispose of asbestos-containing material illegally, and to allow emission of asbestos to the outside air. Eventually, Superfund money had to be used to clean the contamination caused by the illegal work Smith and Cole had ordered.
"These defendants knowingly removed asbestos-containing materials illegally, putting workers and the general public at great risk," said David G. McLeod, Jr., Special Agent in Charge of EPA's criminal enforcement program for the Middle Atlantic States. "The real victims in this case are neighboring residents who have no way to protect themselves against this type of environmental crime. EPA continues to work with our local, state and federal partners to vigorously prosecute those who place personal gain ahead of public health."
A representative from Philadelphia Air Management Services stated, "The convictions of Gene Cornell Smith and Clarence Cole arose from their decision, made knowingly, to abate and remove dangerous asbestos material in clear violation of the law. This matter was first investigated and reported to the EPA by the City of Philadelphia Air Management Services. We are grateful that with the assistance of the Philadelphia U.S. Attorney's Office and EPA Region 3, this matter has been brought to a satisfactory conclusion."
Smith was convicted of conspiracy, and five counts of violating the Clean Air Act after a jury trial, in January 2013. Cole pled guilty in January 2013, and was sentenced to 24 months in prison in June.
In addition to the prison term, Judge Cynthia M. Rufe also ordered the defendants to serve three years of supervised release, and to pay restitution of $451,936.80
The case was investigated by the Criminal Investigation Division of the Environmental Protection Agency, and was prosecuted by Assistant United States Attorney Elizabeth Abrams and Special Assistant United States Attorney Thomas Moshang III.
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, 215-861-8525Kinloch, Missouri, Fire Protection District Chief Sentenced for Federal Fraud ChargesRead the Press Release
St. Louis, MO – The Fire Chief for the Kinloch Fire Protection District, DARRAN KELLEY, was sentenced to 33 months in prison and ordered to pay $259,738 restitution. He was sentenced on charges involving his unauthorized use of more than $140,000 of District funds from January 2007 to January 11, 2013, as well as charges that he made false statements about his receipt of Social Security disability payments, which resulted in overpayments to him of approximately $120,000. Kelley has been the District Fire Chief since 2002.
According to court documents, the Kinloch Fire Protection District maintained a District banking account for the receipt and disbursement of District funds. From January 2007 through January 2013, the District received approximately $160,361 in tax revenues from St. Louis County, Missouri. The City of Kinloch also distributed city funds to the District's bank account for payroll and operations of the District. It was a part of Kelley's scheme that he made unauthorized cash withdrawals from the District's bank account for his own personal use, including for the purchase of various personal items and for gambling at several casinos in the St. Louis area, that were unrelated to the legitimate operations of the District. It was a further part of Kelley's scheme that he made unauthorized transfers of funds from the District's bank account to pay for charges on his own personal Mastercard credit card, which were unrelated to the legitimate operations of the District. Further, Kelley stole and embezzled a portion of the funds received by the District in June 2010 from the Federal Emergency Management Agency (FEMA), which awarded the District a grant to cover 95% of the $250,000 total cost of a fire engine. Additionally, Kelley stole and embezzled funds which were donated to the District by concerned citizens who made the donations to assist the District in paying for its operations.
While Kelley engaged in the theft and embezzlement of District funds, there were substantial outstanding bills from AmerenUE for electric service, American Water for water service, to AT&T for telephone and communications services, and to North Central County Fire Alarm System for dispatch services, radios and pagers. Many of these bills went unpaid as a result of his criminal conduct and some of the necessary services were reduced or cut off due to non-payment.
Beginning on August 15, 2000, Kelley began receiving monthly disability benefit payments through the Social Security Administration pursuant to his application for benefits relative to a personal medical condition. Following his initial application, and in order for the Social Security Administration to determine his continued eligibility for disability benefits, he was required to immediately report any work and income, and to periodically verify his continued disability and report any work on Continuing Disability Review Reports. Kelley failed to truthfully report his work for the Kinloch Fire Protection District, and his income from that work to the Social Security Administration. On July 26, 2011, Kelley made a false statement on his Continuing Disability Review Report by stating that he had not worked since April 1, 2006, the date of his last medical disability decision, when in fact, he had been working as the paid Chief of the Kinloch Fire Protection District during that period of time. Kelley was paid a salary of approximately $640 every two weeks until December, 2011.
Kelley, Ferguson, MO, pled guilty in July to three felony counts of wire fraud, one felony count of federal program theft and one felony count of making false statements. He appeared today for sentencing before United States District Judge Catherine D. Perry.
This case was investigated by the Federal Bureau of Investigation, the Social Security Administration Office of Inspector General and the St. Louis County Police Department. Assistant United States Attorney Hal Goldsmith handled the case for the U.S. Attorney's Office.
Kennewick Man Sentenced to Twelve Years in Federal Prison for Distribution of Child PornographyRead the Press Release
Spokane – Michael C. Ormsby, United States Attorney for the Eastern District of Washington, announced that Brandon Gregory Wilder, age 21, of Kennewick, Washington, was sentenced after having previously pleaded guilty on July 23, 2013 to Distribution of Child Pornography. United States District Court Judge Edward F. Shea sentenced Wilder to a twelve year term of imprisonment, to be followed by a life term of court supervision after he is released from Federal prison.
According to information disclosed during the court proceedings, in March of 2012, the United States Secret Service conducted an online undercover investigation to identity those possessing and distributing child pornography on the Internet using peer to peer file sharing software. As a result of the investigation, on April 5, 2012, Secret Service agents executed a search warrant at Wilder's residence and located his computer, which was found to contain 237 videos and 64 still images of child pornography. Some of the videos depicted minors in bondage, and a number of the child pornography images were of children under the age of 12 years.
Michael C. Ormsby said, "The sentence imposed in this case reflects how serious the crime of distributing child pornography truly is. The United States Attorney's Office in the Eastern District of Washington continues to prioritize the investigation and prosecution of child pornography crimes. I commend the United States Secret Service agents who aggressively investigated this case."
This case was pursued as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the United States Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. The Project Safe Childhood Initiative ("PSC") has five major components:
- Integrated federal, state, and local efforts to investigate and prosecute child exploitation cases, and to identify and rescue child victims;
- Participation of PSC partners in coordinated national initiatives;
- Increased federal enforcement in child pornography and enticement cases;
- Training of federal, state, and local law enforcement agents; and
- Community awareness and educational programs.
For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources".
This investigation was conducted the United States Secret Service. The case was prosecuted by Stephanie J. Lister, an Assistant United States Attorney and PSC Coordinator for the Eastern District of Washington.
CR-13-6008-EFS
Kankakee Man to Serve More Than 15 Years in Federal Prison for Attempted Bank Robbery and Possession of A Firearm by A FelonRead the Press Release
URBANA, Ill. -- A Kankakee man who admitted that he attempted to rob two Kankakee banks in the fall of 2012 has been sentenced. On Nov. 14, 2013, U.S. District Judge Michael P. McCuskey ordered Nevin L. Lenton, 26, to serve 188 months in federal prison (15 years, 8 months). On Jul. 9, 2013, Lenton entered pleas of guilty to the three counts against him: attempted bank robbery, attempted aggravated bank robbery, and possession of a firearm by a felon. Lenton has been in the custody of the U.S. Marshals Service since his arrest in October 2012.
According to court documents, Lenton admitted that he entered Peoples Bank in Kankakee, with a bandana around his face, on Sept. 17, 2012, and appeared to be brandishing a firearm. Lenton slipped and fell when he entered the bank, and when a bank security guard appeared and drew his service weapon, Lenton dropped the firearm and fled. The firearm was later determined to be a pellet gun.
A month later, on Oct. 22, 2012, Lenton told an unnamed individual that he planned to rob a bank in Kankakee. The next day, Lenton drove the individual to the residence of a Kankakee police officer and said that he had gone to the home earlier to break in and steal a firearm; however, because a light was on inside the house, he believed someone was home and he did not break in. Lenton then drove to Mainsource Bank in Kankakee and told the individual in detail how he planned to rob the bank.
When the individual reported Lenton’s plans to law enforcement, officers were able to introduce an undercover officer to Lenton. At Lenton’s request, the undercover officer met Lenton in Chicago on Oct. 25, 2012, and provided Lenton with two firearms. The undercover officer then agreed to accompany Lenton to Kankakee to assist with the robbery of Mainsource Bank. Once Lenton and the undercover officer arrived and parked within one block of the bank, officers arrested Lenton. At the time Lenton possessed the firearms, he had at least three prior felony convictions, including two burglary convictions and a robbery conviction.
The case was investigated by the Kankakee Area Project Safe Neighborhoods Task Force, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the Kankakee Police Department. The case was prosecuted by Assistant U.S. Attorney Eugene L. Miller.
Justice Department, Federal and State Partners Secure Record $13 Billion Global Settlement with JPMorgan for Misleading Investors About Securities Containing Toxic MortgagesRead the Press Release
*CORRECTION: The release below previously stated that New York is receiving $613.8 million in this settlement, however, the number is $613.0 million. This correction notice was posted on Nov. 20, 2013.*
The Justice Department, along with federal and state partners, today announced a $13 billion settlement with JPMorgan - the largest settlement with a single entity in American history - to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009. As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public - including the investing public - about numerous RMBS transactions. The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country. The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges.
This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group.
“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder. “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior. The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability. I want to personally thank the RMBS Working Group for its tireless work not only in this case, but also in the investigations that remain ongoing.”
The settlement includes a statement of facts, in which JPMorgan acknowledges that it regularly represented to RMBS investors that the mortgage loans in various securities complied with underwriting guidelines. Contrary to those representations, as the statement of facts explains, on a number of different occasions, JPMorgan employees knew that the loans in question did not comply with those guidelines and were not otherwise appropriate for securitization, but they allowed the loans to be securitized – and those securities to be sold – without disclosing this information to investors. This conduct, along with similar conduct by other banks that bundled toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.
“Through this $13 billion resolution, we are demanding accountability and requiring remediation from those who helped create a financial storm that devastated millions of Americans,” said Associate Attorney General Tony West. “The conduct JPMorgan has acknowledged - packaging risky home loans into securities, then selling them without disclosing their low quality to investors - contributed to the wreckage of the financial crisis. By requiring JPMorgan both to pay the largest FIRREA penalty in history and provide needed consumer relief to areas hardest hit by the financial crisis, we rectify some of that harm today.”Of the record-breaking $13 billion resolution, $9 billion will be paid to settle federal and state civil claims by various entities related to RMBS. Of that $9 billion, JPMorgan will pay $2 billion as a civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), $1.4 billion to settle federal and state securities claims by the National Credit Union Administration (NCUA), $515.4 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $4 billion to settle federal and state claims by the Federal Housing Finance Agency (FHFA), $298.9 million to settle claims by the State of California, $19.7 million to settle claims by the State of Delaware, $100 million to settle claims by the State of Illinois, $34.4 million to settle claims by the Commonwealth of Massachusetts, and $613 million to settle claims by the State of New York.
JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual. That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight. An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations. If JPMorgan fails to live up to its agreement by Dec. 31, 2017, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.
The U.S. Attorney’s Offices for the Eastern District of California and Eastern District of Pennsylvania and the Justice Department’s Civil Division, along with the U.S. Attorney’s Office for the Northern District of Texas, conducted investigations into JPMorgan’s, Washington Mutual’s and Bear Stearns’ practices related to the sale and issuance of RMBS between 2005 and 2008.
“Today’s global settlement underscores the power of FIRREA and other civil enforcement tools for combatting financial fraud,” said Assistant Attorney General for the Civil Division Stuart F. Delery, co-chair of the RMBS Working Group. “The Civil Division, working with the U.S. Attorney’s Offices and our state and agency partners, will continue to use every available resource to aggressively pursue those responsible for the financial crisis.”
“Abuses in the mortgage-backed securities industry helped turn a crisis in the housing market into an international financial crisis,” said U.S. Attorney for the Eastern District of California Benjamin Wagner. “The impacts were staggering. JPMorgan sold securities knowing that many of the loans backing those certificates were toxic. Credit unions, banks and other investor victims across the country, including many in the Eastern District of California, continue to struggle with losses they suffered as a result. In the Eastern District of California, we have worked hard to prosecute fraud in the mortgage industry. We are equally committed to holding accountable those in the securities industry who profited through the sale of defective mortgages.”
“Today's settlement represents another significant step towards holding accountable those banks which exploited the residential mortgage-backed securities market and harmed numerous individuals and entities in the process,” said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger. “These banks packaged and sold toxic mortgage-backed securities, which violated the law and contributed to the financial crisis. It is particularly important that JPMorgan, after assuming the significant assets of Washington Mutual Bank, is now also held responsible for the unscrupulous and deceptive conduct of Washington Mutual, one of the biggest players in the mortgage-backed securities market.”This settlement resolves only civil claims arising out of the RMBS packaged, marketed, sold and issued by JPMorgan, Bear Stearns and Washington Mutual. The agreement does not release individuals from civil charges, nor does it release JPMorgan or any individuals from potential criminal prosecution. In addition, as part of the settlement, JPMorgan has pledged to fully cooperate in investigations related to the conduct covered by the agreement.
To keep JPMorgan from seeking reimbursement from the federal government for any money it pays pursuant to this resolution, the Justice Department required language in the settlement agreement which prohibits JPMorgan from demanding indemnification from the FDIC, both in its capacity as a corporate entity and as the receiver for Washington Mutual.
“The settlement announced today will provide a significant recovery for six FDIC receiverships. It also fully protects the FDIC from indemnification claims out of this settlement,” said FDIC Chairman Martin J. Gruenberg. “The FDIC will continue to pursue litigation where necessary in order to recover as much as possible for FDIC receiverships, money that is ultimately returned to the Deposit Insurance Fund, uninsured depositors and creditors of failed banks.”
“NCUA’s Board extends our thanks and appreciation to our attorneys and to the Department of Justice, who have worked closely together for more than three years to bring this matter to a successful resolution,” said NCUA Board Chairman Debbie Matz. “The faulty mortgage-backed securities created and packaged by JPMorgan and other institutions created a crisis in the credit union industry, and we’re pleased a measure of accountability has been reached.”
“JPMorgan and the banks it bought securitized billions of dollars of defective mortgages,” said Acting FHFA Inspector General Michael P. Stephens. “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from JPMorgan, Washington Mutual and Bear Stearns not knowing about those defects. Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit. We are proud to have worked with the Department of Justice, the U.S. attorneys in Sacramento and Philadelphia and the New York and California state attorneys general; they have been great partners and we look forward to our continued work together.”
The attorneys general of New York, California, Delaware, Illinois and Massachusetts also conducted related investigations that were critical to bringing about this settlement.
“Since my first day in office, I have insisted that there must be accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said New York Attorney General Eric Schneiderman, Co-Chair of the RMBS Working Group. “This historic deal, which will bring long overdue relief to homeowners around the country and across New York, is exactly what our working group was created to do. We refused to allow systemic frauds that harmed so many New York homeowners and investors to simply be forgotten, and as a result we’ve won a major victory today in the fight to hold those who caused the financial crisis accountable.”
“JP Morgan Chase profited by giving California’s pension funds incomplete information about mortgage investments,” California Attorney General Kamala D. Harris said. “This settlement returns the money to California’s pension funds that JP Morgan wrongfully took from them.”
“Our financial system only works when everyone plays by the rules,” said Delaware Attorney General Beau Biden. “Today, as a result of our coordinated investigations, we are holding accountable one of the financial institutions that, by breaking those rules, helped cause the economic crisis that brought our nation to its knees. Even as the American people recover from this crisis, we will continue to seek accountability on their behalf.”
“We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” said Illinois Attorney General Lisa Madigan. “Today’s settlement with JPMorgan will assist Illinois in recovering its losses from the dangerous and deceptive securities that put our economy on the path to destruction.”
“This is a historic settlement that will help us to hold accountable those investment banks that played a role in creating and exacerbating the housing crisis,” said Massachusetts Attorney General Martha Coakley. “We appreciate the work of the Department of Justice and the other enforcement agencies in bringing about this resolution and look forward to continuing to work together in other securitization cases.”
The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. attorney’s offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.
The RMBS Working Group is led by five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Acting Assistant Attorney General for the Criminal Division Mythili Raman, Co-Director of the SEC’s Division of Enforcement George Canellos, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.
Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov.
Related Materials:
JPMorgan Settlement Agreement
Annex 1: Statement of Facts
Annex 2: Consumer Relief
Annex 3: List of RMBS covered by the settlement
Exhibit A: Claims resolved by the State of New York
Exhibit B: Claims resolved by the Federal Housing Finance Agency
Exhibit C: Claims resolved by the National Credit Union Administration
Exhibit D: Claims resolved by the Federal Deposit Insurance Corporation