Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
Wednesday 14 August 2013
Victims of Largest Fraud Case Prosecuted in Southern District of Georgia Receive over $27 Million in RestitutionRead the Press Release
AUGUSTA, GA – Carl Lamont Brandon, 39, of Augusta, Georgia, was convicted yesterday by a federal jury after a 1-day trial before U.S. District Court Judge J. Randal Hall for possessing a firearm as a felon on October 8, 2012.
United States Attorney Edward Tarver said, “Through Project CeaseFire, the United States Attorney’s Office will continue to vigorously enforce federal firearms laws to rid the streets of violent felons who carry guns. Felons who possess firearms can expect to be returned to prison, and serve federal time without the possibility of parole.”
Evidence presented during the trial revealed that Brandon led police on a high speed chase down Bobby Jones Expressway and through parking lots after Columbia County deputies were dispatched to respond to a possible shoplifting offense committed by Brandon at a nearby Wal-Mart. Upon being cornered by the deputies, Brandon surrendered to authorities and officers found a loaded firearm concealed in a CD case in Brandon’s car. Brandon was on parole at the time of the incident.
Brandon’s prior felonies include an Aggravated Battery and a Possession of a Firearm During the Commission of a Crime, which resulted after Brandon shot a Richmond County deputy in 1990. His other violent felony convictions include Criminal Attempt to Commit Armed Robbery, Armed Robbery, and Aggravated Assault.
If deemed to be an Armed Career Criminal, Brandon faces a mandatory minimum sentenced of 15 years to Life, a fine of up to $250,000, and 5 years of supervised release. Brandon remains in custody pending his sentence. A sentencing date will be scheduled following completion of a presentence investigation and report.
The case was investigated by Columbia County Sheriff’s Office, and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). The case was prosecuted under Project Ceasefire, a joint federal, state and local firearms initiative involving the U.S. Attorney’s Office, ATF and various local police departments.
Assistant U.S. Attorney Nancy C. Greenwood prosecuted the case on behalf of the United States. For additional information, please contact First Assistant United States Attorney James D. Durham at (912) 201-2547.
Upper Marlboro Man Sentenced to 10 Years in Prison for Transporting A 17 Year Old Girl to Engage in Sexual ActivityRead the Press Release
Defendant Took Teenager to Sex Parties
Greenbelt, Maryland – U.S. District Judge Peter J. Messitte sentenced Troy Walker, a/k/a ‘Caveman,” age 48, of Upper Marlboro, Maryland, today to 10 years in prison, followed by 10 years of supervised release, for transporting a minor with the intent to engage in prostitution. Judge Messitte also ordered that upon his release from prison, Walker must register as a sex offender in the place where he resides, where he is an employee, and where he is a student, under the Sex Offender Registration and Notification Act (SORNA).
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; and Chief Mark A. Magaw of the Prince George’s County Police Department.
According to his plea agreement, Walker met a 17 year old girl in March of 2012 through a friend who worked at parties hosted by Walker. Walker asked the victim to work for him at a party he was hosting. Walker hosted parties through a company called Quest For Fire. These parties were advertised as sex parties or “gang bangs” on the internet. Interested individuals would text Walker at the cell phone number listed in the ad and Walker would text back the party’s location. Guests paid for entry to a residence which would allow them to engage in sexual acts with girls provided by Walker.
In August 2012, Walker rented an apartment for the victim and had her engage in sex acts with guests at his parties. The victim’s photo was also posted in ads for the parties on the internet. Walker provided transportation for the victim to the sex parties, which included transportation from Washington, D.C. to Maryland. According to the victim, Walker assaulted her several times.
The victim worked for Walker at the parties hosted in Prince George’s County from April 1 to September 15, 2012, while she was 17 years old.
The case was investigated by the FBI-led Maryland Child Exploitation Task Force (MCETF), which was created in 2010 to combat child prostitution, and includes members from10 state and federal law enforcement agencies. The Task Force coordinates with the National Center for Missing and Exploited Children and the Maryland State Police Child Recovery Unit to identify missing children being advertised online for prostitution.
MCETF partners with the Maryland Human Trafficking Task Force, formed in 2007 to discover and rescue victims of human trafficking while identifying and prosecuting offenders. Members include federal, state and local law enforcement, as well as victim service providers and local community members. For more information about the Maryland Human Trafficking Task Force, please visit http://www.justice.gov/usao/md/priorities_human.html.
United States Attorney Rod J. Rosenstein commended the FBI and Prince George’s County Police Department for their work in the investigation. Mr. Rosenstein thanked Special Assistant U.S. Attorney LisaMarie Freitas of the U.S. Justice Department, Criminal Division, Child Exploitation and Obscenity Section and Assistant U.S. Attorney Kristi O’Malley, who prosecuted the case.
U.S., U.K. Authorities Seize Cocaine Worth over $24 Million in CaribbeanRead the Press Release
SAN JUAN, Puerto Rico – Today, a federal grand jury in the District of Puerto Rico returned an indictment against three defendants charged with drug trafficking, announced Rosa Emilia Rodríguez-Vélez, United States Attorney for the District of Puerto Rico. The Coast Guard, British Royal Navy and U.S. law enforcement partners interdicted a multi-engine “go-fast” vessel bearing no indicators of nationality with three suspected smugglers onboard during an at-sea interdiction Friday in the Caribbean Sea; seizing 721.53 kilograms of cocaine, worth an estimated street value of more than $24 million.
The interdiction was a result of an international, multi-agency law enforcement effort in support of Operation Unified Resolve, Operation Caribbean Guard, Operation Martillo (a joint, interagency, 15-nation collaborative counter narcotic effort), and the Caribbean Corridor Strike Force (CCSF).
“Our collective aggressive efforts involving international, federal and local enforcement authorities continue to yield positive results,” said Rear Admiral Jake Korn, commander of the Coast Guard Seventh District. “We stand united in our unwavering commitment to protect the citizens of Puerto Rico and the U.S. Virgin Islands from the threats that come from the sea by interdicting these major drug shipments as far from shore as possible and bringing those responsible to justice.”
Joint Interagency Task Force South relayed to Coast Guard Seventh District and Coast Guard Sector San Juan Command Center watchstanders that the crew of a patrolling U.S. Customs and Border Protection (CBP) P-3 fixed-wing maritime patrol aircraft detected a suspicious 30-foot go-fast vessel Friday afternoon. The vessel was spotted with three suspected smugglers onboard using a tarp in an effort to conceal their position.
Coast Guard watchstanders at Sector San Juan diverted the Coast Guard Cutter Sapelo to assist with the interdiction of the go-fast, while the Royal Navy’s HMS Lancaster frigate, on patrol in the Caribbean Sea with a U.S. Coast Guard Law Enforcement Detachment Team (LEDET) onboard, also responded.
The CBP aircraft maintained constant aerial surveillance of the go-fast as the HMS Lancaster arrived on scene. Once on scene, the HMS Lancaster launched their Lynx helicopter and high-speed pursuit boat to interdict the go-fast. The suspected smugglers threw a package overboard into the water upon noticing the presence of law enforcement authorities. The package was recovered by the HMS Lancaster’s pursuit boat crew.
A Coast Guard LEDET boarding team, with the assistance of HMS Lancaster crewmembers, boarded the suspect vessel, detained the three men onboard and seized 22 bales of suspected contraband in plain view. Law enforcement personnel took a representative sample from the suspected contraband and conducted a narcotics identification kit field test which revealed positive results for the presence of cocaine.The crew of the HMS Lancaster detained the three suspected smugglers and contraband onboard the HMS Lancaster before transferring custody of the contraband and suspected smugglers to the Coast Guard for transport to Puerto Rico for prosecution.
On Sunday, the crew of the Sapelo transported the detainees and the cocaine to CBP officers, Immigrations and Customs Enforcement (ICE)-Homeland Security Investigations (HSI), and Drug Enforcement Administration (DEA) special agents in Ponce, Puerto Rico. The Caribbean Corridor Strike Force is leading a criminal investigation into the case.
“These arrests and multi-kilogram seizure are a clear indication of the success of the Caribbean Corridor Strike Force Initiative,” said Rosa Emilia Rodríguez-Vélez, U.S. Attorney for the District of Puerto Rico. “Along with our domestic and international law enforcement partners, we will continue to bring our resources to bear to ensure that drug traffickers and their associates are brought to justice for the damage they inflict on our communities.”
The case is being prosecuted by Assistant U.S. Attorney Carlos R. Cardona and Special Assistant U.S. Attorney Kelley Tiffany. If convicted, the defendants could face from 10 years up to life in prison.
Since September 2012, the Coast Guard has seized 20,500 kilograms of cocaine and 8,500 pounds of marijuana during 22 law enforcement interdictions under Operation Unified Resolve, in partnership with regional law enforcement authorities in the Caribbean. The wholesale value for these seizures is worth an estimated $690.3 million.
The Coast Guard’s efforts under Operation Unified Resolve contribute to the interagency results being achieved each and every day locally under Operation Caribbean Guard, which coordinates efforts between the Coast Guard, its DHS, Commonwealth and Territorial law enforcement partners, who are working diligently to deter, detect and disrupt illicit maritime trafficking to Puerto Rico and the U.S. Virgin Islands.
CCSF is an initiative of the U.S. Attorney's Office created to disrupt and dismantle major drug trafficking organizations operating in the Caribbean. CCSF is part of the High Intensity Drug Trafficking Area (HIDTA) and Organized Crime Drug Enforcement Task Force (OCDETF) that investigates South American-based drug trafficking organizations responsible for the movement of multi-kilogram quantities of narcotics using the Caribbean as a transshipment point for further distribution to the United States. The initiative is composed of HSI, the U.S. Attorney for the District of Puerto Rico, Drug Enforcement Administration, FBI, the Coast Guard, CBP and PRPD's Joint Forces for Rapid Action.
The Coast Guard Cutter Sapelo is a 110-foot island class patrol boat homeported in San Juan, PR.
The HMS Lancaster is a British Royal Navy Duke-class Type 23 frigate, which has played a primary role in major drugs seizures in the Caribbean.The Coast Guard’s efforts under Operation Unified Resolve contribute to the interagency results being achieved each and every day locally under Operation Caribbean Guard, which coordinates efforts between the Coast Guard, its DHS, Commonwealth and Territorial law enforcement partners, who are working diligently to deter; detect, and disrupt illicit maritime trafficking to Puerto Rico and the U.S. Virgin Islands.
CCSF is an initiative of the U.S. Attorney's Office created to disrupt and dismantle major drug trafficking organizations operating in the Caribbean. CCSF is part of the High Intensity Drug Trafficking Area (HIDTA) and Organized Crime Drug Enforcement Task Force (OCDETF) that investigates South American-based drug trafficking organizations responsible for the movement of multi-kilogram quantities of narcotics using the Caribbean as a transshipment point for further distribution to the United States. The initiative is composed of Department of Homeland Security, Drug Enforcement Administration, Federal Bureau of Investigations, the US Coast Guard, Customs Border Protection, Puerto Rico Police Department Joint Forces for Rapid Action and the U.S. Attorney for the District of Puerto Rico.
Two Idaho Men Sentenced to Prison for Asbestos ViolationsRead the Press Release
Bradley Eberhart, 51, of Garden Valley, Idaho, and Douglas Greiner, 53, of Eagle, Idaho, were sentenced this week in federal court for violating the asbestos work practice standards of the Clean Air Act, announced Robert G. Dreher, Acting Assistant Attorney General for Environment and Natural Resources Division, and Wendy J. Olson, U.S. Attorney for the District of Idaho.
U.S. District Judge Edward J. Lodge sentenced Eberhart on Monday to six months in prison plus six months of home confinement, followed by six months of supervised release, 200 hours of community service, and restitution of $3.98 million, in joint and several liability. Greiner was also sentenced to six months in prison and six months of home confinement, to be followed by six months of supervised release. The amount of restitution by Greiner will be the subject of further briefing by the parties.
Both defendants previously pleaded guilty on Feb. 26, 2013.
Boise-based Owyhee Construction Inc., was the successful bidder on a $2.1 million waterline renovation project in Orofino, Idaho, a rural community in north central Idaho. Greiner was the project superintendent and Eberhart was the onsite supervisor of the project. The contract documents warned Owyhee Construction that the company may encounter up to 5,000 linear feet of cement asbestos pipe (CAP) during the renovation. CAP is a non-friable form of asbestos that is encapsulated in a cement matrix. When the CAP is broken or crushed by heavy equipment or subjected to cutting and grinding by machinery it becomes subject to regulation because of the threat to public health from airborne fibers.
Eberhart and Greiner failed to properly supervise the renovation. Eberhart supervised employees who were not properly trained in asbestos work and were not properly outfitted with protective gear while cutting CAP with saws. While working in the trenches to replace pipe, workers would remove CAP from the trenches, crush it and then place it back in the trenches. Large quantities of CAP were also removed from the trenches and ended up as fill material on sixteen properties around Orofino. Greiner pleaded guilty to orchestrating one of the disposals. The EPA cleanup cost just under $4 million.
“These prison sentences reflect the serious consequences of the failure of these defendants to comply with EPA’s regulations that protect public health from asbestos, a human carcinogen,” said Robert G. Dreher, Acting Assistant Attorney General for the Environment and Natural Resources Division. “Such criminal acts endanger workers and the community and can, as demonstrated here, cost the federal government millions of dollars to cleanup. The Justice Department will continue to vigorously prosecute these crimes.”“This case demonstrates the commitment of law enforcement and the Department of Justice to ensure the health of our residents,” said U.S. Attorney Olson. “Threats to the environment and to public health may not be readily apparent from a construction project. Renovation projects like these often generate dust with fine asbestos particles that may have the potential to cause serious health and environmental problems if safety precautions are not taken. The full extent of injury from airborne asbestos may not be noticed or diagnosed for years. It is important that companies, their foremen and their operators comply with environmental laws to avoid serious harm.”
“These two Defendants carelessly subjected Orofino residents to asbestos exposure,” said Tyler Amon, Special Agent in Charge of EPA’s Criminal Investigation Division in Seattle. “In the course of their enterprise, they also created sixteen separate asbestos disposal sites that threatened the community, jeopardized workers and cost taxpayers $4 million to cleanup. Today’s sentence sends a clear message: if you risk people’s lives to save time and money, you will pay the price.”
The case was investigated by the U.S. Environmental Protection Agency. The case was prosecuted by Assistant U.S. Attorney D. Marc Haws from the District of Idaho and Senior Trial Attorney J. Ronald Sutcliffe of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.
Two Idaho Men Sentenced to Prison for Asbestos ViolationsRead the Press Release
Waterline Renovation Project Led to $3,980,000 Cleanup
BOISE – Bradley Eberhart, 51, of Garden Valley, Idaho, and Douglas Greiner, 53, of Eagle, Idaho, were sentenced this week in federal court for violating the asbestos work practice standards of the Clean Air Act, announced Robert G. Dreher, Acting Assistant Attorney General for Environment and Natural Resources Division, and Wendy J. Olson, United States Attorney for the District of Idaho.
U.S. District Judge Edward J. Lodge sentenced Eberhart on Monday to six months in prison plus six months of home confinement, followed by six months of supervised release, 200 hours of community service, and restitution of $3.98 million, in joint and several liability. Greiner was also sentenced to six months in prison and six months of home confinement, to be followed by six months of supervised release. The amount of restitution by Greiner will be the subject of further briefing by the parties.
In imposing sentence on Eberhart, Judge Lodge told the defendants, “You don’t put the company ahead of what is right or ahead of people.”
Both defendants previously pleaded guilty on Feb. 26, 2013.
Boise-based Owyhee Construction Inc., was the successful bidder on a $2.1 million waterline renovation project in Orofino, Idaho, a rural community in north central Idaho. Greiner was the project superintendent and Eberhart was the onsite supervisor of the project. The contract documents warned Owyhee Construction that the company may encounter up to 5,000 linear feet of cement asbestos pipe (CAP) during the renovation. CAP is a non-friable form of asbestos that is encapsulated in a cement matrix. When the CAP is broken or crushed by heavy equipment or subjected to cutting and grinding by machinery it becomes subject to regulation because of the threat to public health from airborne fibers.
Eberhart and Greiner failed to properly supervise the renovation. Eberhart supervised employees who were not properly trained in asbestos work and were not properly outfitted with protective gear while cutting CAP with saws. While working in the trenches to replace pipe, workers would remove CAP from the trenches, crush it and then place it back in the trenches. Large quantities of CAP were also removed from the trenches and ended up as fill material on sixteen properties around Orofino. Greiner pleaded guilty to orchestrating one of the disposals. The EPA cleanup cost just under $4 million.
“These prison sentences reflect the serious consequences of the failure of these defendants to comply with EPA’s regulations that protect public health from asbestos, a human carcinogen,” said Robert G. Dreher, Acting Assistant Attorney General for the Environment and Natural Resources Division. “Such criminal acts endanger workers and the community and can, as demonstrated here, cost the federal government millions of dollars to cleanup. The Justice Department will continue to vigorously prosecute these crimes.”
“This case demonstrates the commitment of law enforcement and the Department of Justice to ensure the health of our residents,” said U.S. Attorney Olson. “Threats to the environment and to public health may not be readily apparent from a construction project. Renovation projects like these often generate dust with fine asbestos particles that may have the potential to cause serious health and environmental problems if safety precautions are not taken. The full extent of injury from airborne asbestos may not be noticed or diagnosed for years. It is important that companies, their foremen and their operators comply with environmental laws to avoid serious harm.”
“These two Defendants carelessly subjected Orofino residents to asbestos exposure,” said Tyler Amon, Special Agent in Charge of EPA’s Criminal Investigation Division in Seattle. “In the course of their enterprise, they also created sixteen separate asbestos disposal sites that threatened the community, jeopardized workers and cost taxpayers $4 million to cleanup. Today’s sentence sends a clear message: if you risk people’s lives to save time and money, you will pay the price.”
The case was investigated by the U.S. Environmental Protection Agency. The case was prosecuted by Assistant U.S. Attorney D. Marc Haws from the District of Idaho and Senior Trial Attorney J. Ronald Sutcliffe of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.
Twin Falls Man Pleads Guilty to Federal Firearms ChargeRead the Press Release
BOISE – Brock Tyler Beutler, 23, of Twin Falls, Idaho, pleaded guilty today in United States District Court to a federal indictment charging him with one count of possession of a firearm with an obliterated serial number, U.S. Attorney Wendy J. Olson announced.
According to court documents, officers with the Twin Falls Police Department found a handgun with an obliterated serial number in Beutler’s waistband during a traffic stop on February 5, 2013. When asked about the obliterated serial number on the firearm, Beutler admitted to filing off the serial number so that it could not be traced. Beutler was also in possession of a small amount of methamphetamine.
The charge of possession of a firearm with an obliterated serial number is punishable by up to five years in prison, up to three years of supervised release, and a maximum fine of $250,000. Beutler agreed to forfeit the firearm he unlawfully possessed.
Sentencing is set for November 4, 2013, before U.S. District Judge Edward J. Lodge, at the federal courthouse in Boise.
The case was investigated by the Twin Falls Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
The case was prosecuted as part of Idaho’s Project Safe Neighborhoods Program, which seeks to reduce gun violence in Idaho.
Three Indicted for $780,000 Food Stamp Fraud from Store in ClevelandRead the Press Release
Three men were indicted today on charges that they engaged in a decade-long conspiracy to defraud the food stamp and Women, Infants and Children programs out of more than $780,000 by trading the vouchers for cash and restricted items such as beer and cigarettes from a store in Cleveland, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Ahmad (“Tony”) Damra, 31, of Macedonia, his brother, Mahmoud (“Moe”) Damrah, 26, of Cleveland, and Mohammad D. Mohammad, 41, of Strongsville, were each indicted on one count of conspiracy to commit food stamp fraud, three counts of food stamp fraud and unlawful redemption of food stamps, and one count of Women, Infants and Children Program (WIC) fraud.
“The food stamp program has provided nutritious food to thousands of hungry families over the years,” Dettelbach said. “We will continue to work to recover money stolen from the program and eradicate waste, fraud and abuse of government programs.”
The indictment charges that between 2002 and 2011, the defendants and others conspired to commit over $780,000 in food stamp and WIC program fraud through the use of the East 143rd Food Market, located at 3249 East 143rd Street in Cleveland.
Mohammad owned, operated and managed the store. He obtained a food stamp license in 1997, which, except for a two-year period beginning in September 1998, remained in effect through 2004, according to the indictment.
In 2005, he obtained a food stamp license for the market using the business Rashiqa, Inc., which listed Mohammad’s mother as president. Mohammad placed the business in the name of another person to conceal his ownership because his prior conviction for aggravated arson precluded his participation in the food stamp program, according to the indictment.
Also in 2005, Mohammad obtained a WIC program authorization under Rashiqa, Inc., according to the indictment.
Ahmad Damra started working at the market in 2002, first as a clerk and then as manager. Mahmoud Damrah started working as a clerk at the store in 2008, according to the indictment.
The investigation revealed that the defendants and others used their business to exchange customer food stamps and WIC coupons for cash and other unauthorized items, including beer and cigarettes. The men also purchased customer food stamp cards and used them at other grocery locations to purchase inventory for the market and for their own personal use, according to the indictment.
The indictment was presented to the Grand Jury by Assistant U.S. Attorneys Christos N. Georgalis, Vasile Katsaros, and James Morford after an investigation by agents of the United States Department of Agriculture, Office of Inspector General-Investigations.
If convicted, defendants’ sentences will be determined by the Court after a review of factors unique to the case, including the defendants’ prior criminal record, if any, the defendants’ role in the offense, and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Texas Couple Pleads Guilty to Wire Fraud Related ChargesRead the Press Release
Gulfport, Miss. -- Jennifer Griswold a/k/a Jennifer Lynn McDaniel a/k/a Jennifer Dubois, age 37, of Channelview, Texas, pled guilty today in U.S. District Court to failing to report and concealing wire fraud, announced U.S. Attorney Gregory K. Davis and FBI Special Agent in Charge Daniel McMullen. Griswold’s husband, Dustin Griswold, 34, of Coldspring, Texas, pled guilty on August 7, 2013 to conspiracy to commit wire fraud.
In 2009, Dustin Griswold searched for and found businesses on the internet that were seeking shipping or transportation services. He contacted a business in Connecticut and represented himself and his fraudulent company, Harmoni Shipping, as a large multi-truck, multi-driver transportation company with the ability to transport national and international loads. Mr. Griswold agreed to ship products for the business, requiring payment on a weekly or otherwise frequent basis.
After receiving orders from the business to ship its products, Mr. Griswold contracted with United Parcel Service (“UPS”) Freight based in Richmond, Virginia, to transport the shipments for the customer. UPS Freight transported the shipments and sent the bills to the Griswolds for payment. The Griswolds never paid UPS Freight for their services, even though they were paid by their customer to ship the products. Over a two month period, the Griswolds collected thousands of dollars from businesses who hired them to ship their goods, while incurring with UPS Freight a $782,000 bill which was never paid. During the fraud, Jennifer Griswold made false statements to UPS Freight, claiming that a check had been mailed to UPS Freight and that a $29,000 wire payment was being made to UPS Freight, when in fact no payments of any kind were sent to UPS freight.
Dustin and Jennifer Griswold will be sentenced by Senior U.S. District Judge Walter J. Gex III on November 6, 2013. The maximum penalty for Dustin Griswold’s charge of conspiracy is five years in prison and a $250,000 fine. The maximum penalty for Jennifer Griswold’s charge of misprision of a felony is three years in prison and a $250,000 fine.
This case was investigated by the Federal Bureau of Investigation – Gulfport Office, Texas Department of Public Safety – Criminal Investigations Division, and Vermont State Police. Assistant U.S. Attorneys Mike Hurst and Mary Helen Wall are prosecuting the case.If you believe you have been a victim of fraud from a person or an organization soliciting relief funds on behalf of storm victims, contact the National Center for Disaster Fraud toll free at:
(866) 720-5721
You can also fax information to:
(225) 334-4707
or e-mail it to:
Making sure that victims of federal crimes are treated with compassion, fairness and respect.
Training and seminars for Federal, State, and Local Law Enforcement Agencies.
Help us combat the proliferation of sexual exploitation crimes against children.
Sussex County, N.J., Man Admits Luring Teen to Pennsylvania for Criminal Sexual Activity, Downloading Child PornographyRead the Press Release
NEWARK, N.J. – A Sussex County, N.J., man today admitted luring a teenage boy to Pennsylvania for sex, as well as downloading and receiving child pornography on his home computer, U.S. Attorney Paul J. Fishman announced.
Robert Mucha, 57, of Newton, N.J., pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to one count of enticing a minor to engage in criminal sexual activity and one count of receiving child pornography.
Mucha was arrested in his home on July 26, 2012. He was charged at the time with a single count of possessing child pornography and has been detained by law enforcement since then.
According to documents filed and statements made in court:In October 2010, Mucha convinced a teenage boy to travel from New Jersey to Pennsylvania to spend the day with him and then sleep over at Mucha’s apartment in Stroudsberg, Pa. After he was arrested in July 2012, Mucha admitted to sexual contact with the teenager.
Prior to his arrest, Mucha worked as a volunteer Emergency Medical Technician in Andover, N.J. He also previously taught band and Bugle Corps to teenagers in Belleville, N.J. and Lakewood, N.J.The count of enticing a minor to engage in criminal sexual activity to which Mucha pleaded guilty is punishable by a minimum potential penalty of 10 years in prison and a maximum of life in prison and a $250,000 fine. Sentencing is currently scheduled for Nov. 19, 2013.
Today’s guilty plea is part of Operation Holitna, an ongoing HSI-led investigation that originated in Boston. U.S. Attorney Fishman credited special agents of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Andrew M. McLees in Newark, with the investigation leading to today’s guilty plea. He also thanked the U.S. Attorney’s Office for the District of Massachusetts and the HSI Boston office.
HSI encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at 1-866-347-2423 or its online tip form at http://www.ice.gov/tips. Both are staffed around the clock by investigators. Suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children at 1-800-843-5678 or http://www.cybertipline.com
The government is represented by Assistant U.S. Attorney Andrew J. Bruck of the U.S. Attorney’s Office Criminal Division in Newark.
13-337Defense counsel: Assistant Federal Public Defender Carol Gillen Esq., Newark
Mucha Information
State Contractor Charged in Manhattan Federal Court for Defrauding the New York State Department of Health Out of over $700,000 in Funding for Low-Income Cancer ScreeningRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Thomas P. DiNapoli, the New York State Comptroller, today announced charges against JOSEPH L. JUNKOVIC for allegedly engaging in a scheme to defraud the New York State Department of Health (“NYSDOH”) out of more than $700,000 dedicated to providing cancer screening services to low-income New Yorkers. JUNKOVIC allegedly used a not-for-profit corporation that he controlled, Cancer Service Network, Inc. (“CSN”), to obtain more than $25 million in federal and state funding to administer cancer screening services, and then billed the NYSDOH for thousands of hours that he did not in fact work. He was arrested at his residence this morning and will be presented in Manhattan federal court before U.S. Magistrate Judge Ronald L. Ellis this afternoon.
Manhattan U.S. Attorney Preet Bharara said: “By diverting over $700,000 intended for low-income New Yorkers to his own pocket, Joseph Junkovic allegedly cheated the Department of Health and cynically exploited individuals in need of potentially lifesaving services. We intend to continue our work with Comptroller DiNapoli’s office – whose audit was instrumental to uncovering this alleged fraud. We will not tolerate abuse of government funding and are committed to rooting out and prosecuting the perpetrators of such fraud.”
New York State Comptroller Thomas P. DiNapoli: “As alleged, Mr. Junkovic willfully exploited impoverished clients to finance his globe-trotting, gambling and lavish shopping sprees. Working with U.S. Attorney Preet Bharara, we were able to expose this scam and plan to restore more than $700,000 to state coffers. We will continue to work together to fight public corruption and hold wrongdoers accountable.”
According to the allegations in the Complaint unsealed today in Manhattan federal court:
From April 2008 through September 2011, JUNKOVIC used CSN to obtain more than 18 separate contracts with NYSDOH, totaling more than $25 million, to provide cancer screening services for indigent New Yorkers. The $25 million was funded in part by the United States Department of Health and Human Services. CSN, however, was merely a pass-through organization run out of JUNKOVIC’s home in the Bronx, and JUNKOVIC directed the monies CSN received from NYSDOH to administer the cancer screening programs to his personal consulting company, JLJ Consulting Group, Ltd. (“JLJ”). In billing NYSDOH for his services, JUNKOVIC submitted separate invoices for each contract listing the total number of hours he claimed to have worked each month. When added together, JUNKOVIC frequently billed NYSDOH for well over 600 hours per month – more than 140 hours per week – for his purported services, even while he was frequently on vacation, spending thousands of dollars at various casinos, or making purchases at high-end clothing stores.
For some months, JUNKOVIC claimed he had worked so many hours on multiple contracts simultaneously that he was billing a total of more than 24 hours a day for his services. On other occasions, JUNKOVIC claimed he worked hundreds of hours while he was overseas. For example, for the month of August 2010, CSN billed NYSDOH for more than 590 hours of JUNKOVIC’s time, even though travel and bank records show that JUNKOVIC traveled to Vienna, Austria, on August 6, 2010 and did not return until August 30, 2010. Overall, the Comptroller’s Office, which performed an audit of JUNKOVIC’s invoices to NYSDOH, conservatively estimates that from April 2008 through May 2011, JUNKOVIC defrauded NYSDOH’s cancer services program out of more than $700,000.
JUNKOVIC, 48, of the Bronx, New York, is charged with one count of mail fraud, which carries a maximum sentence of 20 years in prison, and one count of theft of U.S. government property, which carries a maximum sentence of 10 years in prison.
Mr. Bharara praised the investigative and audit work of the Office of the New York State Comptroller.
This case is being prosecuted by the Office’s Public Corruption Unit. Assistant United States Attorney Andrew D. Goldstein 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.
U.S. v. Joseph Junkovic Complaint
Shiprock Woman Sentenced to 110 Months in Prison for Voluntary Manslaughter ConvictionRead the Press Release
ALBUQUERQUE – Pamela Navasie, 42, an enrolled member of the Hopi Tribe who resides in Shiprock, N.M., was sentenced yesterday afternoon to 110 months in federal prison followed by five years of supervised release for her voluntary manslaughter conviction.
Navasie was arrested on Jan. 11, 2011, and charged with killing a 65-year-old Navajo woman at the victim’s Shiprock residence. Navasie has been in federal custody since her arrest.
On Jan. 11, 2013, Navasie pleaded guilty to a felony information charging her with voluntary manslaughter and admitted stabbing the victim in the neck and causing the victim’s death. Navasie admitted stabbing the victim in the heat of passion while the two women were quarreling.
This case was investigated by the Farmington office of the FBI and the Shiprock office of the Navajo Nation Division of Public Safety and was prosecuted by Assistant U.S. Attorney Charles L. Barth.
Savannah Residents Arrested in Connection with Two Seperate Bomb ThreatsRead the Press Release
SAVANNAH, GA – HAROLD CHILDERS, 36, and LAVONTAY GATSON, 20, both of Savannah, were arrested on federal charges last week on charges arising from two separate bomb threats. CHILDERS was charged with making a false statement to FBI agents in connection with a September 18, 2012 bomb threat at Southern States Phosphates on East President Street in Savannah. GATSON was charged with telephoning a Wal-Mart in Savannah and making a bomb threat on March 2, 2013.
The charge against CHILDERS carries a maximum sentence of 5 years in prison and a $250,000 fine. GATSON’S charge carries a maximum penalty of 10 years in prison and a $250,000 fine. U.S. Attorney Ed Tarver emphasized that a criminal complaint is only an accusation and is not evidence of guilt. The defendants are entitled to a fair trial, during which it will be the Government’s burden to prove guilt beyond a reasonable doubt.
Both arrests arose out of investigations by the FBI. Assistant United States Attorney Charlie Bourne is prosecuting the case on behalf of the United States. For additional information, please contact First Assistant United States Attorney James D. Durham at (912) 201-2547.
Recidivist Sex Offender SentencedRead the Press Release
Used computer to solicit sex with a minorGREENSBORO, N.C. – A Burlington man was sentenced today to 300 months in prison for coercion and enticement of a minor, announced United States Attorney Ripley Rand.
William Todd Flowers, 37, of Burlington, North Carolina, pleaded guilty on April 9, 2013, to one count of online coercion and enticement of a person under 18 for criminal sexual activity, an offense punishable by no less than 15 years imprisonment. He was sentenced by United States District Judge Thomas D. Schroeder to 300 months imprisonment followed by lifetime supervised release. Flowers was also ordered to forfeit a cell phone and a vehicle used in the offense.
“This case is yet another example of the power of effective partnership between federal, state, and local authorities,” stated United States Attorney Rand. “We will continue to work together to make the internet a safe place for children, and to make sure that those who are intent on using the internet and other technology to abuse children are punished accordingly.”
The offense was committed between June 15, 2012, and October 12, 2012, using a social networking site. Flowers’ activity was reported by that site to the National Center for Missing and Exploited Children, who relayed the information to the Alamance County Sheriff’s Office. At the time of the offense, Flowers was a registered sex offender and on state probation for felony solicitation of a child by computer, having been convicted in Alamance County in 2010.
This case was investigated by members of the North Carolina Internet Crimes Against Children (ICAC) Task Force, including the Alamance County Sheriff’s Office, Federal Bureau of Investigation, and Cherokee County Sheriff’s Office, and prosecuted by Assistant United States Attorney Anand P. Ramaswamy.
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 United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.Prisoner at Fci Danbury Admits Assaulting Another InmateRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that YVONNE DAVIS, 62, a prisoner at the Federal Correctional Institution (FCI) in Danbury, pleaded guilty today before Senior United States District Judge Warren W. Eginton in Bridgeport to one count of assault with a dangerous weapon.
According to court documents and statements made in court, on November 25, 2012, DAVIS assaulted another FCI Danbury inmate with a ballpoint pen that had been broken so as to have a sharp edge on it. The victim suffered a laceration to the back of her arm that was five to six inches long and one-half inch deep. The wound required 24 stitches to close.
Judge Eginton has scheduled sentencing for November 6, 2013, at which time DAVIS faces a maximum term of imprisonment of 10 years and a fine of up to $250,000.
DAVIS is currently serving a 37-month sentence after having been convicted in the Northern District of Texas of being a felon in possession of a firearm.
This case is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Neeraj N. Patel.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
[email protected]Pine Hill, N.M., Man Sentenced to 87 Months in Federal Prison for Assault ConvictionRead the Press Release
ALBUQUERQUE – Charlie Cohoe, 33, an enrolled member of the Navajo Nation who resides in Pine Hill, N.M., was sentenced on Aug. 8, 2013, to 87 months in prison followed by three years of supervised release for his federal assault conviction.
Cohoe was arrested on Jan. 25, 2013, on a criminal complaint charging him with assault with a dangerous weapon and assault resulting in serious bodily injury. The criminal complaint alleged that, on Jan. 18, 2013, Cohoe repeatedly stabbed and slashed another Navajo man who had agreed to drive Cohoe to a friend’s residence. The assault occurred in Cibola County within the Ramah Navajo Indian Reservation.
On April 10, 2013, Cohoe pled guilty to a felony information, charging him with assault with a dangerous weapon, and admitted assaulting the victim with a knife, causing life-threatening injuries that required surgery. The victim’s face also was disfigured as a result of the assault.
The case was investigated by the Ramah Navajo Police Department with assistance from the New Mexico State Police, the Grants Police Department and the Cibola County Sheriff’s Department, and was prosecuted by Assistant U.S. Attorney Paul Mysliwiec.
Pennsylvania Couple Admits Using Stolen Identities to Scam Student Loan Money from Online UniversitiesRead the Press Release
CAMDEN, N.J. – An East Stroudsburg, Pa., couple admitted today to fraudulently obtaining at least $272,247 in student loan proceeds from Liberty University and American Public University by using stolen identities to have the money directed to addresses where they could intercept it, New Jersey U.S. Attorney Paul J. Fishman announced.
Stephanie Mitchell, 36, and Ronzell Mitchell, 37, pleaded guilty to separate informations charging each with one count of conspiracy to commit mail fraud. They entered their guilty pleas before U.S. District Judge Renée Marie Bumb in Camden federal court.
According to documents filed in this case and statements made in court:
From approximately Aug. 19, 2010, through March 21, 2012, the Mitchells fraudulently obtained U.S. Department of Education (ED) funds and converted them to personal use. Stephanie Mitchell regularly used a box at a UPS Store located in Montvale, N.J., that was opened using the name and driver’s license of another person. The pair then contacted online universities Liberty and American and posed as students for whom student loans had been issued, causing the proceeds of numerous credit balance checks and debit cards to be redirected to the UPS Store and a vacant house located in Stroudsburg, Pa.
During their guilty plea proceedings, Stephanie and Ronzell Mitchell admitted several specific instances in which they redirected student loans intended for others to addresses they controlled. Through this method, the Mitchells obtained approximately $272,247 in ED funds to which they were not entitled.
The count to which the Mitchells pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss caused by their offenses. Sentencing is currently scheduled for Nov. 18, 2013.
U.S. Attorney Fishman credited special agents of the ED Office of the Inspector General, Northeastern Regional Office, under the direction of Special Agent in Charge Brian Hickey; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria Kelokates, and special agents of the U.S. Secret Service, under the direction of James Mottola, Special Agent in Charge of the Newark Field Office, with the investigation.
The government is represented by Assistant U.S. Attorney Deborah J. Gannett of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.13-339
Defense counsel:
Ronzell Michell: Paul Brickfield Esq., River Edge, N.J.
Stephanie Mitchell: Susan Cassell Esq., Ridgewood, N.J.Mitchell, Ronzell Information
Mitchell, Stephanie InformationPROJECT FUTURE TWO-A-DAYS VISITS WHEELING CENTRAL CATHOLIC HIGH Sexual Assault Center Director Offers Advice to StudentsRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-7725 ● Contact: Chris Zumpetta-Parr, Public Affairs SpecialistFollow us on Twitter @NDWVnews
WHEELING, WV- The Project Future Two-a-Days program visited another high school on Wednesday, as student-athletes from Wheeling Central Catholic heard about dangerous drugs and the impact that sexual assault has upon a victim.
United States Attorney William Ihlenfeld, II, led the presentation with assistance from Linda Reeves, the Executive Director of the Upper Ohio Valley Sexual Assault Help Center. The crowd also heard from special guest Clayton Fitzsimmons, whose law firm represents the victim of a sexual assault that occurred last year in Ohio.
Reeves explained why it’s important for her organization to be a part of this initiative.
“We’ve partnered with Project Future Two-a-Days in order to raise awareness about rape and sexual violence among teens and adolescents,” said Reeves. “My staff and I can help to define what sexual violence is and to educate teens about what to do if faced with a situation where they or someone else is a victim or witness to sexual violence.”
Fitzsimmons shared with the crowd the challenges faced by survivors of sexual assault.
“Sexual assault has a profound and permanent impact on victims and their families,” said Fitzsimmons. “It’s important for young people to remember that one bad decision can have implications that last a lifetime for those who have been harmed.”
Head Football Coach Mike Young of Wheeling Central was thankful that the program came to his school.
“We appreciate the interest taken by the U.S. Attorney’s office in teaching our students these important lessons,” said Young, who also serves as athletic director at Central. “Sometimes young people need to hear the message from someone other than a parent or teacher and so when federal prosecutors offer to come in and speak we take advantage of the opportunity.”
According to Reeves, the Upper Ohio Valley Sexual Assault Help Center is a non-profit organization dedicated to providing assistance to the community in dealing with the crime of sexual assault. Services include crisis intervention, advocacy, support services, individual and group counseling, and community education. The Center primarily serves Wetzel, Brooke, Marshall, Ohio and Hancock counties in West Virginia. In Ohio, Jefferson and Belmont counties are served. The Center does not refuse services to anyone regardless of where they reside, and all victim services are provided free of charge.
Project Future Two-a-Days combines the issues of dangerous drugs, sexual assault awareness, and social media responsibility into one presentation for male and female teens. High schools and colleges that are interested in the program are encouraged to contact the U.S. Attorney’s Office at 304-234-0100 to schedule a presentation. These efforts will continue into the fall and will be available to all students within the Northern District of West Virginia, regardless of whether they are involved in athletics.
Ocean Park, Washington Woman Sentenced for Wire FraudRead the Press Release
PORTLAND, Ore. – Lisa Mottaghi, 46, of Ocean Park, Washington, was sentenced by U.S. District Court Judge Ancer L. Haggerty to 33 months in prison for the crime of wire fraud involving a “sweetheart swindle” of a retired widower from St. Helens, Oregon. In addition to her sentence, the Court ordered Mottaghi to serve three years of supervised release following her release from prison and to repay $649,536 in restitution.
“Schemes like this devastate innocent victims and their families. It is especially cruel when fraudsters target senior citizens,” said U.S. Attorney Amanda Marshall. “This conviction demonstrates what happens to those who abuse vulnerable citizens in our community.”
At the sentencing hearing, the government laid out for the Court Mottaghi’s scheme to defraud. In June of 2005, Lisa Mottaghi began borrowing significant sums of money from Gerald Voorhees, a 74-year old widowed retiree from Saint Helens, after developing a relationship of trust with him. By 2009, Voorhees told Mottaghi that he would not loan her any more money.
Shortly thereafter, Voorhees was contacted by email by Tonia Jorgenson, a woman identifying herself as the sister of Mottaghi. Jorgensen told Voorhees about her stable life (albeit with a sick husband) and promised to repay the debts of her sister. However, not long after the first email, Jorgenson wrote Voorhees again with the terrible news of her husband’s death and the fact that her ability to repay the debts of her sister would be delayed due to family interference in the settling of the estate. To make matters worse, she soon claimed her own finances were compromised as a result of her husband’s death and she too needed the financial help of Voorhees. The truth, in fact, was that Jorgenson did not exist. She was the fraudulent creation of Mottaghi.
Writing as her sister, Mottaghi began a two-year scheme to defraud Voorhees. With a tale of loss and vulnerability, Mottaghi created a character designed to elicit compassion and sympathy from him. Over a short period of time, Mottaghi manufactured, in the name of Jorgenson, a fraudulent romance complicated by health concerns and legally-created delays in her access to great wealth, all non-existent or false in every regard.
Voorhees paid the defendant, acting as Jorgenson, nearly $650,000. So strongly did Voorhees believe the lies that Mottaghi told him as Jorgenson, that even after his own family intervened in 2011 to restrict his ability to get access to his own money (information he shared with the defendant), he continued to find ways to give her money. Even knowing that Voorhees no longer had the ability to control his own finances, Mottaghi solicited $2,500 with the lie that if she didn’t get the money, she would lose future contact with her grandson; a grandson that, of course, she didn’t have. Voorhees took out a loan on his car and gave her the $2,500. None of the nearly $650,000 has been recovered.
The investigation of this case was conducted by the Portland office of the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorney Scott Erik Asphaug.
Newark, N.J., Man Pleads Guilty to CarjackingRead the Press Release
NEWARK, N.J. – A Newark man today admitted his role in a shotgun carjacking in Little Falls, N.J., on Oct. 30, 2011, U.S. Attorney Paul J. Fishman announced.
Hanzah Darby, 24, pleaded guilty to an indictment charging him with one count of theft of a motor vehicle by force, violence, and intimidation and one count of use of a firearm in furtherance of a crime of violence. He entered his guilty plea before U.S. District Judge Susan D. Wigenton in Newark federal court.
According to documents filed in this case and statements made in court:
During his guilty plea proceeding, Darby admitted that on Oct. 30, 2011, he and another individual were in the Little Falls area when they spotted a parked 2008 BMW 335 with passengers inside. Darby and his conspirator – who allegedly brandished a shotgun – approached the car and ordered the occupants out of the vehicle at gunpoint.
Ivan Lee, 25, of Newark, is charged with Darby in the indictment, and the charges against him remain pending.
Darby and Lee then took the car and fled the area. Law enforcement officers recovered the car in Newark on Nov. 7, 2011. Darby was standing next to it at the time.
The carjacking charge to which Darby pleaded guilty carries a maximum potential penalty of 15 years in prison. The firearm charge carries a maximum potential penalty of life in prison and a mandatory minimum sentence of seven years in prison, which must run consecutively to any other prison term. Each of the two counts also carries a maximum $250,000 fine. Sentencing is currently scheduled for Nov. 18, 2013.
U.S. Attorney Fishman credited special agents with the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, officers of the Little Falls Police Department, under the direction of Chief John Dmuchowski; the New Jersey State Police, under the direction of Colonel Rick Fuentes; and the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia M. Valdes, with the investigation leading to today’s plea.
The government is represented by Special Assistant U.S. Attorney Thomas S. Kearney of the U.S. Attorney’s Office Criminal Division in Newark.
As for Lee, the charges and allegations contained in the indictment against him are merely allegations, and the defendant is considered innocent unless and until proven guilty.
13-338
Defense counsel: Timothy Donohue Esq., West Orange, N.J.
Darby, Hanzah et al. IndictmentNew York Man Sentenced to 42 Months for Passing Counterfeit $100 Bills at Connecticut StoresRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that SHAUN WHITEHEAD, 26, of Brooklyn, N.Y., was sentenced today by Senior United States District Judge Alfred V. Covello in Hartford to 42 months of imprisonment, followed by five years of supervised release, for using counterfeit U.S. currency to purchase items at five Connecticut stores.
On April 10, 2013, a jury found WHITEHEAD guilty of five counts of passing counterfeit obligations.
According to the evidence presented during the trial, in January and February 2011, WHITEHEAD used counterfeit $100 bills to purchase iPads and Bose headsets from retail stores in Windsor, Waterford, Lisbon, South Windsor and Naugatuck.
WHITEHEAD has been detained since March 9, 2011, when he was arrested in Massachusetts on a state larceny charge. He has been in federal custody since August 24, 2012.
This matter was investigated by the United States Secret Service, with the assistance of the police departments of Windsor, Waterford, South Windsor, Naugatuck and North Attleboro (Mass.), and the Connecticut State Police. The case was prosecuted by Assistant United States Attorneys Felice Duffy and Ray Miller.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
[email protected]Narcotics, Firearms Charges Filed Against Youngstown ManRead the Press Release
A six-count indictment was returned charging a Youngstown man with narcotics and firearms crimes, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Emmett T. Perkins, III, 47, was charged with being a felon in possession of firearms, distribution of heroin and possession of machine guns not registered to him.
Count 1 charges that on or about July 20, 2012, Perkins possessed an AMT, model Backup, .380 caliber pistol, despite previous convictions for trafficking in crack cocaine, domestic violence, intimidation of a crime victim or witness and aggravated assault.
Counts 2 and 4 of the indictment charge Perkins with distributing less than 100 grams of heroin on or about July 20, 2012, and less than 100 grams of heroin on or about August 3, 2012.
Count 3 charges that on or about August 3, 2012, Perkins possessed a Taurus, model 689, .357 caliber pistol, after he had been previously convicted of the charges listed above.
Count 5 charges that on or about October 3, 2012, Perkins possessed a Ceska Zbrojovka, model VZ26, 7.62 x 25mm machinegun, and a Carl Gustav, Swedish K, model 45, 9mm machinegun, after being convicted of the above-listed crimes.
Count 6 charges that on or about October 3, 2012, Perkins possessed a Ceska Zbrojovka, model VZ26, 7.62 x 25mm machinegun; a Carl Gustav, Swedish K, model 45, 9mm machinegun; and a German, MP-40 Type, 9mm machinegun, said firearms not registered to him in the National Firearms Registration and Transfer Record, as required by law.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violations. In all cases, the sentences will not exceed the statutory maximum and, in most cases, it will be less than the maximum.
The investigation preceding the indictment was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives - Youngstown Field Office and the Mahoning Valley Law Enforcement Task Force. The matter is being prosecuted by Assistant United States Attorney David M. Toepfer.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Middletown, Missouri, Bank Manager Sentenced on Embezzlement ChargesRead the Press Release
St. Louis, MO – CANDIDA S. LEHNEN was sentenced to 15 months in federal prison for embezzling more than $90,000 from the American Bank of Missouri while working as a bank branch manager. In addition to the prison sentence, she was ordered to pay more than $90,000 in restitution. Following her term of imprisonment, Lehnen will be required to serve five years of supervised release.
According to court documents, between 2010 and November 2012, Lehnen stole funds by fraudulently processing checks and including false information on transaction forms to reduce the likelihood of her scheme being detected by the bank’s financial controls. Other parts of her embezzlement scheme included using altered debit tickets to obtain funds and closing the account of a deceased account holder and withdrawing the funds. Lehnen typically targeted accounts that she believed had a history of inactivity.
Lehnen, Middletown, MO, pled guilty in May to one felony count of embezzlement by a bank officer. She appeared today in St. Louis for sentencing before Senior United States District Judge E. Richard Webber.
This case was investigated by the Missouri State Highway Patrol. Assistant United States Attorney John Bodenhausen is handled the case for the U.S. Attorney’s Office.Medical Worker Infected Kansas Patients with Hepatitis C, Faces at Least 30 Years in Prison After Pleading GuiltyRead the Press Release
TOPEKA, KAN. – A traveling medical worker has admitted infecting six patients in Kansas with Hepatitis C, including one who died, U.S. Attorney Barry Grissom said today.
David M. Kwiatkowski, 34, a former employee of Hays Medical Center in Hays, Kan., pleaded guilty in U.S. District Court in New Hampshire to seven counts of tampering with a consumer product and seven counts of obtaining controlled substances by fraud. At the same time, he agreed to have charges filed against him in Kansas – one count of tampering with a consumer product and one count of obtaining controlled substances by fraud – transferred to New Hampshire and he pleaded guilty to them as well. He is scheduled to be sentenced Dec. 3, 2013, by a federal judge in New Hampshire.
In his plea, Kwiatkowski admitted exposing patients in Kansas, New York, Pennsylvania, Maryland, Arizona, Georgia and New Hampshire to Hepatitis C, a blood-borne viral disease that is transmitted by exposure to infected blood. The disease, which can cause liver damage and other health problems, can be deadly. Kwiatkowski transmitted the virus by stealing fentanyl, which is a medication for pain, injecting the drug into his body, refilling a syringe with saline, and allowing the contents of the saline-filled syringe, which was tainted with Hepatitis C virus, to be injected into patients. In his plea, he admitted swapping syringes at least 20 times while he worked in Kansas.
Kwiatkowski was a radiologic technician who worked at several health care facilities in Michigan between 2003 and 2007. In November 2007, he became a “traveler,” working through placement agencies and taking short-term positions at various medical facilities. In May 2010 he worked at Hays Medical Center. While he was working there, a physician told him he had Hepatitis C. At least six patients who where treated at Hays during the time he worked there were found to be infected with a strain of Hepatitis C that has been genetically linked to the strain with which he is infected. One of the patients underwent cardiac catheterization on June 7 and July 12, 2010. A medical examiner has concluded that Hepatitis C played a role in contributing to that patient’s death.
As a result of Kwiatkowski’s actions, public health departments and the Centers for Disease Control and Prevention conducted a massive public health investigation. Public health authorities recommended that more than 11,000 people be tested for possible Hepatitis C infection,
Kwiatkowski will be sentenced by a federal judge in New Hampshire on both the New Hampshire and the Kansas charges. Based on the plea agreement, he faces a penalty of no less than 30 years and no more than 40 years in federal prison.
Grissom commended the U.S. Attorney’s Office for the District of New Hampshire, especially Assistant United States Attorney John Farley, the FBI, the Office of Criminal Investigations of the Food and Drug Administration, the Centers for Disease Control and Prevention, and Assistant U.S. Attorney Tanya Treadway for their work on the case.
Media Consultant IndictedRead the Press Release
BATON ROUGE, LA – Acting United States Attorney Walt Green announced today that a Federal Grand Jury returned an indictment charging RAYMOND CHRISTOPHER REGGIE, 51, of Mandeville, Louisiana with five counts of wire fraud and six counts of money laundering, in violation of Title 18, United States Code, Sections 1343 and 1957.
According to the indictment, REGGIE was the owner and operator of an advertising firm that purchased and managed advertising for various car dealerships in southeast Louisiana. During the period January 2009 through July 2012, REGGIE executed a scheme to defraud the car dealerships for which he worked by submitting fictitious advertising expenses for payment by the dealerships. REGGIE falsely represented to the accounts payable administrators of the car dealerships that the advertising expenses were for services actually furnished. Once the dealerships issued payments for the bogus expenses, REGGIE diverted the payments to his personal use and enjoyment. As a result of REGGIE’S submission of fictitious advertising expenses for payment, the car dealerships issued 129 checks totaling approximately $1,144,767 for advertising services which had not been received by the dealerships. REGGIE diverted all of the fraudulently obtained funds to a bank account which he controlled. Once the funds were wired into Reggie’s bank account, he conducted multiple monetary transactions with the proceeds of his fraudulent activities.
If convicted, REGGIE faces up to 30 years imprisonment for each of the five counts of bank fraud and up to ten years imprisonment for each of the six counts of money laundering. REGGIE also faces fines of up to $2,750,000 and a term of five years of supervised release.
The Indictment also notifies REGGIE that should he be convicted, he must forfeit property, real or personal, which constitutes, or is derived from proceeds traceable to his wire fraud including, but not limited to at least $1,144,767, as well as all property, real or personal, involved in the money laundering offenses, or any property traceable to such property, including but not limited to at least $230,615.67, said amount being the value of the property involved in the money laundering offenses.
Acting United States Attorney Green stated, “Anyone who steals from their clients just to enrich themselves will be aggressively investigated and prosecuted by the United States Attorney’s Office.”
IRS Special Agent-in-Charge Gabriel Grchan stated, “This indictment is an example of the complex, white-collar cases our agency has a reputation for investigating. IRS-Criminal Investigations will continue to investigate individuals who engage in illegal schemes to steal money from others. Activities that involve money laundering will not be tolerated by anyone.”
NOTE: An indictment is a determination by a grand jury that probable cause exists to believe that offenses have been committed by a defendant. The defendant is presumed innocent until and unless proven guilty at trial.
Man Sentenced to 10 Years in Prison for Sexually Assaulting A Minor on Ft. Meade Military BaseRead the Press Release
Baltimore, Maryland - U.S. District Judge William D. Quarles sentenced Daheem Bryant-Royal, age 23, of Ft. Meade, Maryland, today to 10 years in prison followed by five years of supervised release for sexual abuse of a minor that occurred on the Ft. Meade military base on September 4, 2011. Judge Quarles also ordered that upon his release from prison, Bryant-Royal must register as a sex offender in the place where he resides, where he is an employee, and where he is a student, under the Sex Offender Registration and Notification Act (SORNA).
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; and Major General David Quantock, Provost Marshal General of the Army and Commanding General of the U.S. Army Criminal Investigation Command.
On December 18, 2012, a federal jury convicted Bryant-Royal of raping a minor female at a home on the Ft. Meade military base, which is exclusive federal jurisdiction. According to the evidence presented at Bryant-Royal’s four day trial, the victim was staying at a residence on Ft. Meade. After attending a party the victim became heavily intoxicated. Witnesses testified that Bryant-Royal entered the bathroom where the victim was taken after she became ill, and sexually assaulted her.
The victim immediately reported the rape to her friends, who drove her home. The victim immediately informed her parents and law enforcement officials about the sexual assault and was admitted into a hospital, where a Sexual Assault Forensic Examination (SAFE) was performed. The results of the examination, which were introduced into evidence during trial, indicate that she was sexually assaulted and DNA evidence recovered from the victim was determined to match Bryant-Royal’s DNA.
United States Attorney Rod J. Rosenstein commended the FBI and U.S. Army Criminal Investigation Command at Ft. Meade for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Rachel M. Yasser and Special Assistant U.S. Attorney Christine L. Duey of the U.S. Justice Department, Criminal Division, who prosecuted the case.Laredo Resident Sentenced in Child Pornography CaseRead the Press Release
LAREDO, Texas – Robert Allen Montgomery, 46, has been ordered to federal prison following his convictions of receiving and possessing child pornography, United States Attorney Kenneth Magidson announced today. Montgomery was convicted on both counts as charged after a bench trial on April 19, 2013.
Today, Senior U.S. District Judge George P. Kazen handed Montgomery a sentence of 96 months in federal prison. Additional information was presented, including statements from the mother of one of the identified victims. In handing down the sentence, Judge Kazen took into consideration the number of images, the youth of the victims depicted in the images and the type of abuses depicted in the images found on Montgomery’s Blackberry. Judge Kazen further noted Montgomery needed drug treatment and mental health help while incarcerated and after being released from federal custody. Montgomery was further ordered serve 15 years of supervised release following completion of his prison term, during which time was ordered not to work with, live near or have any direct contact with any minor without prior approval by the U.S. Probation Office. He was also ordered not to access the Internet or any sexually explicit materials involving minors. He will also be ordered to register as a sex offender.
On May 3, 2012, the Laredo Police Department (LPD) conducted a traffic stop on Montgomery, at which time officers discovered a small amount of cocaine and arrested him for possession of controlled substance. When the officers searched Montgomery’s phone after his arrest, they found images of child pornography. A total of approximately 180 images of child pornography were eventually found on the phone.
Montgomery will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The case was investigated by Homeland Security Investigations and LPD and prosecuted by Assistant U.S. Attorney Sonah Lee.
Kentucky Resident Charged with Tax Evasion and Other Tax Fraud ChargesRead the Press Release
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, and Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, jointly announced today that James S. Faller II, of Russell Springs, Ky., was indicted by a federal grand jury in Bowling Green, Ky. Faller, a consultant and private investigator, is charged in an eleven count indictment with obstructing the internal revenue laws, evading his individual income taxes, making and subscribing to a false form that he filed with the Internal Revenue Service (IRS) and failing to file his individual income tax returns.
The indictment alleges that Faller obstructed the IRS’s ability to collect payment of a substantial penalty he owed to the government and the IRS’s ability to identify his income from 2006 through 2009. According to the indictment, Faller evaded the payment of a $216,000 penalty related to unpaid employment taxes of Call Center Communications Inc., of which Faller was the president. In addition, Faller was charged with evading his individual income taxes from 2006 through 2009. He allegedly failed to report more than $960,000 of income during this four-year period and committed various affirmative acts of evasion.
Faller faces a maximum punishment of three years in prison for the charge of obstructing the internal revenue laws; five years for each count of evading his individual income taxes; three years for making and subscribing to a false form that he filed with the IRS; and one year for each count of failing to file his individual income tax returns. He faces a maximum fine of $100,000 on each count of failing to file his income tax returns and $250,000 for each of the other counts. An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
The case resulted from an investigation by special agents of the IRS - Criminal Investigation. Tax Division Trial Attorney Thomas Voracek and Assistant U.S. Attorney Lee Gentry are prosecuting the case.
Justice Department Settles Immigration-related Discrimination Claim Against SOS Employment GroupRead the Press Release
The Justice Department today reached an agreement with SOS Employment Group, based in Salt Lake City resolving claims that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA).
The department’s investigation confirmed allegations made by a work-authorized individual that SOS Employment Group had, at both initial hire and when subsequently re-verifying the refugee’s employment authorization, rejected the employee’s valid driver’s license and unrestricted Social Security card and required him to produce a Department of Homeland Security Employment Authorization Document (EAD). The department’s investigation further determined that SOS Employment’s documentary demands were based on the individual’s status as a non-U.S. citizen. The anti-discrimination provision of the INA, prohibits employers from using discriminatory documentary policies, procedures or requirements based on citizenship status or national origin when initially determining or subsequently re-verifying an employee’s authorization for employment.
Under the terms of the settlement agreement, SOS Employment Group has agreed to pay $9,157.50 in back pay to the victim and $1,200 in civil penalties to the United States, undergo Justice Department training on the anti-discrimination provision of the INA and be subject to monitoring of its employment eligibility verification practices for a period of one year.
“The INA’s anti-discrimination provision requires that the statute’s employment eligibility verification requirements be implemented in a nondiscriminatory manner without regard to citizenship status or national origin,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights. “The Civil Rights Division is fully committed to vigorously enforcing this important component of the INA.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired), sign up for a no-cost webinar at www.justice.gov/about/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc
Justice Department Settles Immigration-related Discrimination Claim Against Forever 21Read the Press Release
The Justice Department announced today that it reached an agreement with Forever 21 resolving allegations that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA) when it rejected a work-authorized individual’s Department of Homeland Security-issued Employment Authorization Document (EAD), and required her to produce a Permanent Resident Card (commonly known as a “Green Card”) as a condition of employment. The individual, who was employment-authorized as an applicant for permanent residence, was unable to work following the rejection of her EAD. The anti-discrimination provision of the INA prohibits employers from discriminating in the employment eligibility verification process by demanding specific documents or rejecting acceptable documents based on citizenship status or national origin.
Under the terms of the settlement agreement, Forever 21 has agreed to pay $1705.50 in back pay to the individual and $280 in civil penalties to the United States, undergo Justice Department training on the anti-discrimination provision of the INA and be subject to monitoring of its employment eligibility verification practices for a period of one year.
“The INA’s anti-discrimination provision requires that the INA’s employment eligibility verification requirements be implemented in a nondiscriminatory manner without regard to citizenship status or national origin,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights. “The Civil Rights Division is fully committed to vigorously enforcing the anti-discrimination provision’s protections against discriminatory documentary practices.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired), sign up for a free webinar at www.justice.gov/about/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc
Justice Department Files Lawsuit in Delaware Against Regal Contractors LLC Et Al., to Enforce the Employment Rights of Air Force Reserve MemberRead the Press Release
The Justice Department and U.S. Attorney for the District of Delaware Charles M. Oberly III announced today the filing of a lawsuit alleging that Regal Contractors LLC, Regal Builders LLC and Noble Pond Homes willfully violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by terminating U.S. Air Force Reserve Member Lon Fluman following his return from required military training with his reserve unit.Fluman is a Senior Airman with the U.S. Air Force Reserve serving with the 712th Aircraft Maintenance Squadron at Dover Air Force Base. According to the complaint, filed in the U.S. District Court for Delaware, Fluman was scheduled for reserve military duty to begin on Sept. 3, 2012 but was rescheduled on short notice to start one day later. Subsequently, Fluman served weekend reserve duty in early December of 2012. Following his second duty, the defendants terminated Fluman from his position as a maintenance technician. Although Fluman satisfied USERRA’s notification requirements before departing for his military leaves, according to the complaint, the defendants terminated Fluman anyway, claiming the notice provided was not sufficient.
USERRA explicitly protects the rights of members of the uniformed services to retain their employment following absences due to military service obligations. “Congress enacted USERRA to protect our men and women in uniform from experiencing this kind of injustice,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to vigorously enforcing federal laws that protect the employment rights of our servicemembers.”
“Members of the Air Force Reserve sacrifice time away from their jobs to serve their country,” said U.S. Attorney Oberly. “USERRA ensures that they are not discriminated against and that their employment rights are protected.”
This case stems from a referral by the U.S. Department of Labor following an investigation by the Department of Labor’s Veterans’ Employment and Training Service. The case is being handled by the Civil Rights Division and the U.S. Attorney’s Office for the District of Delaware, who work collaboratively with the Department of Labor to protect the jobs and benefits of National Guard and Reserve servicemembers upon their return to civilian life.
Additional information about USERRA can be found on the Justice Department website: w ww.servicemembers.gov and www.usdoj.gov/crt/emp, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
Justice Department Announces Charges Filed Against Two Derivatives Traders in Connection with Multi-Billion Dollar Trading Loss at JPMorgan Chase & CompanyRead the Press Release
U.S. Attorney General Eric Holder, U.S. Attorney for the Southern District of New York Preet Bharara and Assistant Director-in-Charge of the FBI’s New York Field Office George Venizelos announced the unsealing of criminal complaints against Javier Martin-Artajo and Julien Grout for their alleged participation in a conspiracy to hide the true extent of losses in a credit derivatives trading portfolio maintained by the Chief Investment Office (CIO) of JPMorgan Chase & Company (JPMorgan). Martin-Artajo served as a Managing Director and Head of Credit and Equity Trading for the CIO, and Grout was a Vice President and derivatives trader in the CIO.
“Our financial system has been hurt in recent years not just by risky bets gone bad, but also, in some cases, by criminal wrongdoing,” said Attorney General Holder. “We will not stop pursuing those who violate the public trust and compromise the integrity of our markets. I applaud U.S. Attorney Bharara, his colleagues in the Southern District of New York, and all of our partners on the President’s Financial Fraud Enforcement Task Force for their longstanding commitment to combating all forms of financial fraud. And I pledge that we will continue to move both fairly and aggressively to bring the perpetrators of financial crimes to justice.”
“As alleged, the defendants, Javier Martin-Artajo and Julien Grout, deliberately and repeatedly lied about the fair value of billions of dollars in assets on JPMorgan's books in order to cover up massive losses that mounted month after month at the beginning of 2012, which ultimately led JPMorgan to restate its losses by $660 million,” said U.S. Attorney Bharara. “The defendants’ alleged lies misled investors, regulators, and the public, and they constituted federal crimes. As has already been conceded, this was not a tempest in a teapot, but rather a perfect storm of individual misconduct and inadequate internal controls. The difficulty inherent in precisely valuing certain kinds of financial positions does not give people a license to lie or mislead to cover up losses; it does not confer a license to create false books and records or to make false public filings. And that goes double for handsomely-paid executives at a public company whose actions can roil markets and upend the economy.”
“The complaints tell a story of a group of traders who got in over their heads, and to get out, doubled down on a series of risky positions,” said FBI Assistant Director-in-Charge Venizelos. “In the first quarter of 2012, boom turned to bust, as the defendants, concerned about losing control to other traders at the bank, fudged the numbers on their daily book, and in some cases completely made them up. It brought a whole new meaning to cooking the books.”
In a separate action, the U.S. Securities and Exchange Commission (SEC) announced civil charges against Martin-Artajo and Grout.According to the allegations in the criminal complaints unsealed today in Manhattan federal court:
JPMorgan’s CIO, is a component of the bank’s Corporate/Private Equity line of business, which, according to the bank, exists to manage the bank’s excess deposits – approximately $350 billion in 2012. Since approximately 2007, the CIO’s investments have included a so-called Synthetic Credit Portfolio (SCP), which consists of indices and tranches of indices of credit default swaps (CDS). A credit default swap is essentially an insurance contract on an underlying credit risk, such as corporate bonds. CDS indices are collections of CDSs that are traded as one unit, while CDS tranches are portions of those indices, usually sliced up by riskiness.
Under U.S. Generally Accepted Accounting Principles (GAAP) and according to JPMorgan policy, CDS traders were required to value the securities in their portfolios on a daily basis. Those values, or “marks,” became part of the bank’s daily books and records. Because CDS indices and tranches are not traded over an exchange, traders are required to look to various data points in order to value their securities, such as actual transaction prices, price quotations from market makers, and values provided by independent services (such as Totem and MarkIT). JPMorgan’s accounting policy, which used the same methodology employed by the independent services, provided that the “starting point for the valuation of a derivatives portfolio is mid-market,” meaning the mid-point between the price at which market-makers were willing to buy or sell a security. Through about January 2012, CIO traders generally marked the securities in the SCP approximately to this mid-point, which they sometimes referred to as the “crude mid.”
The SCP was extremely profitable for JPMorgan – it produced approximately $2 billion in gross revenues since its inception – but in the first quarter of 2012, the SCP began to sustain consistent and considerable losses. From at least March 2012, Martin-Artajo and Grout conspired to artificially manipulate the SCP marks to disguise those losses. They did so, among other reasons, to avoid losing control of the SCP to other traders at JPMorgan.
Although Martin-Artajo pressured his traders, including Grout, to “defend the positions” in early 2012 by executing trades at favorable prices, the SCP lost approximately $130 million in January 2012 and approximately $88 million in February 2012. In March 2012, when the market moved even more aggressively against the CIO’s positions, Martin-Artajo specifically instructed Grout and the head SCP trader, Bruno Iksil (who has entered a non-prosecution agreement), not to report losses in the SCP unless they were tied to some identifiable market event, such as a bankruptcy filing by a company whose bonds were in the CDS index. Martin-Artajo explained that “New York” – meaning, among others, JPMorgan’s Chief Investment Officer – did not want to see losses attributable to market volatility.
By mid-March 2012, Grout was explicitly and admittedly “not marking at mids.” He maintained a spreadsheet that kept track of the difference between the price that Grout recorded in JPMorgan’s books and records, on the one hand, and the “crude mids,” on the other. By March 15, 2012, according to Grout’s spreadsheet, the difference had grown to approximately $292 million. In a recorded on-line chat the same day, Grout explained that he was trying to keep the marks for most of the SCP’s positions “relatively realistic,” with the marks for one particular security “put aside.” That is, Grout mispriced that one particular security, of which the SCP held billions of dollars’ worth, by the full $292 million. The following day, Iksil told Martin-Artajo that the difference had grown to $300 million, and “I reckon we get to 400 [million] difference very soon.” In a separate conversation, Iksil remarked to Grout that “I don’t know where he [Martin-Artajo] wants to stop, but it’s getting idiotic.”
In the days that followed, Grout at times ignored Iksil’s instructions on how to mark the positions, and instead, followed Martin-Artajo’s mandate to continue to hide the losses. By March 20, 2012, Iksil insisted that Grout show a significant loss: $40 million for the day. In a recorded call, Martin-Aartajo excoriated Iksil, finally emphasizing, “I didn’t want to show the P&L [the profit and loss].” Throughout the remainder of March 2012, while Iksil continued to try to insist that Martin-Artajo acknowledge the reality of the losses, Grout, at Martin-Artajo’s instructions, continued to hide them. As of March 30, 2012 – the last day of the first quarter of 2012 – Grout continued to fraudulently understate the SCP’s losses. These incorrect figures in the SCP were not only integrated into JPMorgan’s books and records, but also – as Martin-Artajo and Grout were well aware – into the bank’s quarterly financial filing for the first quarter of 2012 with the SEC.
During the course of the mis-marking scheme carried out by Martin-Artajo and Grout, the CIO’s Valuation Control Group (VCG) was supposed to serve as an independent check on the valuations assigned by traders to the securities that the traders were marking at month-end. The VCG, however, was effectively only staffed by one person and did not perform any independent review of the valuations. Instead, the VCG tolerated valuations outside of the bid-offer spread as presented by Martin-Artajo and other CIO traders.
In Aug. 2012, after Martin-Artajo and Grout were stripped of their responsibilities over the SCP and their scheme was discovered, JPMorgan restated its first quarter 2012 earnings, and recognized an additional loss of $660 million in net revenue attributable to the mis-marking of the SCP. JPMorgan announced that it was restating its earnings because it had lost confidence in the “integrity” of the marks submitted by Grout, at Martin-Artajo’s direction.
Martin-Artajo, 49, a Spanish citizen, and Grout, 35, a French citizen, are charged in one count of conspiracy; one count of falsifying the books and records of JPMorgan; one count of wire fraud; and one count of causing false statements to be made in JPMorgan’s filings with the SEC. They each face a maximum sentence of five years in prison on the conspiracy count, and 20 years in prison on each of the three remaining counts in the complaints, and a fine of the greater of $5,000,000 or twice the gross gain or gross loss as to certain of the offenses.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.The case was investigated by the FBI. The SEC and the Justice Department’s Office of International Affairs were also involved.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Eugene Ingoglia and Matthew L. Schwartz are in charge of the prosecutions.
The charges contained in the complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Jury Convicts KC Man of Attempted Armed Bank Robbery after Shoot-out with Bank Guard, Federal AgentRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was convicted in federal court today of attempting to rob Blue Ridge Bank and Trust at gunpoint, after being foiled by a bank guard and a federal agent who was a customer at the bank.
Eric L. Smith, 34, of Kansas City, was found guilty of attempted armed bank robbery, using a firearm during a violent crime and being a felon in possession of a firearm.
Smith attempted to rob Blue Ridge Bank and Trust, 6202 Raytown Trafficway, Raytown, Mo., on June 23, 2012. Smith entered the bank and pointed a firearm at a security guard who was seated in the lobby. Smith walked straight to the guard, still pointing the firearm at him, and demanded that the guard give him his weapon. Smith fled from the bank without taking any money when the guard fired three rounds from his 9mm Glock handgun in Smith’s direction. A bullet fired from the guard’s gun shattered the glass in one of the doors through which Smith exited the bank.
The only customer in the bank, a federal agent who was dressed in plain clothes, drew his weapon, pointed it at Smith and pursued Smith out of the bank along with the guard. Smith stopped in the parking lot and turned and fired one shot toward the bank, guard and federal agent. Smith continued running through the parking lot and around the western corner of the strip mall. Smith ran to ared four-door sedan he had parked behind the mall and sped away.
An anonymous tipster saw a surveillance photo of Smith and called the Crime Stoppers TIP Hotline on June 26, 2012. The caller reported that Smith had a bandaged right hand since Saturday but no hand injury on Friday night. The tip led law enforcement officers to the home of Smith’s mother, where he was staying. Smith was at home and was arrested on outstanding warrants.
When agents searched the house, they found a loaded .40-caliber Ruger under a cushion of the couch. The Ruger matched the firearm used by Smith in the attempted bank robbery. The brand of ammunition found in the firearm matched the live round and the shell casing found in the parking lot of Blue Ridge Bank and Trust. Additionally, a forensic expert determined that the .40-caliber shell casing recovered from the parking lot was fired from the Ruger found under the couch cushion. The Ruger contained live rounds of ammunition that matched the shell casing and bullet recovered from the crime scene. Law enforcement officers also identified a Ford four-door sedan parked at the residence that matches the vehicle in which the robber fled.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Smith has two prior felony convictions for aggravated robbery.
Following the presentation of evidence, the jury in the U.S. District Court in Kansas City, Mo., deliberated for about two hours before returning the guilty verdicts to U.S. District Judge Beth Phillips, ending a trial that began Monday, Aug. 12, 2013.
Under federal statutes, Smith is subject to a mandatory minimum sentence of 10 years in federal prison without parole, up to a sentence of 45 years in federal prison without parole, plus a fine up to $750,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Christina Y. Tabor and Special Assistant U.S. Attorney Sarah A. Castle. It was investigated by the FBI and the Kansas City, Mo., Police Department.Jury Convicts Jefferson City Man of Illegal FirearmsRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Jefferson City, Mo., man was convicted in federal court today of illegally possessing six firearms.
Andrew David Brandwein, 39, of Jefferson City, was found guilty of being a felon in possession of firearms.
Evidence introduced during the trial indicated that Brandwein was in possession of six firearms – a Marlin .22 magnum caliber rifle, a Harrington and Richardson .223-caliber rifle, a Weatherby .300 SBY Mag. rifle, a New England Firearms 10-gauge shotgun, a Rossi .30-06 Springfield rifle and a Harrington and Richardson .410 shotgun – on Jan. 8, 2011.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Brandwein has three prior felony convictions for possession of a controlled substance and prior felony convictions for attempting to manufacture a controlled substance, possession of a precursor drug with the intent to manufacture methamphetamine, unlawful possession of a concealable firearm and the distribution, delivery, sale or manufacture of a controlled substance.
His wife, Debra Louise Brandwein, 54, pleaded guilty on Aug. 9, 2013, to tampering with evidence. She admitted that she cleaned two jars that contained methamphetamine in order to protect her husband from prosecution.
Law enforcement officers were dispatched to the Brandwein’s residence on Jan. 8, 2011, when a large barn on the property caught on fire. Officers knocked on the door but received no response. After they used the keys from a truck parked near the barn to enter the house, Andrew Brandwein came out of the back bedroom, and appeared disoriented and confused. Debra Brandwein arrived at the residence a short time later. While in the residence, officers found five firearms sitting on the floor next to a television stand. There was also a loaded Harrington and Richardson .223 rifle lying on the ground next to the truck near the barn.
Andrew Brandwein was arrested; officers found several .223 shells and $2,458 in his pants pockets.
Following the presentation of evidence, the jury in the U.S. District Court in Jefferson City, Mo., deliberated for about two and a half hours before returning the guilty verdicts to U.S. District Judge Brian C. Wimes, ending a trial that began Monday, Aug. 12, 2013.
Under federal statutes, Andrew Brandwein is subject to a sentence of up to 10 years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Special Assistant U.S. Attorney Steven R. Berry. It was investigated by the Cole County, Mo., Sheriff’s Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Osage Fire Protection District, MUSTANG (the Mid-Missouri Unified Strike Team And Narcotics Group) and the Missouri State Highway Patrol.
Individual Arrested in Florida in Connection with a Lottery Scam in JamaicaRead the Press Release
A Jamaican citizen charged in connection with the operation of a fraudulent lottery was arrested Tuesday in Orlando, Fla., following his indictment by a federal grand jury in Fort Lauderdale, Fla., on Aug. 9, 2012, the Justice Department, U.S. Postal Inspection Service, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and U.S. Marshals Service announced today. Oneike Mickhale Barnett was arrested based on charges that he and his co-conspirators ran a lottery scam in Jamaica that fraudulently induced elderly victims in the United States to send them thousands of dollars to cover fees for lottery winnings that victims had not in fact won. The indictment unsealed with Barnett’s arrest forms part of the government’s crackdown on fraudulent lottery scams based in Jamaica.
Beginning in October 2008, Barnett and his co-conspirators are alleged to have contacted victims in the U.S., announced that the victims had won cash and prizes and persuaded the victims to send them thousands of dollars in fees to release the money. The victims never received cash or prizes. The defendant and his co-conspirators allegedly made calls from Jamaica using Voice Over Internet Protocol technology that allowed them to use a telephone number with a U.S. area code. According to the indictment, Barnett convinced victims to send money to middlemen in South Florida, who forwarded the money to Jamaica.
“Lottery scams that target older Americans, such as the one alleged here, are the most pernicious kind of fraud – often swindling seniors out of their life savings,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division. “The Justice Department will continue to combat these schemes and bring those responsible to justice.”
“The alleged lottery scheme in this case is most vile because it targeted the elderly, one of the most vulnerable members in our society,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “While the scam was based in Jamaica, it targeted victims in the United States, including South Florida. We will continue to pursue and prosecute those responsible for these illegal schemes in an effort to bring those responsible to justice and protect those in our society.”
Barnett was charged with conspiracy and 37 counts of wire fraud, and with committing these offenses via telemarketing. If convicted, he faces a statutory maximum sentence of 30 years per count, a possible fine and mandatory restitution.
“This arrest highlights the joint effort between U.S. and Jamaican law enforcement to prosecute those who prey on our nation’s senior citizens,” said U.S. Postal Inspector in Charge for the Miami Division Ronald Verrochio. “The mission of the Postal Inspection Service is to protect consumers by ensuring the nation’s mail system is not used as a tool for fraud.”
Special Agent in Charge for Homeland Security Investigations in Miami Alysa D. Erichs added, “These individuals are preying on some of the most vulnerable members in our communities. We will continue to work with our partners in Jamaica and other law enforcement agencies to put these criminal enterprises out of business.”
Acting U.S. Marshal Neil DeSousa said, “The U.S. Marshals Service in the Southern District of Florida, along with the Jamaica Foreign Field Office and the Organized Crime Drug Enforcement Task Force, remain committed to locating and apprehending criminals who defraud elderly Americans. We will continue to work with the U.S. Postal Inspection Service and Department of Homeland Security on the JOLT task force in the ongoing effort to combat lottery fraud targeting some of our most vulnerable citizens.”
U.S. Attorney Ferrer and Assistant Attorney General Delery both commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations, the U.S. Marshals Service and Jamaica’s Major Organized Crime and Anti-Corruption Task Force. The case is being prosecuted by Assistant U.S. Attorney Bertha Mitrani and Consumer Protection Branch, Civil Division attorneys Jeffrey Steger and Kathryn Drenning.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Individual Arrested in Florida in Connection with A Lottery Scam in JamaicaRead the Press Release
A Jamaican citizen charged in connection with the operation of a fraudulent lottery was arrested Tuesday in Orlando, Fla., following his indictment by a federal grand jury in Fort Lauderdale, Fla., on Aug. 9, 2012, the Justice Department, U.S. Postal Inspection Service, U.S. Immigration and Customs Enforcement's Homeland Security Investigations and U.S. Marshals Service announced today. Oneike Mickhale Barnett was arrested based on charges that he and his co-conspirators ran a lottery scam in Jamaica that fraudulently induced elderly victims in the United States to send them thousands of dollars to cover fees for lottery winnings that victims had not in fact won. The indictment unsealed with Barnett's arrest forms part of the government's crackdown on fraudulent lottery scams based in Jamaica.
Beginning in October 2008, Barnett and his co-conspirators are alleged to have contacted victims in the U.S., announced that the victims had won cash and prizes and persuaded the victims to send them thousands of dollars in fees to release the money. The victims never received cash or prizes. The defendant and his co-conspirators allegedly made calls from Jamaica using Voice Over Internet Protocol technology that allowed them to use a telephone number with a U.S. area code. According to the indictment, Barnett convinced victims to send money to middlemen in South Florida, who forwarded the money to Jamaica.
“The alleged lottery scheme in this case is most vile because it targeted the elderly, one of the most vulnerable members in our society,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “While the scam was based in Jamaica, it targeted victims in the United States, including South Florida. We will continue to pursue and prosecute those responsible for these illegal schemes in an effort to bring those responsible to justice and protect those in our society.”
“Lottery scams that target older Americans, such as the one alleged here, are the most pernicious kind of fraud - often swindling seniors out of their life savings,” said Stuart F. Delery, Assistant Attorney General for the Justice Department's Civil Division. “The Justice Department will continue to combat these schemes and bring those responsible to justice.”
Barnett was charged with conspiracy and 37 counts of wire fraud, and with committing these offenses via telemarketing. If convicted, he faces a statutory maximum sentence of 30 years per count, a possible fine and mandatory restitution.
“This arrest highlights the joint effort between U.S. and Jamaican law enforcement to prosecute those who prey on our nation's senior citizens,” said U.S. Postal Inspector in Charge for the Miami Division Ronald Verrochio. “The mission of the Postal Inspection Service is to protect consumers by ensuring the nation's mail system is not used as a tool for fraud.”
Special Agent in Charge for Homeland Security Investigations in Miami Alysa D. Erichs added, “These individuals are preying on some of the most vulnerable members in our communities. We will continue to work with our partners in Jamaica and other law enforcement agencies to put these criminal enterprises out of business.”
Acting U.S. Marshal Neil DeSousa said, “The U.S. Marshals Service in the Southern District of Florida, along with the Jamaica Foreign Field Office and the Organized Crime Drug Enforcement Task Force, remain committed to locating and apprehending criminals who defraud elderly Americans. We will continue to work with the U.S. Postal Inspection Service and Department of Homeland Security on the JOLT task force in the ongoing effort to combat lottery fraud targeting some of our most vulnerable citizens.”
U.S. Attorney Ferrer and Assistant Attorney General Delery both commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations, the U.S. Marshals Service and Jamaica's Major Organized Crime and Anti-Corruption Task Force. The case is being prosecuted by Assistant U.S. Attorney Bertha Mitrani and Consumer Protection Branch, Civil Division attorneys Jeffrey Steger and Kathryn Drenning.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Independence Business Owner, Wichita Attorney among 18 Indicted in $18 Million Conspiracy to Traffic in Contraband CigarettesRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that an Independence, Mo., business owner and a Wichita, Kan., attorney are among 18 defendants who have been indicted by a federal grand jury in a more than $17 million, multi-state conspiracy to transport hundreds of thousands of cartons of contraband cigarettes from the Kansas City, Mo., area to the state of New York, where they were sold primarily on Indian reservations.
In addition to the federal indictment, the undercover operation by the Bureau of Alcohol, Tobacco, Firearms and Explosives resulted in a $3.5 million civil forfeiture and a non-prosecution agreement that requires a Winnebago, Neb. company to pay a $300,000 penalty.
“When unscrupulous companies traffic in contraband cigarettes, they are stealing from the public through millions of dollars in lost tax revenue,” Dickinson said. “They also create an illegal and unfair advantage over legitimate businesses that follow the law. When they don’t pay the excise tax on their cigarettes, they are able to unfairly undercut the prices charged by off-reservation retailers.”
Craig Sheffler, 43, and his wife, Nicole Sheffler, 35, both of Independence, Harry Najim, 65, of Wichita, Teddy Frenchman, 39, of Winnebago, Neb., AJ’s Candy & Tobacco, LLC, and William F. Parry, 52, both of Irving, N.Y., Tara Sundown, 48, of Basom, N.Y., Philip Christ, 54, and Salvatore Tornabene, 44, both of Hamburg, N.Y., Gerald E. Barber, 67, of Virginia, Mousa Juma, 62, of Chesapeake, Va., T. Cameron Jones, 57, of Quilcene, Wash., Gholamreza “Reza” Tadaiyon, 50, of Weston, Fla., Payam Kheimehdooz, 42, of Miami, Fla., Mohsen Rostami, 47, of North Lauderdale, Fla., and David Bishop, 43, Mark Bishop, 39, and Piotr Hoffmann, 39, all of Montreal, Canada, were charged in a 44-count indictment returned under seal by a federal grand jury in Kansas City, Mo., on Tuesday, Aug. 12, 2013. That indictment was unsealed and made public today upon the arrests and initial court appearances of several defendants.
The federal indictment alleges that each of the defendants participated in a conspiracy to commit wire fraud and traffic in contraband cigarettes from July 2010 to Jan. 26, 2012.
According to the indictment, Craig Sheffler and Tadaiyon purchased $17,345,610 worth of contraband cigarettes from undercover ATF agents during the undercover operation. Approximately 620,600 cartons of cigarettes – containing 10 packs per carton – were transported to New York without paying the required $4.35 per pack excise tax. The untaxed cigarettes were sold by New York retailers and smoke shops on the reservations in the state of New York. The total state excise tax lost to the state of New York was approximately $8,148,420.
The Defendants
Craig Sheffler is the owner of Cheap Tobacco Wholesale, a cigarette wholesale business in Independence. Najim is a partner in the Adams Jones Law Firm, P.A., in Wichita. Najim was the attorney for Craig Sheffler and Cheap Tobacco Wholesale.
Tadaiyon owns Brand Name Connoisseurs, Corp., a business located in Florida. Neither Tadaiyon nor Brand Name Connoisseurs was a licensed New York tobacco wholesaler authorized to bring cigarettes into the state of New York. Payamkheimehdooz and Rostami worked as drivers for Tadaiyon. According to the indictment, Tadaiyon received approximately $1,280,000 in gross profit from the conspiracy.
Barber was president of the Seneca Cayuga Tobacco Company, an Oklahoma tobacco company that manufactures and distributes its own brands of cigarettes.
Parry owns and operates Wolf’s Run, a business that, among other things, operated a gas station, convenience store, and trucking transport business. Tornabene was a driver for Parry. Sundown operated Jan’s Smoke Shop, a reservation business that, among other things, operated a gas station and convenience store. AJ’s is a tobacco wholesaler located on a reservation. AJ’s owner is identified as an unindicted co-conspirator. None of these defendants or their businesses were licensed to bring cigarettes into the state of New York.
David Bishop is the owner of DKB Trade Concepts, a Canadian corporation located in Montréal, Québec. Mark Bishop and Hoffmann worked as drivers for David Bishop. According to the indictment, David Bishop received approximately $303,000 in wire transfers and approximately $133,000 in cash for his “brokerage fees” during the conspiracy. According to the indictment, Hoffmann received approximately $24,250 in wire transfers.
Jones owns and operates Manufacturer’s Production Exchange in Quilcene, Washington. According to the indictment, Jones received approximately $154,000 for his “brokerage fees” during the conspiracy.
Frenchman is the manager of warehouse operations for HCI Distribution, a tobacco distribution company. HCI Distribution Company is a subsidiary of Ho-Chunk, Inc., headquartered in Winnebago, Neb. (on the Winnebago Tribe reservation).
Juma owned and operated Juma Brothers, Inc., located in Portsmouth, Va., a business that distributed tobacco products and other items to retail businesses.
New York Excise Tax
New York, through the Department of Taxation and Finance, pre-collects an excise tax of $4.35 per pack of cigarettes from wholesalers for sales to Indian nations and tribes. Federal and New York state law requires that tax stamps be affixed to cigarette packages – prior to their sale to consumers – reflecting that the required state taxes have been paid.
Only licensed wholesalers may purchase unstamped cigarettes. This is done either directly through the cigarette manufacturer or through other wholesalers. Under New York State law, it is the obligation of state-licensed stamping agents, i.e. wholesalers, to prepay the excise tax and affix stamps on all cigarette packs.
Under state and federal law, tobacco wholesalers must accurately report the sales of cigarettes to the state(s) where the sale occurs. The state of Missouri requires tobacco wholesalers to accurately report the source of all cigarettes purchased and the disposition of those cigarettes. During the course of the conspiracy, the indictment says, in the reports filed by Cheap Tobacco Wholesale, Craig Sheffler falsely reported that the source of the cigarettes purchased from the ATF undercover operation was Cross Bridge LLC, a defunct Florida corporation.
The Conspiracy
Craig Sheffler made regular purchases of contraband cigarettes from undercover ATF agents in Kansas City. He in turn sold many of the cigarettes to Tadaiyon, whose drivers picked them up directly from the ATF warehouse in Kansas City, Mo. The rest of the cigarettes were shipped to New York, either from the undercover ATF warehouse or from the Cheap Tobacco Wholesale warehouse in Independence.
The indictment cites a series of purchases of cigarettes during the conspiracy, each transaction typically involving thousands of cartons and hundreds of thousands of dollars.
For example, the indictment alleges that on Sept. 29, 2011, Craig Sheffler purchased 15,576 cartons of cigarettes from ATF undercover agents for $580,131 in cash and a check for $33,000. During this transaction, Nicole Sheffler carried an orange bucket into the ATF undercover warehouse which contained two paper bags with approximately $400,000 in cash.
On another occasion, the indictment alleges that Craig Sheffler purchased 352 cases of contraband cigarettes from the ATF undercover agents on Nov. 22, 2011. Rather than paying for the cigarettes, the indictment says, Craig Sheffler outlined a breakdown of payments for the purchases of semi-trucks to be coordinated by his attorney, Najim. Craig Sheffler allegedly agreed to give Najim approximately $625,000 to purchase Peterbilt semi-trucks for the undercover agents. Craig Sheffler allegedly stated he would pay Najim’s law firm $9,000 and $60,000 in cash to Najim.
Parry ordered cigarettes directly, while Sundown and AJ’s placed orders for unstamped cigarettes through Christ and Barber. Barber (through Seneca Cayuga Tobacco Company) then placed orders for those unstamped cigarettes from Tadaiyon and Brand Name Connoisseurs. Tadaiyon would forward the order to David Bishop, who would e-mail the order for the unstamped cigarettes to Jones and to Craig Sheffler.
According to the indictment, through the end of Sept. 22, 2011, after the orders had been placed, Tadaiyon, Mark Bishop and Hoffmann picked up the unstamped cigarettes in Kansas City and transported them to Seneca Cayuga Tobacco Company in Oklahoma. From Seneca Cayuga Tobacco Company, the unstamped cigarettes were allegedly transported to Wolf’s Run, Jan’s Smoke Shop, AJ’s and the Totem Pole Smoke Shop in New York by Wolf’s Run or a common carrier.
After Sept. 22, 2011, according to the indictment, Tadaiyon, Mark Bishop, Hoffmann, Kheimehdooz and Rostami picked up the orders of unstamped cigarettes from the undercover ATF warehouse in Kansas City or at the Cheap Tobacco Wholesale warehouse in Independence, then transported them directly to HCI Distribution in Nebraska. Frenchman, at HCI Distribution, allegedly coordinated with HCI Logistics (another subsidiary of Ho-Chunk, Inc.) to have the unstamped cigarettes transported to Jan’s Smoke Shop, AJ’s and the Totem Pole Smoke Shop in New York.
Parry allegedly sold the unstamped, untaxed cigarettes at Wolf’s Run store. AJ’s and Parry allegedly sold the unstamped, untaxed cigarettes to other smoke shops on the reservations in New York. Sundown allegedly sold the unstamped, untaxed cigarettes at Jan’s Smoke shop.
Non-prosecution Agreement
In addition to the federal indictment, Dickinson also announced today that the U.S. Attorney’s Office in the Western District of Missouri has entered into a non-prosecution agreement with HCI Distribution, in which HCI Distribution acknowledges responsibility for its role in the conspiracy and agrees to take several actions; the U.S. Attorney’s Office will defer criminal prosecution and civil action.
Ho-Chunk, Inc., located in Winnebago, Neb., is a corporation operated by the Winnebago Tribe of Nebraska, a federally recognized Indian tribe. Ho-Chunk, Inc., is the parent company of HCI Distribution, also located in Winnebago, which claims to be one of the largest tribal cigarette and tobacco distributors in the United States, and HCI Logistics, a commercial transportation company in Omaha, Neb.
Under the terms of this agreement, HCI Distribution must pay a monetary penalty of $300,000 and take corrective actions. HCI Distribution must also withdraw its claim in the civil forfeiture case. HCI Distribution had claimed $221,850 plus the proceeds from the sale of the 102 cases of seized cigarettes.
Civil Forfeiture
Following the seizures that occurred as a result of the investigation, the U.S. Attorney’s Office started a civil forfeiture case naming the assets taken up to that point. On Oct. 23, 2012, the court entered a default order of forfeiture as to the following assets:
- $399,206.22 of the $599,206.22 seized from InTrust Bank account in the name of Cheap Tobacco Wholesale, LLC;
- $740,000.00 seized on Jan. 26, 2012;
- $18,260.00 seized on Jan. 26, 2012;
- $266,704.28 seized on Jan. 27, 2012 from Bank of Oklahoma in the name of Seneca-Cayuga Tobacco Company;
- More than 300 cases of seized cigarettes;
- 2009 Cessna T206H Stationair aircraft;
- Two 2012 Peterbilt 389 trucks;
- Two 2012 Peterbilt 386 trucks;
- $615,661 seized.
The seized cigarettes have been sold at auction for $532,500. The 2009 Cessna Aircraft has been sold for $450,000. The four trucks have been sold for the following amounts: $115,000; $115,000; $113,000; and $113,000.
The civil case has been stayed pending the resolution of the criminal case.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorneys Paul S. Becker and Justin G. Davids. It was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, IRS – Criminal Investigation, the Federal Deposit Insurance Corporation – Office of Inspector General and the Kansas City, Mo., Police Department.Illegal Alien Convicted of Passport Fraud, False Claim of U.S. Citizenship and Aggravated Identity TheftRead the Press Release
An illegal alien who attempted to obtain a U.S. passport using fraudulent and illegally obtained documents was convicted by a jury today, after a one-day trial in federal court in Cedar Rapids.
Eduardo Rodriguez-Ayala, age 28, a citizen of Mexico, living in Waterloo, Iowa, was convicted of one count of unlawful possession of an identity document, one count of making false statements in a passport application, two counts of making a false claim of United States citizenship, and two counts of aggravated identity theft. The verdict was returned this morning following about ninety minutes of jury deliberations.
The evidence at trial showed that on August 10, 2012, Rodriguez-Ayala, claiming to be a U.S. citizen, used a fraudulent Arizona birth certificate in his brother’s name to obtain an Iowa identification card and to register to vote. Three days later, on August 13, 2012, Rodriguez-Ayala used the falsely procured Iowa identification card and the fraudulent birth certificate to apply for a U.S. passport. Rodriguez-Ayala later gave a false name and date of birth to State Department agents investigating the passport application. Rodriguez-Ayala eventually admitted he used false documents and his brother’s identity to apply for the U.S. passport.
Sentencing before United States District Court Chief Judge Linda R. Reade will be set after a presentence report is prepared. Rodriguez-Ayala was ordered detained without bond pending sentencing. Rodriguez-Ayala faces a possible maximum sentence of ten years’ imprisonment on the unlawful possession of an identity document charge, a possible maximum sentence of ten years’ imprisonment on the making false statements in a passport application charge, and a maximum sentence of three years’ imprisonment on each of the false claim of U.S. citizenship charges. Rodriguez-Ayala also faces a mandatory sentence of two years’ imprisonment on each of the aggravated identity theft charges, with at least one such sentence to be served consecutive to any other sentence. Rodriguez faces a fine of $1,500,000, $600 in special assessments, and three years of supervised release following any imprisonment.
The case is being prosecuted by Assistant United States Attorney Daniel C. Tvedt and was investigated by agents from the United States Department of State and the Department of Homeland Security, Immigration and Customs Enforcement.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is CR 13-2009.
Houston Man Handed Significant Federal Sentence for Cocaine TraffickingRead the Press Release
HOUSTON - Michael Washington, 38, of Houston, has been handed a sentence of 151 months for conspiracy to possess with the intent to distribute and possession with intent to distribute 8.9 kilograms of cocaine, United States Attorney Kenneth Magidson announced today.
On Tuesday, Oct. 11, 2011, Washington was convicted by a jury’s verdict of conspiracy to possess with the intent to distribute cocaine and aiding and abetting the possession with the intent to distribute cocaine. At the hearing today, U.S. District Judge Gray Miller sentenced Washington to 151 months on both counts of conviction to run concurrently. Washington was further ordered to serve five years of supervised release following completion of his prison term.
During the four-day trial, the jury heard testimony which proved that on June 10-11, 2010, Juan Manzanares supplied cocaine to other co-conspirators Roberto Medrano and Alberto Aguirre who subsequently sold the cocaine to Washington. After receiving one kilogram on June 10, Washington made arrangements to purchase five additional kilograms of cocaine the following day.
On June 11, Manzanares, providing the cocaine, rode with Medrano and Aguirre to Washington’s residence on the 9600 block of Kings Valley in Houston to deliver the cocaine. Unbeknownst to all involved, agents with the Drug Enforcement Administration (DEA) had received information about a possible drug transaction and were monitoring the area.
Surveillance units had established a visual on the house and agents witnessed Aguirre exit the vehicle and enter Washington’s residence. Inside, Washington received the cocaine from Aguirre and paid him approximately $113,000. Aguirre departed the residence carrying a black bag with the money, placed it into the vehicle and left. Surveillance then followed all three vehicles.
Officials conducted a traffic stop on the Chevy, at which time they observed the black bag in the back seat with bundles of U.S. currency exposed. The amount of money recovered from the bag was approximately $113,899.
The co-defendants in the case were sentenced to terms ranging from 60-151 months in federal prison.
This matter was investigated by the DEA in conjunction with the Pasadena Police Department. Assistant United States Attorneys Stuart A. Burns and Bertram Isaacs prosecuted the case.
Four Individuals Sentenced for Their Roles in Large, Multi-state Identity Theft RingRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, two individuals were sentenced for their roles in a large, multi-state, identity theft ring. United States District Judge Paul A. Magnuson sentenced Russell Raymond Royals, age 61, of Cottage Grove, to 120 months in prison; and Desmon Desmond Burks, age 38, of St. Paul, to 252 months in prison. Royals previously pled guilty to one count of conspiracy to commit bank fraud and one count of aggravated identity theft. Burks was convicted on September 6, 2012, following a jury trial, of one count of conspiracy to commit bank fraud, two counts of aiding and abetting bank fraud, and two counts of aggravated identity theft.
Two related defendants were sentenced last month for their roles in this conspiracy. On July 23, 2013, Norman Scott Allen, age 44, of Minneapolis, was sentenced to 80 months in prison on one count of conspiracy to commit bank fraud and one count of bank fraud. On July 22, 2013, Frederick Adrianne Hamilton, age 57, also of Minneapolis, was sentenced to 57 months in prison on one count of conspiracy to commit bank fraud and two counts of bank fraud. Both men were convicted on September 6, 2012 following a jury trial. Twenty-three other defendants have been sentenced in this case thus far, while five more await sentencing.These individuals, along with over 100 others, were involved in a conspiracy from 2006 through December of 2011 to defraud banks, bank customers, and businesses. The co-conspirators used victim information to create counterfeit checks and false identification documents to conduct fraudulent transactions at retail establishments where expensive merchandise was purchased and returned for cash. At banks, the conspirators posed as customers and withdrew money from victims’ bank accounts. The members of the conspiracy conducted these fraudulent transactions throughout Minnesota and in at least 13 other states. Victim information was obtained by members of the conspiracy through multiple sources, including from individuals who stole victim information from their places of employment, from individuals employed at area banks, from those who stole the information from the mail, during vehicle break-ins, and business burglaries, among other sources.
Following sentencing, Patrick Henry, the head of the Minnesota Financial Crimes Task Force, said, “The Minnesota Financial Crimes Task Force led this investigation, but the effort was a success because of the extraordinary collaboration by all of the agencies involved.”
Kelly R. Jackson, Special Agent in Charge of Internal Revenue Service-Criminal Investigations, St. Paul Field Office, which also participated in the investigation, said, “Investigating identity theft is a priority for IRS-Criminal Investigations. Today’s sentencings of Desmon Burks and Russell Royals should serve as a strong deterrent to those who are considering similar conduct. Law enforcement and the U.S. Attorney’s Office are serious about investigating identity theft crimes and holding those accountable who commit these types of crimes.”
In a related case, five individuals were charged with conspiracy to commit bank fraud, bank fraud and aggravated identity theft. Jemall Ronta Williams, Jerome Davis, Jr., Tierra Samantha Catrina House, and Shanell Collette Brewer each pleaded guilty to one count of conspiracy to commit bank fraud and one count of aggravated identity theft. Gordon Lamarr Moore was convicted in April 2013 following a jury trial. During the trial, Moore fled and became a fugitive. On July 8, 2013, he was arrested in at a hotel in Milwaukee, Wisconsin. Moore attempted to again flee, but was ultimately apprehended without incident.
These cases resulted from an investigation conducted by the Minnesota Financial Crimes Task Force, the U.S. Postal Inspection Service, and the IRS-Criminal Investigations. They were prosecuted by Assistant U.S. Attorney Karen B. Schommer and Assistant U.S. Attorney Michelle E. Jones.
The Financial Crimes Task Force was established pursuant to state law and is comprised of local, state, and federal law enforcement investigators dedicated to combating the growing problem of cross-jurisdictional financial crimes. The task force, overseen by an advisory board also created under state law, serves the entire District of Minnesota, presenting its cases to county or federal prosecutors, as appropriate.
The task force and the Minnesota U.S. Attorney’s Office want to remind people to protect themselves from identity theft. For more information, visit http://www.stopfraud.gov/protect-identity.html.
For more information on how to avoid becoming a victim of identity theft, visit https://postalinspectors.uspis.gov/investigations/MailFraud/fraudschemes/mailtheft/IdentityTheft.aspx . The IRS-Criminal Investigations also urges citizens to review the Taxpayer Guide to Identity Theft, which can be found at http://www.irs.gov.
For tips on how to prevent mail theft, visit https://postalinspectors.uspis.gov/investigations/MailFraud/fraudschemes/mailtheft/MailTheft.aspx.Four Charged in Heroin Trafficking ConspiracyRead the Press Release
JOHNSTOWN, Pa. - On Aug. 13, 2013, four residents of Johnstown, Pa., were indicted by a federal grand jury in Johnstown on charges of violating federal narcotics and firearms laws, United States Attorney David J. Hickton announced today.
The seven-count indictment named as defendants the following individuals:
Fred Claycomb, Jr., 50;
Matthew John Claycomb, 21;
Ronald Paul Copeland, 44; and
Nichelle Seeley, 27.According to the indictment presented to the court, from Jan.1, 2013, through Jan. 25, 2013, Fred Claycomb, Jr., Matthew John Claycomb, Copeland and Seeley conspired to distribute and possess with intent to distribute less than 100 grams of heroin.
In addition, on Jan. 17, Jan. 18 and Jan. 25, 2013, Fred Claycomb, Jr., Matthew John Claycomb, Copeland and Seeley distributed less than 100 grams of heroin on each of these occasions, and on Jan. 25, 2013, Seeley possessed with the intent to distribute less than 100 grams of heroin.
On Jan.25 2013, Matthew John Claycomb was found in possession of a Harrington and Richardson, Model 158, 410 gauge shotgun. On Mar. 1, 2011, Claycomb was convicted in Cambria County, Pa., of firearms not to be carried without a license, which is a crime punishable by imprisonment for a term exceeding one year. Federal law prohibits persons who have been convicted of a crime punishable by imprisonment exceeding one year from possessing firearms.
The law provides for a maximum total sentence for Fred Claycomb, Jr. of 60 years in prison, a fine of $3,000,000, or both; for Matthew John Claycomb, 70 years in prison, a fine of $3,250,000, or both; for Copeland, 40 years in prison, a fine of $2,000,000, or both; and for Seeley, 60 years in prison, a fine of $3,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendants.
Assistant U.S. Attorney Stephanie L. Haines is prosecuting this case on behalf of the government.
The Laurel Highlands Resident Agency of the Federal Bureau of Investigation and the Cambria County Drug Task Force conducted the investigation leading to the indictment in this case.
An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.
According to Mr. Hickton, the case is being prosecuted as part of Project Safe Neighborhoods, a collaborative effort by federal, state and local law enforcement agencies, prosecutors and communities to prevent, deter and prosecute gun crime.
Former Umatilla Tribal Police Officer Pleads Guilty to Abusive Sexual Contact and Making False StatementsRead the Press Release
PORTLAND, Ore. – Fermore Joseph Craig, Jr., 43, of Pendleton, Oregon, pled guilty yesterday before U. S. District Judge Michael W. Mosman to one count of abusive sexual contact and one count of making false statements to the FBI. The maximum sentence for abusive sexual contact is two years in prison, a fine of $250,000, and a lifetime of supervised release. Craig’s conviction for abusive sexual contact will require him to register as a sex offender. The maximum sentence for making false statements to the FBI is five years in prison, a fine of $250,000, and three years of supervised release. Sentencing is scheduled for November 4, 2013. Craig is currently out of custody and under the supervision of a federal court officer, pending the sentencing hearing.
“Sexual assault is always a heinous crime,” stated U.S. Attorney Amanda Marshall. “But when a tribal police officer, whose very duty is to protect the members of a Tribal Nation, commits such an act, the impact is especially egregious as it violates the trust and safety not only of the victim, but the entire tribal community.”
According to the prosecutor’s statements in court, on May 11, 2013, on the Umatilla Indian Reservation, Craig touched the intimate parts of an adult female. Craig admitted that he intentionally touched the victim’s intimate parts to arouse and gratify his own sexual desire, and he did so without the victim’s permission.
When the victim subsequently disclosed the sexual abuse, the FBI and Oregon State Police initiated an investigation and interviewed Craig. On May 13, 2013, during an interview with an FBI special agent and an Oregon State Police trooper, Craig made false statements to the investigators by lying about the sexual contact he had with the victim.
Craig had been employed as a Umatilla Tribal Police Officer for approximately 15 years, but he was not on duty as a police officer at the time the sexual abuse occurred. After the abuse was reported by the victim, Craig was immediately placed on administrative leave. Craig ultimately resigned from the Umatilla Tribal Police Department in June, while the investigation was ongoing.
The case was investigated by the FBI’s Pendleton office and the Oregon State Police. Assistant U.S. Attorney Craig Gabriel prosecuted the case.
Former Lawrence IT Director Pleads Guilty to Fraud and TheftRead the Press Release
BOSTON - A Dover, NH, man was convicted yesterday in federal court of defrauding the City of Lawrence of more than $5,000 while serving as the Director of the city’s Informationi Technology (IT) Department.
Bryan J. Cahoon, 53, pleaded guilty before U.S. District Judge Rya W. Zobel to a one-count Information alleging fraud and theft concerning programs receiving federal funds.
Had the case proceeded to trial the Government’s evidence would have proven that in 2008 and 2009, Cahoon steered municipal contracts and paid internships to his friends and associates, who then performed services for Cahoon’s private company, Networks@Home, which had subcontracted work on projects for City of Lawrence from another company.
According to the Information and disclosed today in open court, Cahoon worked under a contractual arrangement with the City of Lawrence to serve as the city’s IT Director from April 2007 through January 2010. During this time, Cahoon had an ownership interest in a company called Networks@Home, which provided computer networking and telecommunications services. In 2008 - 2009, Networks@Home subcontracted IT-related work at the Lawrence Public Library and other city properties from another technology company. During that time frame, and in his capacity as IT Director for Lawrence, Cahoon steered city contracts just under $25,000, to friends and associates. He also hired acquaintances as interns for the IT Department by means of contracts just under $5,000. Cahoon then utilized the services of the individuals who had been awarded city contracts and paid internships with his assistance to perform work on city projects on behalf of Networks@Home. Effectively, therefore, the City of Lawrence was double billed for the same work, while Cahoon did little to no work in return for the funds he obtained from the city.
A substantial portion of the funds used to pay for work at the Lawrence Public Library, as well as discounts associated with IT equipment and services, came from the federal “E-Rate” program. The E-Rate program provides discounts to assist most local schools and libraries to obtain affordable telecommunications and Internet access.
Judge Zobel scheduled sentencing for Nov. 19, 2013. Cahoon faces up to 10 years in prison, to be followed by three years of supervised release and a $250,000 fine.
United States Attorney Carmen M. Ortiz, Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation - Boston Field Division, Jonathan W. Blodgett, Essex County District Attorney and Glenn A. Cunha, Inspector General for the Commonwealth of Massachusetts, made the announcement. The case is being prosecuted by Assistant U.S. Attorney William F. Bloomer.Former Employee of Exeter Hospital Pleads Guilty to Charges Related to Multi-State Hepatitis C OutbreakRead the Press Release
CONCORD, N.H. –David M. Kwiatkowski, 34, a former employee of Exeter Hospital, pleaded guilty today to eight counts of obtaining controlled substances by fraud and eight counts of tampering with a consumer product, announced United States Attorney John P. Kacavas.
During the plea hearing, Kwiatkowski admitted that he had been employed as a health care technician in Michigan between 2003 and 2007. Beginning in November 2007, he became a “traveling technician,” working through various placement agencies at medical facilities in New York, Pennsylvania, Maryland, Arizona, Kansas, Georgia and New Hampshire.
Kwiatkowski also admitted that, in June of 2010, he became aware that he was infected with the Hepatitis C virus. It is unknown when Kwiatkowski contracted the infection. Hepatitis C is a blood-borne virus that can cause serious damage to the liver. According to the Centers for Disease Control and Prevention (CDC), Hepatitis C causes more deaths annually in the United States than HIV.
Kwiatkowski admitted that while employed as a health care technician at Exeter Hospital in 2011 and 2012, he devised a scheme to divert and steal the controlled substance Fentanyl for personal use and abuse. Fentanyl is a powerful anesthetic intended for patients undergoing medical procedures, among other uses. Kwiatkowski admitted that he would surreptitiously take syringes of Fentanyl prepared for patients, inject himself with the drug and refill the syringes with saline, causing the syringes to become tainted with his infected blood. He then replaced the tainted syringes for use on unsuspecting patients. Consequently, instead of receiving the prescribed dose of Fentanyl together with its intended anesthetic effect, patients actually received saline that was tainted with the same strain of Hepatitis C carried by Kwiatkowski.
Kwiatkowski also admitted that he engaged in this conduct at several other hospitals, including Hays Medical Center in Kansas and Johns Hopkins University Hospital in Maryland.
Kwiatkowski’s conduct initially came to light after several unexplained cases of Hepatitis C were detected at Exeter Hospital in May of 2012. As part of the public health investigation of this Hepatitis C outbreak, at least 32 patients who were treated at Exeter Hospital, six patients from Hays Medical Center, six patients from Johns Hopkins, and one who was treated at the VA Medical Center in Baltimore, Maryland have been found to have a strain of Hepatitis C that has been genetically linked to the strain carried by Kwiatkowski. Kwiatkowski was arrested on July 19, 2012, and he has remained in custody since that date.
Kwiatkowski pled guilty to all 14 charges in the indictment pending against him in New Hampshire. At the same time, he agreed to have two charges recently filed against him in Kansas transferred to New Hampshire and he pled guilty to them as well. Kwiatkowski is scheduled to be sentenced on December 3, 2013 at 9:30 a.m.
United States Attorney John P. Kacavas commented on the defendant’s guilty pleas, saying, “This development marks another step on the road to justice for this defendant and for his many victims. Tragically, for his victims the defendant’s admissions of guilt are too little, too late. I am grateful to New Hampshire’s public health authorities, who finally put a stop to the defendant’s serial conduct by reporting it to law enforcement. And his guilty pleas today are a direct reflection of the strength of a case built by the dedicated investigative efforts of our federal, state, and local law enforcement partners, to whom I am also deeply grateful.”
Kwiatkowski faces up to ten (10) years in prison for each count of tampering with a consumer product and up to four (4) years in prison for each count of obtaining controlled substances by fraud. Each offense also is punishable by a fine of $250,000.00 and a term of supervised release following any sentence of imprisonment.
This investigation, which remains active and ongoing, has involved the cooperative efforts of federal, state, and local law enforcement entities, including the Federal Bureau of Investigation, the Office of Inspector General of the U.S. Department of Health and Human Services, the Drug Enforcement Administration, Office of Criminal Investigations of the Food and Drug Administration, the Office of Inspector General of the Department of Veterans Affairs, the New Hampshire Attorney General’s Office, the New Hampshire State Police, and the Exeter, New Hampshire Police Department. Assistance also was provided by the New Hampshire Drug Task Force, the Marlborough, Massachusetts Police Department, the Boxborough, Massachusetts Police Department, and the United States Attorney’s Offices in the District of Massachusetts, the District of Kansas, the District of Maryland, and the Middle District of Georgia.
Former Congressman Jesse L. Jackson, Jr. SentencedRead the Press Release
To 30 Months in Prison for Conspiring to Defraud Campaign
His Wife, Sandra Stevens Jackson, Sentenced to One Year on Tax ChargeWASHINGTON – Former Congressman Jesse L. Jackson, Jr., 48, was sentenced today to 30 months in prison for conspiring to defraud his re-election campaigns of about $750,000 in funds that were used to pay for personal items and expenses, including high-end appliances and electronics, and then filing misleading reports to conceal seven years of the illegal activities.
Jackson’s wife, Sandra Stevens Jackson, 49, a former Chicago alderman, was sentenced to one year for filing false tax returns as part of the scheme. The judge permitted the Jacksons to stagger their prison sentences, with Mrs. Jackson beginning to serve her sentence following her husband’s release from incarceration.
The sentencings, in the U.S. District Court for the District of Columbia, were announced by U.S. Attorney Ronald C. Machen Jr., Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, and Richard Weber, Chief of the Internal Revenue Service-Criminal Investigation (IRS-CI).“Jesse Jackson Jr.’s journey from the halls of Congress to federal prison is a tragedy of his own making,” said U.S. Attorney Machen. “Jackson’s political potential was unlimited, but he instead chose to treat his campaign account as a personal slush fund, stealing from the people who believed in him so he could live extravagantly. He squandered his great capacity for public service through outright theft. The prison sentence imposed today should serve as a wake-up call to other public officials who believe there are no consequences for betraying the public trust.”
“In a betrayal of his oath of office and his duty to the citizens he represented, Mr. Jackson violated the integrity of our government and disrespected those he served,” said Assistant Director in Charge Parlave. “Mr. Jackson and his wife selfishly supported themselves with campaign funds and went to great lengths to hide their illegal activity, but they can hide no more as they pay the price with today’s sentences. Public corruption will not be tolerated in our community – no matter the position or names of the individuals involved.”
“Today justice is served for the American public,” said IRS-CI Chief Weber. “This case exposed layers of greed and corruption masked by the illusion of success. The Jacksons were granted the privilege of political office to better the lives of others but used it instead for their own selfish benefit. The Jacksons failed to report over a half-million dollars in taxable income over a six year period. Regardless of circumstances, no one is granted an exemption to commit crimes with impunity. IRS-CI remains committed to the fight against political corruption and tax evasion. This case exemplifies the strong impact we are making in this arena working in cooperation with our law enforcement partners.”Jesse Jackson, Jr. pled guilty in February 2013 to one count of conspiracy to commit wire fraud, mail fraud and false statements. Sandra Stevens Jackson also pled guilty in February 2013. In her guilty plea, she admitted to filing false tax returns for calendar years 2006 through 2011. According to the government’s evidence, she knowingly and willfully failed to report nearly $570,000 in taxable income for those tax years. This led to an estimated tax loss of approximately $159,000.
Jesse Jackson, Jr. was elected to Congress in 1995 and served until November 2012 as the representative for the 2nd Congressional District of Illinois. Sandra Stevens Jackson was an alderman in Chicago from May 2007 until January 2013. Additionally, she had various roles in her husband’s re-election campaigns, starting in January 2005, working at different points as treasurer, consultant, and campaign manager.
According to the government’s evidence, Jackson and his wife carried out the fraud scheme from in or about August 2005 until in or about April 2012. Rather than using funds donated to the Campaign as they were intended – for legitimate expenses associated with Jackson’s re-election – they used a substantial portion for personal expenditures.
Jackson, who has residences in Chicago and Washington, D.C., also admitted taking steps to conceal seven years of illegal activities, including the filing of false and misleading reports with the Federal Election Commission (FEC) and the U.S. House of Representatives.
According to the government’s evidence, money was channeled from the Campaign to the Jacksons in the following ways:
DIRECT EXPENDITURES: Jackson made $57,792 in direct expenditures from the Campaign’s bank account from January 2006 through July 2011. In July 2007, for example, he withdrew $43,350 in Campaign funds to purchase an official check made payable to a jeweler for a men’s gold-plated Rolex watch. In addition, he used $14,442 in Campaign funds to pay down balances on person credit cards maintained by the Jacksons.
CREDIT CARD EXPENDITURES: The Campaign maintained a credit card account, “Jackson for Congress,” from at least August 2005 through August 2012. Individual credit card members on this account included Jackson and his wife. During this period, the Jacksons used the credit cards to purchase merchandise and services that were personal in nature, including high-end electronic items; a washer, a dryer, a range and refrigerator; collector’s items; clothing, food and supplies; movie tickets; health club dues; personal travel, including a holistic retreat, and personal dining expenses. Campaign funds were used to pay $582,772 of personal purchases.
OTHER EXPENDITURES: In March 2006, Jackson directed that a $36,000 check from the Campaign be issued to his wife’s business for billboard expenses. Sandra Stevens Jackson transferred this money from the business account to a personal account. Jackson and his wife, who controlled the personal account, used nearly all of the money that purportedly was for billboard expenses to pay down personal debts.
Additionally, Jackson paid a congressional staffer with funds from the campaign account so that the staffer could pay expenses on Jackson’s behalf, or, in some instances, give cash to Jackson. The Campaign issued about $76,150 in checks to the staffer from about October 2008 until about March 2012, even though the staffer actually was entitled to only about $11,409 for her work. The staffer then expended nearly all of the remaining $64,741 for the personal benefit of Jackson and his wife. For example, the staffer used checks from the Campaign to pay for $26,347 worth of work performed on the Jacksons’ home.
According to the government’s evidence, the Jacksons took steps from 2005 until 2012 to ensure that materially false and misleading reports were filed with government entities. These reports were filed with the FEC and the House of Representatives. These actions were critical to carrying out the conspiracy because they enabled the conduct to continue without question for a lengthy period of time and without the questions from regulators and the public that likely would have ensued had truthful, accurate reports been filed.In announcing the sentences, U.S. Attorney Machen, Assistant Director in Charge Parlave and Chief Weber commended the work of those who investigated the case for the FBI and IRS-CI. They also expressed appreciation for the assistance provided by the U.S. Marshals Service on the asset forfeiture aspects of the case. In addition, they commended those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Tasha Harris, Lenisse Edloe and Gail Price, and former Paralegal Specialist Sarah Reis.
Finally, they acknowledged the work of Assistant U.S. Attorneys Matt Graves, Michael K. Atkinson, and Jonathan W. Haray, of the Fraud and Public Corruption Section of the U.S. Attorney’s Office for the District of Columbia, who are investigating and prosecuting the matter, as well as Assistant U.S. Attorneys Catherine K. Connelly and Anthony Saler, of the Asset Forfeiture and Money Laundering Section.
13-282
##Former Campaign Aide Pleads Guilty to Making A False Statement Regarding His Efforts to Thwart Federal InvestigationRead the Press Release
Into Allegations Involving 2010 Mayoral Campaign
- Admits Giving $8,000 to Potential Witness to Leave Town-WASHINGTON – Vernon Hawkins, who worked on an off-the-books get-out-the-vote effort preceding the 2010 District of Columbia mayoral primary, pled guilty today to making a false statement to federal authorities investigating allegations involving his candidate’s campaign.
Hawkins, who was a volunteer advisor for the candidate, pled guilty to the felony charge in the U.S. District Court for the District of Columbia. Among other things, he admitted that he helped provide a potential witness with approximately $8,000 to convince him to get out of town so that he would not be available to meet with federal agents investigating the campaign.
The guilty plea was announced by U.S. Attorney Ronald C. Machen Jr., Valerie Parlave, Assistant Director in Charge of the FBI Washington Field Office’s Criminal Division, and Thomas J. Kelly, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Hawkins, 74, of Washington, D.C., entered the plea before the Honorable Colleen Kollar-Kotelly. No sentencing date was set. The charge carries a statutory maximum of five years in prison, a fine of up to $250,000, and other penalties. The federal sentencing guidelines for the offense will be determined later by the court.
Hawkins is among four people, all associated with the same mayoral campaign, to plead guilty to charges in a continuing investigation of campaign activities during the election.
Thomas W. Gore, 58, the former assistant treasurer of the campaign, was sentenced on July 26, 2013, to six months in prison and six months of home detention for obstruction of justice and other charges; Gore also must perform 200 hours of community service. Howard L. Brooks, 65, a member of the campaign’s finance and treasury teams, was sentenced last year to 24 months of probation and ordered to perform 200 hours of community service for making a false statement to the FBI. Business owner Eugenia C. Harris, 76, pled guilty in July 2012 to one count of conspiring to violate federal campaign finance law and to obstruct justice; one count of engaging in fraud and making false statements, and one count of conspiring to violate District of Columbia campaign law. Harris is awaiting sentencing.
“Today Vernon Hawkins became the fourth person to plead guilty to a felony for trying to cover up corruption in the 2010 mayoral election,” said U.S. Attorney Machen. “Vernon Hawkins was at ground zero of a scheme to design, staff, and execute an off-the-books shadow campaign. After the election, he and his fellow campaign aides sought to impede our investigation by lying to the FBI, shredding documents, creating fake paperwork, and sending witnesses out of the jurisdiction. This guilty plea takes us one step closer to understanding the extent of the deception that tainted the 2010 campaign.”
“Today, Mr. Hawkins admitted he knowingly lied to federal investigators in an attempt to influence the investigation into the 2010 District of Columbia mayoral election,” said Assistant Director in Charge Parlave. “Despite his attempt, the investigation continues and will not end until all those involved in illegal campaign activities are brought to justice.”
**
Campaign Activities:According to a statement of offense signed by the government as well as the defendant, beginning in the spring of 2010 and continuing through the November election, Hawkins was a volunteer advisor for the campaign of a person described in charging documents as “Candidate A.” Hawkins provided advice to the candidate and other members of the campaign on matters such as field operations, staffing and communications. He also had contact with others outside the official campaign, including a person identified in the court documents as “Executive A,” who was the majority owner of a business, and Harris.
During the campaign, “Executive A,” with assistance from Hawkins, Harris and others, funded an unreported, off-the-books effort to support “Candidate A” by providing services and materials for get-out-the-vote activities. Harris arranged for, and paid expenses associated with, these services through her companies, Belle International, Inc., and Details International, Inc.
In approximately June 2010, Hawkins and Harris met to discuss this get-out-the-vote effort. During this meeting, they also discussed “Executive A’s” interest in supporting the campaign of “Candidate A.” Hawkins then drew up a plan and budget.
Sometime after this meeting, Harris and Hawkins met with “Executive A” about the get-out-the-vote plans. Later, there was a three-way telephone call among Hawkins, Harris and “Executive A” to discuss the budget for an off-the books effort funded by “Executive A” to get out the vote. This budget included money for coordinators, canvassers and drivers, and for the rental of vans, among other expenditures. Harris later hired a consultant to coordinate this off-the books effort. In addition, another person became the transportation coordinator for the efforts funded by “Executive A.”
As the primary election approached, Hawkins’s role in the campaign’s get-out-the-vote effort diminished, and his role increased in the efforts being funded by “Executive A.”
The Federal Investigation:
In 2011, a federal investigation began into financing and other activities involving the campaign of “Candidate A” in the mayoral election. Later that year, Hawkins became aware that individuals associated with the campaign of “Candidate A,” as well as people associated with the efforts funded by “Executive A,” were being contacted by federal investigators. The statement of offense details a series of actions that Hawkins admits took place in ensuing months.
In late November or early December 2011, the transportation coordinator told Hawkins that he had received a business card from a government investigator at his door. About one week later, Hawkins relayed this information to Harris. Hawkins and Harris met a few days after that and discussed the fact that people whom Harris had paid to provide services during the campaign were now meeting with representatives of the U.S. Attorney’s Office. Hawkins and Harris discussed the need for these individuals – specifically the transportation coordinator – to be out of town for about two to four weeks to delay meetings with law enforcement.
Hawkins understood from this conversation that Harris had talked with “Executive A” about the need for such people, including the transportation coordinator, to be out of town for a period of time. He also understood that the consultant hired to coordinate the get-out-the-vote effort funded by “Executive A” already was away.In or about December 2011, Hawkins and Harris attempted to persuade the transportation coordinator to leave town for an extended period of time so that he, too, would be unavailable to speak with federal agents. The transportation coordinator later raised concerns with Hawkins that he would miss business opportunities if he left town and that he needed that income.
Hawkins informed Harris about his conversation about income with the transportation coordinator. A few days later, she gave Hawkins an envelope, which he understood contained $4,000 in cash, to give to the transportation coordinator. Hawkins later provided the money to the transportation coordinator in a supermarket parking lot in Southeast Washington.
In or about January 2012, Hawkins again ran into the transportation coordinator, who wanted additional money to go back out of town. Hawkins later provided another envelope, also from Harris, containing what he understood to be $4,000 in cash, in the supermarket parking lot.
Finally, in August 2012, Hawkins, accompanied by his lawyer, participated in a voluntary interview with two FBI agents and representatives of the U.S. Attorney’s Office. During this interview, he stated that he did not know of anyone being asked or told to go out of town, that he never asked anyone to leave town so that they could not meet with investigators, and that he did not help or assist with sending anyone out of town so they would not be able to speak with federal agents in this investigation. Hawkins made these false statements in an attempt to influence the federal investigation into the efforts funded by “Executive A” in the mayoral campaign.The other guilty pleas also involved efforts to impede the investigation. Brooks admitted making a false statement to investigators, and Gore admitted to making false statements and shredding documents. In her guilty plea, Harris admitted that she caused others to shred and destroy a large volume of paper records maintained by her businesses. She also admitted causing others to destroy stored electronic records from her businesses because they could have revealed what took place in the mayoral election. Finally, Harris also admitted that she made arrangements in early 2012 to travel to Brazil for three months in order to evade federal investigators. Efforts were made toward renting a house in Brazil before the trip was cancelled.
In announcing the plea, U.S. Attorney Machen, Assistant Director in Charge Parlave and Special Agent in Charge Kelly commended the work of those who investigated the case for the FBI and IRS-CI. They also expressed appreciation for the work done by those who handled the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Lionel André, Loyaan Egal, Jonathan Haray, Jonathan Hooks, and Ephraim “Fry” Wernick; former Assistant U.S. Attorney Mary Chris Dobbie; Criminal Investigators Matthew Kutz, Mark Crawford and Melissa Matthews; Legal Assistants Krishawn Graham and Nicole Wattelet, Paralegal Specialists Tasha Harris, Shanna Hays, and Corinne Kleinman, and Law Intern Lindsey Frye.
Finally, they acknowledged the work of Assistant U.S. Attorney Ellen Chubin Epstein, who is investigating and prosecuting this matter.
13-280Florida Airline Fuel Supply Company and Its Owner Indicted for Role in Scheme to Defraud Illinois-Based Ryan International AirlinesRead the Press Release
WASHINGTON—A Florida-based airline fuel supply service company and its former owner and operator were indicted yesterday on charges of participating in a scheme to defraud Illinois-based Ryan International Airlines, the Department of Justice announced.
A federal grand jury in the U.S. District Court for the Southern District of Florida in West Palm Beach, Fla., returned an indictment against Sean E. Wagner and his company Aviation Fuel International Inc. (AFI), an airline fuel supply company. The indictment alleges that Wagner and AFI participated in a conspiracy to defraud Ryan, a charter airline company based in Rockford, Ill., by making kickback payments to Wayne Kepple, a former vice president of ground operations for Ryan, in exchange for awarding business to AFI. Wagner was arrested on July 19, 2013, in Weston, Fla., on a one-count criminal complaint in connection with these charges.
Ryan provided air passenger and cargo services for corporations, private individuals and the U.S. government–including the U.S. Department of Defense and the U.S. Department of Homeland Security.
The indictment alleges, among other things, that from at least as early as December 2005 through at least August 2009, Wagner, AFI and others made kickback payments totaling more than $200,000, in the form of checks, wire transfers, cash and gift cards, to Kepple while working at Ryan.
“The conspirators traded contracts for kickbacks and took affirmative steps to hide their illegal scheme, including wiring payments to personal bank accounts and making secret cash payments,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to aggressively prosecute companies and individuals that seek to defraud the government and U.S. taxpayers by thwarting the competitive process.”
Wagner and AFI are charged with one count of conspiracy to commit wire fraud and honest services fraud, as well as two counts of wire fraud and two counts of mail fraud. Each count carries a maximum sentence of 20 years in prison and a $250,000 criminal fine for individuals and a $500,000 criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.
As a result of this ongoing investigation, four individuals have pleaded guilty to date. Three of the individuals have been ordered to serve sentences ranging from 16 to 24 months in prison and to pay more than $220,000 in restitution. The fourth individual, Kepple, pleaded guilty and is currently awaiting sentencing.
The charges are the result of an investigation being conducted by the Antitrust Division’s National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General with assistance from the U.S. Attorney’s Office for the Southern District of Florida. Anyone with information concerning anticompetitive conduct in the airline charter services industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm.
Five Defendants Charged on Securities Fraud Related ViolationsRead the Press Release
153 Defendants Have Been Charged to Date as Part of the Southern District of Florida Securities and Investment Fraud Initiative
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Michael J. De Palma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Paula Reid, Special Agent in Charge, U.S. Secret Service (USSS), Miami Field Office, Ronald Verrochio, Inspector in Charge, U.S. Postal Inspection Service (USPIS), Eric I. Bustillo, Regional Director, Securities and Exchange Commission (SEC), Jon T. Rymer, Inspector General, Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG), David Meister, Director, Division of Enforcement for the U.S. Commodity Futures Trading Commission (CFTC), Cindy Liebes, Director, Federal Trade Commission, Southeast Region (FTC), and Drew J. Breakspear, Commissioner, State of Florida’s Office of Financial Regulation, announce the most recent charges filed in connection with the Southern District of Florida Securities and Investment Fraud Initiative (the Initiative). The Initiative was first announced in December 2010 and designed to combat securities fraud and protect the interests of the investing public.
The Initiative was established to address an increase in investment and securities fraud schemes in the Southern District of Florida. Participating agencies include the U.S. Attorney’s Office, FBI, IRS, USSS, U.S. Postal Inspection Service, SEC, CFTC, FTC, FDIC, and the Florida Office of Financial Regulation. These law enforcement and regulatory agencies have shared intelligence and combined their resources to combat securities and investment fraud, including Ponzi schemes, affinity fraud schemes, prime bank/high-yield investment scams, business opportunity fraud, promoter/micro-cap/“pump and dump” schemes, foreign exchange (FOREX) frauds, false bankruptcy petitions, and other schemes to defraud individual investors. Among the goals of the Initiative is to alert the public about the prevalence of these types of schemes, educate the public on how to avoid falling prey to these schemes, and to highlight the law enforcement response to the problem.
The Southern District of Florida ranks number one in the nation in charging securities and investment fraud defendants and only second in the number of cases charged. Using the strike force model successfully developed in the health care and mortgage fraud areas, the Initiative has yielded similar success. Since its inception in December 2010, the Initiative has resulted in charges against 153 defendants in the Southern District of Florida, resulting in more than $ 1,777,025,689 billion in restitution ordered.
U.S. Attorney Wifredo A. Ferrer stated, “Fraud in the microcap markets is of increasing concern to our community as these markets have proven to be fertile grounds for fraud and abuse. Fraudsters know that these microcap stocks are difficult for the average investor and regulator to monitor. The defendants charged today abused their knowledge of the capital markets hoping to misappropriate money held in pension fund and brokerage accounts to enrich themselves and their co-conspirators.”
“The FBI will continue to target individuals who attempt to undermine the integrity of the securities industry by defrauding innocent investors,” said William J. Maddalena, Assistant Special Agent in Charge, FBI Miami Division. “If you are an individual investor, exercise due diligence before you invest your first dime. Ask yourself: Does it seem too good to be true? If the answer is ‘Yes,” then it probably is!”
IRS Acting Special Agent in Charge Michael De Palma stated, “IRS Criminal Investigation will continue to lend financial expertise to this joint venture to unravel schemes in complex financial crimes. Together with our law enforcement partners, we will use every tool at our disposal to pursue, investigate and bring swindlers to justice.”
Secret Service Special Agent in Charge Paula Reid stated, “This is a great example of how the law enforcement community in the Southern District of Florida continues to identify and penalize those insiders who misuse an honest system for selfish, personal gains. Unfortunately, these types of criminals chose to compromise the integrity of their trade and manipulate the law, policies, and procedures with no regard to trusting investors.”
“These criminals go to great lengths to mask their criminal schemes,” said Postal Inspector in Charge Ronald Verrochio. “We will continue to work with our law enforcement partners to uncover these schemes in an effort to prevent future victimization.”
“Interested only in lining their own pockets, the company officers and promoters charged today used underhanded tactics to cheat investors and manipulate penny stocks,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “Their utter disregard for investors underscores the importance of stamping out microcap fraud.”
Today, we are announcing charges against five individuals in the following four cases:
United States v. Jack Freedman, Case No. 13-60204-CR-Hurley
Jack Freedman, 58, of Fort Lauderdale, was charged by an Information alleging that he conspired to commit securities fraud. Freedman was a promoter for Green Planet Group, Inc., (GNPG) a publicly traded company whose stock was registered with the Securities and Exchange Commission. The defendant is charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of GNPG common stock. The case is being prosecuted by Assistant U.S. Attorney H. Ron Davidson.
United States v. Richard Greene and Peter Santamaria, Case No. 13-60203-CR-Marra
Richard Greene, 57, and Peter Santamaria, 57, both of Broward County, were charged by an Information alleging that the two conspired to commit securities fraud. The defendants are charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of VDO-PH International (VDPH) common stock. VDPH was a Nevada corporation that purported to engage in developing software for business telephone applications. The case is being prosecuted by Assistant U.S. Attorney H. Ron Davidson.
United States v. Mark Balbirer, Case No. 13-20605-CR-Cooke
Mark Balbirer, 49, of Coral Springs, was charged by an Information today charging him with conspiracy to commit mail fraud. Balbirer, a promoter for the South Florida Film Fund (SFFF), located in Broward County, Florida, is alleged to have engaged in a scheme to send illegal kick-back payments to hedge fund fiduciaries in exchange for their investments in SFFF. The case is being prosecuted by Assistant U.S. Attorney Michael Sherwin.
United States v. Sheldon Simon, Case No. 13-60202-CR-Marra
Sheldon Simon, 58, of Palm Beach County, Florida, was charged by an Information alleging that he committed wire fraud involving the artificial inflation of the securities market. Simon was a stock promoter for Ecoemissions Solutions, Inc. (ECMZ), a publicly traded company whose stock was registered with the Securities and Exchange Commission. Simon is charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of ECMZ common stock. Beginning in February 2011, Simon provided another person with advance ECMZ press releases which, once released, were designed and issued to give the investing public the false impression that the fraudulent purchases of ECMZ stock were induced by positive news about the company and to conceal the defendant’s scheme from the regulatory authorities. The case is being prosecuted by Assistant U.S. Attorney Roger Cruz.
The following defendants recently pled guilty:
United States v. Jeffrey L. Schultz, Case No. 13-60075-CR-Rosenbaum
Jeffrey L. Schultz, 62, of Ft. Lauderdale, FL, was charged by an Information on April 9, 2013. Schultz was the President and Chief Executive Officer of Redfin Network, Inc.(RFNN), a Nevada corporation whose common stock was traded in the Pink Sheets over-the-counter securities market. He was charged with securities fraud for engaging in the manipulation of RFNN’s stock price by providing improper payments to others. After entering a guilty plea in June, he is scheduled to be sentenced on August 26, 2013. The case is being prosecuted by Assistant U.S. Attorney Michael Sherwin.
United States v. Stephen F. Molinari, Case No. 13-60105-CR-Rosenbaum
Stephen F. Molinari, 49, was charged by an Information on May 1, 2013. Molinari was a previously registered securities broker who was also the chairman, chief executive officer and controlling shareholder of a mail order prescription drug business. He was charged with mail fraud in connection with his company. After entering a guilty plea in June, he is scheduled to be sentenced on August 26, 2013. The case is being prosecuted by Assistant U.S. Attorney Harold Schimkat.
The following defendants were recently sentenced:
United States v. Thomas Gaffney, Case No. 12-60224-CR- Dimitrouleas
Thomas Gaffney, 47, of Satellite Beach, FL, was charged by an Information on September 21, 2012. Gaffney was the President and Chief Executive Officer of Health Sciences Group, Inc. (HESG), a Delaware corporation whose common stock was traded in the Pink Sheets. He was charged with mail fraud associated with his company. After entering a guilty plea earlier this year, on August 8, 2013, he was sentenced to time served, followed by three years of supervised release with a special condition of eight months of home confinement. The case is being prosecuted by Assistant U.S. Attorney H. Ron Davidson.
United States v. Scott Haire and Douglas P. Martin, Case No. 12-60133-CR-Williams(s)
Scott Haire, 48, of Coral Springs, FL, and Douglas P. Martin, 47, of Loxahatchee, FL, were charged by a Superseding Indictment on September 20, 2012. Haire was President of Wound Management Technologies, Inc. (WDMN) a Texas corporation whose common stock was traded on the Pink Sheets. Haire was also the Chief Financial Officer of VHGI Holdings, Inc. (VHGI), a Delaware corporation purportedly a diversified holding company which was also traded on the Pink Sheets, that identified and acquired business assets. Douglas P. Martin was the Chief Executive Officer of VHGI. Haire and Martin were both charged with conspiracy to commit securities fraud involving VHGI, and Haire was charged with mail fraud and securities fraud in connection with a kickback scheme involving WDMN. Both plead guilty earlier this year. On May 14, 2013, Martin was sentenced to 12 months’ probation. On August 1, 2013, Haire was sentenced to 30 months in prison, followed by three years of supervised release. The case is being prosecuted by Assistant U.S. Attorneys H. Ron Davidson and Jodi Anton.
Mr. Ferrer commended the investigative efforts of the FBI, IRS-CI, USSS, USPIS, SEC, Federal Deposit Insurance Corporation, Office of Inspector General, U.S. Commodity Futures Trading Commission, Division of Enforcement, Federal Trade Commission, and the State of Florida’s Office of Financial Regulation.
An Indictment or Information is merely an accusation and defendants are presumed innocent until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Five Charged with Possession of 31 Stolen FirearmsRead the Press Release
Firearms Taken During Storage Unit BurglarySALT LAKE CITY – A federal grand jury returned a two-count indictment Wednesday morning charging five individuals with possession of 31 stolen firearms. The firearms were taken during a December 2012 burglary at a storage unit on Redwood Road in Salt Lake City. The five, who have prior felony convictions, also are charged with possession of firearms by a restricted person.
Charged in the indictment are Todd Shawn Cook, age 38, of West Bountiful; John Trenton Boren, age 40, of Salt Lake City; John David Hobbs, age 30, and Robert Lee Biggs, age 49, both of West Valley City; and Kenneth Richard Cahoon, age 38, of Centerville.
Several agencies participated in the investigation, including the ATF, Salt Lake City Police, Grantsville Police, the Bountiful Police Department, and the Davis County Metro Narcotics Unit, among others. The case is being prosecuted as a part of Utah Project Safe Neighborhoods, an initiative targeting gun violence and gang activity in Utah.
According to a complaint filed in the case, officers from the Salt Lake City Police Department responded to the Diamond Storage facility on Redwood Road on Jan. 10, 2013, to investigate the burglary of a unit. The lock on the unit had been cut and items taken from the storage unit. The exact date of the burglary was unknown at that time.
The complaint alleges that approximately one week earlier, on Jan. 2, 2013, Biggs was arrested for possessing a stolen vehicle and seven firearms which, given his status as a convicted felon, were illegal for him to have. The seven firearms were later identified as being among the firearms stolen from the Diamond Storage unit. As the investigation continued, law enforcement officers developed evidence they believe shows that Boren, Hobbs, and Cook were involved in the burglary and Cahoon and Biggs subsequently had possession of some of the stolen firearms.
Investigators also confirmed that Hobbs rented a unit at Diamond Storage that was approximately one building away from the burglarized unit. Records from the storage facility also showed that Hobbs accessed the property on Dec. 20, 2012.
The potential penalty for each count in the indictment is up to 10 years in prison and a $250,000 fine. The five defendants are in custody. Boren has a detention hearing Thursday at 10:30 a.m. before U.S. Magistrate Judge Paul Warner. Hobbs has a detention hearing Thursday at 2 p.m., also before Magistrate Judge Warner.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
Essex Woman Involved in Gifting Tables Pyramid Scheme Is SentencedRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that BETTEJANE HOPKINS, 68, of Essex, was sentenced today by Chief United States District Judge Alvin W. Thompson in Hartford to three years of probation, during which she is required to perform 300 hours of community service, for participating in a pyramid scheme known as “Gifting Tables.”
According to court documents, statements made in court and the evidence presented during a trial of her codefendants, a Gifting Table is configured as a four-level pyramid, with eight participants assigned to the bottom row, four participants assigned to the third row, two participants assigned to the second row, and one participant assigned to the top row. The top row participant is referred to as the “Dessert,” the two participants on the second row as “Entrees,” the four participants on the third row as “Soup and Salads,” and the eight participants on the bottom row as “Appetizers.” To join a Gifting Table, new participants were required to pay $5,000, typically cash, to the Dessert, that is, the participant occupying the top position on the pyramid. The $5,000 payment, which was fraudulently characterized as a gift, secured the new participant a position as an Appetizer on the bottom row. Participants progressed from the bottom row of the pyramid by recruiting additional people to join the Gifting Table. When eight new participants joined a Gifting Table, each having made a $5,000 “gift” to the person occupying the Dessert position at the top of the pyramid, the Dessert left the Gifting Table and kept the $40,000 paid by the eight new participants. That particular Gifting Table was then split, with the two participants occupying the Entree position on the second row moving to the top position (Dessert) of two new pyramids. The other incumbent members of the Gifting Table moved up a row on one of the two newly-formed pyramids, and the search for 16 new participants began. The success of the Gifting Tables depended on new participants joining and making the $5,000 “gift.”
From approximately 2008 to 2011, HOPKINS, Donna Bello and Jill Platt oversaw and profited from a Gifting Tables pyramid scheme operating primarily in Connecticut’s shoreline communities. The defendants recruited individuals to join the scheme, prepared and distributed materials to recruits that contained false representations, and affirmatively misrepresented to recruits and participants that Gifting Tables was not a pyramid scheme.
HOPKINS and her codefendants conspired to defraud the Internal Revenue Service by telling recruits and participants that monies given and received during the scheme were tax-free “gifts” under the IRS Code and that lawyers and accountants had approved Gifting Tables as legal ventures that generated tax-free proceeds. They also advised and counseled participants not to report on their tax returns monies received through their participation in the scheme, or deposit a large amount of cash into bank accounts, which would require the bank to report the sum to the IRS.
HOPKINS received at least $89,500 from her participation in the scheme, none of which was reported on her individual income tax return.
On December 18, 2012, HOPKINS pleaded guilty to one count of conspiracy to defraud the Internal Revenue Service.
On February 20, 2013, after a four-week trial, Bello and Platt were convicted of conspiracy to commit wire fraud and conspiracy to defraud the IRS, multiple counts of wire fraud, and filing false tax returns.
Yesterday, Chief Judge Thompson sentenced Bello to 72 months of imprisonment and three years of supervised release, and Platt to 54 months of imprisonment and three years of supervised release. Bello also was ordered to pay a $15,000 fine.
HOPKINS, Bello and Platt were ordered to pay restitution in the amount of $32,000 to several victims of the scheme.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation, and is being prosecuted by Assistant United States Attorneys Douglas P. Morabito and Peter S. Jongbloed.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
[email protected]Eldridge Man Sentenced to 15 Years in Prison for Production of Child PornographyRead the Press Release
DAVENPORT, IA – On August 13, 2013, James Edward Hall, age 75, of Eldridge, Iowa, was sentenced by United States District Judge John A. Jarvey to 15 years in prison for production of child pornography, announced United States Attorney Nicholas A. Klinefeldt. Judge Jarvey also sentenced Hall to a life term of supervised release.
On November 12, 2012, Hall knowingly induced a minor male to conduct certain acts while Hall recorded the activity. On December 5, 2012, pursuant to a search warrant, a search was conducted at Hall’s residence. An onsite preview of Hall’s computer was conducted, and the video of the minor was found on the computer. Hall was interviewed and admitted that he had recorded the 15 year old juvenile male in Hall’s residence.
This case was investigated by the Scott County Sheriff’s Office, and was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
(Download Press Release )