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Tuesday 13 August 2013
Justice Department Files Antitrust Lawsuit Challenging Proposed Merger Between US Airways and American AirlinesRead the Press Release
The Department of Justice, six state attorneys general and the District of Columbia filed a civil antitrust lawsuit today challenging the proposed $11 billion merger between US Airways Group Inc. and American Airlines’ parent corporation, AMR Corp. The department said that the merger, which would result in the creation of the world’s largest airline, would substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service.
The Department of Justice’s Antitrust Division, along with the attorneys general, filed a lawsuit in the U.S. District Court for the District of Columbia, which seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate. The participating attorneys general are: Texas, where American Airlines is headquartered; Arizona, where US Airways is headquartered; Florida; the District of Columbia; Pennsylvania; Tennessee; and Virginia.
“Airline travel is vital to millions of American consumers who fly regularly for either business or pleasure,” said Attorney General Eric Holder. “By challenging this merger, the Department of Justice is saying that the American people deserve better. This transaction would result in consumers paying the price – in higher airfares, higher fees and fewer choices. Today’s action proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace.”
Last year, business and leisure airline travelers spent more than $70 billion on airfare for travel throughout the United States. In recent years, major airlines have, in tandem, raised fares, imposed new and higher fees and reduced service, the department said.“The department sued to block this merger because it would eliminate competition between US Airways and American and put consumers at risk of higher prices and reduced service,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “If this merger goes forward, even a small increase in the price of airline tickets, checked bags or flight change fees would result in hundreds of millions of dollars of harm to American consumers. Both airlines have stated they can succeed on a standalone basis and consumers deserve the benefit of that continuing competitive dynamic.”
American and US Airways compete directly on more than a thousand routes where one or both offer connecting service, representing tens of billions of dollars in annual revenues. They engage in head-to-head competition with nonstop service on routes worth about $2 billion in annual route-wide revenues. Eliminating this head-to-head competition would give the merged airline the incentive and ability to raise airfares, the department said in its complaint.
According to the department’s complaint, the vast majority of domestic airline routes are already highly concentrated. The merger would create the largest airline in the world and result in four airlines controlling more than 80 percent of the United States commercial air travel market.
The merger would also entrench the merged airline as the dominant carrier at Washington Reagan National Airport, with control of 69 percent of the take-off and landing slots. The merged airline would have a monopoly on 63 percent of the nonstop routes served out of Reagan National airport. As a result, Washington, D.C., area passengers would likely see higher prices and fewer choices if the merger is allowed, the department said in its complaint. Blocking the merger will preserve current competition and service, including flights that US Airways currently offers from Washington’s Reagan National Airport.
The complaint also describes how, in recent years, the major airlines have succeeded in raising prices, imposing new fees and reducing service. The complaint quotes several public statements by senior US Airways executives directly attributing this trend to a reduction in the number of competitors in the U.S. market:· President Scott Kirby said, “Three successful fare increases – [we are] able to pass along to customers because of consolidation.”
· At an industry conference in 2012, Kirby said, “Consolidation has also…allowed the industry to do things like ancillary revenues…. That is a structural permanent change to the industry and one that’s impossible to overstate the benefit from it.”
· As US Airways CEO Parker stated in February 2013, combining US Airways and American would be “ the last major piece needed to fully rationalize the industry.”
· A US Airways document said that capacity reductions have “enabled” fare increases.
“The merger of these two important competitors will just make things worse –exacerbating current airline industry trends toward reduced service, increasing fares and increasing passenger fees,” added Baer.
As the complaint describes, absent the merger, US Airways and American will continue to provide important competitive constraints on each other and on other airlines. Today, US Airways competes vigorously for price-conscious travelers by offering discounts of up to 40 percent for connecting flights on other airlines’ nonstop routes under its Advantage Fares program. The other legacy airlines – American, Delta and United – routinely match the nonstop fares where they offer connecting service in order to avoid inciting costly fare wars. The Advantage Fares strategy has been successful for US Airways because its network is different from the networks of the larger carriers. If the proposed merger is completed, the combined airline’s network will look more like the existing American, Delta and United networks, and as a result, the Advantage Fares program will likely be eliminated, resulting in higher prices and less services for consumers. An internal analysis at American in October 2012, concluded, “The [Advantage Fares] program would have to be eliminated in a merger with American, as American’s large, nonstop markets would now be susceptible to reactionary pricing from Delta and United.” And, another American executive said that same month, “The industry will force alignment to a single approach–one that aligns with the large legacy carriers as it is revenue maximizing.” By ending the Advantage Fares program, the merger would eliminate lower fares for millions of consumers, the department said.
The complaint also alleges that the merger is likely to result in higher ancillary fees, such as fees charged for checked bags and flight changes. In recent years, the airlines have introduced fees for those services, which were previously included in the price of a ticket. These fees have become huge profit centers for the airlines. In 2012, domestic airlines generated more than $6 billion in fees from checked bags and flight changes alone. The legacy carriers often match each other when one introduces or increases a fee, and if others do not match the initiating carrier tends to withdraw the change. By reducing the number of airlines, the merger will likely make it easier for the remaining carriers to coordinate fee increases, resulting in higher fees for consumers.
The department also said that the merger will make coordination easier among the legacy carriers. Although low-cost carriers such as Southwest and JetBlue offer consumers many benefits, they fly to fewer locations and are unlikely to be able to constrain the coordinated behavior among those carriers.
American Airlines is currently operating in bankruptcy. Absent the merger, American is likely to exit bankruptcy as a vigorous competitor, with strong incentives to grow to better compete with Delta and United, the department said. American recently made the largest aircraft order in industry history, and its post-bankruptcy standalone plan called for increasing both the number of flights and the number of destinations served by those flights at each of its hubs.
The department’s complaint describes US Airways executives’ fear of American’s standalone growth plan as “industry destabilizing.” The complaint states that US Airways worries that American’s growth plan would cause “others” to react “with their own enhanced growth plans…,” and that the resulting effect would increase competitive pressures throughout the industry. The department said the merger will allow US Airways’ management to abandon these aggressive growth plans and continue the industry’s current trend toward higher prices and less service.
The department’s complaint states that executives of both airlines have repeatedly said that they do not need the merger to succeed. The complaint states that US Airways’ CEO observed in December 2011, that “A[merican] is not going away, they will be stronger post-bankruptcy because they will have less debt and reduced labor costs.” US Airways’ executive vice president wrote in July 2012, that, “There is NO question about AMR’s ability to survive on a standalone basis.” And, as recently as January 2013, American’s management presented plans that would increase the destinations it serves in the United States and the frequency of its flights, and would position American to compete independently as a profitable airline with aggressive plans for growth.
AMR is a Delaware corporation with its principal place of business in Fort Worth, Texas. AMR is the parent company of American Airlines. Last year American flew more than 80 million passengers to more than 250 destinations worldwide and took in more than $24 billion in revenue. In November 2011, American filed for bankruptcy reorganization.
US Airways is a Delaware corporation with its principal place of business in Tempe, Ariz. Last year US Airways flew more than 50 million passengers to more than 200 destinations worldwide and took in more than $13 billion in revenue.Related Materials:
Remarks as Prepared for Delivery by Assistant Attorney General Bill Baer at the Conference Call Regarding the Justice Department?s Lawsuit Challenging Us Airways? Proposed Merger with American Airlines
Health Care Clinic Owners Plead Guilty in Miami<br /> for Roles in $8 Million Health Care Fraud SchemeRead the Press Release
Two health care clinic owners pleaded guilty today in connection with an $8 million health care fraud scheme involving the now-defunct home health care company Flores Home Health Care Inc.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent in Charge Michael B. Steinbach of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the Miami office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations made the announcement.
Miguel Jimenez, 43, and Marina Sanchez Pajon, 29, of Miami, pleaded guilty before U.S. District Judge Ursula Ungaro in the Southern District of Florida, each to one count of conspiracy to commit health care fraud. At sentencing, scheduled for Oct. 30, 2013, Jimenez and Pajon each face a maximum penalty of 10 years in prison.
Jimenez and Pajon, who are married, were owners and operators of Flores Home Health, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.
According to court documents, Jimenez and Pajon operated Flores Home Health for the purpose of billing Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided. Jimenez’s primary role at Flores Home Health involved controlling the company and running and overseeing the schemes conducted through Flores Home Health. Both Jimenez and Pajon were responsible for negotiating and paying kickbacks and bribes, interacting with patient recruiters, and coordinating and overseeing the submission of fraudulent claims submitted to the Medicare program.
Jimenez, Pajon and their co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Flores Home Health for home health and therapy services that were medically unnecessary and/or not provided. They also paid kickbacks and bribes to co-conspirators in doctors’ offices and clinics in exchange for home health and therapy prescriptions, medical certifications, and other documentation. Jimenez, Pajon, and their co-conspirators used the prescriptions, medical certifications, and other documentation to fraudulently bill Medicare for home health care services that Jimenez and Pajon knew were in violation of federal criminal laws.
From approximately October 2009 through approximately June 2012, Flores Home Health was paid approximately $8 million by Medicare for fraudulent claims for home health services that were not medically necessary and/or not provided.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case was prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Health Care Clinic Owners Plead Guilty in Miami for Roles in $8 Million Health Care Fraud SchemeRead the Press Release
Two health care clinic owners pleaded guilty today in connection with an $8 million health care fraud scheme involving the now-defunct home health care company Flores Home Health Care Inc.
U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; Special Agent in Charge Michael B. Steinbach of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the Miami office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations made the announcement.
Miguel Jimenez, 43, and Marina Sanchez Pajon, 29, of Miami, pleaded guilty before U.S. District Judge Ursula Ungaro in the Southern District of Florida, each to one count of conspiracy to commit health care fraud. At sentencing, scheduled for Oct. 30, 2013, Jimenez and Pajon each face a maximum penalty of 10 years in prison.
Jimenez and Pajon, who are married, were owners and operators of Flores Home Health, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.
According to court documents, Jimenez and Pajon operated Flores Home Health for the purpose of billing Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided. Jimenez’s primary role at Flores Home Health involved controlling the company and running and overseeing the schemes conducted through Flores Home Health. Both Jimenez and Pajon were responsible for negotiating and paying kickbacks and bribes, interacting with patient recruiters, and coordinating and overseeing the submission of fraudulent claims submitted to the Medicare program.
Jimenez, Pajon and their co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Flores Home Health for home health and therapy services that were medically unnecessary and/or not provided. They also paid kickbacks and bribes to co-conspirators in doctors’ offices and clinics in exchange for home health and therapy prescriptions, medical certifications, and other documentation. Jimenez, Pajon, and their co-conspirators used the prescriptions, medical certifications, and other documentation to fraudulently bill Medicare for home health care services that Jimenez and Pajon knew were in violation of federal criminal laws.
From approximately October 2009 through approximately June 2012, Flores Home Health was paid approximately $8 million by Medicare for fraudulent claims for home health services that were not medically necessary and/or not provided.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case was prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
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.
Health Care Business Owner Sentenced to Four Years in Prison, Pays A Million Dollar Civil Settlement, and Agrees to 20-year Exclusion from Medicare and Medicaid in Connection with Illegal Kickback SchemeRead the Press Release
Babubhai Rathod is the Ninth Person Convicted of Felony Charges in a Joint Federal-State Investigation Resulting from a Whistleblower Lawsuit
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick Miles announced today that Babubhai Rathod, age 44, of Okemos, Michigan, was sentenced to four years in prison and two years of supervised release for his lead role in a conspiracy to pay illegal kickbacks to health care practitioners and others to induce the referral of patients to medical clinics, physical therapy clinics, and a home health care agency. U.S. District Judge Janet T. Neff also ordered Rathod to pay $950,000 in restitution, $900,000 of which Rathod paid prior to sentencing under the terms of a related $1,000,000 civil False Claims Act settlement. As part of that civil settlement, Rathod also agreed to a 20-year exclusion from federal health care programs, including Medicare and Medicaid. In sentencing Mr. Rathod, Judge Neff described the kickback charges as “very, very serious” and having “consequences to . . . very important government programs in which millions of Americans participate.”
Rathod’s conviction and the related civil settlement arose from a superseding indictment and civil complaint which alleged that between at least January 2007 and January 2012, Rathod directed a scheme to pay physicians, mid-level practitioners, and others for referring patients to medical clinics (Lakeshore Spine & Pain, P.C., based in Ludington, MI), physical therapy clinics (U.S. Rehab Services, P.C., among others, based in Mt. Pleasant, MI), and a home health care agency (Lakeshore Home Health Care, Inc., based in Lansing, MI). The illegal payments were made in cash and checks disguised as bonuses, mileage reimbursements, and payments under sham contracts for medical director and consulting services that were never performed. During the sentencing hearing, Judge Neff specifically noted that the physicians who received such kickbacks stole from government programs that provide “crucial medical services.” Judge Neff further emphasized, with respect to such medical professionals, that “[a] thief is a thief.”
The superseding indictment and civil complaint also alleged that between at least January 2007 and January 2012, Rathod directed a scheme where Lakeshore Spine & Pain, P.C. routinely submitted claims for medical services in order to fraudulently obtain higher insurance reimbursements than those to which the company was entitled, a practice known as upcoding. Notably, Rathod was able to own and operate this network of affiliated health care companies, and direct these kickback and upcoding schemes, despite the fact that in 2003, Rathod pleaded one of his physical therapy companies guilty to a felony charge of falsifying medical records and subsequently lost his physical therapy license as the result of an assault conviction involving a patient.
Rathod’s sentencing follows the felony convictions of five other persons who paid or received illegal kickbacks in exchange for referring patients to Rathod’s health care companies for physical therapy, electrodiagnostic testing, and home health care services. Judge Neff imposed the following sentences for those individuals:
- Lino S. Dial, Jr., D.O. (Physician, Edmore, MI). Dial was sentenced to four months’ imprisonment and $70,000 in restitution. Dial has also been excluded from federal health care programs for five years.
- Clinton J. Cornell, P.A. (Physician Assistant, Mt. Pleasant, MI). Cornell was sentenced to fourteen months’ imprisonment and $38,430 in restitution. Cornell is also subject to a minimum five-year exclusion from federal health care programs.
- John E. Roberts, P.A. (Physician Assistant, Mt. Pleasant, MI). Roberts was sentenced to four months’ imprisonment and $70,000 in restitution. Roberts has also been excluded from federal health care programs for five years.
- Natalie J. Schutte, P.A. (Physician Assistant, Edmore, MI). Schutte was sentenced to two years’ probation and $120,000 in restitution. Schutte has also been excluded from federal health care programs for five years.
- Raju G. Nakum (Practice Administrator, Mt. Pleasant, MI). Nakum was sentenced to three months’ imprisonment and $345,000 in restitution. Nakum is also subject to a minimum five-year exclusion from federal health care programs.
Two other individuals employed by Lakeshore Spine & Pain, P.C. were convicted of felony health care fraud for their roles in the illegal upcoding scheme. Judge Neff imposed the following sentences for those individuals:
- Rajesh Makwana (Practice Administrator, Ludington, MI). Makwana was sentenced to twelve months and one day imprisonment and $71,000 in restitution. Makwana is also subject to a minimum five-year exclusion from federal health care programs.
- Sandeepkumar Patel (Biller, Ludington, MI). Patel was sentenced to two years’ probation. Patel has been excluded from federal health care programs for five years and will be deported from the United States.
In addition to these individuals and Rathod, a ninth individual, Kevin Witt, D.O., of Jackson, Michigan was charged and convicted by the Michigan Attorney General’s Office on a related state felony charge for accepting kickback payments from Rathod. Witt has been excluded from federal health care programs for five years.
This case resulted from a civil lawsuit filed by a whistleblower who worked in one of Rathod’s offices. The lawsuit, known as a qui tam action, was filed under the False Claims Act and Michigan Medicaid False Claims Act, which allow private whistleblowers to bring lawsuits on behalf of the United States and the State of Michigan and receive a share of any recoveries. In this case, the United States and State of Michigan intervened in the whistleblower’s lawsuit, recovered $1,140,000 to date, and are pursuing additional claims against over a dozen other physicians and mid-level practitioners. The whistleblower has received $240,100 of these settlement proceeds, as well as additional amounts for attorney’s fees and costs.
“Whistleblowers play a key role in protecting federal health care programs from fraud and abuse, including kickback schemes that are often difficult to detect and result in the referral of unnecessary and upcoded services,” said U.S. Attorney Miles. “Paying kickbacks for patient referrals distorts the motives of health care professionals. The U.S. Attorney’s Office will continue to aggressively investigate and prosecute such kickback schemes and seek all available civil and criminal remedies including treble civil damages, monetary penalties, and felony prosecutions.”
“It is essential to maintain integrity in our healthcare system. Patients deserve to know that when a doctor refers them for additional treatment, the decision to do so is based upon quality health advice—not what is best for the doctor’s bottom line,” said Attorney General Bill Schuette. “Kickbacks with the Medicaid program do not just hurt patients, they affect the taxpayers whose hard-earned dollars subsidize healthcare for those in need.”
FBI Special Agent in Charge Robert D. Foley, III stated, “Those who provide health care must be held to the highest standards of ethics and integrity. The FBI remains committed to pursuing and prosecuting such criminals who abuse the system by receiving illegal kickbacks.”
“Paying kickbacks for the referral of Medicare or Medicaid patients is a serious crime,” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. “Kickbacks inappropriately influence health care practitioners’ medical decision making process, lead to overutilization and/or upcoding of services, and further increase program costs. The OIG will continue to aggressively pursue all available remedies whether criminal, civil or administrative to ensure the integrity of the Medicare and Medicaid programs and protect vital taxpayer dollars.”
These convictions and settlements were the result of a coordinated effort by the U.S. Attorney’s Office for the Western District of Michigan, the Michigan Attorney General’s Office, the Federal Bureau of Investigation, the U.S. Department of Health and Human Services, Office of Inspector General, and Blue Cross Blue Shield of Michigan.
END
Head of Charter School Pleads Guilty to FraudRead the Press Release
PHILADELPHIA - Masai Skief, 32, of Philadelphia, Pennsylvania, pleaded guilty today to an information charging him with two counts of wire fraud, arising from the abuse of his leadership positions at a Philadelphia charter school, announced United States Attorney Zane David Memeger. Skief was the chief executive officer of Harambee Institute of Science and Technology Charter School (“Harambee Charter School”) and the president and chief administrative officer of a related non-profit organization, Harambee Institute, Inc. (“Harambee Institute”).
Harambee Charter School, a non-profit corporation, was established to educate children from kindergarten to eighth grade, and it promoted itself as Pennsylvania’s first African-centered charter school. Harambee Institute was a separate non-profit corporation that had been established to provide students with educational services and vocational training. Harambee Institute owned the school building that was used by Harambee Charter School and collected rent from the school. For its students, Harambee Charter School created a scholarship fund intended to benefit those who intended to attend a “historically black institution of higher education in the United States.”
During a guilty plea hearing before the Honorable Paul S. Diamond, Skief admitted that he engaged in a scheme to improperly obtain the funds of both the scholarship fund and Harambee Institute. First, Skief improperly withdrew $9,000 from the scholarship fund in order to purchase a house for himself in Philadelphia. Then, through his control of the bank accounts of Harambee Institute, Skief converted for his own personal use approximately $79,000 from Harambee Institute. He did this primarily through a series of improper cash withdrawals from the bank accounts of Harambee Institute.
Skief also made substantial efforts to conceal his illegal activities, both during and after the fraud. In particular, he attempted to disguise a significant portion of his improper cash withdrawals from the accounts of Harambee Institute as labor costs for Harambee Institute, when there were no such labor costs associated with the improper withdrawals. Skief directed an accountant to create IRS forms to reflect this false information. Skief also directed others to lie for him to federal agents and to a federal grand jury about the use of the funds that the defendant had unlawfully converted.
A sentencing hearing is scheduled for November 14, 2013. Skief faces a maximum possible sentence of 40 years in prison and an expected advisory sentencing guideline range of at least 21 to 27 months imprisonment, plus full restitution to the scholarship fund and to the Harambee Institute.
“Masai Skief stole scholarship money, mortgaging children’s futures to help buy himself a house,” said FBI Special Agent-in-Charge Edward Hanko. “His further theft from the education non-profit taught Philadelphia’s kids a harsh lesson about unmitigated greed.”
“Today’s action shows that Mr. Skief not only abused his position of trust for personal gain, but did so at the expense of students. That is unacceptable,” said Special Agent-in-Charge Steven Anderson, of the U.S. Department of Education Office of Inspector General Mid-Atlantic Office. “OIG will continue to aggressively pursue those who misappropriate education funds for their own purposes. America’s students and taxpayers deserve nothing less.”
The case was investigated by the Federal Bureau of Investigation and the United States Department of Education Office of Inspector General. It is being prosecuted by First Assistant United States Attorney Louis D. Lappen and Assistant United States Attorney Joseph J. Khan.
Click here to view the indictment
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Grand Island Man Sentenced for Structuring Bank Transactions to Evade Reporting RequirementsRead the Press Release
United States Attorney Deborah R. Gilg announced that Senior United States District Court Judge Richard G. Kopf sentenced Randy Evans, age 60 of Grand Island, Nebraska, to 5 years of probation, a $50,000.00 fine, and ordered the forfeiture of $32,702.85. In addition, Evans must pay a $100 special assessment.
Randy L. Evans is the owner of RCE Investments, Inc., doing business as Randy Auto Sales, located in Grand Island, Nebraska. Between January 4, 2010 and February 28, 2012, Randy Evans deposited and directed currency deposits in a bank account of Randy’s Auto Sales at Five Points Bank, a financial institution as defined by federal law. Evans was aware of the financial institution’s legal obligation to report currency transactions in excess of $10,000. During the period set forth in the Indictment, Evans intentionally structured, and caused to be structured, currency deposits with Five Points Bank in amounts under $10,000, in order to evade the reporting requirements of federal law. During the period in question, Evans structured, and caused to be structured, currency transactions totaling between $1,000,000 and $2,030,322.22, including $32,702.85 seized by the United States from a bank account controlled by Evans at Five Points Bank during this investigation.
“The use of cash is legal, however, structuring cash transactions to evade federal reporting requirements is illegal,” said Sybil Smith, Special Agent in Charge of IRS Criminal Investigation. “Individuals who engage in this type of activity run the risk of a possible prison sentence, a monetary forfeiture and/or fine.”
This case was investigated by IRS Criminal Investigations.Georgetown Home Builder Convicted of Bank Fraud, Embezzlement, Aggravated Identity Theft and False Loan ApplicationRead the Press Release
LEXINGTON, KY - A home builder from Georgetown, KY., was convicted by a federal jury of fraudulently obtaining more than a million dollars in loans from a Frankfort bank.
The jury convicted 59 year-old Lee C. Tevis of one count of bank fraud, three counts of false loan application, three counts of aiding and abetting bank embezzlement and three counts of aggravated identity theft. Tevis was acquitted on a conspiracy count. The jury rendered the verdict Monday evening, after more than 15 hours of deliberation, following five days of trial.
Evidence at trial proved that, starting in 2006, Tevis began construction on a house and fraudulently obtained loans from American Founders Bank (AFB), by setting up bogus corporations in the names of other people to bypass loan limits.
The evidence furthered revealed that Tevis used some of the loan money, which the bank intended to be used to fund a home in Frankfort, to pay off his personal loans and debt on other construction projects.
According to trial testimony, when Tevis reached loan limits established by the Bank, he set up a bogus corporation in the name of his company’s foreman, an illegal alien, in order to obtain more loans. After fraudulently qualifying for the loans, Tevis used the social security number of the foreman’s five year-old son to pass the bank’s credit check.
Tevis fraudulently received $1.4 million in loans from the bank, according to the evidence at trial. The Bank eventually foreclosed on the home that Tevis received the loans for and suffered a significant financial loss in the process.
Jim Tate, the AFB president who approved the loans for Tevis, previously pleaded guilty to bank fraud and will be sentenced on September 10.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, Federal Bureau of Investigation, and John E. Lucas, Special Agent in Charge, Federal Deposit Insurance Corporation, Office of Inspector General jointly announced the conviction.
The investigation was conducted by the FBI and the FDIC-OIG. Assistant U.S. Attorneys Andrew Sparks and Jim Arehart represent the U.S. Attorney’s Office in this case.
Tevis will appear for sentencing on December 3. He faces a maximum of 30 years in prison. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal statutes before imposing a sentence.
Four Men Indicted on Federal Charges in $158 Million Consumer and Mortgage Fraud ConspiracyRead the Press Release
Another Defendant Pleaded Guilty Today; Two Others Previously Pleaded Guilty And Are Awaiting Sentencing
CHARLOTTE, N.C. – The former senior vice president of a manufactured housing retailer, two of his former sales managers and a former loan officer associated with the retailer have been indicted on federal charges involving a $158 million consumer and mortgage fraud conspiracy, announced the U.S. Attorney’s Office for the Western District of North Carolina.
The superseding criminal indictment filed on August 6, 2013, stems from an ongoing investigation into allegations that the defendants were involved in a consumer and mortgage fraud conspiracy that defrauded North Carolina buyers of manufactured and modular housing and originated $158 million in fraudulent federally-secured loans for their purchase. Another defendant pleaded guilty today in connection with the scheme and two others have already pleaded guilty to related charges and awaiting sentencing.
U.S. Attorney Tompkins is joined in making today’s announcement by Lester Fernandez, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the Department of Housing and Urban Development (HUD-OIG); Karen Citizen-Wilcox, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the U.S. Department of Agriculture (USDA-OIG); Keith Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS); and North Carolina Attorney General Roy Cooper who oversees the North Carolina State Bureau of Investigation (NC SBI).
The superseding indictment charges Dennis Wayne Parris, 55, of Pinehurst, N.C., Fabian Sparrow, 35, of Burlington, N.C., Andrew B. McKeown, 38, of Asheboro, N.C., and Isaac “Ike” A. Vinson, IV, 46, of Pawleys Island, S.C., with one count of conspiracy to make false statements to the U.S. Departments of Housing and Urban Development (HUD) and Agriculture (USDA) and one count of wire fraud conspiracy. Parris, Sparrow and Vinson are also charged with one count of aiding and abetting the destruction of documents with intent to impede a federal investigation.
According to allegations contained in the superseding indictment, from in or about April 2005 to October 2010, Parris, Sparrow, and McKeown were employed by Phoenix Housing Group (“PHG”), a manufactured and modular housing retailer headquartered in Greensboro, N.C. with sales offices throughout North and South Carolina. Parris was Senior Vice President at PHG. Sparrow and McKeown worked as sales managers at PHG’s sales centers doing business as “Southern Showcase Housing” in Burlington and Asheboro, respectively. A fourth former PHG employee also involved in the scheme, Roger Dean Bailey, Jr., 40, of Hickory, was the sales manager of PHG’s sales center in Granite Falls, N.C., doing business as “Homes America.”
The superseding indictment alleges that Parris, Sparrow, McKeown and Bailey executed a mortgage fraud scheme to sell PHG manufactured and modular homes to consumers in North and South Carolina. Parris, Sparrow, McKeown, Bailey, and other PHG officers allegedly created a culture at PHG wherein employees were compelled to generate as many sales as possible regardless of whether their customers could afford the homes they were sold. Furthermore, the indictment alleges that, even after the HUD investigation into Bailey and Homes America became known, Parris, Sparrow and McKeown continued the scheme at other PHG locations.
According to the indictment, the co-conspirators were able to secure financing on those loans with the assistance of three loan officers of W.R. Starkey Mortgage (“WRSM”), a mortgage loan originator with corporate offices in North and South Carolina, among other states. WRSM was approved to originate loans insured by the Federal Housing Administration (“FHA”) or guaranteed by USDA. Vinson was a WRSM branch manager and loan officer in Myrtle Beach, S.C. Marina McCuen, 49, of Asheville, N.C. was a loan officer for WRSM’s Asheville office. Vinson originated loans for PHG customers in Burlington and supervised McCuen, who originated loans for PHG customers in Granite Falls, N.C. Joseph Klakulak, 37, of Charlotte, was a loan officer for WRSM’s Charlotte office. The indictment alleges that the three loan officers conspired with PHG’s management to fraudulently obtain federally-secured mortgages for PHG customers’ purchase of home/land deals.
In all, Parris, Sparrow, McKeown, Bailey and their conspirators sold over 1,100 homes to North Carolina consumers from PHG stores in Burlington, Asheboro, Granite Falls, and elsewhere, financed with more than $158 million in government-insured loans. The fraudulent loans resulted in hundreds of mortgage insurance claims totaling more than $24 million and net losses to the United States presently exceeding $16 million. According charging documents in Klakulak’s case, he originated over 400 of these loans, totaling more than $60 million, causing net losses to the federal government in excess of $3 million.
The superseding indictment further charges that, beginning in September 2008, Parris, Vinson, Sparrow, McCuen and Bailey obstructed HUD’s investigation into PHG’s and WRSM’s fraudulent activities at PHG’s Granite Falls sales office by destroying and attempting to destroy documents and asking witnesses to lie to investigators.
Today, Klakulak pleaded guilty before U.S. Magistrate Judge David S. Keesler to one count of conspiracy to defraud the United States and to make false statements to HUD and USDA. He was released on bond pending sentencing, which has not been set yet. At sentencing, Klakulak faces a maximum of five years in prison and a $250,000 fine.
Bailey pleaded guilty in October 2011 to conspiracy to commit wire fraud and to make false statements to HUD, making false statements to HUD, and wire fraud. McCuen pleaded guilty in June 2012 to one count of conspiracy to make false statements to HUD and USDA in connection with this scheme. Both McCuen and Bailey have been released on bond and await sentencing.
Also today, Vinson had his initial appearance on the superseding indictment before Judge Keesler. Vinson was released on bond. His co-defendants, Parris and McKeown, have been ordered to appear on a summons and will be arraigned on the charges on September 3, 2013. An arrest warrant has been issued for Sparrow, who is currently believed to be a fugitive. A photo of Sparrow is attached.
If convicted on all offenses, Parris, Sparrow, and Vinson face a maximum of 55 years in prison and a $1.5 million fine. McKeown faces a maximum of 35 years in prison and a $1.25 million fine if convicted on counts one and two of the indictment.
The charges contained in the indictment are allegations. They defendants are presumed innocent unless and until they are proven guilty beyond a reasonable doubt in a court of law.
In January 2011, PHG ceased business operations as part of a settlement with the Consumer Protection Division of the North Carolina Attorney General’s office. This settlement stemmed from a state civil action filed in November 2009, claiming Bailey, then the owner of K and B Home Builders in Hickory, N.C., along with other employees and/or managers of PHG and WRSM, as well as other businesses and individuals, were involved in deceptive consumer practices.
The prosecution for the case is being handled by Assistant United States Attorney Michael Savage and Benjamin Bain-Creed of the U.S. Attorney’s Office in Charlotte. The investigation is being handled HUD-OIG, USDA-OIG, USPS-OIG, and state investigators with NC SBI, the Office of Commissioner of Banks and the Consumer Protection Division of the N.C. Department of Justice.
Former Watertown Police Officer Convicted of Passing False Prescriptions Using Another’s IdentityRead the Press Release
BOSTON - A Framingham man pleaded guilty today in federal court in connection to crimes committed while in his official capacity as a Watertown police officer.
Joseph Deignan, 58, was convicted of unlawful possession of a controlled substance by fraud and fraud in connection with identification documents.
At today’s plea hearing, the prosecutor stated that Deignan, a former Watertown Police Officer who retired in February 2012, used the identity of another person to obtain oxycodone and other controlled substances by forging prescriptions in the other person’s name. Deignan stole the driver’s license of the person in 2010 while he was working as the traffic supervisor for the Watertown Police Department. From 2010 through December 2013, using various doctors’ information, Deignan forged over 100 prescriptions for controlled substances and used the stolen identity to fill the scripts.
The maximum sentence under the identity theft count is 15 years in prison, followed by three years of supervised release and a $250,000 fine. Judge Douglas P. Woodlock set sentencing for November 15.
United States Attorney Carmen M. Ortiz and John Arvanitis, Special Agent in Charge of the Drug Enforcement Administration’s New England Field Division made the announcement today. The DEA was provided assistance from the Marlborough Police Department. The Watertown Police Department has been cooperative during the investigation. The case is being prosecuted by Assistant U.S. Attorney Eugenia Carris of Ortiz’s Public Corruption Unit.Former Wastewater Manager in Hays Charged with Violating Clean Water ActRead the Press Release
WICHITA, KAN. – A former manager of wastewater facilities for the city of Hays, Kan., has been charged with violating the Clean Water Act, U.S. Attorney Barry Grissom said today.
Charles L. Blair, 57, Hays, Kan., is charged with four counts of making false statements about nitrogen levels in the effluent for the City of Hays. In three counts, Blair is alleged to have made false statements in Discharge Monitoring Reports. The reports significantly understated the amount of ammonia nitrogen in the city’s effluent. In another count, Blair is alleged to have falsely stated to agents of the Environmental Protection Agency that he had provided accurate reports to EPA. The crimes are alleged to have occurred in February, March and July 2012 in Hays, Kan.
The Clean Water Act regulates the discharge of pollutants from point sources to waters of the United States. More information on the law is available at:
http://www2.epa.gov/laws-regulations/summary-clean-water-actIf convicted, Blair faces a maximum penalty of two years in federal prison and a fine up to $10,000 on each of the first three counts and a maximum penalty of five years and a fine up to $250,000 on the fourth count.
The Environmental Protection Agency investigated. Assistant U.S. Attorney Matt Treaster is prosecuting.
OTHER INDICTMENTS
Antoine Otano, 23, Wichita, Kan., is charged with one count of possession with intent to distribute cocaine, and one count of unlawful possession of a firearm in furtherance of drug trafficking. The crimes are alleged to have occurred May 25, 2009, in Sedgwick County, Kan.If convicted, he faces a penalty of not less than five years and not more than 40 years and a fine up to $2 million on the cocaine charge, and a penalty of not less than five years – consecutive to the sentence on the other count – and a fine up to $250,000 on the firearm charge.
The Wichita Police Department and the Drug Enforcement Administration investigated. Special Assistant U.S. Attorney Michelle Jacobs is prosecuting.
Eleazar Marquez-Bencomo, 52, Garden City, Kan., is charged with one count of possession with intent to distribute cocaine and two counts of unlawful possession of a firearm in furtherance of a drug trafficking. The crimes are alleged to have occurred Aug. 1, 2013, in Finney County, Kan.
If convicted, he faces a penalty of not less than five years and not more than 40 years and a fine up to $2 million on the cocaine charge, and a penalty of not less than five years – consecutive to the sentence on the other count – and a fine up to $250,000 on each firearm count. The Finney County Sheriff’s Department, the Garden City Police Department and the Drug Enforcement Administration investigated. Special Assistant U.S. Attorney Michelle Jacobs is prosecuting.
Amos Becknell, 33, Wichita, Kan., is charged in a superseding indictment with one count of possession with intent to distribute cocaine, one count of unlawful possession of a firearm in furtherance of drug trafficking and three counts of unlawful possession of a firearm after a felony conviction. The crimes are alleged to have occurred April 1, 2011, in Sedgwick County, Kan.
If convicted, he faces a maximum penalty of 20 years and a fine up to $1 million on the cocaine count, a penalty of not less than five years, consecutive to the sentence on the cocaine count, and a fine up to $250,000 on the charge of possessing a firearm in furtherance of drug trafficking, and a maximum penalty of 10 years and a fine up to $250,000 on each of the charges on unlawful possession of a firearm after a felony conviction. The Wichita Police Department investigated. Special Assistant U.S. Attorney Michelle Jacobs is prosecuting.
Troy D. Benton, 43, Liebenthal, Kan., is charged with one count of possession with intent to distribute methamphetamine and one count of unlawful possession of a firearm after a felony conviction. The crimes are alleged to have occurred July 4, 2013, in Ellis County, Kan.
If convicted, he faces a penalty of not less than five years and not more than 40 years and a fine up to $2 million on the drug charge and a maximum penalty of 10 years and a fine up to $250,000 on the firearm charge. The Ellis County Sheriff’s Office investigated. Assistant U.S. Attorney Matt Treaster is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Former Owner of Liquor Store Pleads Guilty to Tax Crime and Selling Cutting Agents to Local Drug DealersRead the Press Release
Southfield, Mich., resident Bashar Saroki pleaded guilty to filing a false tax return and selling drug paraphernalia, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents, Saroki controlled and operated Golden Star Party Store, a liquor store that was located in Detroit. From 2007 through 2011, Saroki sold more than $1 million worth of a variety of cutting agents to local narcotics dealers out of Golden Star Party Store and from his residence. The cutting agents were substances used by narcotics dealers to dilute the potency and increase the quantity of the narcotics sold to customers. Despite the significant proceeds from the sale of cutting agents, Saroki reported very little income on his false tax return for 2009.
Saroki faces a maximum sentence of three years in prison, one year of supervised release and a $250,000 fine on each count. U.S. District Judge Robert H. Cleland set sentencing for Dec. 17, 2013.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of special agents of IRS-Criminal Investigation, who investigated this case, and Tax Division Trial Attorneys Kenneth C. Vert and Yael T. Epstein, who prosecuted the case.
Former Loan Officer Pleads Guilty to Stealing $400,000 from Victims in Investment Fraud SchemeRead the Press Release
LAS VEGAS, Nev. – A former loan officer from Henderson, Nev., who convinced over 30 victims to give him money for a high yield investment scheme involving the foreign currency exchange market, has pleaded guilty to federal fraud and money laundering charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Kamalu Gonzales, 47, pleaded guilty on Monday, Aug. 12, 2013, before U.S. District Judge Gloria M. Navarro to two counts of mail fraud, six counts of wire fraud, and two counts of money laundering. Gonzales is scheduled to be sentenced on Nov. 14, 2013, and faces up to 30 years in prison and a $1 million fine on each of the fraud charges and up to 10 years in prison and a $250,000 fine on each of the money laundering charges.
According to the court records, from approximately 2007 to 2008, Gonzales told individuals that he was a successful investor and trader in the foreign currency exchange market. Gonzales recruited individuals to invest with him in the market, telling them that they could earn high rates of return on their investments in a short period of time. Some of the victims wired money to Gonzales, and others borrowed money from their retirement fund, line of credit, or refinanced their houses in order to invest with him.
During 2007, Gonzales worked as a loan officer for Meridias Capital in Henderson, Nev. Gonzales helped persons refinance their homes, and placed false information in the loan applications so the individuals could obtain refinancing and cash to which they would not have otherwise been entitled. Gonzales convinced these individuals to give him some of the cash they received from refinancing for his investment fraud scheme. None of the victims agreed to pay Gonzales any commissions or fees, or agreed that he could use their investments for personal or business expenses or to pay other investors.
In order to continue the scheme and to keep victims from discovering the crime, Gonzales lied to the victims repeatedly and told them their investments were doing well. As a result of the lies, some victims gave Gonzales more money to invest. Gonzales also made payments to some of the victims using monies he received from other victims.
Gonzales received approximately $1 million total from over 30 victims in 2007 and 2008. Gonzales did not invest the victims’ funds as promised and diverted approximately $410,000 for his own personal purposes.
Gonzales is free on a personal recognizance bond pending sentencing.
The case was investigated by the FBI and is being prosecuted by Assistant U.S. Attorneys Kathryn C. Newman and Kimberly M. Frayn.
Today's announcement is part of efforts underway by President Obama's Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys' offices and state and local partners, it's the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Former Corporate Controller for Collin Street Bakery (CSB) Is Arrested and Detained on Mail Fraud ChargeRead the Press Release
Defendant Allegedly Embezzled More Than $16 Million from CSB
DALLAS — Sandy Jenkins, 64, of Corsicana, Texas, was arrested by special agents of the FBI yesterday afternoon on a federal criminal complaint charging mail fraud. Jenkins appeared before a magistrate judge this afternoon where he waived preliminary and detention hearings and was remanded into custody pending the outcome of his case. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
According to the affidavit filed with the complaint, as well as the government’s motion for detention, Jenkins was the corporate controller for the Collin Street Baker (“CSB”) in Corsicana, Texas, from February 1998 through June 21, 2013. On June 21, 2013, Jenkins was terminated after CSB discovered the alleged fraud. In particular, Jenkins caused CSB checks to be written to his personal creditors and then manipulated CSB’s computerized accounting system to show that the checks had been voided. In order to keep CSB’s books in balance and further disguise his fraudulent activity, Jenkins created checks in CSB’s accounting system purporting to go to an approved vendor in the same amounts as the checks to his personal creditors. The checks to Jenkins’s personal creditors were used to bankroll a lavish lifestyle that included a house in Santa Fe, New Mexico, 43 luxury automobiles, frequent travel on private planes and a watch and jewelry collection worth approximately $3 million. The government’s investigation shows that Jenkins caused 888 fraudulent checks to be sent to his personal creditors, resulting in approximately $16.65 million in losses to the bakery.
A complaint is a written statement of the essential facts of the offenses charged and must be made under oath before a magistrate judge. A defendant is entitled to the presumption of innocence until proven guilty. The government has 30 days to present the matter to a grand jury for indictment. The maximum statutory penalty for the offense of mail fraud is 20 years in federal prison and a $250,000 fine, per count. In addition, restitution could be ordered.
The investigation is being conducted by the FBI. Assistant U.S. Attorney J. Nicholas Bunch is in charge of the prosecution and Assistant U.S. Attorney Melissa Childs is handling the forfeiture.
Former CFO of Communications and Power Co. Facing Fraud and Tax ChargesRead the Press Release
ERIE, Pa. - A resident of Erie, Pennsylvania, has been indicted by a federal grand jury in Erie on charges of mail fraud and tax evasion, United States Attorney David J. Hickton announced today.
The two-count indictment named Brian M. Quimby, 46, as the sole defendant.
According to the indictment presented to the court, while Quimby was employed as CFO of Thayer Power and Communications, he defrauded Key Bank. In addition, Quimby failed to file his income tax return for calendar year 2007.
The law provides for a maximum total sentence of 35 years in prison, a fine of $1,250,000, 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 defendant.
Assistant United States Attorney Christian A. Trabold is prosecuting this case on behalf of the government.
The Internal Revenue Service, Criminal Investigation, and the Federal Bureau of Investigation conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former CEO of Miami Lakes Tax Preparation Business Charged in Structuring SchemeRead the Press Release
Wifredo A Ferrer, United States Attorney for the Southern District of Florida, and Michael J. De Palma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announce that defendant Carlos Rodriguez, 40, of Miami Lakes, was charged in a 19 count indictment with structuring financial transactions with the intent to evade currency reporting requirements, in violation of Title 31, United States Code, Sections 5324(a)(3) and 5324(d)(2). The indictment also seeks the forfeiture of $558,516.80, the amount of currency involved in the structuring violations, pursuant to Title 31, United States Code, 5317(c)(1). Defendant Rodriguez had his initial appearance today before U.S. Magistrate Judge John O’Sullivan.
According to the indictment, financial institutions are required to report cash transactions in amounts over $10,000.00 to the IRS. The indictment alleges that between January 4, 2012 and March 22, 2012, Rodriguez intentionally cashed fifty-six checks from his business account in amounts just under $10,000.00 at a financial institution in order to evade the cash reporting requirements. As further alleged in the indictment, the total amount of money involved in the structuring violations was $558,516.80. If convicted, the defendant faces up to 10 years in prison for each count.
According to statements made in court, Rodriguez was Chief Executive Officer of Rodri Rodri & Associates, Inc., a tax preparation business, during the time of the alleged structuring violations and currently is the Chief Financial Officer of Ayudame Financial Services, Inc.
Mr. Ferrer commended the investigative efforts of IRS-CI. This case is being prosecuted by Assistant U.S. Attorney Elijah A. Levitt.
An indictment is only an accusation and the defendant is 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.
Federal Grand Jury Criminal Indictments AnnouncedRead the Press Release
TULSA, Okla. — The results of the August 2013 Federal Grand Jury were announced today by Danny C. Williams Sr., United States Attorney for the Northern District of Oklahoma.
The following named individuals have been charged with a federal crime or crimes by the return of an indictment by the Grand Jury. The return of an indictment is a method of informing the defendant of alleged violations which must be proven in a court of law beyond a reasonable doubt to overcome the defendant’s presumption of innocence.Tyrone Taray Shaw. Felon in Possession of Firearm and Ammunition. Shaw, 29, of Tulsa, is accused of possessing a Romarm AK-47 assault rifle and ammunition after six prior felony convictions which included possession of marijuana and escape from confinement. If convicted, the maximum sentence of imprisonment would be 10 years and a fine of $250,000, along with the forfeiture of the Romarm AK-47 assault rifle and ammunition. The Bureau of Alcohol, Tobacco, Firearms and Explosives is the lead agency.
Andres Gonzalez. Possession with Intent to Distribute Methamphetamine and Possession of a Firearm in Drug Trafficking Crime. Gonzalez, 26, of Tulsa, is accused of possession with intent to distribute 50 or more grams of methamphetamine and possession of a firearm furtherance of a drug trafficking crime. If convicted, the minimum mandatory sentence of imprisonment would be five years and the maximum imprisonment is 40 years, and a fine of $4,000,000. Gonzalez shall forfeit about $1,800, one caliber pistol and ammunition. The Federal Bureau of Investigation is the lead agency.
Matthew Scott Storey. Possession with Intent to Distribute Methamphetamine. Storey, 29, of Tulsa, is accused of possession and intent to distribute 500 grams or more of methamphetamine. If convicted, the minimum imprisonment would be 10 years for possession and the maximum imprisonment is 20 years for intent to distribute. The Federal Bureau of Investigation is the lead agency.
Jesus Uzziel Rodriguez, Vincente Chipres Valencia and Francisco Reyes-Sanchez. Drug Conspiracy and Possession with Intent to Distribute Methamphetamine. Rodriguez, 30, of Hayward, California, Valencia, 33, of East Palo Alto, California and Reyes-Sanchez, 34, of Mounds, Oklahoma are accused of possessing and conspiring to distribute 500 grams and more of methamphetamine. If convicted, the minimum mandatory imprisonment is 10 years with a maximum life imprisonment, and a $10,000 fine. The lead agencies for this case are the Oklahoma Bureau of Narcotics and Dangerous Drugs Control and Tulsa Police Department, Special Investigative Division.
Luis Alberto Vale and Alejandro Alspuro-Bernal. Drug Conspiracy and Possession with Intent to Distribute Heroin. Vale, 23, and Alspuro-Bernal, 31, both of Tulsa, are accused of conspiring and possessing with the intent to distribute 100 grams or more of heroin between May and July 2013. If convicted, the minimum mandatory imprisonment would be five years and the maximum imprisonment is 40 years, up to $5,000,000 fine, and a forfeiture of approximately $11,000. The U.S. Immigration and Customs Enforcement, Homeland Security Investigations is the lead agency.
Edin Ayala-Lopez. Alien in the United States After Deportation. Ayala-Lopez, 26, was arrested in Tulsa County and charged with having returned to the United States unlawfully after being deported in June 2008 near New Orleans, Louisiana. If convicted, Ayala-Lopez would face a maximum 20 years imprisonment and/or fine up to $250,000. The U.S. Immigration and Customs Enforcement is the lead agency of this case.
Marino Lopez-Miranda. Alien in the United States After Deportation. Lopez-Miranda, 53, was arrested in Tulsa County and charged with having returned to the United States unlawfully after being deported near Del Rio, Texas in September 2008. If convicted, Lopez-Miranda would face a maximum 20 years imprisonment and/or fine up to $250,000. The U.S. Immigration and Customs Enforcement is the lead agency of this case.El Departamento de Justicia Realiza Acuerdo Conciliatorio con la Asociación de Propietarios de Vivienda y Compañía de Administración de Propiedades en una Demanda de Vivienda Justa Asociada A Límites de Ocup...Read the Press Release
Washington– El Departamento de Justicia anunció hoy que Townhomes of Kings Lake HOA Inc. (Asociación de Propietarios de Vivienda) y Vanguard Management Group, Inc. han aceptado pagar 150,000 dólares en resolución de una demanda que alegando violaciones de la Ley de Vivienda Justa [Fair Housing Act (FHA)]. La demanda alegaba que la HOA adoptó y ambos demandados hicieron valer límites de ocupación que discriminaron contra familias con niños en Townhomes of Kings Lake, una comunidad de 248 viviendas en Gibsonton, Fla.
Bajo el decreto por consentimiento propuesto, el que aún debe ser aprobado por el Tribunal Federal de Distrito para el Distrito Medio de Florida, los demandados pagarán 45,000 dólares a la familia que inició la queja original entablada con el Departamento de Vivienda y Desarrollo Urbano de EE.UU. [U.S. Department of Housing and Urban Development (HUD)], 85,000 dólares a un fondo para víctimas para indemnizar a otras familias discriminadas, y 20,000 dólares a los Estados Unidos como multa civil. Además, el decreto por consentimiento propuesto prohíbe a los demandados discriminar en el futuro contra familias con niños y exige que los demandados reciban capacitación sobre los requisitos de la FHA. En enero de 2013, mientras la demanda se encontraba pendiente, la HOA modificó sus límites de ocupación de modo a permitir 4 ocupantes en las viviendas de 2 dormitorios, seis ocupantes en las viviendas de 3 dormitorios y ocho ocupantes en las viviendas de 4 dormitorios.
"La Ley de Vivienda Justa asegura que no se les niegue a familias con niños sus derechos de vivienda mediante políticas de ocupación discriminatorias", señaló Jocelyn Samuels, Secretaria de Justicia Auxiliar Interina de la División de Derechos Civiles. "El Departamento de Justicia seguirá haciendo valer enérgicamente las leyes de vivienda justa que protegen los derechos de familias con niños ".
La demanda, entablada en octubre del 2012, surgió de una queja presentada a HUD por una familia con seis niños que vivía en Townhomes of Kings Lake. Después de que la familia se mudó a su vivienda de 4 dormitorios, los demandados indicaron que había un problema con el número de personas que vivían en el hogar y amenazaron con desalojar a la familiar. Finalmente, la familia se mudó de la comunidad Kings Lake. Después de que HUD investigó la queja, la agencia emitió un cargo de discriminación y remitió la cuestión al Departamento de Justicia. La demanda alegó que los demandados violaron los derechos de la familia, y que las políticas de ocupación restrictivas discriminaron a otras familias con niños, y que los demandados exhibieron un patrón o práctica de discriminación o se les negaron derechos protegidos por la FHA a un grupo de personas.
"Más de veinte años de orientación de HUD y casos han servido de aviso a los proveedores de vivienda de que las normas de ocupación que limiten injustamente o excluyan a familias con niños violan la Ley de Vivienda Justa", señaló Bryan Greene, Secretario Auxiliar Interino de Vivienda Justa e Igualdad de Oportunidades de HUD. "HUD y el Departamento de Justicia se comprometen a asegurar que todas las personas tengan acceso igualitario a la vivienda para la que califiquen financieramente".
Las personas que crean que ellas mismas u otras personas que conocen fueron víctimas de discriminación en la vivienda como resultado de las antiguas políticas de ocupación de Townhomes of Kings Lake deben comunicarse con la Sección de Vivienda y Cumplimiento de Ley Civil de la División de Derechos Civiles al 1-800-896-7743, oprima el 2 para continuar en español y seleccione el buzón número 7, o enviar un mensaje de correo electrónico a [email protected].
La Ley de Vivienda Justa federal prohíbe discriminación en vivienda por razón de raza, color, religión, sexo, estado familiar, origen nacional y discapacidad. El hacer valer las leyes de vivienda de justa es una prioridad de la División de Derechos Civiles. Para obtener más información sobre la División de Derechos Civiles y las leyes que hace valer, visite www.justice.gov/crt.
East Bay Trio Charged in Identity Theft SchemeRead the Press Release
OAKLAND – East Bay residents Sean Lucas Cowgill, Juanco Tango Andres, and Guadalupe Nieves, Jr., made their initial appearance on August 9, 2013, in federal court on charges of wire fraud and aggravated identity theft, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation Special Agent in Charge José M. Martinez.
According to the indictment, unsealed on August 9, 2013, from about May 27, 2011 to February 24, 2012, Sean Lucas Cowgill allegedly carried out a scheme to obtain money by filing false tax returns claiming refund payments. In order to carry out the scheme, Cowgill created an identification form (“ID-Doc”) which included questions requiring personal information, such as name, income, birthday, Social Security number, number of dependents, expenses, and type of work.
Cowgill trained and used recruiters to convince people to complete the ID-Doc form in order to determine if they were eligible for a stimulus program sponsored by President Obama. Cowgill used the completed ID-Doc forms to prepare and electronically file false federal individual income tax returns, claiming fraudulent tax credits and refunds. Cowgill directed the refunds to be paid in a manner that enabled him to exercise control over the refunds. Cowgill paid recruiters $50 to $100 for each completed ID-Doc form that resulted in a tax refund.
According to the indictment, from about September 17, 2011 to about February 24, 2012, Cowgill taught Juanco Tango Andres and Guadalupe Nieves, Jr. to use information from ID-Doc forms to prepare false federal income tax returns claiming tax credits and refunds. Andres and Nieves allegedly followed Cowgill’s scheme, training and using recruiters to convince people to complete the ID-Doc form. Andres and Nieves paid Cowgill a $50 “franchise fee” for each tax refund.
All three defendants were indicted on July 23, 2013. Cowgill was charged with 13 counts of wire fraud and three counts of aggravated identity theft. Andres was charged with 10 counts of wire fraud and eight counts of aggravated identity theft. Nieves was charged with 10 counts of wire fraud and one count of aggravated identity theft.
The maximum statutory penalty for each count of wire fraud, in violation of Title 18, U.S.C § 1343, is 20 years in prison and a fine of $250,000. The maximum penalty for aggravated identity theft, in violation of Title 18, U.S.C § 1028A, is two years in prison, consecutive to the underlying felony and a fine of $250,000.
Thomas Moore is the Assistant U.S. Attorney who is prosecuting this case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
(Cowgill indictment )
Detroit Man Used Counterfeit Credit Cards to Buy Retail Store Gift CardsRead the Press Release
PITTSBURGH, Pa. - A Detroit man pleaded guilty in federal court to conspiracy to access device fraud, United States Attorney David J. Hickton announced today.
Jamon Paul Judson, 32, of Detroit, Mich., pleaded guilty to one count before Senior United States District Judge Donetta W. Ambrose.
In connection with the guilty plea, the court was advised that Judson along with other defendants, left Michigan in early 2009 to use counterfeited, re-encoded credit cards to make purchases of retail store gift cards at numerous Giant Eagle stores in Ohio and Pennsylvania in 2009. The group was apprehended in Cranberry Township in August 2009, and found in possession of counterfeited credit cards and a device used to make counterfeit cards, as well. Losses total near $120,000.
Judge Ambrose scheduled sentencing for Dec, 4, 2013, at 11 a.m. The law provides for a total sentence of five years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.
Pending sentencing, the defendant was released on bond conditions.
Assistant United States Attorney Gregory C. Melucci is prosecuting this case on behalf of the government.
The Western Pennsylvania Financial Crimes Task Force (WPFCTF) conducted the investigation that led to the Indictment in this case. The WPFCTF was established in February 1995 as a collaborative, multi-agency effort to effectively combat financial crimes, including identity fraud, in Western Pennsylvania. Partners in this effort are the United States Attorney's Office for the Western District of Pennsylvania, the United States Secret Service, the United States Postal Inspection Service, the Department of Homeland Security, the Allegheny County District Attorney's Office, the Allegheny County Police Department, the City of Pittsburgh Bureau of Police and the Pennsylvania State Police.
Correctional Officer Pleads Guilty to A Racketeering ConspiracyRead the Press Release
Smuggled Drugs and Other Contraband for BGF Gang Members in Baltimore Correctional Facilities
Baltimore, Maryland - Jennifer Owens, a/k/a O and J.O., age 31, of Randallstown, Maryland pleaded guilty today to a racketeering conspiracy for smuggling drugs and other contraband for Tavon White and other member of the Black Guerilla Family (BGF) gang inside several correctional facilities.
The guilty plea 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; Secretary Gary D. Maynard of the Maryland Department of Public Safety and Correctional Services; Baltimore Police Commissioner Anthony W. Batts; and Baltimore City State’s Attorney Gregg L. Bernstein.According to court documents, BGF has been the dominant gang at the Baltimore City Detention Center (BCDC), and in several connected facilities, including the Baltimore Central Booking Intake Center, the Women’s Detention Center, which houses many men, and in the Jail Industries Building.
Jennifer Owens worked as a correctional officer (CO) at BCDC from 2007 to 2013. Owens admitted that she entered into a personal and sexual relationship with BGF gang leader Tavon White while he was an inmate at BCDC and has two children by White. According to her plea agreement, Owens frequently smuggled Percocet pills and Suboxone strips into BCDC on behalf of White and others. From 2010 to 2011, Owens smuggled marijuana and tobacco into the prison two to four times per week, but after that she concentrated on pills and strips. Outside the prison, Owens frequently obtained contraband from other co-defendants and was paid either by transfers of funds onto Green Dot cards or by cash from these co-defendants. Owens also moved contraband internally within BCDC for others. Owens was aware that other co-defendants and many other correctional officers also smuggled contraband.
Owens faces a maximum sentence of 20 years in prison for the racketeering conspiracy. U.S. District Judge Ellen L. Hollander scheduled sentencing for January 24, 2014.
The case arose from the efforts of the Maryland Prison Task Force, a group of local, state and federal law enforcement agencies and prosecutors that met regularly for more than two years and generated recommendations to reform prison procedures. The investigation is continuing.
U.S. Attorney Rosenstein recognized the efforts of the other members of the Maryland Prison Task Force, including: Colonel Marcus L. Brown, Superintendent of the Maryland State Police; Chief Mark A. Magaw of the Prince George’s County Police Department; United States Marshal Johnny Hughes; Special Agent in Charge Karl C. Colder of the Drug Enforcement Administration - Washington Field Division; Tom Carr, Director of the Washington-Baltimore High Intensity Drug Trafficking Area; and Dave Engel, Executive Director of the Maryland Coordination and Analysis Center.
United States Attorney Rod J. Rosenstein praised the FBI, Maryland Department of Public Safety and Correctional Services, Baltimore Police Department, and Maryland Prison Task Force, for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Robert R. Harding and Ayn B. Ducao, who are prosecuting this Organized Crime Drug Enforcement Task Force case.Chief Executive Officer Sentenced to 30 Months in Securities Fraud SchemeRead the Press Release
BOSTON - The chief executive of Vida Life International Ltd., a public company that traded on the over-the-counter securities market, was sentenced yesterday to 30 months in federal prison for conspiracy to commit securities fraud, wire fraud and mail fraud.
John C. Jordan, 62, of Cameron Park, Calif., was sentenced by United States District Court Judge Nathaniel M. Gorton after being convicted in May by a jury. Jordan was also ordered to pay a fine and to forfeit his illegal earnings.
Jordan was sentenced for his role in a scheme to pay secret kickbacks to an investment fund representative who had agreed to steer the investment fund to buy stock in Vida Life. The kickbacks were concealed through the use of a sham consulting agreement and other fraudulent documents. Jordan did not know that the purported investment fund representative was actually an undercover agent with the Federal Bureau of Investigation.
The conviction and sentence followed a year-long investigation focusing on preventing fraud in the micro-cap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies a share. Fraud in the microcap markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse. This is, in part, because accurate information about microcap stocks may be difficult for the average investor to find, since many microcap companies do not file financial reports with the Securities Exchange Commission.
Two additional defendants who were charged as part of the undercover operation were sentenced last month. Steven Berman, 50, of Ohio, the former chief executive Officer of China Wi-Max Communications, Inc., and Richard Kranitz, 69, a Wisconsin securities attorney who served as an adviser and a member of the board of directors of China Wi-Max, were each sentenced to 18 months in federal prison after pleading guilty to conspiracy to commit securities fraud.
Two other defendants are scheduled to be sentenced over the next several weeks. Karen Person, 62, of Las Vegas, Chief Executive Officer of the Small Business Company, Inc., is scheduled to be sentenced on August 16. Person also pleaded guilty to conspiracy to commit securities fraud. James Prange, 62, of Greenbush, Wis., a self-described financing consultant to small and emerging companies, who, like Jordan, was convicted after trial on multiple counts of conspiracy to commit securities fraud and wire fraud, is scheduled to be sentenced on September 25, 2013.
The Securities and Exchange Commission, which conducted a parallel civil investigation alongside the FBI undercover operation, cooperated with criminal authorities in bringing these, and charges against 10 other defendants who participated in the kickback scheme. Six of the defendants have already pled guilty to charges arising out of their involvement in the scheme.U.S. Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division made the announcement today. The case was prosecuted by Assistant U.S. Attorneys Sarah E. Walters, Stephen E. Frank, and Vassili Thomadakis of Ortiz’s Economic Crimes Unit.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Canyon County Man Sentenced for Federal Firearms ViolationsRead the Press Release
BOISE – Kyle Alan Batt, 28, of Caldwell, Idaho, was sentenced in federal court today to 180 months in prison for unlawful possession of a firearm and one count of possession of a firearm with an obliterated serial number, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Edward J. Lodge ordered Batt to serve three years of supervised release after his prison term, and also ordered Batt to forfeit the firearm and pay restitution for the injuries he caused to two Canyon County Sheriff deputies. Batt pleaded guilty to the charges on May 31, 2013.
According to information presented in court, Batt shot two Canyon County Sheriff’s deputies on October 24, 2012. Deputies found Batt hiding with a gun that morning, shortly after the deputies were shot. When he was discovered, Batt shot himself in the head. He was initially charged by complaint and taken into federal custody in November 2012. A federal grand jury returned an indictment on December 11, 2012.
According to the plea agreement, Batt admitted that on October 23, 2012, he knowingly possessed a Beretta .40 semiautomatic pistol with an obliterated serial number. At the time Batt possessed the pistol he had previously been convicted, on May 14, 2004, in Boise County, Idaho, of possession of a controlled substance, a felony crime punishable by a term of imprisonment exceeding one year and is therefore prohibited from possessing firearms.
“Mr. Batt’s criminal history prohibited him from possessing any kind of firearm,” said Olson. “This defendant’s disregard for the law enforcement officers’ lives were aggravating factors that warranted the serious federal prison term he imposed in this case. I commend the cooperation among the various law enforcement agencies and the partnership of the Canyon County Prosecuting Attorney’s Office in this case to ensure that appropriate charges recognizing the seriousness of the conduct were pursued in each jurisdiction.”
The case was investigated by the Nampa Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Batt was prosecuted by the Special Assistant U.S. Attorney hired by the Treasure Valley Partnership and the State of Idaho to address gang crimes. The Treasure Valley Partnership is comprised of a group of elected officials in southwest Idaho dedicated to regional coordination, cooperation, and collaboration on creating coherent regional growth. For more information, visit treasurevalleypartners.org.
California Man and Woman Charged with Discharge of A Pollutant from A Point SourceRead the Press Release
United States Attorney Brendan V. Johnson announced that two Hacienda Heights, California, residents have been indicted by a federal grand jury.
Sean Clark, age 47, and Devorah Lopez, age 50, d/b/a Glencoe CampResort II, were indicted by a federal grand jury on July 17, 2013, for Discharge of a Pollutant from a Point Source into a Water of the United States. The Indictment alleges that in both 2011 and 2012 the defendants discharged fill material into Bear Butte Creek. They appeared before U.S. Magistrate Veronica L. Duffy on August 12, 2013, and pled not guilty to the Indictment.
The maximum penalty upon conviction is 3 years of imprisonment, not less than $5,000 nor more than $50,000 fine per day of violation, or both; 1 year of supervised release, an additional year of supervised release upon revocation; and a mandatory $100 each special assessment to the Federal Crime Victims Fund. Restitution may also be ordered. The charge is merely an accusation, and Clark and Lopez are presumed innocent until and unless proven guilty.
The investigation is being conducted by the U.S. Environmental Protection Agency and Assistant U.S. Attorney Meghan N. Dilges is prosecuting the case.
Clark and Lopez were released on bond pending trial which has been set for October 15, 2013.Boise Man Sentenced for Producing and Distributing Child PornographyRead the Press Release
Advertised 3-Year-Old Child for Prostitution on Craigslist
BOISE – U.S. Attorney Wendy J. Olson announced that Jason Lloyd Schaber, 40, of Boise, Idaho, was sentenced today in United States District Court to 30 years in prison on count one and 10 years on count two, to run concurrently, followed by lifetime supervised release. Schaber pleaded guilty in May 2013 to sexual exploitation of children by producing and distributing child pornography between 2010 and 2012. U.S. District Judge Edward J. Lodge also ordered Schaber to forfeit the personal property used in the offenses.
According to the plea agreement, the investigation of Schaber's activities began in April 2012 after Boise police were contacted by a person who saw a Craigslist advertisement offering a young child for sex. Investigators worked with Craigslist and Google and traced the ad back to Schaber in mid-May, according to reports. Boise police investigators obtained a warrant to search Schaber's home, which they executed on May 31, 2012. Schaber has been in custody since his arrest.
The plea agreement states that Schaber produced 26 sexually explicit images and videos of female minor(s) who were less than six years of age, and distributed child pornography that he had produced himself, or that he had obtained from the Internet, via email to at least 16 other individuals. The images and videos depicted actual and simulated intercourse, oral sex and the lascivious exhibition of the genitals and pubic area of the minors, according to the plea agreement.
“Mr. Schaber well deserves the lengthy sentence the Court imposed,” said Olson. “His horrific conduct victimized an innocent child. This office, along with its federal and state law enforcement and prosecuting partners, will continue to act cooperatively and aggressively to bring child sexual predators to justice. I applaud the quick and efficient work of the ICAC investigators in this case. We hope for the ongoing recovery of the victims in this case.”
Members of the Idaho Internet Crimes Against Children Task Force investigated the case, including investigators from the Boise Police Department, the Ada County Sheriff's Department, and the Federal Bureau of Investigation, with technical assistance provided by the U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the High Technology Investigative Unit at the U.S. Department of Justice, Child Exploitation and Obscenity Section in Washington, D.C., with cooperation from the Ada County Prosecuting Attorney's Office.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, visit www.usdoj.gov/psc. For more information about internet safety education, visit www.usdoj.gov/psc and click on the tab “resources.” For more information about registered sex offenders in Idaho, visit www.isp.idaho.gov/sor_id.
Baraga Man Sentenced in KBIC Beating and Hannahville Sexual AssaultRead the Press Release
MARQUETTE, MICHIGAN – Joel Thomas Smith, 24, of Baraga, Michigan, was sentenced to 71 months in federal prison for assault resulting in serious bodily injury and sexual abuse of a minor, U.S. Attorney Patrick A. Miles, Jr. announced today. In addition to the prison term, U.S. District Judge R. Allan Edgar ordered Smith to serve eight years of supervised release following his release from prison, and to pay a $200 special assessment. Smith, who was on federal supervised release from a 2009 conviction for assault with a dangerous weapon, was sentenced to an additional18 months in federal prison for the violation of his supervised release.
On May 13, 2013, Smith pleaded guilty to a federal indictment charging him with assault resulting in serious bodily injury and a felony information charging him with sexual abuse of a minor. The assault charge arose from an incident at a residence in Baraga, Michigan, on the Keweenaw Bay Indian Community reservation on February 11, 2013. During this incident, Smith assaulted his live-together girlfriend, fracturing one of her ribs. The sexual assault charge stemmed from an incident in summer 2007 at a residence located on the Hannahville Indian Community reservation. During this incident, Smith, who was 19 at the time, engaged in sexual intercourse with a 13 year-old girl. This incident first came to light in May 2011, when the victim first disclosed what had happened to her.
The Keweenaw Bay Indian Community Tribal Police, the Hannahville Indian Community Tribal Police and the FBI investigated the cases. Assistant U.S. Attorney Paul D. Lochner prosecuted the cases.
END
Appeals Court Affirms Life Sentence for Drug Conspiracy LeaderRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that the Third Circuit Court of Appeals today affirmed the sentence of life imprisonment imposed by Senior U.S. District Court Judge Edwin M. Kosik on Charles Sechler for his participation in an eight-year drug trafficking conspiracy that was responsible for distributing large amounts of methamphetamine and marijuana in Northeastern and Central Pennsylvania between 1995 and 2003.
According to United States Attorney Peter J. Smith, Sechler, age 44, who resided in the Montoursville area during the time of the conspiracy, was convicted by a jury after a six-day trial in July 2007. The jury returned guilty verdicts on all eleven drug-related charges against Sechler and his co-defendant Steven Fausnaught. Fausnaught was sentenced to 24 years in prison and his sentence was previously affirmed on appeal.
Sechler was indicted by a federal grand jury on August 12, 2003, as a result of an investigation by the Federal Bureau of Investigation, the Pennsylvania State Police, Bloomsburg Police, the Columbia County Drug Task Force, and the Pennsylvania Attorney General’s Office.
After his conviction in the case, Sechler was released on bail and fled to Canada, was subsequently apprehended by Canadian authorities in cooperation with the U.S. Marshals Service, then fought extradition by claiming he was a “political prisoner.” He was returned to the United States and sentenced on July 14, 2011.
In upholding the life sentence, the Third Circuit Court noted that Sechler was responsible for distributing at least 15 kilograms of methamphetamine and more than 100 kilograms of marijuana, possessed firearms in connection with the conspiracy, and was an organizer and leader of the multi-year drug trafficking operation. The Court rejected Sechler’s argument that the sentence of life imprisonment violated the Eighth Amendment’s prohibition against cruel and unusual punishments, reasoning that the district court’s sentence was not “grossly disproportionate when balanced against the gravity of his offenses.”
Assistant United States Attorney Francis P. Sempa prosecuted the case and handled the appeal for the government.
Alien Trafficker Gets Enhanced Sentence for Sexual AssaultRead the Press Release
LAREDO, Texas – Juan Zavala Gutierrez, 22, a resident of Mexico, has been sentenced to five years in federal prison for transporting undocumented aliens for private financial gain, United States Attorney Kenneth Magidson announced today. Gutierrez pleaded guilty June 10, 2013.
In April 2013, Gutierrez, himself an illegal alien, guided a group of 11 illegal aliens from Mexico, crossing through the Rio Grande River into the United States. All the illegal aliens hid in the brush and Gutierrez sexually assaulted them. He ordered the aliens to undress and forced himself on the females, taking advantage of their vulnerability. Gutierrez was admittedly intoxicated and under the influence of drugs.
Today, U.S. District Judge Marina Garcia Marmolejo handed Gutierrez a sentence of 60 months in federal prison. In handing down the sentence, the court noted that alien smugglers cannot prey on and violate the transported women. Judge Marmolejo, in exercising an upward departure from the U.S. Sentencing guidelines, enhanced the defendant’s punishment to reflect his crude actions.
The case was investigated by the United States Border Patrol and Homeland Service Investigations and prosecuted by Assistant U.S. Attorney Sanjeev Bhasker.
Monday 12 August 2013
West Hollywood Doctor Pleads Guilty to Distributing Painkillers After Being Ordered to Stop Writing Prescriptions by DEARead the Press Release
LOS ANGELES – A West Hollywood doctor pleaded guilty this afternoon to a federal drug trafficking charge for writing hundreds of prescriptions for various controlled substances after a federal order revoked his authority to prescribe drugs.
James William Eisenberg, 72, who resides in the Venice district of Los Angeles, pleaded guilty to one count distribution of hydrocodone, a drug best known by the brand names Vicodin and Norco.
Eisenberg wrote the prescriptions while he worked out of several medical offices in West Hollywood, including a Santa Monica Boulevard storefront he called Pacific Support Services. Eisenberg also issued “medical marijuana” recommendations from these West Hollywood locations. He has been prohibited from issuing such recommendations and from practicing medicine at medical marijuana clinics as a condition of his release on bail.
In order to legally prescribe controlled substances such as hydrocodone, physicians must be registered with the United States Attorney General and have a valid DEA registration number. On December 14, 2011, a DEA administrative judge determined that Eisenberg acted as a “drug dealer” and suspended his registration number. The DEA issued an order permanently revoking Eisenberg’s registration on July 24, 2012.
The orders issued by the administrative judge were based on findings that Eisenberg, who at the time was working out of a “medical marijuana” club in Arizona, “lacked a legitimate medical purpose and acted outside of the usual course of professional practice” when he wrote prescriptions for oxycodone (the generic form of a drug often best known as the brand-name OxyContin) and Xanax in exchange for $150 cash payments. The DEA judge also found that Eisenberg wrote “medical marijuana” recommendations to undercover officers posing as patients, and that Eisenberg prescribed OxyContin to one of the undercover agents “before [Eisenberg] had even performed a physical examination.”
DEA investigators later learned that Eisenberg continued to prescribe controlled substances, including hydrocodone, in violation of the DEA’s orders. A review of a California Department of Justice database that can be used to track prescriptions showed that, following the suspension of Eisenberg’s registration number, patients filled more than 1,700 of his prescriptions for controlled substances, including more than 1,200 prescriptions for hydrocodone. As charged in the indictment, Eisenberg wrote one of those prescriptions on December 27, 2011, less than two weeks after his registration number was suspended.
DEA investigators executed a federal search warrant on one of Eisenberg’s West Hollywood offices on February 19, 2013. The affidavit in support of the search warrant outlines evidence, including surveillance and undercover operations, that Eisenberg continued to write prescriptions for controlled substances in violation of the DEA’s revocation order. The evidence included an operation in which an undercover agent, posing as a patient, obtained a prescription from Eisenberg for hydrocodone and alprazolam (the generic form of a drug best known as Xanax).
As a result of today’s guilty plea, Eisenberg faces a statutory maximum sentence of 10 years in federal prison when he is sentenced by United States District Judge Michael W. Fitzgerald on December 9, 2013.
The investigation into Eisenberg was conducted by the Drug Enforcement Administration.
Release No. 13-104
U.s. Attorney Announces Charges Against Indianapolis Man for Threatening Federal JudgeRead the Press Release
INDIANAPOLIS – Joseph H. Hogsett, the United States Attorney, announced today that federal charges have been filed against Delenore Lowell McTarsney, age 53, of Speedway. According to a criminal complaint unsealed this afternoon, McTarsney is alleged to threatened the life of a federal judge and other local officials in a series of comments posted online.
“We in the law enforcement community are committed to doing all within our power to ensure the safety of all those who work in or around our criminal justice system,” Hogsett said. “Due to the very real threat posed by violence and terrorism, the U.S. Attorney’s Office takes seriously all threats – whether they are made online or offline.”
The criminal complaint alleges that in June 2012, McTarsney began posting hundreds of comments in response to a YouTube video submitted by a local attorney. These comments were generally concerned with the defendant’s belief that he was the victim of a conspiracy that involved the local attorney as well as a number of other individuals associated with the Indianapolis legal community, including a current federal bankruptcy judge.
These comments were allegedly posted throughout 2012, and continued into early 2013. In January 2013, a number of these comments allegedly began referencing specific acts of violence that the defendant stated he would undertake against those he believed had conspired against him. These threats included descriptions of violent acts against the local attorney, as well as the federal judge, whose home address was included in these online threats.
The defendant’s alleged actions were investigated by agents with the Federal Bureau of Investigation, as well as representatives of the U.S. Marshals service. On August 10, 2013, the defendant was arrested at his home and charged with making online threats.
According to Assistant U.S. Attorneys Sharon M. Jackson, who is prosecuting the case for the government, McTarsney faces up to five years in prison if he is convicted, as well as fines and federally-supervised release at the end of his prison term.
A criminal complaint is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
U.S. Attorney's Office Indicts Burke Co. Drug and Alcohol Treatment Center, Its Owner and Two Employees on False Claims Act Conspiracy and Bribery ChargesRead the Press Release
U.S. Probation Office Contracted the Facility to Conduct Drug Testing and Counseling Services to Federal Probationers and Parolees
ASHEVILLE, N.C. – A Burke County drug and alcohol treatment center, its owner and two of its employees have been indicted on False Claims Act conspiracy and bribery charges announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The six-count indictment was returned by a federal grand jury sitting in Asheville on August 6, 2013.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Gregory A. Forest, Chief of the United States Probation Office for the Western District of North Carolina join U.S. Attorney Tompkins in making today’s announcement.
Charged in the federal criminal indictment are Clean on Green, PLLC (“Clean on Green”), based out of Morganton and Lenoir, N.C.; Lewis R. Dorman, III, 62, of Morganton and owner of Clean on Green; Levi J. Michaels, 41, also of Morganton; and Lerry Ratley, 60, of Rock Hill, S.C. All defendants are charged with one count of conspiracy to violate the False Claims Act. Dorman and Ratley are charged with one count of bribery of a public official and Michaels with four such counts. Dorman and Clean on Green also face one count of making false, fictitious or fraudulent claims.
According to the indictment, Clean on Green was a facility providing alcohol and drug treatment services in Morganton. Dorman was the owner and operator of Clean on Green, and in that capacity Dorman signed contracts with the U.S. Probation Office for the Western District of North Carolina to provide counseling services and to administer the collection and processing of urinalysis samples of individuals on federal pretrial release, supervised release, parole, or probation. According to the indictment, Michaels was employed by Clean on Green, and was responsible for managing the office, scheduling appointments, processing persons for substance abuse assessments, administering and monitoring urinalysis screening for persons on federal probation and scheduling individual drug and alcohol abuse counseling sessions. Also according to the indictment, Ratley worked at Clean on Green and his primary duty was to conduct group counseling sessions.
The indictment alleges that under its contract with the U.S. Probation Office, Clean on Green was required to collect and test urine samples from probationers or parolees for the presence of controlled substances and to provide the results to the U.S. Probation Office. The U.S. Probation office relied upon these results to inform the U.S. District Court or the Parole Commission as to whether a probationer or parolee was using controlled substances, which would be a violation of the conditions of release or parole. According to the indictment, the contract between Clean on Green and the U.S. Probation Office specified a urine collection protocol to ensure that the test results were accurate and reliable.
The indictment alleges that between 2010 and 2012, Dorman and Michaels did not follow the specific protocol for the urinalysis collection and instead allowed individuals to fraudulently submit substitute urine samples to avoid the detection of a controlled substance. According to the indictment, on multiple occasions Michaels accepted $40 to $50 as cash payments in exchange for allowing individuals under federal supervision to bypass proper urine collection protocols. On at least occasion, according to the indictment, Dorman also accepted a cash payment.
According to the indictment, Clean on Green also had a contract with U.S. Probation to provide individual and group counseling sessions to persons under federal supervision. The procedure required that such persons sign in and out of the counseling sessions and a Clean on Green employee was responsible for verifying the accuracy of the attendance records. From 2010 and continuing until around July of 2012, according to the indictment, Doman and Ratley repeatedly allowed individuals supervised by U.S. Probation to claim attendance at counseling sessions when they did not attend the required sessions. The indictment alleges that, on several occasions, Ratley accepted cash payments from federally supervised persons for allowing them to skip the required counseling sessions. The indictment alleges that on one such occasion, a supervised individual scheduled to attend a three-hour group counseling session only stayed at the facility approximately three minutes and, in return, paid Ratley $40 in cash to falsify the sign in/out forms. The indictment alleges that Dorman submitted these false forms to the U.S. Probation Office along with Clean on Green invoices for those services provided.
U.S. Attorney Tompkins stated, “The defendants’ brazen conduct and utter disregard of the trust bestowed upon them compromised the integrity of the legal system. This kind of conduct cannot be allowed to go on unchecked.”
“These individuals allowed countless criminals to cheat the judicial system in order to line their own pockets. Now they will be held accountable for taking money from those offenders unwilling to follow the conditions of their release,” said John A. Strong, Special Agent in Charge, FBI Charlotte.
“The U.S. Probation Office would like to thank U.S. Attorney Tompkins, the U.S. Attorney’s Office and the FBI for their quick action in this case. The fraud associated in this case had the potential to impact public safety and the safety of U.S. Probation Officers in the Western District of North Carolina. This serves and an outstanding example of federal agencies working together to protect the public and their interests,” said Chief U.S. Probation officer Gregory A. Forest.
The False Claims conspiracy charge carries a maximum of 10 years in prison and a $250,000 fine. The false, fictitious or fraudulent claims charge carries a maximum of five years in prison and a $250,000 fine, and each bribery of public official charge carries a maximum of 15 years in prison and a $250,000 fine.
Dorman and Michaels were arrested on Friday, August 9, 2013, and have been released on bond. Ratley was arrested earlier today. His initial appearance will be scheduled by the Court.
The charges contained in the indictment are allegations. They defendants are presumed innocent unless and until they proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the FBI in cooperation with the U.S. Probation Office. The prosecution is handled by Assistant U.S. Attorney Richard Lee Edwards of the U.S. Attorney’s Office in Asheville.
U.S. Attorney General Announces "Smart on Crime" InitiativesRead the Press Release
Memphis, TN – U.S. Attorney General Eric H. Holder, Jr. today introduced a new initiative designed to reform the criminal justice system for the 21st century, announced U.S. Attorney Edward L. Stanton III.
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“By targeting the most serious offenses, prosecuting the most dangerous criminals, directing assistance to crime ‘hot spots,’ and pursuing new ways to promote public safety, deterrence, efficiency, and fairness – we can become both smarter and tougher on crime,” said Attorney General Holder in remarks to the American Bar Association’s Annual Convention in San Francisco.
“Attorney General Holder’s ‘Smart on Crime’ initiative provides a measured approach to modernizing the criminal justice system and offers a sensible alternative to the one-size-fits-all policy proven to be flawed and ineffective,” said U.S. Attorney Stanton. “The U.S. Attorney’s Office, court personnel, and our law enforcement partners in the Western District of Tennessee have already been working to implement many of the principles outlined in the initiative, such as launching re-entry and drug courts and using diversion as a resource when warranted for non-violent offenders. This bold approach will allow federal prosecutors to not only be more efficient and effective at deterring crime and reducing recidivism, but also more consistent with our nation’s commitment to treating all Americans as equal under the law.”
“Smart on Crime” is a series of directives to U.S. Attorney Offices across the nation designed to redirect efforts and assets toward more measured, individualized examinations of both the crime and the criminal. The five guiding principles of “Smart on Crime” are:
I. PRIORITIZE PROSECUTIONS TO FOCUS ON THE MOST SERIOUS CASES.
Given scarce resources, federal law enforcement efforts should focus on the most serious cases that implicate clear, substantial federal interests. Currently, the Department’s priorities are:
1. Protecting Americans from national security threats
2. Protecting Americans from violent crime
3. Protecting Americans from financial fraud
4. Protecting the most vulnerable members of society
Based on these federal priorities, the Attorney General is, for the first time, requiring the development of district-specific guidelines for determining when federal prosecutions should be brought. This necessarily will mean focusing resources on fewer but the most significant cases, as opposed to fixating on the sheer volume of cases.
II. REFORM SENTENCING TO ELIMINATE UNFAIR DISPARITIES AND REDUCE OVERBURDENED PRISONS.
Prisons are over-capacity, and the rising cost of maintaining them imposes a heavy burden on taxpayers and communities. At the state level, costs for running corrections facilities have roughly tripled in the last three decades, making it the second-fastest rising expense after Medicaid. At the federal level, the Bureau of Prisons comprises one-third of the Justice Department’s budget.
This requires a top-to-bottom look at our system of incarceration. For many non-violent, low-level offenses, prison may not be the most sensible method of punishment. But even for those defendants who do require incarceration, it is important to ensure a sentence length commensurate with the crime committed. Our policies must also seek to eliminate unfair sentencing disparities.
III. PURSUE ALTERNATIVES TO INCARCERATION FOR LOW-LEVEL, NON-VIOLENT CRIMES.
Incarceration is not the answer in every criminal case. Across the nation, no fewer than 17 states have shifted resources away from prison construction in favor of treatment and supervision as a better means of reducing recidivism.
Federal law enforcement should encourage this approach. In appropriate instances involving non-violent offenses, prosecutors ought to consider alternatives to incarceration, such as drug courts, specialty courts, or other diversion programs. Accordingly, the Department will issue a “best practices” memorandum to U.S. Attorney Offices encouraging more widespread adoption of these diversion policies when appropriate.
IV. IMPROVE REENTRY TO CURB REPEAT OFFENSES AND RE-VICTIMIZATION.
After prison, recidivism rates are high. A reduction in the recidivism rate of even one or two percentage points could create long-lasting benefits for formerly incarcerated individuals and their communities.
To lead these efforts on a local level, the U.S. Attorney in the Western District of Tennessee will designate a prevention and reentry coordinator to focus on prevention and reentry efforts. As part of this enhanced commitment, Assistant U.S. Attorneys will be newly encouraged to devote time to reentry issues in addition to casework.
V. ‘SURGE’ RESOURCES TO VIOLENCE PREVENTION AND PROTECTING MOST VULNERABLE POPULATIONS.
Even as crime levels have fallen, many of our communities in the Western District of Tennessee still suffer from alarming rates of homicides, shootings and aggravated assaults. Confronting this problem and its root causes with a holistic approach remains a priority for the Department of Justice. By exploring cost-effective reforms to our prison system, it will allow law enforcement to redirect scarce federal resources towards the priority of violence prevention.
Under a new memorandum issued by the Deputy Attorney General, U.S. Attorneys will update anti-violence strategies that are specific to their district. With multiple federal, state, and local agencies involved in the fight against violent crime, strong relationships and robust information sharing are critical to achieve common goals and to avoid the unnecessary duplication of competing resources and efforts.Two More Romanian Nationals Plead Guilty to Immigration FraudRead the Press Release
BOISE – Victor Raul Fenesan, 31, and Claudia Luminita Beian, 33, both of Boise, Idaho, pleaded guilty today in United States District Court to federal immigration fraud charges based on their fraudulent marriages to United States citizens, U.S. Attorney Wendy J. Olson announced. The Romanian nationals were charged in two separate federal indictments. Fenesan pleaded guilty to one count of obtaining a United States Visa by fraud; Beian pleaded guilty to Unlawful Procurement of Citizenship.
According to plea agreements filed in the cases, Fenesan and Beian each admitted that, in 2004, they both married U.S. citizens for the sole purpose of obtaining immigration benefits. Neither Fenesan nor Beian resided with their spouses as husband and wife, but rather continued to reside with each other. In April 2005, United States Citizenship and Immigration Services (USCIS) granted both Fenesan and Beian lawful permanent resident Visas, which they would not have received had they disclosed the fraudulent nature of their marriages. In February 2010, Beian obtained naturalization as a United States citizen as a result of her fraudulent marriage. As part of her plea agreement, Beian stipulated to an order revoking her citizenship. Fenesan did not attempt to obtain U.S. citizenship.
The defendants each face up to ten years in prison, a maximum fine of $250,000, and up to three years of supervised release, in addition to administrative removal proceedings.
Fenesan and Beian are scheduled to be sentenced on October 21, 2013, before U.S. District Judge Edward J. Lodge at the federal courthouse in Boise.
The cases were investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
Two Members of International Narcotics Trafficking Conspiracy Sentenced in Manhattan Federal CourtRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that MARTIN RAOUF BOURAIMA and CORNEILLE DATO were sentenced today in Manhattan federal court for participating in a conspiracy to import narcotics into the United States. Both BOURAIMA and DATO were sentenced to 50 months in prison. BOURAIMA and DATO were arrested in Monrovia, Liberia, in coordination with Liberian authorities in February 2011, and thereafter transferred to the custody of the United States. BOURAIMA pled guilty in November 2012, and DATO pled guilty in January 2013, both before U.S. District Judge Naomi Reice Buchwald, who also imposed today’s sentences.
Manhattan U.S. Attorney Preet Bharara stated: “Martin Raouf Bouraima and Corneille Dato readily agreed to transport heroin and sell cocaine which they understood would be for the benefit of the Taliban, and which they understood would reach the streets of the United States. With their sentences today, Bouraima and Dato become the latest defendants to be punished for their roles in this narco-trafficking conspiracy.”
According to the Indictment and Complaint previously unsealed in this case:
Beginning in the summer of 2010, BOURAIMA, DATO, and some of their co-defendants (the “co-defendants”) communicated with confidential sources (“CSs”) working with the U.S. Drug Enforcement Administration (“DEA”), who purported to represent the Taliban. The communications occurred by telephone, via e-mail, and in a series of audio-recorded and videotaped meetings over several months.
During meetings with the CSs beginning in June 2010, in West Africa, BOURAIMA, DATO, and their co-defendants agreed to receive and store multi-ton shipments of Taliban-owned heroin. Thereafter, BOURAIMA, DATO, and their co-defendants agreed to transport the heroin within West Africa, from where they understood portions of it would be sent on a commercial airplane to the United States to be sold for the financial benefit of the Taliban. During these meetings, BOURAIMA, DATO, and their co-defendants also agreed to sell multi-kilogram quantities of cocaine to the Taliban that they could then sell at a profit. As with the heroin, BOURAIMA, DATO, and their co-defendants understood that portions of the cocaine sold to the CSs would be transported to the United States by commercial airline and then sold in this country.
In addition to the prison terms, BOURAIMA, 42, and DATO, 56, both citizens of Benin, were each ordered to pay a $200 special assessment.
Last week, DATO and BOURAIMA’s co-defendant, Francis Sourou Ahissou, was sentenced by Judge Buchwald to 66 months in prison for his role in the conspiracy. Co-defendants Oded Orbach and Alwar Pouryan, who were convicted after trial in April 2013 of conspiring to provide material support to the Taliban and conspiring to acquire anti-aircraft missiles, are scheduled to be sentenced by Judge Buchwald on September 4, 2013 at 10:30 a.m.
The charges against BOURAIMA and DATO were the result of the coordinated efforts of the U.S. Attorney’s Office for the Southern District of New York and the DEA’s Special Operations Division, as well as the DEA Lagos Country Office, the DEA Warsaw Country Office, the DEA Ghana Country Office, the DEA Athens Country Office, and the DEA SECI (South East European Cooperative Initiative Regional Center for Combating Transborder Crime). Mr. Bharara praised the outstanding investigative work of the DEA and thanked the U.S. Department of Justice Office of International Affairs and National Security Division, the U.S. Department of State, and the U.S. Immigration and Customs Enforcement for their assistance. Mr. Bharara also thanked the Government of Liberia for its cooperation.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Christian Everdell, Aimee Hector, and Glen Kopp are in charge of the prosecution.
St. Paul Man Pleads Guilty to Possessing .357 Revolver and MarijuanaRead the Press Release
MINNEAPOLIS— Earlier today in federal court, a 27-year-old St. Paul man pleaded guilty to carrying a .357-caliber revolver during and in relation to a drug-trafficking crime. Leroy Uriah Spivey, who was indicted on April 15, 2013, entered his plea before Chief United States District Judge Michael J. Davis.
In his plea agreement, Spivey admitted that on December 8, 2012, he got out of a taxi near an ongoing police investigation at a residence on George Street West in St. Paul, Minnesota. Spivey tried to walk away from investigating police officers while he admittedly tried to pull the .357 revolver from his waistband. Spivey then slid the firearm beneath a nearby car when finally complied with the officers’ command to stop and get down on the ground. Police recovered the weapon and found a large bag containing approximately 40 grams of marijuana on Spivey’s person. Spivey admittedly intended to distribute the bag of marijuana, which included 27 smaller bags of distribution amounts of marijuana. In his plea agreement, Spivey admitted that he possessed the firearm for security and protection during his drug distribution efforts.For his crime, Spivey faces a potential maximum penalty of life in prison, with a mandatory minimum penalty of five years. Judge Davis will determine his sentence at a future hearing, yet to be scheduled.
This case is the result of an investigation by the St. Paul Police Department and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Allen A. Slaughter.St. Charles Man Pleads Guilty to Federal Drug and Weapons ChargesRead the Press Release
St. Louis, MO –EHRICK PREIS admitted with his plea in court documents that on six occasions, between December 2012 and March 2013, he distributed at total of 858 units of LSD to undercover law enforcement personnel in exchange for more than $6,000 in St. Charles County. During the transactions, Preis made statements indicating he knew the substance was intended for human consumption, including statements that the substance was "LSA, 2CI and LSD," a "beefed up version of LSD." A subsequent search of Preis’s residence following the sixth drug purchase revealed two improvised explosive devices (IEDs), pipe bomb type devices/destructive devices, which he admitted creating.
Preis, St. Charles, MO, pled guilty before United States District Judge Carol E. Jackson to one felony count of distribution of a controlled substance and one felony count of possession of an unregistered destructive device. Sentencing has been set for November 14, 2013.
The drug charge carries a maximum penalty of 20 years in prison and/or fines up to $250,000; the weapons charge carries a maximum of ten years prison and/or fines up to $10,000. In determining the actual sentences, a Judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by the St. Louis County Multi-Jurisdictional Drug Task Force, the Drug Enforcement Administration and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant United States Attorney Michael Reilly is handling the case for the U.S. Attorney's Office.Serial Bank Robber Pleads GuiltyRead the Press Release
PHILADELPHIA - Tarik Hooks, 35, of Philadelphia, pleaded guilty today to robbing six banks and attempting to rob three others between February 2, 2013, and February 21, 2013. Hooks admitted that: on February 2, 2013, he robbed the Citizen’s Bank branch located inside the Acme supermarket at 121 East City Avenue, in Bala Cynwyd, PA; on February 8, 2013, he robbed the Wells Fargo Bank branch at 65 West Baltimore Avenue in Lansdowne, PA; on February 12, 2013, he robbed the TD Bank at 401 West Lancaster Avenue in Haverford, PA; on February 14, 2013, Hooks robbed the Sovereign Bank at 1 Belmont Avenue in Bala Cynwyd, PA; on February 17, 2013, he robbed the TD Bank at 5501 Ridge Avenue in Philadelphia, PA; and on February 21, 2013, he robbed the TD Bank at 2200 Garrett Road in Drexel Hill, PA.
Hooks also pleaded guilty to unsuccessful robberies at: the Citizen’s Bank branch inside the Giant supermarket, at 543 North Oak Avenue in Clifton Heights, PA, on February 7, 2013; the Citizen’s Bank branch, at 543 North Oak Avenue in Clifton Heights, PA, on February 9, 2013; the TD Bank branch, at 5501 Ridge Avenue, in Philadelphia, PA, on February 14, 2013.
In addition to the nine counts of the indictment, the defendant also admitted today to robbing a
Citizen’s Bank located inside an Acme market at 2084 Naamans Road, in Wilmington, Delaware, on February 10, 2013, at approximately 11:20 a.m. The defendant has agreed that, for purposes of calculating his Sentencing Guideline range and restitution, the February 10 bank robbery shall be treated as if the defendant had been convicted of the offense.Hooks faces a maximum possible sentence of 180 years in prison, a fine of up to $2.25 million, and $900 in special assessments when sentenced on November 12, 2013.
The case was investigated by agents from the Federal Bureau of Investigation, the Philadelphia Police Department, the Lower Merion Township Police Department, Landsdowne Police Department, Aldan Police Department and is being prosecuted by Special Assistant United States Attorney Pedro de la Torre.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Salesman Admits Role in Bribes-For-Test-Referrals Scheme Involving New Jersey Clinical LaboratoryRead the Press Release
NEWARK, N.J. – A Monmouth County, N.J. man pleaded guilty today to his role in a long-running bribes-for-test-referrals scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, N.J., its president, and numerous associates, U.S. Attorney Paul J. Fishman announced.
Len Rubinstein, 42, of Holmdel, N.J., pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with conspiring to violate the Anti-Kickback Statute and the Travel Act, and with money laundering, and making cash payments of thousands of dollars to doctors on behalf of BLS.
Rubinstein is the 14th individual to plead guilty in connection with BLS’s sophisticated bribery scheme, which its organizers have admitted involved the payment of millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.
According to documents filed in this and other cases and statements made in court:
On April 9, 2013, federal agents arrested David Nicoll, 39, of Mountain Lakes, N.J.; Scott Nicoll, 32, of Wayne, N.J., a senior BLS employee and David Nicoll’s brother; and Craig Nordman, 34, of Whippany, N.J., a BLS employee and the CEO of Advantech Sales LLC – one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Santangelo. In June, David and Scott Nicoll, Nordman, and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo pleaded guilty last month to charges relating to his role in the scheme. Ten employees or associates of BLS, and four physicians have pleaded guilty to their roles in the bribery scheme.
From May 2012 through April 2013, Rubinstein agreed with the Nicolls and others to pay doctors to refer patients to BLS for testing of blood specimens. He paid cash bribes to doctors as part of the conspiracy. Rubinstein admitted he used Delta Consulting Group LLC – an entity he controlled – to hide the money he received from BLS and used to make bribe payments to doctors.
Rubinstein faces a maximum potential penalty of five years in prison and a $250,000 fine on the bribery conspiracy charge and 20 years in prison and a $500,000 fine on the money laundering charge, or twice the gross gain or loss from the offense. Sentencing is scheduled for Nov. 12, 2013. He has also agreed to forfeit $250,000. The investigation has so far recovered more than $3 million through forfeiture.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Tom O’Donnell; IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, and the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Joseph Minish, Senior Litigation Counsel Andrew Leven, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.
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Defense counsel: Charles Uliano Esq., West Long Branch, N.J.
Rubinstein Information
Reva, Va., Man Pleads Guilty to Stalking ChargesRead the Press Release
CHARLOTTESVILLE, VIRGINIA – A 61-year-old former employee of the Library of Congress pled guilty this morning in the United States District Court for the Western District of Virginia in Charlottesville to charges involving stalking and identification fraud.
Kenneth Edward Kuban, 61, of Reva., Va., was indicted in April 2013 on a variety of stalking-related charges. This morning in District Court, Kuban pled guilty to one count of stalking in violation of a protective order, one count of identification fraud and one count of violating a protective order within the special maritime and territorial jurisdiction of the United States.
“Mr. Kuban used his government computer and the internet to harass and intimidate the victim in this case,” United States Attorney Timothy J. Heaphy said today. “While his actions caused the victim months of emotional trauma, they could have resulted in much more serious harm. Fortunately, law enforcement acted swiftly and put an end to Mr. Kuban’s horrific behavior before it resulted in violence. This case shows both the dangerous potential of web portals like the one Mr. Kuban used to stalk his victim, and our commitment to vigorously pursue actual or threatened violence against women in whatever form it takes.”
Today in court, Kuban admitted to posing online as the victim and using the website Craigslist to post advertisements and lure third parties to the victim’s home in anticipation of having direct contact with the victim for the purpose of having sexual encounters. The defendant admitted to posting more than 165 advertisements on the website between January and March of 2013. Many of these advertisements contained the victim’s address and/or photograph. Fifty-four of those advertisements were posted from Kuban’s personal computer while 111 were posted from his government-issued computer at the Library of Congress, his place of employment.
Between January and March 2013 more than 100 men appeared at or around the victim’s home seeking sexual encounters with her based upon the ads posted by Kuban. In one instance, a man arrived at the victim’s home with a crowbar in order to pry open an electronic gate the victim had installed to protect herself. The man brought the crowbar at the urging of Kuban, posing as the victim. The threat to the victim’s safety became so great that local law enforcement felt it necessary to post deputies at her home to deter trespassing and harassment.
At a sentencing hearing scheduled for November 15, 2013, Kuban faces a maximum possible penalty of up to 15 years in prison.
The investigation of the case was conducted by the Library of Congress-Office of the Inspector General. United States Attorney Timothy J. Heaphy and Assistant United States Attorney Ronald Huber are prosecuting the case for the United States.
Real Estate Developer and Escrow Agent Sentenced to Prison for Mortgage FraudRead the Press Release
TUCSON, Ariz. – On Aug. 9, 2013, Walter Scott Fruit, 54 and Sandra Jackson, 48, both from Tucson, Ariz., were sentenced to federal prison by U.S. District Court Judge Cindy K. Jorgenson for their role in a mortgage fraud scheme. Fruit was sentenced to 30 months in prison; Jackson was sentenced to six months in prison. Fruit had previously pleaded guilty on Feb. 28, 2013, to charges of conspiracy to commit bank fraud and conspiracy to commit transactional money laundering, both felonies. Jackson had previously pleaded guilty on Feb. 27, 2013, to conspiracy to commit wire fraud, also a felony.
As part of his guilty plea, Fruit, a real estate agent and real estate developer, admitted his participation in a mortgage fraud scheme to obtain various loans between July 2006 and May 2007. Fruit and another co-conspirator, also a real estate developer, purchased several properties using various business entities with which they were associated. Thereafter, Fruit and his co-conspirator sold these properties to straw buyers. Fruit also admitted that he fraudulently inflated the true sales price of the properties.
As part of the loan approval process, Fruit knowingly caused to be submitted documents containing false statements representing that the borrowers would provide the down payment or cash to close the real estate transactions. Portions of the fraudulently obtained loan proceeds were wired or deposited into bank accounts controlled by Fruit or another co-conspirator.
Jackson, a former escrow agent, admitted as part of her guilty plea that she obtained three properties through fraudulently obtained loans and that she knew that documents provided to the lenders on her behalf relating to these properties contained one or more material false representations.
The properties obtained as result of this mortgage fraud scheme went into foreclosure resulting in significant losses to the lenders. As part of Fruit’s sentence, he was ordered to pay a restitution judgment totaling more than $2.5 million dollars. Jackson was ordered to pay approximately $480,000.
The investigation in this case was conducted by the Internal Revenue Service, Criminal Investigation and the Federal Bureau of Investigation. The prosecution was handled by Jonathan B. Granoff, Assistant U.S. Attorney, District of Arizona, Tucson.
CASE NUMBER: CR-11-3046-TUC-CKJ
RELEASE NUMBER: 2013-063_Fruit/JacksonFor more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az
Philadelphia Man Charged with Duping Gold BuyersRead the Press Release
Hashim Sharif, 39, of Philadelphia, PA was charged today by Information with one count of wire fraud in connection with a scheme that, collectively, defrauded victims out of approximately $1 million, announced United States Attorney Zane David Memeger.
Sharif, who also went by the name “Adam Ford,” operated a website (phoniexgoldllc.com) where he advertised gold and other precious metal products for sale. After receiving money from customers Sharif did not send the purchased products and spent the money on luxury vehicles, real estate, and other goods.
If convicted the defendant faces a maximum possible sentence of 20 years imprisonment, three years supervised release, a $250,000 fine, and a $100 special assessment.
The case was investigated by the Federal Bureau of Investigation and Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney David L. Axelrod.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525New York Man Sentenced to More Than Three Years in Federal Prison for Distributing MarijuanaRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that ALEXANDER LAPPIN, 34, of Brooklyn, N.Y., was sentenced today by United States District Judge Janet Bond Arterton in New Haven to 37 months of imprisonment, followed by three years of supervised release, for distributing marijuana. Judge Arterton also ordered LAPPIN to pay a $3,600 fine and to forfeit $105,825.
According to court documents and statements made in court, this matter stems from a Drug Enforcement Administration and Connecticut State Police Statewide Narcotics Task Force investigation into a large-scale marijuana growing and trafficking organization that operated in the greater Danbury area and had ties to New York, Massachusetts, and Vermont. Between June 2011 and June 2012, the drug trafficking organization conspired to manufacture, sell, and distribute more than 1,000 kilograms of marijuana.
The investigation, which included the use of court-authorized wiretaps, revealed that LAPPIN was selling multi-kilogram quantities of marijuana to Nicolas Calamaras of New Fairfield, who distributed the drug to numerous individuals in the Danbury area.
Thirteen individuals were charged a result of the investigation, during which investigators seized marijuana, more than $520,000 in cash, 10 firearms, vehicles and real property.
LAPPIN was arrested on June 14, 2012. On that date, investigators seized more than $105,000 in cash from his Brooklyn apartment.
LAPPIN has been detained since his arrest. On May 13, 2013, he pleaded guilty to one count of conspiracy to distribute and to possess with intent to distribute more than 100 kilograms of marijuana.
Calamaras has pleaded guilty and awaits sentencing.
This matter is being investigated by the Drug Enforcement Administration and the Connecticut State Police Statewide Narcotics Task Force Northwest Office. The case is being prosecuted by Assistant United States Attorneys Tracy L. Dayton and David X. Sullivan.
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U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
[email protected]Ms-13 Member Exiled to 15 Years in Prison for Illegal Possession of A Gun and Ammunition and Illegally Re-entering the U.s.Read the Press Release
Threatened A Witness in the Hours Before His Arrest
Baltimore, Maryland - U.S. District Judge George L. Russell, III sentenced Carlos Romero, age 22, a native of El Salvador residing in Baltimore, Maryland, today to 15 years in prison, followed by one year of supervised release, for illegal reentering the United States and for being a felon in possession of a gun and ammunition.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Special Agent in Charge Steven L. Gerido of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Baltimore City State’s Attorney Gregg L. Bernstein; and Baltimore Police Commissioner Anthony W. Batts.
According to the evidence presented at Romero’s two day trial, Romero was arrested in the early morning hours on June 8, 2011, after police saw the truck in which Romero was riding spin “donuts” and squeal wheels in an intersection. After stopping the truck, police asked the driver for his license and registration. The driver opened the glove box to retrieve the registration and police saw the butt of a revolver. The officers drew their weapons and placed the driver and Romero under arrest. The driver was removed from the vehicle and handcuffed. As the officers removed Romero from the truck, they saw a bullet slip out of his right front pants pocket, and they recovered another bullet from Romero’s pocket after he was out of the truck. Officers retrieved the gun, a .38 Special loaded with .38 special caliber ammunition - the same ammunition found in Romero’s pocket. Additional ammunition was recovered from the passenger-side floorboard of the truck, along with one spent cartridge casing of the same ammunition.
Witnesses at trial testified that Romero was deported from the United States in April 2010 and had not applied for, nor received permission to return. Another witness testified that a few hours prior to his arrest, Romero had threatened to cut out the witness’ tongue for talking to police about a shooting that had occurred in March 2011, at the bar where the witness worked. The perpetrator of the March 2011 shooting was a fellow MS-13 gang member. After Romero’s threat, the witness contacted a Baltimore Police detective and identified Romero in a photo lineup as the man who had threatened him.
United States Attorney Rod J. Rosenstein commended HSI Baltimore, the ATF, Baltimore Police Department and Baltimore City State’s Attorney's Office for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Justin S. Herring, who prosecuted the case.
Monmouth County, N.J., Man Who Owned Trinidad Casino Charged with Evading Payment of More Than $1 Million in TaxesRead the Press Release
NEWARK, N.J. – A Monmouth County, N.J., man is expected to appear in federal court today on charges of tax evasion and failing to file federal personal tax returns on income derived from his ownership of a casino in Trinidad, resulting in a $1 million loss to the United States, U.S. Attorney Paul J. Fishman announced.
David Migliore, 50, of Brielle, N.J., was charged in a six-count indictment returned Aug. 1, 2013, by a federal grand jury in Newark charging him with three counts of tax evasion and three counts of willfully failing to file personal tax returns relating to tax years 2009, 2010, and 2011. Migliore surrendered this morning to special agents of IRS-Criminal Investigation and is scheduled to make his initial appearance this afternoon before U.S. Magistrate Judge Mark Falk in Newark federal court.
According to the indictment unsealed today:
Migliore owned several limited liability corporations in New Jersey, including Brielle Investment LLC; Brielle Investments & Management Co. LLC; and La Soufriere Maritime Inc. Migliore also owned Island Club casino in Trinidad and had authority over foreign bank accounts in Trinidad.
From 2009 to 2011, Migliore earned significant income from Island Club Casino, resulting in taxes due totaling more than $1 million. Migliore allegedly took steps to conceal his income and assets from the IRS, including: using unreported bank accounts in Trinidad to deposit personal income; using U.S. bank accounts in the names of his limited liability corporations and business entities to receive personal income from Island Club casino in Trinidad; using limited liability corporations and business entities to pay for personal expenses in New Jersey and elsewhere; placing personal property in the names of limited liability corporations and business entities; directing income from Island Club Casino in Trinidad to be transferred directly to vendors in the United States to pay for his personal expenses; directing employees of Island Club Casino to send his income from the casino to individuals in New Jersey via Western Union for his benefit; and directing individuals to pick up cash, which was income attributed to him, from Western Union offices in New Jersey.
Each count of tax evasion is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. Each count of failing to file tax returns is punishable by a maximum potential penalty of one year in prison and a $100,000 fine.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; special agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Andrew M. McLees in Newark; law enforcement officers from the Monmouth County Prosecutor’s Office, under the direction of Acting Monmouth County Prosecutor Christopher J. Gramiccioni; and police officers from Wall Township Police Department, under the direction of Chief Robert Brice, with the investigation leading to the indictment.
The government is represented by Assistant U.S. Attorney Zahid N. Quraishi of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
The charges and allegations contained in the indictment are merely accusations, and the defendant is considered innocent unless and until proven guilty.
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Defense counsel: Robert Weir Esq., Red Bank, N.J.Migliore Indictment
McKean County Man Admits Receiving Child PornographyRead the Press Release
ERIE, Pa. - A resident of Smethport, Pennsylvania, pleaded guilty in federal court to a charge of violating federal laws relating to the sexual exploitation of children, United States Attorney David J. Hickton announced today.
Peter Nollen Hergenrother, 63, pleaded guilty to one count before Senior United States District Judge Maurice B. Cohill, Jr.
In connection with the guilty plea, the court was advised that Hergenrother received computer images depicting minors engaging in sexually explicit conduct.
Judge Cohill scheduled sentencing for November 12, 2013 at 1:30 p.m. The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.
Pending sentencing, the court continued Hergenrother on bond.
Assistant United States Attorney Christian A. Trabold is prosecuting this case on behalf of the government.
The Pennsylvania State Police conducted the investigation that led to the prosecution of Hergenrother.
Launched in February 2006, Project Safe Childhood is a nationwide initiative designed to protect children from online exploitation and abuse. Led by the U.S. Attorneys' Offices, 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 identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Maryland General Hospital Agrees to Pay $750,000 to Resolve False Claims Act Allegations in Connection with Overbilling for Cardiac TestingRead the Press Release
Baltimore, Maryland - Maryland General Hospital (“MGH”), an acute care hospital in Baltimore, Maryland that is part of the University of Maryland Medical Systems Corporation, agreed to pay $750,000 to settle allegations under the False Claims Act. The government alleged that MGH overbilled in connection with cardiac testing and failed to repay the overpayments after senior financial managers learned of them.
The settlement was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services.
The allegations resolved in the settlement include overbilling of cardiac perfusion studies performed in MGH from March 24, 2003 through December 23, 2009. The allegations resolved also relate to MGH’s failure to repay overbilled amounts after senior financial managers learned of the overpayments. Evidence established that senior financial managers at MGH were made aware of the overpayments in February and August 2007. Federal law requires that recipients of overpayments by the Medicare system identify them and repay them. Despite its awareness of the problem MGH failed to do so until this litigation.
The allegations settled today arose from a lawsuit filed by Kenneth Creeger against MGH under the qui tam, or whistleblower, provisions of the False Claims Act. United States ex rel. Kenneth Creeger v. Maryland General Hospital, No. 1:10-cv-0281 (D. Md.). The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. As part of today’s resolution, Mr. Creeger will receive $119,728 from the settlement.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $10.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.5 billion.
The settlement was a result of an investigation by the U.S. Attorney’s Office for the District of Maryland and the Justice Department’s Civil Division, the Inspector General of Department of Health and Human Services. The case was handled by Assistant U.S. Attorney Allen Loucks.
Manhattan U.S. Attorney Announces Transfer of 18 Valuable Works of Art to Marc Dreier VictimRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States Marshals Service transferred 18 seized works of art by such well-known artists as Andy Warhol, Mark Rothko, Roy Lichtenstein, and Damien Hirst (the “Artwork”) to a victim of the fraud committed by MARC DREIER (“Victim-1”). Prior to his arrest, DREIER displayed the Artwork in his residence. DREIER gave Victim-1 a security interest in the Artwork, then valued at over $30 million, purportedly to secure the payment to Victim-1 on promissory notes that DREIER secretly forged, and that had a face value of over $110 million. Victim-1 previously transferred $1.65 million in forfeited funds to the Government, which the U.S. Attorney’s Office will seek to make available to victims of DREIER’s fraud.
Manhattan U.S. Attorney Bharara said: “Marc Dreier lived in a world of luxury and opulence built on a foundation of fraud he committed against his many victims. With this transfer of valuable artwork, one of his victims receives some payment on what Dreier owed, and another $1.65 million is forfeited to the Government, which will benefit victims of this massive fraud.”
According to public documents filed in this case in Manhattan federal court:
DREIER was the founder and managing partner of Dreier LLP, a law firm which, along with its affiliates, employed more than 270 attorneys. From approximately 2002 through December 2008, he conspired to engage in securities and wire fraud involving the sale of fake promissory notes and the embezzlement of Dreier LLP client funds. During the course of the scheme, DREIER collected more than $700 million through the sale of the fake promissory notes, only a portion of the principal and interest of which he actually paid. He also misappropriated more than $46 million in client funds. The total out-of-pocket losses to purchasers of the various fake notes, and to law firm clients whose funds were embezzled, was approximately $400 million.
DREIER, 63, of New York, New York, pled guilty in May 2009 to one count of conspiracy to commit securities and wire fraud, one count of securities fraud, five counts of wire fraud, and one count of money laundering. In July 2009, U.S. District Court Judge Jed S. Rakoff sentenced him to 20 years in prison and ordered him to pay roughly $388 million in restitution. Judge Rakoff also issued a preliminary order of forfeiture covering various assets, including the Artwork, which was seized from DREIER. The Government and Victim-1 subsequently requested that the Court enter a settlement agreement, pursuant to which Victim-1 would receive the Artwork and would pay $1.65 million to the Government. The $1.65 million payment reflected a term of Victim-1’s security agreement with DREIER, which required Victim-1 to pay $1.65 million to DREIER for the security interest in the Artwork. Following an evidentiary hearing in July 2013, Judge Rakoff so-ordered the settlement agreement between the Government and Victim-1.
The Artwork transferred to Victim-1 consists of the following works of art:
- Household gloss on canvas by Damien Hirst, “Elaidic Anhydride (hot pinks spot painting)” (2007)
- Silkscreen ink and synthetic polymer paints on canvas by Andy Warhol, “Rudolph Nureyev” (1975)
- Silkscreen ink and synthetic polymer paints on canvas by Andy Warhol, “John Lennon” (1985-86)
- Oil on canvas by Alex Katz, “Red Tulips” (1967)
- Household gloss on canvas by Damien Hirst, “2-(P-CHLOROPHENOXY)-2-METHYLPRIOPIONIC ACID (multicolored spots)” (1998)
- Polychrome aluminum by Robert Indiana, “Love” (1966/1999)
- Enamel on steel by Keith Haring, “Untitled” (1982)
- Acrylic and graphite on canvas by Agnes Martin, “Loving Love” (2000)
- Silkscreen ink and acrylic on canvas by Andy Warhol, “Jackie (Blue Jackie, 3 quarter view)” (1964)
- Silkscreen ink and acrylic on canvas by Andy Warhol, “Jackie (White Jackie)” (1964)
- Silkscreen ink and acrylic on canvas by Andy Warhol, “Jackie (Profile looking down)” (1964)
- Silkscreen ink and acrylic on canvas by Andy Warhol, “Jackie (smiling Jackie w/JFK)” (1964)
- Oil on canvas by Mark Rothko, “Untitled” (1957-63)
- Oil and magna on canvas by Roy Lichtenstein, “First Painting with Bottle” (1975)
- Screenprint by Roy Lichtenstein, “Reverie (C. 38)” (1965)
- Three dimensional archival print by John Baldessari, “Arms and Legs” (2008)
- Color photographs by Richard Prince, “Untitled (Four Women)” (1980)
- Offset lithograph by Roy Lichtenstein, “Crying Girl” (1963)
Mr. Bharara praised the outstanding efforts of the Criminal Investigators of the U.S. Attorney’s Office and thanked the U.S. Securities and Exchange Commission and the U.S. Marshals Service for its assistance in this case.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force and Asset Forfeiture Unit. Assistant U.S. Attorneys Jeffrey Alberts and Sharon Cohen Levin are in charge of this prosecution.
U.S. v. Marc Dreier Opinion & Order
Manhattan Man Sentenced in Convenience Store RobberyRead the Press Release
TOPEKA, KAN. – A Manhattan man has been sentenced to 42 months for robbing a convenience store in Manhattan, Kan., which set in motion a series of events leading ultimately to a deadly arson in which a Kansas State University researcher died, U.S. Attorney Barry Grissom said today.
Frank Joseph Hanson, 23, Manhattan, Kan., was sentenced after pleading guilty to one count of brandishing a firearm during a crime of violence. Hanson admitted that on Feb. 6, 2013, he robbed Dara’s Fast Lane, a convenience store in Manhattan.
Co-defendant Dennis James Denzien pleaded guilty to one count of aiding abetting a robbery. In his plea, Denzien admitted that he drove Hanson to Dara’s Fast Lane at 1816 Claflin Road in Manhattan. Wearing a mask and brandishing a revolver, Hanson entered the store. After Hanson robbed the store, Denzien drove him away from the scene of the robbery.
Later that day, Riley County Police Department officers served two search warrants at a residence where Denzien lived with another defendant, Patrick Martin Scahill. Ultimately, investigators recovered a mask, gloves, a backpack and a firearm used in the robbery.
While officers were working to obtain one of the warrants they served at Denzien’s residence, Hanson, Scahill, defendant Virginia Amanda Griese, defendant Gavin Hairgrove and another person met and discussed what would happen if the police searched the residence and how to distract police long enough for Scahill to re-enter the residence and remove incriminating evidence.
In the end, Griese drove Scahill to the Lee Crest Apartments at 820 Sunset Avenue in Manhattan. Scahill poured gasoline in a hallway of the building and set a fire, hoping to distract police from searching the residence, which was across the street from the apartments. Vasanta Pallem, a post graduate researcher at Kansas State University who lived on the third floor of the apartments, was overcome by smoke and died after she was unable to escape the burning building.
Other defendants include:
Dennis James Denzien, who pleaded guilty to one count of aiding and abetting a robbery and was sentenced to 20 months in federal prison.
Patrick Martin Scahill, who pleaded guilty to arson resulting in a death and was sentenced to 360 months.
Virginia Amanda Griese, who pleaded guilty to arson resulting in a death and was sentenced to 240 months.
Gavin Taylor Hairgrove, who is set for trial Oct. 8.
Grissom commended all the investigators and law enforcement agencies that worked on the case, including the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Riley County Attorney’s Office, the Riley County Police Department, the Manhattan Fire Department, the Kansas State Fire Marshal’s Office, the Kansas Bureau of Investigations and the Pottawatomie County Sheriff’s Office, as well as Assistant U.S. Attorney Jared Maag, Special Assistant U.S. Attorney Barry Wilkerson and Special Assistant U.S. Attorney Barry Disney, who are prosecuting.In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Manhattan Accountant Sentenced for Embezzling More Than $500,000Read the Press Release
TOPEKA, KAN. – An accountant in Manhattan, Kan., has been sentenced to 33 months in federal prison for embezzling from a commercial construction company where he worked, U.S. Attorney Barry Grissom said today. He was ordered to pay more than $640,000 in restitution.
Larry D. Lord, 64, Manhattan, Kan., pleaded guilty to one count of mail fraud and one count of filing a false tax return. In his plea, Lord admitted the crimes occurred from 2005 to 2012 while he worked as an accountant for Cheney Construction Incorporated in Manhattan, Kan.
He used his position to embezzle funds from CCI’s bank account to pay his personal expenses, including his and his wife’s personal credit cards. Lord wrote checks on CCI’s bank account and mailed the checks to a credit card company. To conceal the crimes, he falsified the company’s check register log to make it appear the check was written to a legitimate payee. He wrote checks totaling $535,179. In addition he failed to report the embezzled funds on his federal income tax, resulting in taxes owed for 2006 through 2011.
Grissom commended the Internal Revenue Service, the FBI, the Pottawatomie County Sheriff’s Office and Assistant U.S. Attorney Christine Kenney for their work on the case.
Man Pleads Guilty to Tax EvasionRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a man pleaded guilty to evading taxes for tax years 2006-2009. Roger Martin Pedley pleaded guilty to four counts of tax evasion. Pedley, who was indicted on April 9, 2013, entered his plea before Chief United States District Judge Michael J. Davis.
In his plea agreement, Pedley admitted owning and operating the Pine Ridge Golf Course in Motley as well as engaging in other business ventures. These ventures generated considerable cash income for Pedley. Pedley also admitted engaging in transactions with this cash at various banks in ways that avoided triggering the banks’ federal currency reporting requirements. In addition, Pedley admitted that he failed to declare the cash as income on his personal income tax returns, filed jointly with his wife for tax years 2006, 2007, 2008, and 2009.
For his crimes, Pedley faces a potential maximum penalty of five years in prison on each count. Judge Davis will determine his sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by the Internal Revenue Service-Criminal Investigations. It is being prosecuted by Assistant U.S. Attorney John Docherty.Per U.S. Department of Justice policy, the U.S. Attorney’s Office is not allowed to provide the age and city of residence for defendants charged in criminal tax cases.
Man Indicted on Kidnapping, Retaliating Against A Witness, and Transporting and Coercing an Individual for Prostitution ChargesRead the Press Release
PANAMA CITY, FLORIDA – A Federal Grand Jury has returned an indictment charging Jacobo Feliciano-Francisco, a/k/a “Uriel Castillo-Ochoa”, a/k/a “Kiko”, age 30, with federal criminal violations related to kidnapping, retaliating against a witness, and transporting an individual in interstate commerce for prostitution. The Indictment was announced today by Pamela C. Marsh, United States Attorney for the Northern District of Florida.
The indictment alleges that between 2006 and 2011, numerous organized individuals created a network of brothels and prostitution delivery services in Tennessee and Kentucky, using undocumented aliens from Spanish-speaking countries. F.T., a female individual, cooperated with the FBI in its investigation into these individuals after she was forced and coerced into working as a prostitute for approximately three years. Due to her cooperation, a total of 13 individuals were convicted in Tennessee and Kentucky of various federal sex-trafficking and prostitution criminal charges. In the fall of 2012, following her cooperation with law enforcement, F.T. was approached at her Tennessee residence by another individual and confronted about her cooperation. Out of concern for the safety of F.T. and her family, she and her family were relocated to Panama City Beach, Florida.
Following F.T.’s relocation, Feliciano-Francisco and others conspired to kidnap and did kidnap F.T. with the intent to transport her from Florida to Louisiana where she would be forced to work as a prostitute in retaliation for her prior cooperation with law enforcement. During her kidnapping, F.T. was sexually assaulted by Feliciano-Francisco, and he and others repeatedly threatened the physical safety of both her and her family. Feliciano-Francisco transported F.T. to a residence in Mississippi where she was confined until another conspirator arrived to pick her up and transport her to Louisiana.
Counts One and Two of the indictment charge Feliciano-Francisco with Conspiracy to Kidnap and Kidnapping. If convicted on those counts, Feliciano-Francisco faces a term of imprisonment of up to life, supervised release of up to five (5) years, a fine of up to $250,000, and a $100 special monetary assessment. Counts Three, Four, and Five of the indictment charge Feliciano-Francisco with Retaliation against a Witness, Transportation of an Individual in Interstate Commerce for Prostitution, and Coercion into Prostitution, respectively. If convicted on Counts Three and Five of his indictment, Feliciano-Francisco faces a term of imprisonment of not more than twenty (20) years. If convicted on Count Four of his indictment, Feliciano-Francisco faces a term of imprisonment of not more than ten (10) years. Additionally, as to each of counts Three, Four, and Five, Feliciano-Francisco faces the imposition of a fine of up to $250,000, supervised release of up to 3 years, and a $100 special monetary assessment.
Feliciano-Francisco appeared today for his initial appearance and arraignment in United States District Court in Panama City, Florida. Feliciano-Francisco pled not guilty to the charges and his trial was scheduled for December 9, 2013 before United States District Judge Richard Smoak.
The indictment results from an investigation by agents of the FBI and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. The case is being prosecuted by Assistant United States Attorney Kathryn Risinger.
An indictment is merely an allegation by a grand jury that a defendant has committed a violation of federal criminal law and is not evidence of guilt. All defendants are presumed innocent and entitled to a fair trial, during which it will be the government’s burden to prove guilt beyond a reasonable doubt.