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26 September 2013
Six Individuals, Including Three Licensed Mortgage Brokers and A Real Estate Agent, Have Agreed to Pay Civil Penalties to the United States to Settle Civil Fraud ClaimsRead the Press Release
The Defendants Obtained Mortgage Loans Based On Falsified Mortgage Applications To Purchase Investment Properties In Charlotte’s Dilworth Neighborhood
CHARLOTTE, N.C. – Six individuals, including three licensed mortgage brokers and a real estate agent, have agreed to pay civil penalties ranging from $5,000 to $85,000 to the United States to resolve civil fraud allegations stemming from false statements they made in mortgage loan applications, announced Anne M. Tompkins, United States Attorney for the Western District of North Carolina.
In addition to the civil penalties, Kyle Frey, Adam Goulet, Roger Sterling Moore, William S. Nunemaker, Tyler P. Nunemaker and Daniel Brewton (Defendants) have also agreed to pay to the United States any profits from the sale of the real estate properties they purchased with those loans.
The civil complaints filed against the defendants pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act, (“FIRREA”), allege that beginning in or about 2005 to in or about 2008, the defendants obtained mortgage loans from various financial institutions and purchased real estate properties as speculative investments in Charlotte’s Dilworth neighborhood. A federal investigation revealed that the loan applications the defendants submitted contained false statements. The civil complaints filed in U.S. District Court allege that the defendants falsified information on the mortgage applications, including the borrower’s income, assets, liabilities, and/or net worth.
According to court records, the defendants also falsely represented on the mortgage applications that they were buying the houses as their primary residences when, in fact, they had no intention of living in them. According to allegations contained in filed documents, the defendants purchased the properties with the intention of building new houses and then selling them quickly for a profit. By representing to the financial institutions that the mortgage loans were for primary residences, the defendants were able to obtain favorable “no recourse” loans, which typically means that if they defaulted on the mortgages, the lender’s only recourse would be against that one property bought and built with the loan and the defendants’ other assets would not be at risk. Under such circumstances, a borrower is attempting to use the bank’s money, risk free, to speculate in real estate development. The United States contends that through the false statements alleged in these actions, the defendants avoided having to obtain commercial loans which typically would have required larger down payments, personal guarantees, or the pledging of other assets, and further avoided the risk associated with being personally liable for the success of their real estate speculation.
The defendants were on notice of the requirement to provide truthful statements in mortgage applications as they were either licensed mortgage originators, licensed real estate agents, experienced real estate investors, or closely related to such persons. In addition, all of the misrepresentations were made on the mortgage applications, despite the fact that each loan application contained a warning against making false statements or misrepresentations on the form. The mortgage loans obtained based on the false applications were generally in the range of $775,000 to $890,000.
In the FIRREA civil actions filed by the U.S. Attorney’s Office, without admitting liability, the defendants have agreed to settle the cases by paying civil penalties ranging from $5,000 to $85,000 and to sell properties which the United States alleges were purchased with mortgages obtained by false statements. Also, pursuant to these settlements, the profits – if any – from the sale of these properties will be surrendered to the United States.
Congress enacted FIRREA in 1989 as part of a comprehensive legislative plan to reform and strengthen the banking system and the federal deposit insurance system that protects the public from bank failures. FIRREA also authorizes the Department of Justice to file civil actions to recover monetary penalties of up to $1 million per false statement made in transactions affecting financial institutions.
In making today’s announcement, U.S. Attorney Tompkins thanked the Charlotte Division of the FBI and the Enforcement Division of the North Carolina Office of the Commissioner of Banks for their assistance in investigating this case. The case is being handled by Special Assistant United States Attorney Allison Carroll, and Assistant United States Attorneys Paul Taylor and Mike Savage of the U.S. Attorney’s Office for the Western District of North Carolina. The investigation is ongoing.
Six Charged in Ohio with Operating an Illegal Gambling Business and Other Related OffensesRead the Press Release
The Justice Department and Internal Revenue Service (IRS) announced today that Reece Powers II, the former co-owner of R&J Partnership Ltd. doing business as Reece’s Las Vegas Supply (RLVS), a gambling supplies store located in Dayton, Ohio, was charged with illegal gambling, tax fraud and obstruction-of-justice-related offenses in an eight-count indictment unsealed today. Other defendants charged in the indictment are Douglas A. Sanders, Jason S. Pulaski, Michael E. Gedeon, Jennifer Williams and Walter F. Dyer.
The indictment, which was returned on Sept. 24, 2013, was unsealed following the arrests of Powers, Pulaski, Gedeon, Williams and Dyer. All six defendants were charged with one count each of conspiracy to operate an illegal gambling business, and one count each of operating an illegal gambling business. Additionally, Powers was charged with one count of conspiracy to defraud the United States by impeding and impairing the lawful functions of the IRS, and one count of witness tampering. Furthermore, Pulaski, Gedeon, Williams and Dyer were each charged with one count of obstruction of justice.
According to the indictment, between February 2004 and May 2011, Powers oversaw the recruitment of local charitable organizations to sponsor casino-like card games, such as Texas Hold’Em poker tournaments and live-action poker games (poker fundraisers), that were exempted from the general prohibition against games of chance under then-existing Ohio laws. The indictment alleges that Powers skimmed a portion of the money received from the poker fundraisers while providing false accountings of the money generated to the charitable organizations that they were meant to benefit. The indictment further alleges that Sanders, Pulaski, Gedeon, Williams, Dyer and other co-conspirators who worked as card dealers, cashiers, chip sellers, pit bosses, tournament directors and managers, received compensation for their roles in conducting the poker fundraisers in violation of Ohio law, at Powers’ direction. The indictment further alleges that each of the defendants claimed that they were uncompensated volunteers and that several of them deliberately misled investigators of the State of Ohio’s Attorney General’s Office and the IRS during the investigation.
According to the indictment, Powers further conspired with another individual to sell RLVS and its associated real estate so that it appeared as if the business was sold for an amount less than its actual sale price, in an effort by Powers to evade the payment of taxes. According to the indictment, Dyer, Pulaski, Gedeon, and Williams further committed obstruction of justice by testifying falsely before a federal grand jury investigating the poker scheme. Additionally, Powers is charged with tampering with a witness by allegedly instructing the witness to testify falsely to the federal grand jury.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. District Judge Timothy Black for the Southern District of Ohio will be presiding over the case after the arraignment of the defendants. If convicted, Powers faces a maximum sentence of 35 years in prison, a fine of $1,000,000, and five years of supervised release. If convicted, Pulaski, Gedeon, Williams and Dyer each face a maximum sentence of 20 years in prison, a fine of $750,000 and three years of supervised release. If convicted, Sanders faces a maximum sentence of ten years in prison, a fine of $500,000 and three years of supervised release.
This case was investigated by special agents of IRS - Criminal Investigation. The case is being prosecuted by Trial Attorneys Jorge Almonte and Stephen Descano of the Justice Department’s Tax Division.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax/ .
Sergio Alejandro Lopez Sentenced in U.S. District CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Great Falls, on September 26, 2013, before U.S. District Judge Dana L. Christensen, SERGIO ALEJANDRO LOPEZ, a 37-year-old resident of Portland, Oregon, was sentenced to a term of:
Prison: 130 months
Special Assessment: $200
Supervised Release: 5 years
LOPEZ was sentenced in connection with his guilty plea to (2) counts of distribution of methamphetamine.
In an Offer of Proof filed by Assistant U.S. Attorney Joseph E. Thaggard, the government stated it would have proved at trial the following:
In January 2011, a confidential informant (hereafter "the CI") in Great Falls worked under the direction and supervision of Central Montana Drug Task Force (CMDTF) agents to investigate drug trafficking in Great Falls;
In that capacity, the CI made several phone calls to LOPEZ, who was living outside the State of Montana. LOPEZ agreed to mail methamphetamine to the CI in Great Falls in exchange for the CI sending money to LOPEZ by Western Union.
As part of this plan, on January 19, 2011, the CI sent two Western Union wires to LOPEZ in the amounts of $500 and $600.
LOPEZ, or a person acting at his behest, then mailed a package to the CI in Great Falls. On January 20, 2011, agents seized approximately 31.2 grams of purported methamphetamine found in the package mailed to the CI.
Subsequently, the CI set up another postal delivery of methamphetamine by LOPEZ. On January 29, 2011, two Western Union wires in the amounts of $500 and $600 were sent to LOPEZ to purchase the methamphetamine. LOPEZ, or persons acting at his behest, then mailed a package of methamphetamine to the CI in Great Falls.
On January 31, 2011, agents seized approximately 34.8 grams of purported methamphetamine sent to the CI by LOPEZ, or persons working at his direction.
The substances seized on January 20 and January 31, 2011, were submitted to Drug Enforcement Administration's Western Region Laboratory for chemical analysis by a qualified forensic chemist. That analysis revealed each package contained five or more grams of actual (pure) methamphetamine, a Schedule II controlled substance.
The material in the packages seized on January 20 and 31, 2011, was also submitted to the DEA laboratory for latent fingerprint analysis by a qualified fingerprint examiner. The examination disclosed that a latent fingerprint lifted from material contained in the package seized on January 20, 2011, matched LOPEZ's known fingerprints.
Because there is no parole in the federal system, the "truth in sentencing" guidelines mandate that LOPEZ will likely serve all of the time imposed by the court. In the federal system, LOPEZ does have the opportunity to earn a sentence reduction for "good behavior." However, this reduction will not exceed 15% of the overall sentence.
The investigation was a cooperative effort between the Federal Bureau of Investigation, the Montana Division of Criminal Investigation, and the Russell County Drug Task Force.
San Antonio Man Sentenced to Federal Prison for Downloading Child PornRead the Press Release
In San Antonio, 55-year-old Victor Zamarron, a former civilian contractor at Brooks Army Medical Center, was sentenced to 210 months in federal prison followed by 50 years of supervised release for downloading child pornography announced United States Attorney Robert Pitman and Federal Bureau of Investigation Special Agent in Charge Armando Fernandez, San Antonio Division.
In September 2012, a routine information technology inspection revealed that Zamarron was downloading and viewing child pornography through the government computer system. A subsequent search warrant executed by FBI agents at the defendant’s residence resulted in the seizure of two computers. A forensics examination of those computers revealed the presence of more than 30,000 images depicting child pornography. On June 24, 2013, Zamarron pleaded guilty to one count of receipt of child pornography.
This investigation was conducted by the Federal Bureau of Investigation together with the U.S. Army Criminal Investigation Division at Fort Sam Houston in San Antonio. Assistant United States Attorney Tracy Thompson prosecuted this case on behalf of the government.Romanian Man Convicted on 33 Counts of Wire FraudRead the Press Release
VICTORIA, Texas - A federal jury sitting in Victoria has convicted Romanian national Doru Gabriel Trifu, 28, on all 33 counts as charged in an Internet fraud scheme, announced United States Attorney Kenneth Magidson. The jury returned its verdicts late yesterday following a four-day trial.
Trifu, a Romanian non-immigrant residing in Orangevale, Calif., was part of the fraudulent scheme in which consumer items were listed for sale over the Internet. Individuals attempting to make purchases were instructed to send money via MoneyGram to an escrow agent who would accept the funds, complete the transaction and deliver the item. However, after the buyer electronically transferred the money, the item would never be delivered.
During trial, the government presented videos and numerous surveillance photographs taken from Wal-Mart stores across Texas, Mississippi and Alabama where the fraudulent transactions occurred.
Testimony was provided by several victims who described how they were told they were purchasing the item from a U.S. serviceman who was about to deploy to the Middle East and were told to use a third party broker to complete the transaction.
An agent with Homeland Security Investigations (HSI) also testified and identified a pattern of approximately 230 fraudulent transactions between March 2011 and February 2012 using two fake U.S. passport numbers. Over the course of the scheme, the amount of identified fraud totaled more than $567,000.
Senior U.S. District Judge John Rainey, who presided over the trial, has set sentencing for Dec. 2, 2013, at which time Trifu faces a maximum of 20 years of imprisonment and a possible $250,000 fine on each count. He has been in custody since his November arrest in California where he will remain pending that hearing.The case was investigated by HSI. Assistant U.S. Attorney Lance Watt is prosecuting.
Rochester Man Pleads Guilty to Defrauding Elderly in Telemarketing SchemeRead the Press Release
ROCHESTER, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Ricky Miller, Sr., 55, of Rochester, N.Y., pleaded guilty to conspiracy to commit mail fraud in a telemarketing scheme before U.S. District Judge David G. Larimer. The charge carries a maximum penalty of 30 years in prison, a $250,000 fine, or both.
Assistant U.S. Attorney John J. Field, who is handling the case, stated that Miller worked with a group based in Jamaica that ran a bogus sweepstakes telemarketing scheme. The scheme, which targeted the elderly, involved calling victims with news that they had won a sweepstakes prize or lottery. The victims were then asked for money in order to release the purported winnings. The defendant agreed to act as a point of contact in the United States to receive money from the victims which he then forwarded to Jamaica after taking a substantial cut for himself. Victims sent approximately $300,000 to Miller during the course of the scheme.
The plea is the culmination of an investigation by the United States Postal Inspection Service, under the direction of Inspector In Charge Kevin Niland of the Boston Division.Previously Convicted Sex Offender Sentenced to 10 Years in Prison for Possessing Child PornographyRead the Press Release
Baltimore, Maryland – U.S. District Judge Marvin J. Garbis sentenced Harold Michael Nicol, age 53, of Cumberland, Maryland, today to 10 years in prison, followed by lifetime supervised release, for possessing child pornography. Judge Garbis ordered that upon his release from prison, Nicol must register as a sex offender in the place where he resides, where he is an employee, and where he is a student, under the Sex Offender Registration and Notification Act (SORNA). In 1997, Nicol was convicted of a sex offense in the Allegany County Circuit Court.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); Colonel Marcus L. Brown, Superintendent of the Maryland State Police; Cumberland Police Chief Charles H. Hinnant; and Allegany County State’s Attorney Michael O. Twigg.
According to the plea agreement, in November 2011, during an undercover internet investigation into a file sharing program, an undercover officer downloaded four files containing images of prepubescent minor engaging in sexually explicit conduct with adults. Additional investigation determined that the files were being made available for download by Nicol from his home computer. A search warrant was subsequently executed at Nicol’s residence in Cumberland. Computers and computer storage media were seized, along with a .270 caliber rifle and a .50 caliber muzzle loader rifle. Because of his previous felony conviction, Nicol is prohibited from possessing firearms. Nicol’s computers and storage media were forensically examined and revealed that Nicol possessed over 400 images of child pornography.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc. For more information about internet safety education, please visit www.justice.gov/psc and click on the "resources" tab on the left of the page.
This investigation was part of Operation Predator, a nationwide HSI initiative to protect children from sexual predators, including those who travel overseas for sex with minors, Internet child pornographers, criminal alien sex offenders and child sex traffickers. HSI encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at 1-866-DHS-2ICE or by completing its online tip form. Both are staffed around the clock by investigators.
United States Attorney Rod J. Rosenstein commended HSI Baltimore, the Maryland State Police, Cumberland Police Department and the Allegany County State’s Attorney’s Office for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Judson T. Mihok, who prosecuted the case.
Penn Hills Man Sentenced to Prison for Illegally Possessing PistolRead the Press Release
PITTSBURGH - A Pittsburgh-area resident has been sentenced in federal court to 21 months imprisonment followed by three years supervised release on his conviction of violating federal firearms laws, United States Attorney David J. Hickton announced today.
Chief United States District Judge Joy Flowers Conti imposed the sentence on Norman Warren, 24.
According to information presented to the court, on or about Sept. 4, 2012, Warren, being a convicted felon as a result of a prior firearms conviction, illegally possessed a Hi-Point, .380 caliber pistol. Federal law prohibits anyone who has been convicted of a crime punishable by a term of imprisonment exceeding one year to possess a firearm.
Assistant United States Attorney Charles A. Eberle prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Pittsburgh Bureau of Police and the Bureau of Alcohol, Tobacco, Firearms, & Explosives for the investigation leading to the successful prosecution of Warren. This case was prosecuted under Project Safe Neighborhoods, a collaborative effort by federal, state and local law enforcement agencies, prosecutors and communities to prevent, deter and prosecute gun crime.
Pembroke Man Charged with Tax CrimesRead the Press Release
BOSTON - A Pembroke man has been charged with tax evasion and related offenses including sending documents to the Secretary of the Treasury demanding payment of $100 billion.
Theordore Hammond, Jr., 59, was indicted with two counts of tax evasion, seven counts of filing false tax returns, two counts of making false claims, and endeavoring to impede the IRS. The indictment was unsealed yesterday after Hammond was arrested.
The indictment alleges that Hammond was a self-employed carpenter for many years and, between 1998 and 2008, earned income of about $1.1 million. During that same period, Hammond failed to timely file federal income tax returns and, when he did file, reported zero income on most of the returns. Hammond also filed two returns for tax year 2008, falsely claiming he was owed refunds totaling more than $1.6 million. The indictment also alleges that, as the IRS attempted to collect the income taxes Hammond owed, Hammond took numerous steps to frustrate those collection efforts, including threatening to file improper liens against the Revenue Officer, refusing to provide records to the IRS, instructing an employer not to use Hammond’s Social Security Number on an IRS payment form, and sending documents to the then-Secretary of the Treasury demanding payment of $100 billion.
If convicted of the tax evasion or false claim counts, Hammond could serve a maximum penalty of five years in prison, three years of supervised release, and a $250,000 fine or twice the gross gain or loss, whichever is greater. If he is convicted of filing false tax returns or endeavoring to impede the IRS, he could a maximum penalty of three years in prison, one year of supervised release, and a $250,000 fine or twice the gross gain or loss, whichever is greater.
United States Attorney Carmen M. Ortiz and John G. Collins, Acting Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Christine Wichers of Ortiz’s Civil Division and Sandra S. Bower of the Economic Crimes Unit.The details contained in the Indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Paul Joseph Richter Found Guilty in U.S. Federal CourtRead the Press Release
The United States Attorney's Office announced that on September 23, 2013, in Missoula, after a federal district court trial before U.S. District Judge Donald W. Molloy, PAUL JOSEPH RICHTER, a 50-year-old resident of Florence, was found guilty of being a felon-in-possession of a firearm. Sentencing is set for January 8, 2014. He is currently detained.
Assistant U.S. Attorney Paulette L. Stewart prosecuted the case for the United States.
RICHTER faces possible penalties of 10 years in prison, a $250,000 fine and 3 years supervised release.
The investigation was a cooperative effort between the Montana Probation and Parole, the Missoula County Sheriff's Office, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Nixa Contractor Pleads Guilty to Stealing $73,000 from Elderly Tornado VictimsRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Nixa, Mo., contractor who was hired to repair tornado damage at the Joplin residence of an elderly couple pleaded guilty in federal court today to a fraud scheme in which he stole more than $73,000.
Terry Alton Parker, 58, of Nixa, pleaded guilty before U.S. Magistrate Judge David P. Rush to bank fraud, wire fraud and money laundering.
Parker operated Alliance Contracting of Nixa, LLC, and was hired by a Joplin, Mo., resident to repair his house following the May 22, 2011, tornado. The victim, identified as “H.B.” in the federal indictment, was 84 years old at the time; he was caring for his 88-year-old wife, who required home care and nursing assistance.
After being hired, Parker was at H.B.’s home on a regular basis from June 2011 through February 2012. Parker befriended H.B. and soon began using his downstairs office area as his own office.
In November 2011, without H.B.’s knowledge or permission, Parker took a check from H.B.’s checkbook and wrote a check to himself for $38,640. Parker forged H.B.’s signature and deposited the check into his own bank account.
Parker persuaded H.B., who did not own a computer, to get Internet access at his home so Parker could order supplies online and conduct other business via the Internet. H.B. agreed to pay for the service. Parker set up an online banking account for H.B.’s checking account, without H.B.’s knowledge or permission, and directed all bank statements and other notifications from the bank to be delivered to an e-mail address that Parker set up in H.B.’s name (also without his knowledge). Parker established a PayPal account, without H.B.’s knowledge or permission, which was linked to H.B.’s checking account.
Parker initiated five wire transfers totaling $34,420 from H.B.’s checking account into the PayPal account from Dec. 31, 2011, to Feb. 22, 2012. Most of those funds ($32,545) were then transferred from H.B.’s PayPal account to Parker’s own PayPal account.
Under federal statutes, Parker is subject to a sentence of up to 70 years in federal prison without parole, plus a fine up to $1,750,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Steven M. Mohlhenrich. It was investigated by the FBI and the Joplin, Mo., Police Department.Nine Automobile Parts Manufacturers and Two Executives Agree to Plead Guilty to Fixing Prices on Automobile Parts Sold to U.S. Car Manufacturers and Installed in U.S. CarsRead the Press Release
Nine Japan-based companies and two executives have agreed to plead guilty and to pay a total of more than $740 million in criminal fines for their roles in separate conspiracies to fix the prices of more than 30 different products sold to U.S. car manufacturers and installed in cars sold in the United States and elsewhere, the Department of Justice announced today. The department said that price-fixed automobile parts were sold to Chrysler, Ford and General Motors, as well as to the U.S. subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Toyota and Fuji Heavy Industries–more commonly known by its brand name, Subaru.
“These international price-fixing conspiracies affected more than $5 billion in automobile parts sold to U.S. car manufacturers, and more than 25 million cars purchased by American consumers were affected by the illegal conduct,” said Attorney General Eric Holder. “The Department of Justice will continue to crack down on cartel behavior that causes American consumers and businesses to pay higher prices for the products and services they rely upon in their everyday lives.”
“Some of the price-fixing conspiracies lasted for a decade or longer, and many car models were fitted with multiple parts that were fixed by the auto parts suppliers,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The Antitrust Division has worked hand in hand with its international competition colleagues who have provided invaluable assistance to the Justice Department in breaking up these worldwide price-fixing cartels.”
“Today’s charges should send a message to companies who believe they don’t need to follow the rules,” said Ronald Hosko, Assistant Director of the FBI’s Criminal Division. “If you violate the laws of this country, the FBI will investigate and put a stop to the threat you pose to our commercial system. The integrity of our markets is a part of the foundation of a free society.”
Including those announced today, 20 companies and 21 executives have been charged in the Antitrust Division’s ongoing investigation into price fixing and bid rigging in the auto parts industry. All 20 companies have either pleaded guilty or have agreed to plead guilty and have agreed to pay more than $1.6 billion in criminal fines. Seventeen of the 21 executives have been sentenced to serve time in U.S. prisons or have entered into plea agreements calling for significant prison sentences.
Each of the companies and executives charged today has agreed to cooperate with the department’s ongoing antitrust investigation. The plea agreements are subject to court approval. The companies’ and executives’ agreed-upon fines and sentences are: • Hitachi Automotive Systems Ltd. to pay a $195 million criminal fine; • Jtekt Corporation to pay a $103.27 million criminal fine; • Mitsuba Corporation to pay a $135 million criminal fine; • Mitsubishi Electric Corporation (MELCO) to pay a $190 million criminal fine; • Mitsubishi Heavy Industries Ltd. to pay a $14.5 million criminal fine; • NSK Ltd. to pay a $68.2 million criminal fine; • T.RAD Co. Ltd. to pay a $13.75 million criminal fine; • Valeo Japan Co. Ltd. to pay a $13.6 million criminal fine; • Yamashita Rubber Co. Ltd. to pay a $11 million criminal fine; • Tetsuya Kunida, a Japanese citizen and former executive of a U.S. subsidiary of a Japan-based automotive anti-vibration rubber products supplier to serve 12 months and one day in a U.S. prison, and to pay a $20,000 criminal fine; and
• Gary Walker, a U.S. citizen and former executive of a U.S. subsidiary of a Japan-based automotive products supplier to serve 14 months in a U.S. prison, and to pay a $20,000 criminal fine.
MELCO and Hitachi conspired with each other and other co-conspirator firms not charged today on sales of certain auto parts, including starter motors, alternators, and ignition coils, the department said. Mitsuba and Mitsubishi Electric conspired together and with other co-conspirators not charged today on certain sales of starter motors. Each of the other companies charged today colluded with other unnamed co-conspirators.
Generally, the companies, executives and co-conspirators engaged in the various price-fixing schemes by attending meetings and communicating by telephone in the United States and Japan to reach collusive agreements to rig bids, set prices and allocate the supply of auto parts sold to the car manufacturers. They took measures to keep their conduct secret by using code names and meeting in remote locations. Those charged also had further communications to monitor and enforce the collusive agreements.
The multiple conspiracies also harmed U.S. automobile plants in 14 states: Alabama; California; Georgia; Illinois; Indiana; Kansas; Kentucky; Michigan; Mississippi; Missouri; Ohio; Tennessee; Texas and Wisconsin, the department said.
The department has coordinated its investigation with the Japanese Fair Trade Commission, the European Commission, Canadian Competition Bureau, Korean Fair Trade Commission, Mexican Federal Economic Competition Commission and Australian Competition and Consumer Commission.
The following charges were filed today in U.S. District Court for the Eastern District of Michigan in Detroit: Hitachi Automotive Systems Ltd.
According to a one-count felony charge, Hitachi and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of auto parts it sold to Ford, General Motors, Honda, Nissan and Toyota, in the United States and elsewhere. The affected auto parts include starter motors, alternators, air flow meters, valve timing control devices, fuel injection systems, electronic throttle bodies, ignition coils, inverters and motor generators. According to the charge, Hitachi and its co-conspirators carried out the conspiracy from at least as early as January 2000 until at least February 2010.
Hitachi manufactures and sells auto parts to automobile manufacturers throughout the world. The affected auto parts perform an array of functions in automobile engines, from regulating air and fuel flow to starting the engine to controlling the timing of engine valves.
Mitsuba Corporation
According to a two-count felony charge, Mitsuba and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of windshield washer systems and components, windshield wiper systems and components, starter motors, power window motors, and fan motors it sold to Chrysler, Honda, Subaru, Nissan and Toyota in the United States and elsewhere. According to the charge, Mitsuba and its co-conspirators carried out the conspiracy from January 2000 until February 2010. Mitsuba also agreed to plead guilty to one count of obstruction of justice, because of the company’s efforts to destroy evidence ordered by a high-level U.S.-based executive after learning of the U.S. investigation of collusion in the auto parts industry.
Mitsuba manufactures and sells numerous automotive parts to automobile manufacturers throughout the world. The affected auto parts perform an array of functions in automobiles. Windshield washer and wiper systems include a number of components and are designed to clear water or snow from vehicle windows. Starter motors are small electric motors used in starting internal combustion engines. Power window motors are small electric motors used to raise and lower vehicle windows. Fan motors are small electric motors used to turn radiator cooling fans.
Mitsubishi Electric Corporation (MELCO)
According to a one-count felony charge, MELCO and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of automotive parts, including starter motors, alternators and ignition coils, it sold to Chrysler, Ford, General Motors, Honda, Fuji Heavy Industries Ltd. (Subaru), Nissan, and certain of their subsidiaries in the United States and elsewhere. According to the charge, MELCO and its co-conspirators carried out the conspiracy from at least as early as January 2000 until at least February 2010.
MELCO manufactures and sells automotive parts, including starter motors, alternators, and ignition coils. Starter motors are small electric motors used in starting internal combustion engines. Alternators generate an electric current while the engine is in operation. Ignition coils are part of the fuel ignition system and release electric energy suddenly to ignite a fuel mixture.
Mitsubishi Heavy Industries Ltd.
According to a one-count felony charge, Mitsubishi Heavy Industries Ltd. (MHI) and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of compressors and condensers it sold to General Motors and Mitsubishi Motors North America in the United States and elsewhere. According to the charge, MHI and its co-conspirators carried out the conspiracy from at least as early as January 2001 until at least February 2010.
MHI manufactures and sells compressors and condensers. A compressor produces and circulates highly pressurized refrigerant gas throughout the car air conditioning system. A condenser cools the engine by condensing the refrigerant gas into liquid and releasing heat.
T.RAD Co. Ltd.
According to a one-count felony charge, T.RAD Co. Ltd. and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of radiators it sold to Toyota and Honda and the prices of automatic transmission fluid warmers (ATF warmers) sold to Toyota in the United States and elsewhere. According to the charge, T.RAD and its co-conspirators carried out the conspiracy from November 2002 until February 2010.
T.RAD manufactures and sells heat exchangers, including radiators and ATF Warmers. Radiators are devices located in the engine compartment of a vehicle that cool the engine. ATF warmers are devices located in the engine compartment of a vehicle that warm the automatic transmission fluid.
Valeo Japan Co. Ltd.
According to a one-count felony charge, Valeo Japan Co. Ltd. and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to allocate the supply of, rig bids for, and to fix, stabilize and maintain the prices of air conditioning systems it sold to Nissan North America Inc., Suzuki Motor Corporation and Subaru, in the United States and elsewhere. According to the charge, Valeo and its co-conspirators carried out the conspiracy from April 2006 until February 2010.
Valeo was engaged in the manufacture and sale of automotive air conditioning systems, which are systems that cool the interior environment of a vehicle. Air conditioning systems, whether sold together or separately, are defined as automotive compressors, condensers, HVAC units (typically consisting of a blower motor, actuators, flaps, evaporator, heater core, and filter embedded in a plastic housing), control panels, sensors and associated hoses and pipes.
Gary Walker
According to a one-count felony charge, Gary Walker, a U.S. citizen and former executive of a U.S. subsidiary of a Japan-based automotive products supplier, engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of seatbelts sold to Honda, Mazda, Nissan, Subaru and Toyota in the United States and elsewhere. According to the charge, Walker and his co-conspirators carried out the conspiracy from at least Jan. 1, 2003 until at least February 2010.
The following charges were filed today in U.S. District Court for the Southern District of Ohio in Cincinnati: Jtekt Corporation
According to a two-count felony charge, Jtekt and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to allocate markets, to rig bids for, and to fix, stabilize and maintain the prices of bearings it sold to Toyota and electric powered steering assemblies it sold to Nissan, in the United States and elsewhere. According to the charge, Jtekt and its co-conspirators carried out the bearings conspiracy from 2000 until July 2011 and the steering assemblies conspiracy from 2005 until October 2011.
Jtekt manufactures and sells bearings and steering assemblies. Bearings are widely used in industry in numerous applications for many products. Bearings reduce friction and help components to roll smoothly past on another. Electric powered steering assemblies provide electric power to help the driver more easily steer the automobile. Electric powered steering assemblies link the steering wheel to the tires, and include the column, intermediate shaft and electronic control unit, among other parts, but do not include the steering wheel or tires.
NSK Ltd.
According to a one-count felony charge, NSK and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to allocate markets, to rig bids for, and to fix, stabilize and maintain the prices of bearings it sold to Toyota, in the United States and elsewhere. NSK manufactures and sells bearings. According to the charge, NSK and its co-conspirators carried out the conspiracy from 2000 until July 2011.
The following charges were filed today in U.S. District Court for the Northern District of Ohio in Toledo: Yamashita Rubber Co. Ltd.
According to a one-count felony charge, Yamashita Rubber Co. Ltd. and co-conspirators engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, raise, and maintain the prices of automotive anti-vibration rubber products it sold in the United States and elsewhere to Honda Motor Co. Ltd., American Honda Motor Company Inc. and Suzuki Motor Corporation. According to the charge, Yamashita Rubber Co. and its co-conspirators carried out the conspiracy from at least April 2003 until May 2012.
Automotive anti-vibration rubber products are comprised primarily of rubber and metal, and are installed in automobiles to reduce engine and road vibration.
Tetsuya Kunida
According to a one-count felony charge, Tetsuya Kunida, a former executive of a U.S. subsidiary of a Japan-based automotive anti-vibration rubber products supplier, engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, raise, and maintain the prices of automotive anti-vibration rubber products. The conspiracy affected sales of automotive anti-vibration rubber products to Toyota Motor Corporation and other automakers in the United States and elsewhere. ccording to the charge, Kunida and his co-conspirators carried out the conspiracy from at least November 2001 until May 2012.
DENSO Corporation, Nippon Seiki Ltd., Tokai Rika Co. Ltd., Furukawa Electric Co. Ltd, Yazaki Corp., G.S. Electech Inc., Fujikura Ltd., Autoliv Inc., TRW Deutschland Holding GmbH, Diamond Electric Mfg. Co. Ltd., and Panasonic Corporation have already pleaded guilty. Fifteen individuals have been sentenced to pay criminal fines and to serve prison sentences ranging from a year and a day to two years each.
The companies and individuals are charged with price fixing in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations and a $1 million criminal fine and 10 years in prison for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. Additionally, Mitsuba was also charged with obstruction of justice, which carries a maximum penalty of a $500,000 criminal fine.
The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the Antitrust Division’s Chicago Office, New York Office, the National Criminal Enforcement Section, and the FBI’s Cincinnati, Cleveland, Detroit, New York and Washington Field Offices, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html. To report a crime to the FBI, go to www.fbi.gov and click on the “Report a Crime” tab.Related Materials:
Gary Walker Information
Hitachi Information
JTekt Information
Melco Information
MHI Information
Mitsuba Information
Yamashita Rubber Information
Valeo Japan Information
Tetsuya Kunida Information
T.RAD Information
NSK InformationNine Alleged Members of Hobos Street Gang Indicted in RICO Conspiracy for Murders and Other Violent Drug-Related CrimesRead the Press Release
CHICAGO — Nine defendants who allegedly directed or participated in a violent, drugtrafficking street gang known as the Hobos were charged today in a federal racketeering conspiracy (RICO) indictment with engaging in murders, attempted murders, robberies, and narcotics distribution. The five-count indictment returned by a federal grand jury alleges five murders, solicitation of a sixth murder, four attempted murders, three robberies, and the operation of “drug spots” and “drug lines” on the city’s south side among a pattern of criminal activity between 2004 and 2009.
Four of the defendants are charged with personally shooting to death five victims between 2006 and 2009, including one victim who was allegedly killed because he was cooperating with law enforcement.
The indictment charges that the “Hobos Enterprise” allegedly used violence to enrich its members and their associates; to promote and enhance the criminal enterprise; to preserve and protect its power, territory, operations, and proceeds; to keep victims and witnesses in fear; and to prevent law enforcement from detecting its crimes.
“The indictment portrays a gang with virtually no restraint on its ruthless use of violence to further its goals,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois. “The gang’s alleged murders, robberies and drug dealing invited our employing the federal racketeering laws to prosecute the full scope of their crimes, some extending beyond the normal statute of limitations; and, if convicted, to bring the most severe federal sentences to bear for the terror that plagued the blocks and street corners they allegedly controlled.” The investigation is continuing, Mr. Shapiro added.
“This RICO indictment is the result of a long-term commitment we share with our law enforcement partners to address the dangerous threats facing our communities today. This investigation targeted an exceptionally violent group that used murder, threats, and intimidation to further their agenda. The charges demonstrate our focus and determination to strike at gangrelated criminal enterprises and to eliminate the terror these groups inflict on our neighborhoods,” said Robert J. Shields, Jr., Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
“Through the work of Chicago Police officers and our gang investigators, in close partnership with the FBI, IRS, and the U.S. Attorney’s Office, we are able to announce federal RICO charges against nine dangerous members of the Hobos gang,” said Chicago Police Superintendent Garry F. McCarthy. “Today’s announcement should serve as a warning ― we do not and we will not accept violence in our communities or in our neighborhoods. And we will do everything in our power to hold dangerous criminals accountable for the crimes they commit,” he added.
“Today’s indictment sends a loud message that we are committed to our law enforcement partners and the communities in which we live,” said James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. “Gang activity and criminal enterprises thrive on financial gain and perpetuate criminal violence on our streets. IRS Criminal Investigation brings its financial expertise to an investigation and we are privileged to be working with the Chicago Police Department and other federal law enforcement partners to keep our communities safe.”
The Illinois Department of Corrections also participated in the investigation. The Chicago Police Department initiated the investigation, which the federal agencies joined later under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF) and the Chicago High Intensity Drug Task Force (HIDTA). The case is part of a sustained, coordinated effort by federal law enforcement agencies, working together with the Chicago Police and other state and local departments, to disrupt Chicago’s sophisticated, often violent, drug-trafficking organizations.
Law enforcement has identified the Hobos as a tight-knit, violent crew that originated in the former Robert Taylor Homes and banded together from factions of the much larger Gangster Disciples and Black Disciples street gangs. They allegedly targeted drug dealers and high-value targets to rob and relied upon each other to protect their drug territory, retaliate against rival gangs, and prevent witnesses from cooperating with law enforcement.
All nine defendants were charged with racketeering conspiracy and are currently in state or federal custody. They are: GREGORY CHESTER, ALSO KNOWN AS “Bowlegs,” “Big Homie,” “Pops,” and “Desjuar Anderson,” 36, of Richton Park, identified as the leader of the Hobos; ARNOLD COUNCIL, aka “Armstrong” and “Hobo,” 37; PARIS POE, aka “Poleroski,” 33; GABRIEL BUSH, aka “Louie,” 34; STANLEY VAUGHN, aka “Smiley,” 36; WILLIAM FORD, aka “Joe Buck,” 33; GARY CHESTER, aka “Chee,” 35, (Gregory Chester’s cousin); BYRON BROWN, aka “B-Rupt,” 28; and RODNEY JONES, aka “Milk,” 26, all of Chicago. Byron Brown’s deceased twin brother, Brandon Brown, is named as an unindicted coconspirator.
Poe, Council, Bush, and Byron Brown were each charged with one count of murder in aid of racketeering, and Council was charged with brandishing a firearm during a clothing store robbery. The indictment also seeks forfeiture of an unspecified amount of illegal proceeds.
All nine defendants will be arraigned on later dates in U.S. District Court.
According to the indictment, the murders committed by members and associates of the Hobos Enterprise included:
- Wilbert Moore, who was killed because he was cooperating with law enforcement, by Council and Poe on Jan. 19, 2006;
- Terrance Anderson by Bush and others on Sept. 1, 2007;
- Eddie Moss by Byron Brown and others on Dec. 14, 2007;
- Larry Tucker by Bush, the Brown brothers, and others on Jan. 20, 2008; and
- Kenneth Mosby by Byron Brown and others on May 12, 2008.
Gregory Chester allegedly solicited the murder of Antonio Bluitt, which occurred on Sept. 2, 2007.
The attempted murders included: Victim 1 by Council and Poe on June 11, 2006; Victims 2 and 3 by Bush and Ford on June 5, 2007; Victim 4 by Bush and Vaughn on June 27, 2007; and Victim 5 by Jones on Nov. 5, 2007.
The robberies included: Victim 1 by Council and Poe on June 11, 2006; the Collections Clothing Store by Council and others on Nov. 8, 2008; and Victims 6 and 7 by Poe, Gary Chester, and others on March 25, 2009.
The RICO conspiracy count further alleges that the Hobos and their associates operated drug spots and drug lines where they distributed user quantities of narcotics, at times using nicknames to identify their products. These locations included:
- the building and area located at 4429 South Federal, within the former Robert Taylor Homes, which was controlled and managed by Gregory Chester and Council and drugs were sold under the nicknames “Green Monster” and “Pink Panther;”
- the area around 47th Street and Vincennes Avenue, which was controlled by Bush and Vaughn and operated by Ford;
- the area around 51st Street and Calumet Avenue, which was managed by the Brown brothers and Jones; and
- the area around 51st Street and Martin Luther King Drive, which was controlled by Bush.
As part of the racketeering conspiracy, the defendants allegedly:
- used gang-related terminology, symbols, and gestures, including the slogan “Hobo or Nothing,” and a hand sign known as the “Hobo Horns;”
- shared the proceeds of robberies and the trafficking of narcotics;
- obtained, used, brandished, and discharged firearms in connection with the enterprise’s illegal activities;
- managed the procurement, transfer, use, concealment, and disposal of firearms and dangerous weapons within the enterprise to protect their interests and further their goals;
- monitored law enforcement radio frequencies and acquired radio equipment to detect and avoid law enforcement inquiry into their illegal activities;
- had nominees obtain rental vehicles to conceal their use while committing illegal activities;
- identified victims from whom they could obtain distribution quantities of controlled substances or large sums of money by robbing them;
- conducted surveillance of intended murder and robbery victims, a practice referred to as “lamping” and “doing homework;” and
- restrained and murdered victims and witnesses to prevent their escape, and to prevent identification of themselves and their associates.
The RICO conspiracy count carries a maximum sentence of 20 years in prison, or life for the four defendants charged with committing murders. Those four defendants ― Poe, Council, Bush, and Byron Brown ― also face a mandatory life sentence, or death, if convicted of murder in aid of racketeering. Only the Attorney General of the United States may decide later whether to seek the death penalty. The charge of brandishing a firearm against Council carries a mandatory consecutive sentence of seven years and a maximum of life in prison. If convicted, the Court must determine a reasonable sentence to impose under federal statutes and the advisory United States Sentencing Guidelines.
The government is being represented by Assistant U.S. Attorneys Patrick Otlewski, Erika Csicsila, and Derek Owens.
An indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Indictment
New York Man Convicted of Sex Trafficking FemalesRead the Press Release
PHILADELPHIA - Justin Williams, a/k/a "New York Ice", a/k/a "Pimp Juice", 39, of
New York, NY, was convicted today of sex trafficking young women. Between November 2011 and January 2012, Williams recruited young females to work as prostitutes in his business who were advertised on the Internet for purchase, using locations such as "Backpage," for purposes of prostitution. Williams engaged in acts of physical violence to force the victims to remain in his business. The advertisements featured pictures of the victims, scantily clad, the price, and a phone number to call to arrange a meeting with a female. Williams forced the victims to engage in sex acts with clients.Williams exploited at least three females, ranging in age from 18 to 27. He moved them between Philadelphia, New York, Atlantic City, NJ, and Washington, DC, for purposes of prostitution. He was convicted of two counts of sex trafficking by force and one count of witness tampering for writing a letter to victim #2 to retract her statement prior to trial.
Williams faces a 15-year mandatory minimum prison sentence on the sex trafficking counts with a maximum sentence of life. U.S. District Court Judge J. Curtis Joyner scheduled a sentencing hearing for January 23, 2014.
This case was investigated by the Federal Bureau of Investigation, Arlington County Police Department (Arlington, VA), with assistance from the Philadelphia First Judicial Court Warrant Unit, and the New York City Police Department. It is being prosecuted by Assistant United States Attorney Michelle Morgan.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525New Haven Man Sentenced to 63 Months in Federal Prison for Distributing Heroin and Crack CocaineRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that JESUS MORALES, also known as “Cano,” 41, of New Haven, was sentenced today by Senior U.S. District Judge Ellen Bree Burns in New Haven to 63 months of imprisonment, followed by three years of supervised release, for distributing heroin and crack cocaine.
MORALES is one of more than 100 individuals charged as a result of “Operation Bloodline,” a joint law enforcement investigation targeting narcotics trafficking and gang violence in the Dwight-Kensington and Fair Haven sections of New Haven. Led by the DEA New Haven Task Force and the New Haven and Hamden Police Departments, the year-long investigation included the use of court-authorized wiretaps on numerous telephones, extensive physical surveillance, controlled purchases of narcotics, execution of search warrants and seizures of narcotics and firearms. The investigation revealed that MORALES conspired with others to purchase and redistribute heroin and cocaine base (“crack cocaine”).
MORALES has been detained since his arrest on May 21, 2012. On April 4, 2013, he pleaded guilty to one count of conspiracy to possess with intent to distribute, and to distribute, heroin and cocaine base (“crack”).
MORALES’s criminal history includes five felony convictions for drug offenses and one felony conviction for robbery in the second degree.
This matter is being investigated by the Drug Enforcement Administration’s New Haven Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the New Haven, Hamden, West Haven, North Haven, Branford, Ansonia and Meriden Police Departments. The United States Marshals Service, the Connecticut State Police, the Connecticut Department of Correction, Parole and Community Services and the Milford, Hartford, New Britain, North Branford and Stratford Police Departments have provided valuable assistance to the investigation.
This case is being prosecuted by Assistant United States Attorneys S. Dave Vatti and Marc Silverman.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]New Bern Man Sentenced for Bankruptcy Fraud CrimesRead the Press Release
RALEIGH – United States Attorney Thomas G. Walker announced that today in federal court, United States District Judge Terrence W. Boyle sentenced TODD ALLEN FULCHER , 49, to six months imprisonment, followed by three years of supervised release, and an order of restitution.
FULCHER was named in an Indictment filed on October 3, 2012, charging him with one count of Bankruptcy fraud and four counts of Concealment of assets, false oaths and claims, bribery, and one count of Destruction, alteration or falsification of records in relation to a bankruptcy case in the Eastern District of North Carolina. On April 10, 2013, FULCHER pled guilty to one count of Bankruptcy fraud in violation of Title 18, United States Code, Section 157(3) and one count of Destruction, alteration or falsification of records in violation of Title 18, United States Code, Section 1519.
According to the investigation, beginning on or about January 9, 2010, and continuing through November 2011, FULCHER, devised a scheme to defraud by means of materially false and fraudulent pretenses and representations as part of a bankruptcy proceeding. He knowingly made false statements on his bankruptcy Schedules and Statement of Financial Affairs; FULCHER also knowingly concealed bank account information; income information; real estate located in Trenton, North Carolina; three shotguns and two riles; and wood working hand tools with regard to his bankruptcy after filing for Chapter 13 relief under Title 11. Additionally, FULCHER fraudulently concealed personal property belonging to the estate, including a boat, firearms, and a motorcycle. Additionally, he knowingly concealed vehicles belonging to Fulcher Tire Sales & Service, Inc. which belonged to the corporation’s bankruptcy estate.
The United States Bankruptcy Court for the Eastern District of North Carolina previously had entered orders detaining FULCHER for contempt for his failure to attend creditors’ meetings and to abide by the orders of the court.Investigation of this case was conducted by the Federal Bureau of Investigation. Assistant United States Attorney S. Katherine Burnette prosecuted the case for the government.
More Than 50 People Indicted in Massive Fraud RingRead the Press Release
A massive case of organized tax and bank fraud culminated today with the unsealing of four federal grand jury indictments accusing 55 people of participating in one or more illicit schemes, including the theft of more than 2,000 identities that were used to claim more than $20 million in bogus IRS tax refunds. As a result the IRS paid out more than $7 million – even issuing payments in the names of dead people.
The charges are the result of a two year-long investigation by federal and local authorities in San Diego and Los Angeles. Twenty-two defendants were arrested this morning during sweeps in Los Angeles, San Diego, Las Vegas and Maryland. Hundreds of federal, state, and local law enforcement officers participated in the takedown. Thirty-three defendants remain at large, including 21 who are believed to be out of the country. During searches at 12 locations, authorities seized $13,000 in cash and four handguns, including three that were unregistered.
“This case is staggering in terms of the number of victims, its level of sophistication, its audacious methods and the callous disregard for victims,” said U.S. Attorney Laura Duffy. “These arrests are the first strike back on behalf of taxpayers and more than 2,000 victims who now have to reclaim their good names – a frustrating task that can take years. We will continue to make these cases a priority.”
“Individuals who commit refund fraud and identity theft of this magnitude and with this degree of dishonesty and deceit, deserve to be punished to the fullest extent of the law,” said Richard Weber, Chief, IRS Criminal Investigation. “IRS Criminal Investigation, along with our law enforcement partners and the United States Attorney's Office, remain vigilant in identifying, investigating and prosecuting individuals involved in these schemes.”
FBI Special Agent in Charge, Daphne Hearn, commented, “This investigation involved multiple complex fraudulent schemes resulting in significant losses to financial institutions and American taxpayers. Today's arrests...send a clear message to those involved in stealing money from American taxpayers. The FBI and our partners will aggressively pursue those involved in stealing precious taxpayer money through fraudulent schemes.”
Tax refund fraud involving the use of stolen identities has emerged as such a fast-growing crime category that it has earned an acronym – SIRF – for Stolen Identity Refund Fraud. The Department of Justice issued a new directive last year to coordinate, expedite and streamline the prosecutorial efforts of the Tax Division and U.S. Attorneys offices nationwide.
The various schemes are described in four separate indictments:
- The largest indictment – involving the identity theft and bogus tax refunds - charges 29 people and involved the alleged filing of about 2,000 fraudulent tax returns. The coconspirators filed two types of fraudulent returns – those that claimed refunds from fabricated gambling winnings and losses, and those based on made-up wages and withholdings. The returns sought $17 million in undeserved refunds.
This scheme involved the participation of scores of San Diego-based foreign nationals from former Soviet bloc countries - including Russia, Kazakhstan, and Turkmenistan - who were visiting San Diego using J-1 and F-1 visas. The visas allow foreigners to come to the United States for a short period of time to study, work, and travel.
However, instead of studying or working, the almost two dozen foreign nationals charged today allegedly worked primarily as foot soldiers for criminal organizations operating in Los Angeles and elsewhere. Leaders of the identity theft ring, many of whom are Armenian nationals or Armenian-American, exploited the popular student visa program in part because the visa holders would not be here long. In fact, many have since returned to their countries.
The alleged leaders of the stolen identity fraud schemes were Arthur Grigorian, Ernest Soloian and Hovhannes Harutyunyan. One of the defendants, Yvonne Mihailescu, used her position as an of Wells Fargo Bank to open bank accounts which were used to receive the fraudulent tax refunds launder the proceeds, according to the indictment.
While here, they rented apartments in San Diego and elsewhere, opened post office boxes and bank accounts at the San Diego branches of Bank of America and Wells Fargo, and collected fraudulent tax refunds through the receipt of refund checks and direct deposits from the U.S. Treasury. Some of the refund checks were mailed to apartments on University Avenue and El Cajon Boulevard in San Diego.
The indictment indicates that the coconspirators employed sophisticated methods to cover their tracks. For instance, they took steps to disguise their Internet Protocol (IP address) when filing tax returns electronically, making it difficult for law enforcement to determine the location. In addition, they used code language when communicating and referred to each other only by nicknames, such as “Anaconda” and “Blondie.” They used prepaid cell phones which they changed on a regular basis.
- A second indictment charges three people who are accused of filing more than 400 false returns using stolen identities which claimed more than $3 million in fraudulent refunds. Armen Eritsian and Hovhannes Harutyunyan are the alleged leaders of the scheme.
- A third indictment charges eight people, led by Hovakim Sogomonian and Harout Gevorgyan, and describes an elaborate ruse in which defendants obtained bank account and other personal information about wealthy Wells Fargo customers and then sent imposters to branches to withdraw large sums of money. The imposters altered their appearances with haircuts and new clothes and prepared by role-playing. In all they attempted to withdraw more than $3 million, and succeeded in obtaining $551,842, the indictment said. The imposters instructed tellers to wire large sums of money to the account of a gold dealer, and then they picked up gold coins from the dealer and delivered them to the other defendants.
- Finally, a fourth indictment charges 18 defendants, led by Karen Galstian and Vahag Stepanyan, with a scheme to defraud Bank of America of more than $600,000 by writing bad checks. This scheme also utilized stolen identities to further the fraud.
The FBI and IRS recommend that individuals take the following steps to minimize the chance of becoming a victim of identity theft:
Don’t carry your Social Security card or any document with your SSN on it.
Don’t give a business your SSN just because they ask. Give it only when required.
Protect your financial information.
Check your credit report every 12 months.
Secure personal information in your home.
Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts.
Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.All of the defendants arrested in today’s operation are expected to make their initial appearances in federal court either today or tomorrow in the district where they were arrested. Following the defendants’ initial appearances, the next scheduled court date is Oct. 3, 2013, at 2 p.m., before United States Magistrate Judge Mitchell D. Dembin.
*U.S. Attorney Duffy, the IRS’ Anthony J. Orlando and the FBI’s Darrell Foxworth will be available for interviews this afternoon. If you are interested, please contact Kelly Thornton at 619-546-9726.
DEFENDANTS Case Number: 13cr3479 *ARTHUR GRIGORIAN
*ERNEST SOLOIAN
*HAROUT GEVORGYAN
HOVHANNES HARUTYUNYAN
SUKHROB MUSAYEV
STANISLAV MELNIKOV
RENAT TALANOV
*YVONNE MIHAILESCU
MADLEN OSPANOVA
MERUYERT AKHMETOVA
INDIRA AKHMETOVA
*VYACHESLAV LAZAREV
YEVGENIY IVANOV
KARINA POLOZOVA
ZHASSULAN SHILIKBAY
SAGIT BATCHAEV
PATIMAT MAGALIYEV
KURBAN MAGALIYEV
ILYAS ABDRAKHAY
YERMEK DOSSYMBEKOV
VYACHESLAV TSOY
KONSTANTIN IVANOV
NURBEK AKHMADIYEV
ALISHER OMAROV
KSENIA CHABANOVA
*YELENA SKLYAROVA
ULAN ZAKIROV
TAIYR ZHURYN
YEVGENIY SOTNIKOV DEFENDANTS Case Number: 13cr3480 *ARMAN ERITSIAN
HOVHANNES HARUTYUNYAN
MARSAL MEDET DEFENDANTS Case Number: 13cr3481*KAREN GALSTIAN
DEFENDANTS Case Number: 13cr3482
*VAHAG STEPANYAN
*GEORGE KARAPETIAN
ARA ADAMYAN
*CHRISTOPHER BUCKELY
*CARLOS FERRUFINO, Jr.
*AKOP GALSTIAN
*FARBOB GOLHASSANI
PAUL T. GONNELLY, Jr.
*TATYANA KARBACHINSKAYA
MARIA KHARITONOVA
ALISA NOVIKOVA
*DAVID MEGUERIAN
*ASHOT MNATSAKAMYAN
SEDRAK MOVSESYAN
ROBERT T. RODRIGUEZ
*CHRISTOPHER RUIZ
*VARDGES VARDANYAN*HOVAKIM SOGOMONIAN
*HAROUT GEVORGYAN
*TIGRAN ERITSYAN
*EMIL STEPANYAN
SAGIT BATCHAEV
*KONSTANTIN YUGAY
*BAGDASAR BAGDASARYAN
*MAE BARBARA WEISSBERGER*In Custody
SUMMARY OF CHARGESThe following crimes are charged in at least one of the four indictments. For charges against each defendant, please see indictments.
Conspiracy – Title 18, U.S.C., Section 371
Maximum penalty: 5 years’ imprisonment and $250,000 fineMail Fraud – Title 18, U.S.C., Section 1341
Maximum penalty: 20 years’ imprisonment and $250,000 fineWire Fraud – Title 18, U.S.C., Section 1343
Maximum penalty: 5 years’ imprisonment and $250,000 fineMoney Laundering – Title 18, U.S.C. § 1956
Maximum penalty: 5 years’ imprisonment and $250,000 fineAggravated Identity Theft – Title 18, U.S.C., Section 1028A
Maximum penalty: 2 years’ imprisonment consecutive to underlying offenseConspiracy to Commit Bank Fraud – Title 18, U.S.C., Section 1349
Maximum penalty: 30 years’ imprisonment and $1,000,000 fineCriminal Forfeiture – Title 18, U.S.C., Section 981(a)(1)(C) and Title 28, U.S.C., Section 2461(c) Maximum penalty: Forfeiture of proceeds
AGENCIESFederal Bureau of Investigation
Internal Revenue Service Criminal Investigation
Los Angeles Police DepartmentAn indictment itself is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.
Michael Thomas Bad Old Man Pleads Guilty in U.S. Federal CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Great Falls, on September 26, 2013, before U.S. Magistrate Judge Keith Strong, MICHAEL THOMAS BAD OLD MAN, a 21-year-old resident of Browning and an enrolled member of the Blackfeet Tribe, pled guilty to burglary. Sentencing has been set for January 16, 2014. He is currently detained.
In an Offer of Proof filed by Assistant U.S. Attorney Ryan G. Weldon, the government stated it would have proved at trial the following:
On October 18, 2011, BAD OLD MAN and another male individual, identified here as "X.X.," bumped into the female victim in Browning, which is within the exterior boundaries of the Blackfeet Indian Reservation.
BAD OLD MAN and the victim used to date each other. BAD OLD MAN and "X.X." went to a bar, but later decided to go confront the victim and her new boyfriend. After asking around, "X.X." and BAD OLD MAN kicked in the door and entered a home in Browning, which was where the victim was staying with her new boyfriend.
When interviewed by the FBI, BAD OLD MAN stated that he had wanted to fight the victim's new boyfriend when he entered the home. People had come out of various rooms in the house, and BAD OLD MAN admitted that he "tore into everybody that I seen [sic]." BAD OLD MAN stated that homeowner's boyfriend approached BAD OLD MAN. At that point, "X.X." jumped in and started to fight with the homeowner's boyfriend. BAD OLD MAN then went to the back of the residence and started using his fists to punch the victim's new boyfriend.
BAD OLD MAN faces possible penalties of 20 years in prison, a $50,000 fine and 3 years supervised release.
The investigation was conducted by the Federal Bureau of Investigation.
Miami Home Health Company Recruiter Pleads Guilty in $48 Million Health Care Fraud SchemeRead the Press Release
A patient recruiter of a Miami health care company pleaded guilty today for his participation in a $48 million home health Medicare fraud scheme.
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 Dennis of the HHS Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.
Emilio Amador, 46, pleaded guilty before U.S. District Judge Federico A. Moreno to one count of conspiracy to receive health care kickbacks and two counts of receiving health care kickbacks. He faces a maximum penalty of five years in prison for each count when he is sentenced on Dec. 4, 2013.
According to court documents, Amador was a patient recruiter who worked for Caring Nurse Home Health Care Corp. (Caring Nurse), a Miami home health care agency that purported to provide home health and therapy services to Medicare beneficiaries.
According to court documents, from approximately January 2006 through approximately June 2011, Amador would recruit patients for Caring Nurse, and in doing so would solicit and receive kickbacks and bribes from the owners and operators of Caring Nurse in return for allowing Caring Nurse to bill the Medicare program on behalf of the patients Amador had recruited. These Medicare beneficiaries were billed for home health care and therapy services that were medically unnecessary and/or not provided.
According to court documents, Amador also pleaded guilty to his involvement with fraudulent billings for Nation’s Best Care Home Health, Corp. (Nation’s Best) as relevant conduct. Amador was the owner, operator and president of Nation’s Best. The billings for Nation’s Best were approximately $30 million.
In a related case, on Feb. 27, 2013, Rogelio Rodriguez and Raymond Aday, the owners and operators of Caring Nurse and Good Quality Home Health Care, Inc. (Good Quality), another fraudulent home health care agency, were sentenced to 108 and 51 months in prison, respectively. Their sentencings followed their December 2012 guilty pleas to one count each of conspiracy to commit health care fraud charged in an October 2013 indictment. From in or around January 2006 through in or around June 2011, Caring Nurse and Good Quality submitted approximately $48 million in claims for home health services that were not medically necessary and/or not provided. Medicare paid approximately $33 million for these fraudulent claims.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Assistant Chief Joseph S. Beemsterboer of the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,500 defendants who collectively have falsely billed the Medicare program for more than $5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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.Miami Home Health Company Recruiter Pleads Guilty in $48 Million Health Care Fraud SchemeRead the Press Release
A patient recruiter of a Miami health care company pleaded guilty today for his participation in a $48 million home health Medicare fraud scheme.
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 Dennis of the HHS Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.
Emilio Amador, 46, pleaded guilty before U.S. District Judge Federico A. Moreno to one count of conspiracy to receive health care kickbacks and two counts of receiving health care kickbacks. He faces a maximum penalty of five years in prison for each count when he is sentenced on Dec. 4, 2013.
According to court documents, Amador was a patient recruiter who worked for Caring Nurse Home Health Care Corp. (Caring Nurse), a Miami home health care agency that purported to provide home health and therapy services to Medicare beneficiaries.
According to court documents, from approximately January 2006 through approximately June 2011, Amador would recruit patients for Caring Nurse, and in doing so would solicit and receive kickbacks and bribes from the owners and operators of Caring Nurse in return for allowing Caring Nurse to bill the Medicare program on behalf of the patients Amador had recruited. These Medicare beneficiaries were billed for home health care and therapy services that were medically unnecessary and/or not provided.
According to court documents, Amador also pleaded guilty to his involvement with fraudulent billings for Nation’s Best Care Home Health, Corp. (Nation’s Best) as relevant conduct. Amador was the owner, operator and president of Nation’s Best. The billings for Nation’s Best were approximately $30 million.
In a related case, on Feb. 27, 2013, Rogelio Rodriguez and Raymond Aday, the owners and operators of Caring Nurse and Good Quality Home Health Care, Inc. (Good Quality), another fraudulent home health care agency, were sentenced to 108 and 51 months in prison, respectively. Their sentencings followed their December 2012 guilty pleas to one count each of conspiracy to commit health care fraud charged in an October 2013 indictment. From in or around January 2006 through in or around June 2011, Caring Nurse and Good Quality submitted approximately $48 million in claims for home health services that were not medically necessary and/or not provided. Medicare paid approximately $33 million for these fraudulent claims.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Assistant Chief Joseph S. Beemsterboer of the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,500 defendants who collectively have falsely billed the Medicare program for more than $5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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.
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.
Mexican Man Pleads Guilty to Re-entering the United States After Having Been Previously RemovedRead the Press Release
Defendant Sentenced to Time Served
ALBANY, NEW YORK—IGNACIO HERNANDEZ-LOPEZ, age 39, a citizen of Mexico, pled guilty and was sentenced today in United States District Court in Albany before United States District Court Judge Mae A. D’Agostino to one count of re-entry by a previously removed alien, announced United States Attorney Richard S. Hartunian. HERNANDEZ-LOPEZ was sentenced to time served.
HERNANDEZ-LOPEZ, a citizen of Mexico, was involuntarily removed from the United States to Mexico on March 17, 2004. On August 16, 2013, HERNANDEZ-LOPEZ, who did not have permission to re-enter the United States, was encountered by Immigration and Customs Enforcement officers in Whitehall, New York.
This case was investigated by the Department of Homeland Security, Immigration and Customs Enforcement (ICE), Albany, New York.
Medina Man Sentenced to 14 Years in Prison for Child Pornography CrimesRead the Press Release
A Medina man was sentenced to 14 years in prison for crimes related to child pornography, law enforcement officials said today.
Richard J. Miezin, 48, was previously found guilty of receiving, distributing and possessing visual depictions of minors engaged in sexually explicit conduct, as well as making false statements and representations to the Federal Bureau of Investigation during their investigation.
Miezin knowingly distributed, by computer, numerous computer files, which contained visual depictions of real minors engaged in sexually explicit conduct from April 27, 2010, through February 25, 2011, according to court documents.
“This sentence should send a message to those who would victimize children,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
“Victims of child pornography are repeatedly harmed when images of their abuse are distributed over the Internet,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office. “Individuals like Richard Miezin, who choose to engage in such despicable behavior, will be brought to justice.”
“Protecting our children from this type of exploitation is one of my highest priorities,” said Medina County Sheriff Tom Miller. “I remain committed to combating those who would seek to victimize the most innocent among us.”
This case is the result of was a joint effort of the Medina County Sheriff’s Office and the Akron Office of the FBI’s Crimes Against Children Task Force. The case was prosecuted by Assistant United States Attorney Carol M. Skutnik.
Targeting child predators is a priority of this newly established task force with the Medina County Sheriff and FBI. This task force will utilize all available investigative, technical and community resources to protect the children in our communities.
Medical Clinic Owners and Patient Recruiters Charged in Miami for Role in $8 Million Health Care Fraud SchemeRead the Press Release
Several patient recruiters, including two medical clinic owners, have been arrested in connection with a health care fraud scheme involving defunct home health care company Flores Home Health Care Inc. (Flores Home Health).
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 Dennis of the HHS Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.
In an indictment returned on Sept. 24, 2013, and unsealed this afternoon, Isabel Medina, 49, and Lerida Labrada, 59, were charged with conspiracy to commit health care fraud, which carries a maximum penalty of 10 years in prison upon conviction. Together with Mayra Flores, 49, and German Martinez, 36, Medina and Labrada also face charges for allegedly conspiring to defraud the United States and to receive health care kickbacks as well as receipt of kickbacks in connection with a federal health care program, which carry a maximum penalty of five years in prison upon conviction.
According to the indictment, the defendants worked as patient recruiters for the 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. Medina and Labrada were also the owners and operators of Miami medical clinics which allegedly provided fraudulent prescriptions to the owners and operators of Flores Home Health.
Flores Home Health was allegedly operated for the purpose of billing the Medicare program for, among other services, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.
From approximately October 2009 through approximately June 2012, Flores Home Health was paid approximately $8 million by Medicare for allegedly fraudulent claims for home health services.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by A. Brendan Stewart of the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,500 defendants who collectively have falsely billed the Medicare program for more than $5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted.
Medical Clinic Owners and Patient Recruiters Charged in Miami for Role in $8 Million Health Care Fraud SchemeRead the Press Release
Several patient recruiters, including two medical clinic owners, have been arrested in connection with a health care fraud scheme involving defunct home health care company Flores Home Health Care Inc. (Flores Home Health).
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 Dennis of the HHS Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.
In an indictment returned on Sept. 24, 2013, and unsealed this afternoon, Isabel Medina, 49, and Lerida Labrada, 59, were charged with conspiracy to commit health care fraud, which carries a maximum penalty of 10 years in prison upon conviction. Together with Mayra Flores, 49, and German Martinez, 36, Medina and Labrada also face charges for allegedly conspiring to defraud the United States and to receive health care kickbacks as well as receipt of kickbacks in connection with a federal health care program, which carry a maximum penalty of five years in prison upon conviction.
According to the indictment, the defendants worked as patient recruiters for the 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. Medina and Labrada were also the owners and operators of Miami medical clinics which allegedly provided fraudulent prescriptions to the owners and operators of Flores Home Health.
Flores Home Health was allegedly operated for the purpose of billing the Medicare program for, among other services, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.
From approximately October 2009 through approximately June 2012, Flores Home Health was paid approximately $8 million by Medicare for allegedly fraudulent claims for home health services.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by A. Brendan Stewart of the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,500 defendants who collectively have falsely billed the Medicare program for more than $5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted.
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.
Mechanicsburg Man Sentenced for Tax EvasionRead the Press Release
The United States Attorney's Office for the Middle District of Pennsylvania announced that Thomas C. Holloway, age 46, of Mechanicsburg, Pennsylvania, was sentenced today by Chief U.S. District Court Judge Christopher C. Conner for attempted income tax evasion for 2008. Holloway was sentenced to six months in prison, six months home confinement and one year of supervised release. Judge Conner further ordered that $80,000 in restitution be paid to the IRS.
According to United States Attorney Peter J. Smith, Holloway previously was employed by Spherion (an IT firm based in Mechanicsburg and formerly known as Intellimark and Technisource) between 2001 and 2009 and he embezzled company funds which were not reported on his income tax returns. Holloway previously was charged by local authorities with theft by deception in connection with the embezzlements and was sentenced in 2010 in state court to probation and ordered to pay $125,000 in restitution to Spherion. The current tax charges allege that the tax loss to the IRS was $80,000 for the years 2003-2009.
The case was investigated by the Criminal Investigation Division of the IRS and was prosecuted by Senior Litigation Counsel Bruce Brandler.
****Marshall County Man Charged with Sexual Exploitation of A MinorRead the Press Release
Peoria, Ill. — A federal grand jury has returned an indictment that charges Brian A. Miller, 35, of Varna, Ill., with 25 counts of sexual exploitation of a minor. The indictment, returned late yesterday, also seeks the criminal forfeiture of Miller’s cell phone and data storage device, alleging that said items were used in the commission of the alleged offenses and that the equipment was manufactured and transported in interstate and foreign commerce.
Miller was previously arrested and charged with one count of the same offense in a criminal complaint filed Aug. 29, 2013. At a hearing on Sept. 9, before U.S. Magistrate Judge John A. Gorman, Miller waived his detention hearing and was ordered to remain detained in the custody of the U.S. Marshals Service.
The affidavit filed in support of the criminal complaint alleges that Miller used a cell phone to take images of minors from a hole in the wall of his home while the minors were using a shower. The indictment returned today alleges that from about Jan. 1, 2010 through June 16, 2012, on 25 occasions, Miller used minors to produce images of child pornography.
If convicted, the statutory penalty for sexual exploitation of a minor in the production of child pornography is not less than 15 years in prison and up to 30 years in prison. The offense also carries a term of supervised release of up to life following any term of imprisonment.
The charge is the result of an investigation by the U.S. Secret Service; the Marshall County Sheriff’s Office, the Peoria County Sheriff’s Office and the Bloomington Police Department. Assistant U.S. Attorney Kirk D. Schoenbein is prosecuting the case.
Members of the public are reminded that an indictment is merely an accusation; the defendant is presumed innocent unless proven guilty.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Manhattan U.S. Attorney and FBI Announce Charges Against New York Accountant in Connection with the Fraud at Bernard L. Madoff Investment SecuritiesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Cheryl Garcia, the Acting Special Agent-in-Charge for the New York Regional Office of the U.S. Department of Labor’s Office of the Inspector General, Office of Labor Racketeering and Fraud Investigations (“DOL-OIG”), and Jonathan Kay, the Regional Director for the New York Regional Office of the United States Department of Labor, Employee Benefits Security Administration (“DOL-EBSA”) announced that PAUL J. KONIGSBERG was arrested today for his role in the scheme to falsify books and records at Bernard L. Madoff Investment Securities (“Madoff Securities”), through which Bernard L. Madoff ran his multibillion-dollar Ponzi scheme. KONIGSBERG was also charged in connection with his role in creating a fictitious, no-show job through which a co-conspirator received hundreds of thousands of dollars in compensation from Madoff. KONIGSBERG was presented in Manhattan federal court this afternoon.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Paul Konigsberg threw aside his ethical duties as an accountant in favor of his role as a false bookkeeper, which included allegedly participating in a scheme of back-dating client account statements to show fictitious trades and conjuring profits and losses of millions of dollars. With today’s indictment, he will be made to answer for his alleged conduct as yet another player on Madoff’s team.”
FBI Assistant Director-in-Charge George Venizelos said: “Sadly, as is often the case in a financial fraud, there was someone to help ‘cook the books’ in the Madoff scheme. Paul Konigsberg was arrested by FBI agents for his alleged role in the multibillion-dollar Ponzi scheme run by Bernard Madoff. Konigsberg allegedly falsified books and records and created a no-show job so a co-conspirator could receive thousands of dollars in compensation. The FBI will continue to investigate and arrest those involved with the Madoff scheme in an attempt to bring some justice to the victims of this devastating fraud.”
DOL-OIG Acting Special Agent-in-Charge Cheryl Garcia said: “Today’s arrest highlights our commitment to work with our law enforcement partners to investigate those who allegedly defraud employee benefit plans and seek to conceal their crimes by falsifying documents required by the Employee Retirement Income Security Act.”
DOL-EBSA New York Regional Director Jonathan Kay said: “Accurate reporting is an essential part of maintaining employee benefit plan integrity. EBSA’s efforts in this case exemplify our commitment to protecting employee benefits and working in coordination with fellow federal agencies.”
In a separate action, the United States Securities and Exchange Commission (“SEC”) announced civil charges against KONIGSBERG.
According to a superseding indictment unsealed today in Manhattan federal court:
KONIGSBERG, a lawyer and Certified Public Accountant, was the senior tax partner of Konigsberg Wolf & Co., P.C. (“Konigsberg Wolf”) and a minority shareholder of Madoff Securities International Limited (“Madoff International”), Madoff’s London-based affiliate. KONIGSBERG was the only person outside of the Madoff family to hold an ownership interest in either Madoff Securities or Madoff International.
Beginning in at least the early 1990s, Madoff began to steer many of his investors towards KONIGSBERG’s accounting practice, particularly certain long-time investors in whose accounts Madoff executed the most glaringly fraudulent transactions. By December 2008, when Madoff’s scheme collapsed, Konigsberg Wolf provided accounting services in connection with more than approximately 300 Madoff Securities accounts. As their accountant, KONIGSBERG typically received duplicate copies of his client’s Madoff Securities account statements, and sometimes the only copy.
After the death of one long-time Madoff client – who had recruited investors and had been promised by Madoff corresponding annual commission payments in the form of guaranteed returns – Madoff encouraged the client’s widow to use KONIGSBERG as her accountant. KONIGSBERG, Madoff, and Frank DiPascali, Jr. – who pled guilty for his role in the fraud and is cooperating with the Government – agreed on an investment “strategy” for the widow’s account. Under the “strategy,” the widow’s money would be “invested” in United States Treasury bonds and cash equivalents for the first 11 months of each year, and then in December, DiPascali would fabricate back-dated options trades in order to generate the promised returns. For instance, one of the widow’s accounts was invested in Treasuries and money market funds in January through November of 2003, resulting in net equity at the end of November 2003 of approximately $860,000. In January 2004, however, DiPascali back-dated fake options trades purportedly executed in December 2003 to generate an additional approximately $825,000, nearly doubling the value of the account. Each December, over the course of several years, KONIGSBERG spoke with DiPascali to ensure that DiPascali arranged for the back-dated trades necessary to ensure the widow’s promised returns.
Similarly, in May 2003, KONIGSBERG requested that another co-conspirator who worked at Madoff Securities (“CC-1”) create back-dated trades in a second client’s account, retroactive to December 2002, in order to generate losses for tax purposes. A Madoff Securities worksheet reflecting the specific composition of the back-dated trades bears the notation “Paul OK’d this,” and an associated note reads, “Jan losses were for 2002 Tax & were put on in May 2003.” The Madoff Securities computer system confirms that in May 2003, CC-1 back-dated the precise trades that “Paul OK’d” to December 2002.
From time to time, moreover, Madoff “amended” the holdings of certain of his oldest clients, replacing statements reflecting one set of securities with revised statements, for the exact same time period, reflecting entirely different holdings and values. Because the existence of multiple, vastly different account statements for the same time risked exposing the fraud, Madoff could only ask certain trusted clients to return their statements in favor of the “amended” ones. Because KONIGSBERG serviced many of Madoff’s most important accounts, he frequently returned statements in favor of the “amended” ones. For example, in late 2002 or early 2003, KONIGSBERG sent back an entire year’s worth of statements for one client in favor of new ones. The new statements reflected millions of dollars in additional profitable trading activity for the client. Likewise, in 2008, KONIGSBERG sent back several months’ worth of statements for a different client, in favor of new ones reflecting millions of dollars in losses.
In addition to being paid for his accounting services by the dozens of clients referred to him by Madoff, for over a decade, KONIGSBERG also received payments directly from Madoff Securities of approximately $15,000 to $25,000 per month for KONIGSBERG’S work in connection with one client in particular. That client, one of Madoff’s oldest and largest, deposited and withdrew tens of billions of dollars into Madoff Securities over the years, and Madoff executed glaringly fraudulent trades in his accounts, such as back-dating an entire year’s worth of statements into accounts that did not previously exist.
Beginning in approximately 1992, Madoff offered KONISBERG, the defendant, an additional cash payment of approximately $20,000 per year. Rather than receiving this money in the form of trading profits, KONIGSBERG instructed Madoff to pay a relative of KONIGSBERG’s (“CC-2”), who had previously worked at Madoff Securities. CC-2 received salary, health, and retirement benefits from Madoff Securities, despite the fact that in recent years CC-2 earned hundreds of thousands of dollars at an overseas hedge fund. Between approximately 1992 until December 2008, CC-2 received more than approximately $320,000 in cash compensation on account of CC-2’s “no show” job at Madoff Securities, plus health and retirement benefits to which CC-2 was not entitled.
KONIGSBERG, 77, was arrested in New York, New York. He is charged in two counts of conspiracy, one count of falsifying the books and records of a broker-dealer, one count of falsifying the books and records of an investment advisor, and one count of making false statements in a document required to be kept by ERISA. He faces a maximum sentence of 40 years in prison. He is also subject to mandatory restitution and criminal forfeiture, and faces criminal fines up to twice the gross gain or loss derived from the offense.
Mr. Bharara praised the work of the FBI, the DOL, and the Internal Revenue Service – Criminal Investigation. He also thanked the SEC.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which U.S. Attorney Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov .
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Matthew L. Schwartz, Randall W. Jackson, John T. Zach, and Christopher D. Frey are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
U.S. v. Paul Konigsberg S11 Indictment
Local Chiropractor Pleads Guilty to Fraudulent Billing ClaimsRead the Press Release
Springfield, Ill. –Christopher Leone, owner of Leone Family Chiropractic, 1019 S. 6th Street, Springfield, Ill., today waived indictment and pleaded guilty to submitting fraudulent bills for services to private insurance companies and the Medicare program. Leone appeared today before U.S. Magistrate Judge Byron G. Cudmore. Sentencing is scheduled on Feb. 3, 2014, before U.S. District Judge Sue E. Myerscough. Leone has agreed to pay restitution in the amount of $48,624 on or before the sentencing hearing.
Leone, 41, is the owner of C.D. Leone Chiropractic, P.C., doing business as Leone Family Chiropractic. Leone was directly responsible and in control of the practice’s business aspects, including billing patients and the submission of claims for services to insurance companies, when the fraudulent claims were submitted. The business specializes in chiropractic treatment for the spine and nervous system and also offers other wellness treatments, including physical therapy.
Beginning in about 2005 to February 2011, Leone admitted he billed private insurance companies for a total of approximately $48,624 and the Medicare program for services specifically coded for physical therapy that required the physician or therapist have direct (one-on-one) patient contact. Leone admitted that neither he nor a therapist had direct patient contact, and in fact, the patients performed all physical therapy treatment on their own without any supervision by Leone or any other employee.
The Illinois State Police, Medicaid Fraud Control Bureau, and the Federal Bureau of Investigation conducted the investigation. The government is represented by Assistant U.S. Attorney Patrick D. Hansen.
For the offense of submitting false demands for payment against the United States of less than $1,000, the penalty is up to one year in prison and a fine of up to $100,000. The defendant may also be required to pay restitution to victims of the offense.
Justice Department Resolves Citizenship Status Discrimination <br /> Charge Against Pennsylvania Employer Huber NurseriesRead the Press Release
The Justice Department announced today that it has reached a settlement agreement with Huber Nurseries, based in Manheim, Pa., resolving allegations that Huber engaged in citizenship status discrimination by preferring to hire temporary visa holders over recent lawful permanent residents from Nepal. The underlying charge was filed by Philadelphia Legal Assistance on behalf of the lawful permanent residents.
The Department of Justice investigation was initiated on Aug. 15, 2012 when six lawful permanent residents from Nepal were denied employment by the Pennsylvania nursery. The department concluded that Huber unlawfully preferred to hire twelve foreign national workers under the H-2A visa program and subjected the U.S. workers to different selection standards and increased scrutiny. The H-2A temporary agricultural program allows agricultural employers who anticipate a shortage of domestic workers to bring nonimmigrant foreign workers to the U.S. to perform temporary agricultural work. The Immigration and Nationality Act (INA) generally prohibits employers from refusing to hire protected workers, including U.S. citizens, certain lawful permanent residents, refugees and asylees, based on their citizenship status.
Under the terms of the settlement, Huber has agreed to pay $2,250 in civil penalties to the United States and $59,617 in back pay to the six injured parties, who are former refugees. Huber has also agreed to provide its human resources personnel with training on the anti-discrimination requirements of the INA, adopt nondiscrimination policies with respect to recruitment and hiring and maintain and submit records to the Department of Justice for the one-year term of the agreement. Trial Attorney Richard Crespo represented the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) in this matter.
“Work-authorized individuals should not be denied access to jobs because of unlawful discrimination on the basis of immigration status or national origin," said Jocelyn Samuels, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division. "We are pleased to have reached a settlement with Huber and look forward to continuing to work with employers to educate them about anti-discrimination protections and employer obligations under the law."
OSC is responsible for enforcing the anti-discrimination provision of the INA. For more information about protections against employment discrimination under the immigration laws, or to report a possible violation, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired), sign up for a free webinar at www.justice.gov/about/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc .
Justice Department Reaches Settlement with Southport Bank to Resolve Allegations of Mortgage Lending DiscriminationRead the Press Release
The Justice Department announced today that Southport Bank of Kenosha, Wis., will pay $687,000 to African-American and Hispanic wholesale mortgage borrowers as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of race and national origin.
The settlement, which is subject to court approval, was filed in conjunction with the Department’s complaint in the U.S. District Court for the Eastern District of Wisconsin. The complaint alleges that Southport charged hundreds of African-American and Hispanic borrowers higher fees than white borrowers on wholesale mortgage loans in violation of the Fair Housing Act (FHA) and Equal Credit Opportunity Act (ECOA). Southport cooperated fully with the Department’s investigation into its lending practices and agreed to settle this matter without contested litigation.
The lawsuit originated from a 2012 referral by the Federal Deposit Insurance Corporation (FDIC) to the Justice Department’s Civil Rights Division. Southport is regulated by the FDIC.
The proceeds of the settlement will be used to compensate the African-American and Hispanic victims of Southport’s alleged discrimination. Under the proposed settlement, a list of individual victims will be identified by the United States. The settlement requires borrowers who are eligible for compensation to be notified by the bank and provides for monitoring of the compensation process by the department.
Southport is not currently engaged in the business of wholesale home mortgage lending, but the settlement provides that if it re-enters that business, the bank will implement policies, practices and monitoring designed to prevent and detect potential fair lending violations.
“Discrimination on the basis of race and national origin in the extension of credit, including by wholesale lenders, must be eliminated,” said Jocelyn Samuels, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division. “We commend Southport for working cooperatively with the Justice Department in reaching an appropriate resolution of this case.”
“The United States Department of Justice, through both the Civil Rights Division and my office, remains steadfast in its commitment to identifying, investigating, and addressing patterns and practices of racial and national origin bias in the extension and management of mortgage loans” said James L. Santelle, U.S. Attorney for the Eastern District of Wisconsin. “ As reflected by today’s settlement, we are animated not only by the all-important mandates of the Fair Housing Act and the Equal Credit Opportunity Act but also by our much-related interest in ensuring that all Americans are afforded economic opportunities and financial options in this most basic aspect of life—housing. I join the Assistant Attorney General in recognizing the leadership of the Southport Bank of Kenosha for their cooperation in accomplishing this settlement that compensates members of our African-American and Hispanic communities for the discrimination that they suffered.”
The Justice Department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Rights Division. Since the Fair Lending Unit was established in February 2010, it has filed or resolved 26 lending matters under the FHA, ECOA and the Servicemembers Civil Relief Act. The settlements in these matters provide for a minimum of $660 million in monetary relief for impacted communities and more than 300,000 individual borrowers. The Attorney General’s annual reports to Congress subject to ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications/ .
The Civil Rights Division, the U.S. Attorney’s Office for the Eastern District of Wisconsin, and the FDIC are members of the 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. For more information on the task force, visit http://www.stopfraud.gov/ .
A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department’s website at http://www.justice.gov/fairhousing.
Justice Department Grant Awarded to Continue Anti-Violence Efforts in SeattleRead the Press Release
An innovative partnership led by the U.S. Attorney’s Office was awarded nearly $500,000 from the Department of Justice to continue efforts to combat gun violence in Seattle, announced U.S. Attorney Jenny A. Durkan. The two-year Project Safe Neighborhoods grant will support a comprehensive strategy to reduce gun crimes, work with at-risk youth, bolster re-entry efforts, and improve data gathering in the East and Southeast police precincts. The U.S. Attorney’s Office will lead a partnership of the King County Prosecuting Attorney’s Office, Seattle Police Department (SPD), Seattle Neighborhood Group, South Seattle Community College, Washington Association of Sheriffs and Police Chiefs, and research partner Michelle Maike.
“We must join together and use all tools to reduce gun violence in neighborhoods that have experienced far too much of it,” said U.S. Attorney Durkan. “That means supporting prevention efforts for at-risk youth, giving those re-entering our neighborhoods skills and support, and continuing our emphasis on prosecuting gun-related crimes. We are moving forward with proven community strategies, critical law enforcement support and extensive data gathering to keep our communities safe.”
The grant funding announced today will continue to fund a Senior Deputy King County Prosecutor to act as a Special Assistant U.S. Attorney, reviewing and prosecuting firearms-related cases. The grant also provides $90,000 for four youth prevention and intervention programs developed by Seattle Neighborhood Group. The programs include a chess club run by SPD Detective Denise “Cookie” Bouldin, a youth-run record label, an urban writing project for teens, and a boxing program developed by a former gang member. The grant also provides $90,000 to South Seattle Community College to provide life skills training, workforce development and other education programs to ex-offenders returning to the target neighborhoods.
Additional funding is aimed at gathering data on the programs and evaluating which strategies are working. SPD will receive $20,000 for its crime analysis unit to purchase new equipment and gather data for the program. An experienced researcher, Michelle Maike, will receive $100,000 to analyze the data and help develop new strategies to combat gun violence. Additionally, $30,000 is targeted towards raising public awareness of the anti-crime efforts in impacted neighborhoods. The Washington Association of Sheriffs and Police Chiefs will help administer the grant.
Jury Convicts Defendant in $25 Million Fraud SchemeRead the Press Release
Defendant Claimed to be a Fortune Teller and Spiritual Adviser
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Michael J. De Palma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation, (IRS-CI), Frank Adderly, Chief, Fort Lauderdale Police Department, and Paula Reid, Special Agent in Charge, U.S. Secret Service, Miami Field Office, announce that a Fort Lauderdale federal jury found Rose Marks, 62, of Fort Lauderdale, Florida and New York, New York, guilty of all counts charged in connection with a $25 million fraud scheme.
More specifically, after a month-long trial, the jury convicted Rose Marks of all 14 counts in an indictment which charged conspiracy to commit mail fraud and wire fraud (18 U.S.C. ' 1349), mail fraud (18 U.S.C. ' 1341), wire fraud (18 U.S.C. ' 1343), conspiracy to commit money laundering and money laundering (18 U.S.C. ' 1956 and 1957), and filing false income tax returns (26 U.S.C. ' 7206). At sentencing, the defendant faces a maximum statutory term of 20 years in prison for each of the mail, wire fraud and conspiracy counts, 10 years for the money laundering counts and three years in prison for each of the tax counts, as well as mandatory restitution and possible fines.
Rose Marks was taken into custody after the verdict was returned. Sentencing is scheduled for December 9, 2013 at 3:30 p.m. before U.S. District Judge Kenneth A. Marra in West Palm Beach.
On August 16, 2011, a multi-count indictment was unsealed charging Rose Marks and nine other defendants with conspiracy to commit mail fraud and wire fraud (18 U.S.C. ' 1349), mail fraud (18 U.S.C. ' 1341), wire fraud (18 U.S.C. ' 1343), and money laundering conspiracy (18 U.S.C. ' 1956). The indictment, the result of “Operation Crystal Ball,” focused on a group of individuals, all family members, claiming to be fortune tellers, psychic readers and spiritual advisors. In reality, however, these individuals defrauded more than twenty victims out of $25 million.
According to the evidence at trial, Rose Marks and her co-conspirators held themselves out as fortune tellers, clairvoyants and spiritual advisers. In this way, they falsely represented to their victims that they could remove purported curses or negativity from their lives or that of their loved ones. Rose Marks and her co-conspirators claimed that these curses were the cause of illnesses, family problems, marital and relationship issues and other difficulties faced by their victims.
The evidence and testimony presented at trial showed that to execute the scheme, Rose Marks and her co-conspirators used magic tricks and false statements to induce their victims to give them large sums of money and other valuables, including jewelry and gold coins, to be “sacrificed” and “cleansed” of negativity. The defendants told victims that the money would be used for the “work”, which included meditation and prayer, and that they and their family would continue to suffer terrible consequences, unless the money and valuables was “cleansed.” Although the defendants promised to return the victims’ money and valuables when the “work” was completed, the defendants deposited the victims’ funds into bank accounts they controlled and used the money to pay for their personal expenses and promote their lifestyle.
The following defendants have entered guilty pleas and are awaiting sentencing in connection with the August 16, 2011, Indictment:
Vivian Marks, of Fort Lauderdale, Florida; pled guilty on 2/8/2013; Sentencing is set for 10/7/2013 at 1:30 p.m. in West Palm Beach, Florida.
Ricky Marks, of Fort Lauderdale, Florida and New York, New York; pled guilty on 3/12/2013; sentencing is set for 10/7/2013 1:30 p.m. in West Palm Beach, Florida.
Michael Marks, of Fort Lauderdale, Florida; pled guilty on 11/28/2012; sentencing is set for 10/7/2013 at 1:30 p.m. in West Palm Beach, Florida.
Victoria Eli, of Fort Lauderdale, Florida and Secaucus, New Jersey; pled guilty on 3/15/2013; sentencing is set for 11/4/2013 at 1:30 p.m. in West Palm Beach, Florida.
Nancy Marks, of Fort Lauderdale, Florida and New York, New York; pled guilty on 3/14/2013; sentencing is set for 12/2/2013 at 10:00 a.m. in West Palm Beach, Florida.
Rosie Marks, of Fort Lauderdale, Florida; pled guilty on 2/8/2013; sentencing is set for 12/2/2013 at 10:00 a.m. in West Palm Beach, Florida.
Cynthia Miller, of Fort Lauderdale, Florida; pled guilty on 3/15/2013; sentencing is set for 12/2/2013 at 10:00 a.m. in West Palm Beach, Florida.
Donnie Eli, of Fort Lauderdale, Florida and New York, New York; pled guilty on 2/08/2013; sentencing is set for 12/2/2013 at 10:00 a.m. in West Palm Beach, Florida.Mr. Ferrer commended the investigative efforts of IRS-CI, the Fort Lauderdale Police Department and U.S. Secret Service. This case is being handled by Assistant U.S. Attorneys Roger Stefin and Laurence Bardfeld.
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.
Indictment Charges Man with Passport FraudRead the Press Release
PHILADELPHIA – Ramon Ignacio Rosa-Santos, 32, of Philadelphia, was charged today in an Indictment with passport fraud and falsely claiming to be a United States citizen, announced United States Attorney Zane David Memeger. According to the Indictment, Rosa-Santos, an alien and a native and citizen of the Dominican Republic, falsely represented his identity in an application for an United States passport. Rosa-Santos falsely stated that his name was “J.L.S.,” and that he was born in Puerto Rico, and was, therefore, a United States citizen, which he knew to be false.
If convicted of the offenses, Rosa-Santos faces a total maximum sentence of 15 years imprisonment, a $500,000 fine, five years supervised release, and a $200 special assessment.
This case was investigated by the United States State Department Diplomatic Security Service and Immigration and Customs Enforcement. The case is being prosecuted by Assistant United States Attorney Anita Eve.
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, 215-861-8525Harrisburg Man Charged Federally with Firearm Violation as Result of Drug Transaction DisputeRead the Press Release
The United States Attorney's Office for the Middle District Pennsylvania announced that a federal grand jury in Harrisburg returned an indictment Wednesday charging Anderson Ortiz, age 34, of Harrisburg, Pennsylvania, for possessing a firearm after being convicted of a felony.
According to United States Attorney Peter J. Smith, the charge resulted from a May 31, 2013 incident in Harrisburg in which weapons were fired during an alleged dispute over drugs.
The case was investigated by the FBI and the Harrisburg Police Department as part of an on-going coordinated effort to combat drug violence in Harrisburg.
Prosecution is assigned to Assistant United States Attorney Joseph J. Terz.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is 10 years’ imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.Guy Joseph Manzo Pleads Guilty in U.S. Federal CourtRead the Press Release
The United States Attorney(s Office announced that during a federal court session in Missoula, on September 24, 2013, before U.S. District Judge Donald W. Molloy, GUY JOSEPH MANZO, a 62-year-old resident of North Babylon, New York, pled guilty to wire fraud. Sentencing has been set for January 8, 2014. He is currently released on special conditions.
In an Offer of Proof filed by Assistant U.S. Attorney Timothy J. Racicot, the government stated it would have proved at trial the following:
On January 3, 2011, MANZO, who lives in New York, opened checking and savings accounts with Glacier Bank in Montana using the bank's online account opening services. The checking account number ended in 0308 and the savings account number ended in 0338. On January 12, 2011, MANZO opened a second checking account with Glacier Bank, ending in 0391.
In February 2011, MANZO attempted to fund the checking account ending in 0308 with three bad checks, totaling $9,252. Shortly thereafter, on March 1, 2011, Glacier Bank closed and charged off MANZO's 0308 account in the amount of $318.01. After the account was closed, he continued to write checks against the account. Between March and October 2011, MANZO wrote 36 bad checks against the closed 0308 account for a combined total of $175,042. Thirty-four of these checks, worth $173,000, were made payable to "Citibanks Mastercard." Each of the checks contain MANZO's signature.
In September 2011, MANZO successfully made 21 fraudulent ACH transfers, totaling $16,057.36, from an account with Glacier Bank that did not belong to him. Eleven of those transfers, totaling $887.42, were for his personal benefit. The other ten, totaling $15,071.94, were made for the benefit of his girlfriend (name withheld to protect privacy). Glacier Bank discovered the fraudulent transfers on September 30, 2011.
Finally, between October 2011 and January 2012, MANZO attempted 54 fraudulent ACH transfers, for a combined total of $45,325.61, which were ultimately unsuccessful. Those 54 attempted transfers did not process because they were attempted against closed accounts or accounts that did not exist. It appears MANZO attempted those fraudulent transactions by guessing Glacier Bank customer account numbers. Twelve of the attempted transfers, totaling $1,814.16, were made for the benefit of MANZO himself, and 42, totaling $43,511.45, were made for the benefit of his girlfriend.
On February 15, 2012, a Secret Service agent interviewed MANZO. MANZO confirmed that he had several accounts through Glacier Bank, but stated that the accounts were closed and no longer available for his use. When presented with copies of the checks written on his closed Glacier account, MANZO confirmed his signature and admitted he had negotiated the checks despite knowing the account was closed. MANZO said he wrote the checks to pay creditors in order to maintain his credit score, and explained that as long as creditors had the appearance of being paid, his credit score would stay in the low 700s. MANZO also explained that his girlfriend was battling cancer and that he is on disability for a back injury that he sustained while employed as a plumber. MANZO said he has no other source of income.
MANZO faces possible penalties of 20 years in prison, a $250,000 fine and 3 years supervised release.
The investigation was conducted by the United States Secret Service.
Greenville Shooter SentencedRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announced that in federal court today United States District Judge Terrence W. Boyle sentenced MARKIS R. ALLEN, 21, of Greenville, North Carolinato 120 months imprisonment followed by three years supervised release.
On January 16, 2013, a Federal Grand Jury returned an Indictment charging ALLEN with unlawful possession of a firearm by a convicted felon. On March 19, 2013, ALLEN pled guilty to the charge.
According to the investigation, on October 14, 2011, Greenville police officers responded to a shooting. When officers arrived at the location, they found the victim with a gunshot wound. After a description was obtained and distributed, officers found ALLEN behind a residence. Officers found a loaded shotgun concealed down the rear of ALLEN’s pants.The criminal investigation of this case was conducted by Bureau of Alcohol, Tobacco, Firearms and Explosives and the Greenville Police Department. Assistant United States Attorney Jane J. Jackson handled the prosecution on behalf of the Eastern District of North Carolina.
Fort Polk Man Pleads Guilty to Sexually Abusing A 13-year Old GirlRead the Press Release
LAKE CHARLES, La. – United States Attorney Stephanie A. Finley announced today that Eric Britton, 19, of Fort Polk, La., pleaded guilty before U.S. District Judge Patricia Minaldi to sexually abusing a minor.
According to the evidence presented at the guilty plea, Britton admitted that on July 20, 2012, he engaged in sexual intercourse with a 13-year-old female at an unoccupied residence on the Fort Polk military base.
As a result of his guilty plea, Britton faces up to 15 years in prison, a $250,000 fine, and a lifetime of supervised release for sexual abuse of a minor. He will also be required to register as a sex offender. Sentencing has been set for January 9, 2014.
The U.S. Army Criminal Investigation Command and the FBI conducted the investigation. Assistant U.S. Attorney Daniel J. McCoy is prosecuting the case.
Former Vice President of Alberici Constructors Pleads Guilty to FraudRead the Press Release
St. Louis, MO – Clone Jefferson Oliver pled guilty to participating in a scheme to defraud Alberici Constructors, Inc. by inflating invoices.
CLONE JEFFERSON OLIVER, Apollo Beach FL, former vice-president of construction at St. Louis-based Alberici, pled guilty to six counts of mail fraud, wire fraud and money laundering. United States District Judge Catherine D. Perry has set his sentencing has been set for December 19, 2013.According to court documents, Oliver was the project manager for Alberici on a project to build a water treatment plant in Arlington County, Virginia. Work on the project began in September 2006 and the cost of the project was $238,000,000. Oliver and Kenneth Marc Simmons, a subcontractor on the project, participated in a scheme to defraud Alberici through the preparation and submission of inflated invoices and false change orders for materials provided to the project by Simmons' business, Industrial and Municipal Supply (IMS). When IMS received payment on the bad invoices, Simmons kept a share and then forwarded money in the nature of kickbacks to Oliver. Simmons made many of the payments to a corporation formed by Oliver called Advanced Construction Solutions which had the same initials (ACS) as another supplier to the Arlington project, American Construction Services. The court document refers to Oliver's company as the "fake ACS" while the latter company is referred to as the “real ACS.” Oliver admitted that, in the scheme to overpay IMS, Alberici was overbilled in the amount of $4.8 million from 2006 through 2011.
The real ACS provided welding services to the project. At Oliver's direction the owner of the real ACS billed Alberici for piping actually supplied by IMS in a situation where the real ACS provided only welding services on that piping. IMS invoiced the real ACS for that piping, through inflated invoices of approximately $2,000,000. The real ACS included those billings in the invoices it submitted to Alberici for payment.“IRS Criminal Investigation’s role becomes even more important in kickback schemes due to the complex financial transactions involving fictitious entities and false documents,” said Sybil Smith, Special Agent in Charge of IRS Criminal Investigation. “Those individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable.”
Each count of mail and wire fraud carries a maximum prison term of 20 years in prison and/or fines to $250,000. Oliver is charged in two additional counts of money laundering with each count carrying a maximum prison term of 10 years and/or a fine up to $250,000. If convicted, each defendant would be subject to an order of restitution in favor of Alberici.Oliver will be liable to pay Alberici the full $6.8 million in restitution. He agreed that property and assets he acquired with the stolen money would be forfeited as part of that restitution. This includes two houses in Florida (one in Apollo Beach and one in Zephyrhills), a diamond ring with platinum mounting, a 2010 Mercedes Benz vehicle, a 2007 Sea Ray boat, two SeaDoo Bombardier water craft and several bank accounts.
Co-defendant KENNETH MARC SIMMONS, La Grange GA, pled guilty earlier this month to two felony counts of mail fraud and two felony counts of wire fraud before Judge Perry. His sentencing is scheduled for December 18, 2013.
This case was investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation. Assistant United States Attorneys James E. Crowe, Jr., Anthony Franks and Richard Finneran are handling the case for the U.S. Attorney’s Office.
Former South Dakota Guardsman Sentenced for Embezzling Government PropertyRead the Press Release
United States Attorney Brendan V. Johnson announced that a Black Hawk, South Dakota, man convicted of Theft of Government Property was sentenced on September 25, 2013, by Chief Judge Jeffrey L. Viken, U.S. District Court.
Dennis Mallow, age 47, was sentenced to 27 months in custody, 3 years of supervised release, restitution in the amount of $25,473.93, and a $100 special assessment to the Federal Crime Victims Fund. Mallow pre-paid the restitution amount on September 17, 2013.
Mallow was indicted by a federal grand jury in November of 2012 for Theft of Government Property and Theft from Agency Receiving Federal Funds. He pled guilty to the Theft of Government Property charge in May of 2013.
The conviction stems from incidents that took place between October 1, 2009, and September 7, 2012, when Mallow served as a chief warrant officer and supervisory employee of the South Dakota Army National Guard at Camp Rapid in Rapid City, South Dakota. During that time, Mallow used his position as the warehouse supervisor at Camp Rapid to order numerous items, including toolboxes, tools, equipment, gear, and other property of the United States for his personal, unauthorized use. In total, Mallow stole and knowingly converted over $55,000 worth of government property, some of which was recovered.
The investigation was conducted by the Federal Bureau of Investigation and the South Dakota Army National Guard. The case was prosecuted by Assistant U.S. Attorney Wayne Venhuizen.
Mallow was ordered to self-surrender to the U.S. Marshals Service at 2:00 pm on September 26, 2013.Former Opelousas Housing Authority Employee Pleads Guilty to Wire Fraud Conspiracy ChargeRead the Press Release
LAFAYETTE, La. – United States Attorney Stephanie A. Finley announced today that Garnette L. Thomas, 75, of San Augustine, Texas, pleaded guilty before U.S. Magistrate Judge Patrick Hanna to conspiracy to commit wire fraud.According to evidence presented at the guilty plea, Thomas was employed as the Opelousas Housing Authority grant and capital funds coordinator from 2005 to 2009. From 2007 to 2009, Thomas admitted that she conspired with other unnamed conspirators to send and receive fake bids by email in order to circumvent state and federal bid laws. They used the fake bids to make it appear that several companies were placing bids on construction projects, but in fact, there was one company being considered. Thomas, assisted by others, accomplished this by using letterhead and other information to create fake bid documents from other companies who were not placing bids on the contracts. These fake bids were then filed so records showed that more than one company had bid on the projects.
Thomas faces up to five years in prison, three years of supervised release, a $250,000 fine and restitution for conspiracy to commit wire fraud. A sentencing date of January 10, 2014 was set.
The FBI and the U.S. Department of Housing and Urban Development conducted the investigation. Assistant U.S. Attorney Kelly P. Uebinger is prosecuting the case.
Former Monroe City Council Members Sentenced for Taking BribesRead the Press Release
SHREVEPORT, La. – United States Attorney Stephanie A. Finley announced today thatformer Monroe City Council members Arthur Gilmore Jr., 55, and Robert E. “Red” Stevens, 61, both of Monroe, were sentenced by U.S. District Judge Donald E. Walter. Gilmore received 24 months in prison and 3 years supervised release, and Stevens received 20 months in prison and three years supervised release for accepting cash bribe payments from an FBI cooperating witness in exchange for help with matters pending before the City Council.
After a four-day trial, a federal jury found Gilmore guilty on May 16, 2013 of violating the Racketeer Influenced and Corrupt Organizations Act, more commonly known as RICO. Stevens pleaded guilty on May 2, 2013 to violating the RICO Act. According to evidence in court filings, in 2008 and 2009 the defendants accepted cash bribe payments from a Monroe businessman who was working as a cooperating witness under the direction of the FBI. The payments were in exchange for their assistance with matters pending before the City Council.
“This has been a long process but in the end, after two trials, the jury and the judge heard the evidence and justice prevailed,” Finley stated. “These defendants abused their positions as public officials, and by selling their votes, violated the law and betrayed the community they were elected to represent.”
The FBI-Monroe Resident Agency and the Louisiana State Police investigated the case. First Assistant U.S. Attorney Alexander Van Hook and Counsel to the U.S. Attorney William J. Flanagan prosecuted the case.Former Logan County Bank President Sentenced to Prison for Bank EmbezzlementRead the Press Release
Ordered To Pay $562,293 Restitution to Bank
Springfield, Ill. – U.S. District Judge Richard Mills today ordered the former president of a Logan County bank, Bryson John Russell, 66, of Lincoln, Ill., to serve 30 months (2 ½ years) in federal prison for embezzling more than $500,000 from the Hartsburg State Bank. Russell was ordered to pay restitution to the bank in the amount of $562,293, and was ordered to self-report on a date to be determined by the federal Bureau of Prisons to begin serving his prison sentence. Russell was also ordered to remain on supervised for three years following his release from prison.
On Feb. 27, 2013, Russell waived indictment and entered a plea of guilty to a single count of embezzlement as charged in an information filed by the U.S. Attorney’s Office for the Central District of Illinois. Russell admitted that in 1992, he began taking cash from the bank to pay for personal items and obligations. Russell became bank president in 1989 and was a career employee, having begun work in 1966 at Hartsburg State Bank, Hartsburg, Ill.
At some point, to conceal his activity, Russell began creating bank loans in the names of various bank customers, including relatives. When the various loans were due, Russell created different, larger loans in relatives’ names and other bank customers’ names to pay off the loans, as well as to embezzle additional money. In addition, Russell admitted cashing a customer’s $15,000 certificate of deposit and applying the proceeds to a loan he had created in the customer’s name.
The charges were investigated by the Federal Bureau of Investigation in coordination with the Hartsburg State Bank. Assistant U.S. Attorney Patrick D. Hansen prosecuted the case.
Former Fund Manager Sentenced in Manhattan Federal Court to 30 Months in Prison in Connection with Multimillion-Dollar Commodities Fraud SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that THOMAS HAMPTON, formerly the Managing Director of Hampton Capital Markets, LLC (“Hampton Capital” or the “Fund”), was sentenced today in Manhattan federal court to 30 months in prison in connection with an investment scheme in which HAMPTON concealed millions of dollars in losses he incurred trading various securities, including S&P 500 futures contracts tied to the S&P 500 stock index. HAMPTON pled guilty in April 2013 to one count of commodities fraud before U.S. Magistrate Judge James C. Francis. He was sentenced today by U.S. District Judge Robert W. Sweet.
Manhattan U.S. Attorney Preet Bharara said: “Lying to investors is never acceptable and, as Thomas Hampton now knows after being convicted and sentenced for doing so, it is a federal crime that carries stiff penalties.”
According to the charging instruments in this case and statements made in open court and at the plea proceeding:
From September 2010 through September 2011, HAMPTON was the Managing Director of Hampton Capital, an Arizona limited liability company that had more than $4 million in assets under management. Hampton Capital engaged in the business of buying and selling exchange traded funds (“ETFs”). An ETF is an investment fund that holds assets such as stocks, commodities or bonds, and typically tracks – or attempts to replicate the performance of – an underlying benchmark or index, such as the S&P 500 equities market index. Hampton Capital purported to utilize specially designed computer software to trade ETFs based on pricing inefficiencies. In his role as Managing Director, HAMPTON bought and sold various securities, including S&P 500 E-mini futures contracts, on behalf of the Fund.
When the Fund began to suffer substantial losses as a result of HAMPTON’s trading, he concealed those losses from investors by, among other things, falsely representing that the investments continued to earn profits. For example, HAMPTON provided monthly statements to investors as early as April 2011 that falsely reflected a positive return for the Fund instead of disclosing the actual losses suffered. Based on his misrepresentations and omissions, Hampton Capital investors did not seek to redeem or withdraw their investments. In fact, some investors provided additional investment capital. As a result of the scheme, more than 50 investors lost in total almost $5 million.
In addition to his prison term, HAMPTON, 45, of St. Louis, Missouri, was sentenced to three years of supervised release. He was also ordered to pay restitution in the amount of $4,879,627.98, and to forfeit this amount.
Mr. Bharara praised the investigative work of the FBI. He also thanked the U.S. Commodity Futures Trading Commission for their assistance.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jillian B. Berman and Emil J. Bove, III, are in charge of the prosecution.
Former Federal Employee Indicted for $113,000 Scheme to Steal from Co-workersRead the Press Release
Septembe 26, 2013KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a former IT specialist for the U.S. Department of Agriculture has been indicted by a federal grand jury for a scheme to steal $113,000 from three co-workers, one of whom is blind.
Paula M. Steen, 49, of Overland Park, Kan., was charged in a three-count indictment returned by a federal grand jury in Kansas City, Mo., on Wednesday, Sept. 25, 2013. Steen was employed by the USDA Farm Service Agency at the USDA Beacon Federal Office Facility, 6501 Beacon Drive, Kansas City, Mo.
The federal indictment alleges that Steen engaged in a scheme to steal from her co-workers at USDA over a four-year period, from Dec. 30, 2008, until she resigned under pressure on Dec. 29, 2012. According to the indictment, the scheme resulted in an attempted loss of at least $113,282 and an actual loss of $103,682.
The indictment alleges that Steen charged $57,693 on the credit accounts of one co-worker (identified in the indictment as “S.S.”), who is legally blind. Steen later repaid $18,278 of that amount to creditors. Steen also attempted to borrow $2,600 in the co-worker’s name, the indictment says, but after submitting the personal loan application to a financial institution, she later withdrew it. According to the indictment, Steen also secured four personal loans from this co-worker totaling $48,171, which she did not repay.
The indictment also alleges that Steen illegally transferred $16,096 from another co-worker’s credit union account to her own creditors and to her own bank account. (This co-worker is identified in the indictment as “R.H.”) Steen also attempted to illegally transfer another $2,000, according to the indictment.
The indictment also alleges that Steen attempted to open a joint credit card account in the name of a third co-worker (identified in the indictment as “J.S.”), using his Social Security number and date of birth without his authorization.
The federal indictment charges Steen with two counts of wire fraud and one count of aggravated identity theft.
The indictment also contains a forfeiture allegation, which would require Steen to forfeit $103,682, which represents the actual loss to the victims of her scheme.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by the U.S. Department of Agriculture, Officer of Inspector General.
Former Exel Transportation Services Employees Sentenced in Federal Corporate Hacking CaseRead the Press Release
DALLAS — Joseph Roy Brown, 39, of Collierville, Tennessee, and John Michael Kelly, 43, of Plano, Texas, were sentenced yesterday afternoon, by U.S. District Judge Jorge A. Solis, to twelve months and one day in prison, and a 12-month term of probation, respectively, following their guilty pleas earlier this year to their roles in a corporate hacking conspiracy. Brown was ordered to surrender to the Bureau of Prisons on December 4, 2013. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
The lead defendant in the case, Michael Musacchio, 62, of Plano, Texas, was sentenced earlier this month by Judge Solis to serve a total of 63 months in federal prison, following his conviction at trial in March 2013 for conspiring to hack into his former employer’s computer network. The issue of restitution is still under consideration by the court. Musacchio was convicted on one felony count of conspiracy to make unauthorized access to a protected computer (hacking) and two substantive felony counts of hacking.
According to the evidence submitted at trial and plea papers filed in the case, from 2000 to September 2004, Musacchio was the president of Exel Transportation Services, a third party logistics or intermodal transportation company that facilitated links between shippers and common carriers in the manufacturing, retail and consumer industries.
In 2004, Musacchio left Exel to form a competing company, Total Transportation Services, where he was the original president and CEO. Two other former Exel employees from the Exel Information Technology (IT) Department, Brown and Kelly, also went to work at Musacchio’s new company. Between 2004 and 2006, Musacchio and Brown, assisted by Kelly, engaged in a scheme to hack into Exel’s computer system to conduct corporate espionage. Through their repeated unauthorized accesses into Exel’s email accounts, co-conspirators Musacchio and Brown were able to obtain Exel’s confidential and proprietary business information and use it to benefit their new employer and themselves as investors.
This was the first investigation of hacking for the purpose of corporate espionage that was conducted by the Justice Department’s Computer Crime and Intellectual Property (CCIP) Section, the U.S. Attorney’s Office for the Northern District of Texas and the FBI.
The FBI Dallas Field Office was in charge of the investigation. Deputy Criminal Chief Assistant U.S. Attorney Linda Groves and Assistant U.S. Attorney Candina Heath, of the U.S. Attorney’s Office for the Northern District of Texas, and Trial Attorney Rick Green of the Criminal Division’s CCIP Section, prosecuted.
Five Santa Fe Residents Arrested on Federal Oxycodone Trafficking ChargesRead the Press Release
ALBUQUERQUE – Five residents of Santa Fe, N.M., were arrested earlier today based on a 16-count federal indictment charging them with Oxycodone trafficking offenses. Two other Santa Fe residents were arrested on federal marijuana trafficking charges and another individual was arrested on state narcotics trafficking charges.
The arrests were announced by Acting U.S. Attorney Steven C. Yarbrough, First Judicial District Attorney Angela R. Pacheco, Special Agent in Charge Joseph M. Arabit of the DEA’s El Paso Field Division, Chief Raymond J. Rael of the Santa Fe Police Department, and New Mexico State Police Lieutenant W. Troy Weisler, Commander of the HIDTA Region III Drug Enforcement Task Force.
Today’s arrests were part of a multi-agency law enforcement operation that included the execution of federal search warrants at three residences and a business in Santa Fe. The charges against the defendants are the result of “Operation High Desert Bash,” an investigation initiated in Jan. 2013 by the DEA’s Tactical Diversion Squad in Albuquerque, the Santa Fe Police Department and HIDTA Region III Narcotics Task Force in response to the epidemic increase in prescription drug abuse, addiction and overdose deaths in New Mexico, particularly among teens and young adults. Operation High Desert Bash primarily targeted a drug trafficking organization unlawfully distributing quantities of Oxycodone in Santa Fe County. Oxycodone is an opioid narcotic pain reliever similar to morphine that is medically prescribed to treat moderate to severe pain and can be habit-forming.
Ashraf Nassar, 30, Phillip Anaya, 37, Krystal Holmes, 27, Sarah N. Romero, 34, and Daniel Trujillo, 31, are charged in Count 1 of a 16-count indictment with conspiracy to distribute Oxycodone in Santa Fe County between Dec. 2012 and Sept. 2013. Counts 2 through 4 of the indictment charge Nassar, Anaya and Holmes with substantive Oxycodone distribution offenses, and all five defendants are charged with using telephones to facilitate drug trafficking crimes (commonly referred to as “phone counts”) in Counts 5 through 16. If convicted, the defendants each face a maximum penalty of 20 years in prison and a $1,000,000 fine on each of the Oxycodone charges and a maximum penalty of four years in prison and a $250,000 fine on each of the phone counts. All five are scheduled to make their initial appearances in Albuquerque federal court tomorrow morning.
Clarence Cline, 64, and Stephanie DeStefano, 52, are charged in a federal criminal complaint with conspiracy to cultivate marijuana. According to the complaint, Cline and DeStefano were arrested after officers found approximately 277 marijuana plants and 6.6 kilograms of marijuana that was being prepared for distribution in Cline’s residence and approximately 38 marijuana plants and 3.7 kilograms of marijuana that was being prepared for distribution in DeStefano’s residence. If convicted of the offense charged in the complaint, Cline and DeStefano each face a prison sentence of not less than five years and not more than 40 years, a maximum penalty of 40 years in prison and a $5,000,000 fine. Cline and DeStefano also are scheduled to make their initial appearances in Albuquerque federal court tomorrow morning.
Cynthia Sandoval, 53, was arrested on a state arrest warrant for three counts of felony trafficking in Oxycodone in violation of NMSA § 30-31-20(A)(2)(a). If convicted of the state charges against her, Sandoval faces a maximum penalty of nine years in prison and a $10,000 fine.Officers seized approximately 7300 mg of Oxycodone during the investigation. During today’s law enforcement operation, they seized more than $1,000 in cash and two vehicles in addition to the marijuana plants and marijuana seized from the residences of Cline and DeStefano.
“Prescription drug abuse is our nation's fastest-growing segment of illegal drug abuse and it is devastating communities in New Mexico,” said Acting U.S. Attorney Steven C. Yarbrough. “The prescription drug abuse problem is one that law enforcement alone cannot solve, but instead will require a comprehensive effort from public health, medical providers and other community stakeholders. Although we are committed to being part of such an effort, we will continue to investigate and vigorously prosecute those who contribute to prescription drug abuse.”
“The abuse of prescription drugs, such as Oxycodone, is a serious problem in Santa Fe County and it leads all too often to addiction, shattered lives, and even death,” said First Judicial District Attorney Angela R. Pacheco. “It is in the interest of public safety, especially that of our young people, that the law enforcement community work together to target those who illegally distribute these pharmaceuticals in order to prevent future abuse and prescription drug overdoses throughout New Mexico.”
“Prescription drug abuse is a serious problem that destroys individuals’ lives and negatively affects the overall health and safety of our community,” said DEA Special Agent in Charge Joseph M. Arabit. “To address this problem and its often tragic consequences, DEA will continue to target those who illegally obtain and distribute these potentially dangerous substances.”
“I want to commend the dedicated members of my department, the HIDTA Region III Drug Enforcement Task Force and our fellow federal law enforcement partners for their efforts to rid the area of illegal narcotics and the perpetrators who dispense them,” Santa Fe Police Chief Raymond J. Rael said. “The nearly a year-long operation, spurred by the zealous work of my officers, ensures criminals get the message loud and clear, illegal activity of any kind will not be tolerated in Santa Fe.”
“The diversion and abuse of prescription drugs is a major problem in the Santa Fe area, which poses a major threat to both public health and public safety in the area,” added Lt. W. Troy Weisler, Commander of the HITDA Region III Drug Enforcement Task Force. “The individuals involved in the illegal distribution of prescription drugs are often involved in other criminal activities as well. Today’s operation will have a significant impact on narcotics trafficking in the area as well as the property and violent crime associated with it.”
These cases were investigated by the Tactical Diversion Team of the DEA’s Albuquerque office, the Santa Fe Police Department and the HIDTA Region III Drug Enforcement Task Force. The federal cases are being prosecuted by Assistant U.S. Attorneys Shammara H. Henderson and Joel R. Meyers. The state case will be prosecuted by the First Judicial District Attorney’s Office.
Operation High Desert Bash was designated as part of the Organized Crime Drug Enforcement Task Force (“OCDETF”) program, a nationwide Department of Justice program that combines the resources and unique expertise of federal agencies, along with their local counterparts, in a coordinated effort to disrupt and dismantle major drug trafficking organizations.
DEA’s Tactical Diversion Squads combine DEA resources with those of federal, state and local law enforcement agencies in an innovative effort to investigate, disrupt and dismantle those suspected of violating the Controlled Substances Act or other appropriate federal, state or local statutes pertaining to the diversion of licit pharmaceutical controlled substances or listed chemicals.
The HIDTA Region III Drug Enforcement Task Force is comprised of officers from the New Mexico State Police, Santa Fe Police Department and Santa Fe County Sheriff’s Office. It is part of the High Intensity Drug Trafficking Areas (HIDTA) program which was created by Congress with the Anti-Drug Abuse Act of 1988. HIDTA is a program of the White House Office of National Drug Control Policy (ONDCP) which provides assistance to federal, state, local and tribal law enforcement agencies operating in areas determined to be critical drug-trafficking regions of the United States and seeks to reduce drug trafficking and production by facilitating coordinated law enforcement activities and information sharing.
Charges in indictments and criminal complaints are only accusations. All criminal defendants are presumed innocent unless proven guilty beyond a reasonable doubt.
Five Miami Residents Arrested for Alleged Roles in $48 Million Home Health Care Fraud SchemeRead the Press Release
Five Miami residents have been charged for their alleged roles in a $48 million home health Medicare fraud scheme.
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 Dennis of the HHS Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement after the case was unsealed following the defendants’ arrests yesterday.
On Sept. 24, 2013, a federal grand jury in Miami returned an 11-count indictment charging Marianela Martinez, 45; Mireya Amechazurra, 49; Lissett Jo-Moure, 55; Omar Hernandez, 48; and Celia Santovenia, 49, each with one count of conspiracy to receive health care kickbacks and two counts of receiving kickbacks in connection with a Federal health care program. Each charge carries a maximum penalty of five years in prison upon conviction.
According to the indictment, the defendants participated in a scheme involving Caring Nurse Home Health Care Corp. (Caring Nurse) and Good Quality Home Health Inc. (Good Quality), Miami home health care agencies that purported to provide home health and therapy services to Medicare beneficiaries. The defendants allegedly referred Medicare beneficiaries to Caring Nurse and/or Good Quality in exchange for kickbacks, knowing that Caring Nurse and/or Good Quality would in turn bill Medicare for home health services purportedly rendered for the recruited Medicare beneficiaries.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted.
In a related case, on Feb. 27, 2013, Rogelio Rodriguez and Raymond Aday, the owners and operators of Caring Nurse and Good Quality, were sentenced to 108 and 51 months in prison, respectively. The sentencings followed their December 2012 guilty pleas to one count each of conspiracy to commit health care fraud charged in an October 2012 indictment, which alleged that from approximately January 2006 through June 2011, Caring Nurse and Good Quality submitted approximately $48 million in claims for home health services that were not medically necessary and/or not provided. Medicare paid approximately $33 million for those fraudulent claims.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Assistant Chief Joseph S. Beemsterboer of the Criminal Division’s Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,500 defendants who collectively have falsely billed the Medicare program for more than $5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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.
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.
Financing Consultant Sentenced to for Securities Fraud SchemeRead the Press Release
BOSTON - A self-described financing consultant to small and emerging companies was sentenced yesterday for his role in a kickback scheme.
James L. Prange, 63, of Greenbush, Wis., was sentenced by United States District Court Judge Nathaniel M. Gorton to 30 months in prison, two years of supervised release, a $15,250 fine and forfeiture.. In May 2013, Prange was convicted by a jury of conspiracy to commit securities fraud, wire fraud and mail fraud.
Prange was sentenced for his role in a scheme to pay secret kickbacks to an investment fund representative who had agreed to use the fund’s money to buy stock in three companies that had hired Prange’s firm, Northern Equity, to help them raise capital. The kickbacks were concealed through the use of sham consulting agreements and other fraudulent documents. Prange and the company executives were unaware 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.
Executives of three publicly traded companies who were also charged as part of the undercover operation were sentenced in the last two months. In August, Karen L. Person, 62, of Las Vegas, Nev., the chief executive officer of SBCO, Inc., and John C. Jordan, 62, of Cameron Park, Calif., the chief executive officer of Vida Life International Ltd., were each sentenced to 30 months in prison for their roles in the scheme. Person pleaded guilty to conspiracy to commit securities fraud and Jordan was convicted after trial on multiple counts of conspiracy to commit securities fraud and wire fraud. In July, 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 after pleading guilty to conspiracy to commit securities fraud.
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. Eight of those defendants have already pleaded guilty to charges arising out of their involvement in the scheme.United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case 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.
Federal Jury Convicts Fort Worth Man Who Robbed Credit Union in BurlesonRead the Press Release
FORT WORTH, Texas — After a one-day trial and less than 30 minutes of deliberation, a federal jury has convicted Bentley Mark Jenkins, 46, of Fort Worth, Texas, on one count of bank robbery. Jenkins faces a maximum statutory sentence of 20 years in federal prison and a $250,000 fine. He will remain in custody pending sentencing, which is set for January 10, 2014. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
According to evidence presented at trial and documents filed in the case, on February 9, 2013, Jenkins, wearing a towel over his head, presented a note to a teller at the Educational Employees Credit Union, located at 750 NE Alsbury Boulevard in Burleson, Texas. That note stated, “give me all hundreds and fifty and no body gets hurt.” A teller gave Jenkins all the hundreds and fifties he had in the cash drawer, but Jenkins became agitated and shouted, “more, more, more.” Feeling threatened, the teller gave Jenkins the twenties that he had in his cash drawer. Jenkins then grabbed all of the cash from the teller drawer and fled the credit union.
Burleson Police arrested Jenkins, following a car and foot chase. Jenkins was searched and a large amount of cash was found on his person and in a vehicle he was operating.
Paragraph Seven.
The case was investigated by the FBI and the Burleson Police Department. Assistant U.S. Attorney John Bradford prosecuted.
Federal Inmate Sentenced to Life in Federal Prison for the Murder of A Fellow InmateRead the Press Release
Ocala, Florida - U.S. District Judge Anne C. Conway today sentenced Boyd Wallace Higginbotham, Jr. (55) to life in federal prison for murdering fellow inmate Steven Pritchard. A federal jury found Higginbotham guilty of first degree murder following a trial that concluded on August 22, 2013.
Both Higginbotham and Pritchard were inmates at United States Penitentiary II at the Coleman Federal Correctional Complex, in Sumter County, Florida. Higginbotham was serving a sentence on a felon in possession of a firearm conviction. Pritchard was serving a sentence on a bank robbery conviction.
According to evidence presented at trial, Higginbotham and Pritchard had been having an escalating dispute over several days. On February 20, 2008, Higginbotham and Pritchard were both at the same table in the penitentiary mess hall during lunch when Pritchard made threatening comments to Higginbotham in front of other inmates. Higginbotham got up, walked away from the table, and took his tray to the tray return area. Higginbotham then walked up behind Pritchard, grabbed him around the neck, and repeatedly stabbed him with a homemade knife. He stabbed him in the chest, abdomen, back, and forearm. Pritchard was air lifted to the trauma unit at the Orlando Regional Medical Center. On March 6, 2008, Pritchard died as a result of complications from the stab wounds.
This case was investigated by the Federal Bureau of Investigation and the Federal Bureau of Prisons. It was prosecuted by Assistant United States Attorney Sam Armstrong.