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Thursday 8 August 2013
Pharmacist Pleads Guilty to Money Laundering Scheme Tied to Illegal Internet PharmacyRead the Press Release
PHILADELPHIA – Eric Vern Fox, 45, a pharmacist living in Berwyn, Pennsylvania, pleaded guilty today to a money laundering conspiracy, in violation of federal money laundering laws. These charges were transferred from the Eastern District of Texas for guilty plea and sentencing. Between June 2002 and September 2007, Fox owned and operated two compounding pharmacies in this district: the Medicine Shoppe, located at 578 Lancaster Avenue, Berwyn, PA, and Compounding Rx Apothecary, located at 81 Lancaster Avenue, Store #4, Malvern, PA.
The indictment alleges that from June 2002 until September 2007, Fox agreed with the owners and operators of an illegal internet pharmacy, the Madison Pain Clinic, located in Texas, to compound millions of hydrocodone pills that the Madison Pain Clinic sold to internet customers under fraudulent “prescriptions,” outside the usual course of professional practice and not for a legitimate medical purpose.
The money laundering charge, to which Fox pleaded guilty, alleges that between June 2002 and September 2007, Fox was paid by the Madison Pain Clinic for the hydrocodone pills that the clinic sold to its internet customers, and agreed to launder the proceeds of this illegal activity totaling at least $4.5 million. The plea agreement calls for Fox to receive an agreed-upon sentence of 12 months and a day in prison, followed by three years of supervised release. The plea agreement also requires Fox to forfeit the sum of $2 million and pay an assessment of $100. U.S. District Court Judge R. Barclay Surrick scheduled a sentencing hearing for November 8, 2013.
The case was investigated by the Drug Enforcement Administration and the Internal Revenue Service, Criminal Investigations. In this district it is being prosecuted by Assistant United States Attorney Mary E. Crawley.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Pharmacist Pleads Guilty to Money Laundering Conspiracy in Connection with Compounding Millions of Hydrocodone Pills for Illegal Internet PharmacyRead the Press Release
Department of Justice
Office of Public AffairsSHERMAN – A pharmacist has pleaded guilty in Philadelphia, Pennsylvania to charges originating in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Eric Vern Fox, 45, a pharmacist living in Berwyn, Pennsylvania, pleaded guilty to money laundering conspiracy, in violation of federal money laundering laws, announced United States Attorney Zane David Memeger. These charges were transferred from the Eastern District of Texas for guilty plea and sentencing. According to the charges, from June 2002 until September 2007, Fox owned and operated two compounding pharmacies in this district: the Medicine Shoppe, located at 578 Lancaster Avenue, Berwyn, PA, and Compounding Rx Apothecary, located at 81 Lancaster Avenue, Store #4, Malvern, PA. The indictment alleges that from June 2002 until September 2007, Fox agreed with the owners and operators of an illegal internet pharmacy, the Madison Pain Clinic, located in Texas, to compound millions of hydrocodone pills that the Madison Pain Clinic sold to internet customers under fraudulent “prescriptions,” outside the usual course of professional practice and not for a legitimate medical purpose.
The money laundering charge to which Fox pleaded guilty alleges that between June 2002 and September 2007, Fox was paid by the Madison Pain Clinic for the hydrocodone pills that the clinic sold to its internet customers, and agreed to launder the proceeds of this illegal activity totaling at least $4,500,000. The plea agreement calls for Fox to receive an agreed-upon sentence of twelve months and a day in prison, followed by three years of supervised release. The plea agreement also requires Fox to forfeit the sum of $2,000,000 and pay an assessment of $100. At the hearing today, the Honorable R. Barclay Surrick accepted the plea agreement, scheduling sentencing to take place on November 8, 2013.
The case was investigated by the Drug Enforcement Administration and the Internal Revenue Service, Criminal Investigation Division. It was prosecuted by Assistant United States Attorney Steven Buys in the Eastern District of Texas. In the Eastern District of Pennsylvania, the case is being prosecuted by Assistant United States Attorney Mary E. Crawley.
UNITED STATES ATTORNEY'S OFFICE Contact: PATTY HARTMAN
EASTERN DISTRICT, PENNSYLVANIA Media Contact
Suite 1250, 615 Chestnut Street 215-861-8525
Philadelphia, PA 19106Ocean County, N.J., Man Sentenced to 37 Months in Prison for Possessing Child PornographyRead the Press Release
TRENTON, N.J. – An Ocean County, N.J. man, was sentenced today to 37 months in prison for possessing more than 600 images of child sexual abuse and using his computer to send and store them, U.S. Attorney Paul J. Fishman announced.Christopher Seufert, 32, of Brick, N.J., previously pleaded guilty before U.S. District Judge Mary L. Cooper to an information charging him with one count of possession of child pornography. Judge Cooper imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
Seufert admitted he possessed more than 600 images of child pornography on a computer located in his residence in March 2010. He admitted using his America Online email account to send some of the images to himself and store them. Seufert acknowledged that among the images he possessed were images which depicted minors engaging in sexually explicit conduct with other minors and adults, including material portraying sadistic or masochistic conduct or other depictions of violence. The criminal images were brought to the attention of law enforcement by a tip from America Online.
In addition to the prison term, Judge Cooper sentenced Seufert to five years of supervised release with computer monitoring and restricted contact with minors. He must also register as a sex offender.
U.S. Attorney Fishman credited special agents of the Newark FBI’s Child Exploitation Taskforce and credit, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and the N.J. State Police Internet Crimes Against Children Taskforce, under the direction of Col. Rick Fuentes, with the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorneys John Clabby and Sarah Wolfe of the U.S. Attorney’s Office Criminal Division in Trenton.Defense Counsel: Lisa Van Hoeck Esq., Assistant Federal Public Defender, Trenton
New Orleans Woman, Clarissa O. Morgan, Pleads Guilty to Mail FraudRead the Press Release
CLARISSA O. MORGAN, age 27, a resident of New Orleans, Louisiana, pled guilty today in federal court before U. S. District Judge Carl J. Barbier, to a one-count indictment charging her with mail fraud, announced U. S. Attorney Dana Boente.
According to court documents, MORGAN submitted a fraudulent claim to the Gulf Coast Claims Facility on September 27, 2010. In her claim application she stated that she lost income from her job at Queen and Crescent Hotel in New Orleans as a result of the oil spill. In support of her claim, MORGAN submitted a fraudulent letter from the hotel stating that her work hours had been cut due to lack of business. Shortly after submitting the claim form, the Gulf Coast Claims Facility mailed two payments totaling $10,300 to MORGAN’S home in New Orleans. After the payments were issued, an investigator with the Gulf Coast Claims Facility contacted the Queen and Crescent Hotel to discuss MORGAN’S work history. The Director of Human Resources stated that the signer of the fraudulent letter submitted by MORGAN in support of her claim was not, nor had ever been, employed at the hotel; and further, that MORGAN did not become laid off nor have her hours cut because of the oil spill. On September 26, 2012, an agent with the FBI interviewed MORGAN about the matter. MORGAN admitted that the claim she filed with the Gulf Coast Claims Facility was fraudulent.
MORGAN faces a maximum term of imprisonment of 20 years, a fine of up to $250,000, and three years of supervised release following imprisonment. Sentencing is scheduled for November 14, 2013, at 9:30 am.
This case was brought as part of this District’s partnership with the National Center for Disaster Fraud (NCDF), a nationwide initiative to protect available funds and assistance for those victims of both natural and man-made disasters such as hurricanes, floods, tornadoes and the recent Gulf oil spill. If you have knowledge of fraud, waste, abuse, or allegations of mismanagement involving disaster relief operations, you can contact the NCDF by either calling the hotline at (866) 720-5721, faxing (225) 334-4707, emailing at [email protected] or in writing to National Center for Disaster Fraud, Baton Rouge, LA 70821-4909.
The case was investigated by special agents with the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Spiro Latsis.
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New Orleans Woman, Alicia Wells, Sentenced for Defrauding Gulf Coast Claims FacilityRead the Press Release
ALICIA WELLS, age 29, of New Orleans, Louisiana, was sentenced today in federal court by U. S. District Judge Carl J. Barbier to 4 years probation for mail fraud relating to a fraudulent application she made to the Gulf Coast Claims Facility (GCCF) for financial assistance in the aftermath of the Deepwater Horizon oil spill in the Gulf of Mexico, announced U. S. Attorney Dana J. Boente. In addition to the term of probation, Judge Barbier ordered the defendant to pay restitution in the amount of $13,200 to BP America.
According to court documents, the GCCF made disaster assistance money available to individuals and businesses affected by the oil spill resulting from the Deepwater Horizon explosion. The GCCF required individuals to verify loss of income. On September 25, 2010, WELLS applied for disaster assistance funds, representing that she was working at Center Plate before the oil spill. However, WELLS had never worked for Center Plate and that she submitted false documentation to establish that she was employed at Center Plate and to establish her false loss earnings. Based on WELLS’ fraudulent application, the GCCF issued three checks totaling $13,200 to which WELLS was not entitled.
This case was brought as part of this District’s partnership with the National Center for Disaster Fraud (NCDF), a nationwide initiative to protect available funds and assistance for those victims of both natural and man-made disasters such as hurricanes, floods, tornadoes and the recent Gulf oil spill. If you have knowledge of fraud, waste, abuse, or allegations of mismanagement involving disaster relief operations, you can contact the NCDF by either calling the hotline at (866) 720-5721, faxing (225) 334-4707, emailing at [email protected] or in writing to National Center for Disaster Fraud, Baton Rouge, LA 70821-4909.
The case was investigated by the United States Secret Service and prosecuted by Assistant United States Attorney Loan “Mimi” Nguyen.
Nevada Man Pleads Guilty to Filing a False Federal Income Tax ReturnRead the Press Release
Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally and U.S. Attorney Daniel G. Bogden for the District of Nevada today announced that Arthur Risser Jr., of Las Vegas, pleaded guilty to filing a false personal tax return for 2008.
According to the plea agreement, Risser earned over $100,000 each year during 2006 through 2008 while employed as a large engine mechanic from 2006 to 2008, at Aggregate Industries Southern Nevada Paving Inc. and, during 2006 and 2007, at Las Vegas Paving Corporation. Risser intentionally understated his wages and listed inflated amounts for withheld taxes to increase his refund on his individual income tax returns for 2006, 2007 and 2008. According to the indictment, Risser earned over $300,000 from 2006 to 2008 but only reported $54,472 of income on his federal tax returns for those three years.
Risser faces a potential maximum prison term of three years and a maximum fine of $250,000. His sentencing is scheduled for Nov. 13, 2013, before U.S. District Judge Andrew P. Gordon.
Assistant Attorney General Kathryn Keneally and U.S. Attorney Daniel G. Bogden thanked special agents of the Internal Revenue Service-Criminal Investigation, who investigated the case, and Assistant U.S. Attorney Nicholas Dickinson and Tax Division Trial Attorney Sonia M. Owens, who prosecuted the case.
NYPD Officer Pleads Guilty in Manhattan Federal Court to Tax Fraud and Identity TheftRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JONATHAN WALLY, a Police Officer with the New York City Police Department (“NYPD”), pled guilty today in Manhattan federal to tax fraud and identity theft offenses related to his preparation and filing of false and fraudulent U.S. individual income tax returns (“tax returns”) on behalf of himself and others. WALLY pled guilty before U.S. Magistrate Judge Sarah Netburn.
Manhattan U.S. Attorney Preet Bharara said: “Jonathan Wally spent his off-duty time breaking the law he enforced as a police officer. With his guilty plea today, he will now pay the price for his crimes of identity theft and tax fraud, including the return of all the money he swindled from the IRS.”
According to the court filings and statements made today in court:
WALLY has been employed by the NYPD as a Police Officer assigned to the 34th precinct located in the Washington Heights/Inwood section of New York, New York since 2003. Since at least 2008, he also served as a registered tax preparer with the Internal Revenue Service (“IRS”). Although the NYPD requires its Police Officers to obtain written authorization to engage in off-duty employment, WALLY never sought or obtained such authorization to work as a tax preparer.
From 2010 through April 2012, WALLY defrauded the IRS by causing it to issue tax refunds to other individuals based on fraudulent and false tax returns prepared and filed by WALLY on behalf of those taxpayers. Among other things, the tax returns claimed deductions for false dependents. During that time period and continuing through January 2013, WALLY further defrauded the IRS by preparing and filing fraudulent and false tax returns on his own behalf that claimed false dependents and failed to declare certain income, causing him to receive tax refunds to which he was not entitled.
In connection with the fraudulent tax return scheme, WALLY obtained the personal identifying information and Social Security cards of children, which he used to declare the children as dependents on false and fraudulent tax returns he prepared and filed on behalf of others and himself.
As a result of the false and fraudulent tax returns prepared and filed by WALLY on behalf of other individual taxpayers, the IRS paid them at least $146,818 in fraudulent tax refunds. As a result of the false and fraudulent tax returns prepared and filed by WALLY on his own behalf, and his failure to declare the income he earned as a tax preparer, the IRS paid WALLY at least $48,990 in fraudulent tax refunds. In total, WALLY’s tax scheme defrauded the IRS in the amount of $195,808.
WALLY, 34, of Bronx, New York, pled guilty to four counts. Counts One and Two charged WALLY with the tax offenses of aiding and abetting the filing of a false and fraudulent tax return and subscribing to a false and fraudulent tax return, respectively. Each of Counts One and Two carries a maximum sentence of three years in prison. Counts Three and Four charged WALLY with identify theft. Count Three carries a maximum sentence of 15 years in prison, and Count Four carries a maximum sentence of five years in prison.
In addition, WALLY has agreed to forfeit and make restitution to the IRS of $195,808. He further has agreed to file accurate amended returns for himself for calendar years 2009 through 2013, and not to contest any interest or penalties assessed against him by the IRS in connection with such amended returns. He also has agreed not to engage in any tax preparation work on behalf of others in the future. WALLY is scheduled to be sentenced before U.S. District Judge Lorna G. Schofield on December 9, 2013 at 2:30 p.m.
Mr. Bharara praised the investigative work of the Internal Revenue Service-Criminal Investigation, the New York State Department of Taxation and Finance, and the Internal Affairs Bureau of the NYPD.
This prosecution is being handled by the Office's Public Corruption Unit. Assistant United States Attorney Carrie H. Cohen is in charge of the prosecution.
U.S. v. Jonathan Wally Information
U.S. v. Jonathan Wally Consent Order of ForfeitureMortgage Broker Indicted in $2.2 Million Loan Fraud and Kickback SchemeRead the Press Release
SAN DIEGO - Donald V. Totten, an unlicensed mortgage broker who operated a mortgage brokerage business from Rancho Santa Fe, was indicted today by a federal grand jury on charges that he obtained $2.2 million in mortgage loans using false information and then siphoned off hundreds of thousands of dollars from the sale of the properties.
Totten was arrested on July 24, 2013, and made his initial appearance in the Northern District of California. He is currently in federal custody and will be transported to the Southern District of California for the proceedings.
According to the indictment, Totten arranged a series of real estate transactions with a Chula Vista property owner who was struggling to make his mortgage payments. In a complicated set of transactions, Totten first entered into a partnership with an investor from Carlsbad, promising to share the costs of maintenance of the properties and then split the proceeds from an eventual re-sale.
To purchase the properties, Totten employed a straw buyer (his investor’s girlfriend) who never intended to live in the properties despite certifications to the contrary on her loan applications. In addition to providing significant down payments from his own funds, Totten falsified the straw buyer’s loan applications and, among other things, inflated her income and assets in order to induce the financial institutions to grant the mortgages.
According to the indictment, Totten and his loan processor, Shellie Lockard, who worked for his brokerage business Money World, then sent fabricated supporting documents to the mortgage lenders to bolster the bogus claims in the loan applications. The indictment charges Totten with purchasing four homes for the same straw buyer simultaneously – by intentionally failing to disclose to each lender that the borrower was in the process of buying multiple properties.
Last week, Lockard admitted falsifying applications for dozens of Money World mortgage loans. Lockard pled guilty on July 30, 2013. According to court documents, in addition to the four Chula Vista properties, Lockard processed dozens more fraudulent loan applications for Totten involving the purchase and re-finance of properties around the country. In each case, Lockard admitted that the loan paperwork she provided to mortgage lenders contained false information about the borrowers’ income, assets, debts, intent to occupy the properties, and other lies.
According to the indictment, Totten earned substantial commissions on the four Chula Vista sales, and at the same time he secretly arranged for almost $192,000 in sale proceeds to be sent directly to his own bank accounts as kickbacks. He concealed his receipt of these payments from the lenders by directing them to Island Financial, a company which he controlled. According to the indictment, after the sales closed, Totten had the straw buyer sign over the deeds to the properties to a trust that he controlled, effectively obtaining ownership. Eventually, however, each of the four mortgages defaulted and the properties were foreclosed. The lenders and secondary mortgage purchasers, including Fannie Mae and Freddie Mac, suffered losses as a result of the foreclosures.
“Prosecuting people who have contributed to the mortgage meltdown is one of my top priorities because they have played such a significant role in our nation’s financial turmoil, and because the economic damage to taxpayers is immense,” said U.S. Attorney Laura Duffy.
FBI Special Agent in Charge Daphne Hearn commented, “Mortgage fraud costs taxpayers billions of dollars every year and is a threat to our nation's economy. The FBI will continue to lend our agent and analyst resources to investigate these important cases.”
“Totten allegedly participated in a fraudulent scheme involving over $2 million in mortgage loans that ultimately defaulted, to the detriment of Fannie Mae, Freddie Mac and American taxpayers,” said Federal Housing Finance Agency Inspector General Steve A. Linick . “We are proud to support our law enforcement partners in investigating and prosecuting this case.”
“Mortgage fraud causes tremendous financial damage to everyone, including financial institutions, borrowers and the American taxpayer,” said Jose A. Gonzalez, Special Agent in Charge for IRS Criminal Investigation’s (IRS CI) Los Angeles Field Office. “IRS CI is firmly committed to supporting our law enforcement partners and the U.S. Attorney’s Office in the investigation and prosecution of fraudsters committing mortgage fraud crimes.”
These charges are the result of an active, ongoing criminal investigation. Anyone with information relating to these charges should contact the San Diego branch of the Federal Bureau of Investigation at (858) 565-1255, or the Federal Housing Finance Agency - Office of Inspector General hotline at (800) 793-7724.
The public is reminded that an indictment is not evidence that the defendant committed the crime charged. The defendant is presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
DEFENDANT Criminal Case No. 13MJ2783 Donald V. Totten SUMMARY OF CHARGESTitle 18, U.S.C., Section 1349 -- Conspiracy to Commit Wire Fraud. Maximum Penalty: 30
years custody, a maximum fine of $1,000,000 or twice the gain derived from or loss caused by
the offense, five years supervised release, and $100 special assessment.Title 18, U.S.C., Section 1343 -- Wire Fraud Affecting a Financial Institution. Maximum
DEFENDANT Criminal Case No. 13MJ2783 Shellie Lockard Age: 43 Westlake Village, CA SUMMARY OF CHARGES
Penalty: 30 years custody, a maximum fine of $1,000,000 or twice the gain derived from or loss
caused by the offense, five years supervised release, and $100 special assessment.Title 18, U.S.C., Section 1349 -- Conspiracy to Commit Bank Fraud and Wire Fraud. Maximum
INVESTIGATING AGENCIES
Penalty: 30 years custody, a maximum fine of $1,000,000 or twice the gain derived from or loss
caused by the offense, five years supervised release, and $100 special assessment.Federal Bureau of Investigation
Internal Revenue Service-Criminal Investigation
Federal Housing Finance Agency-Office of Inspector GeneralMexican Citizen Indicted for Illegal ReentryRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania and the U.S. Department of Homeland Security, Immigration and Customs Enforcement, announced today that a 28-year-old year-old native and citizen of Mexico has been charged with Illegal Reentry into the United States.
According to United States Attorney Peter J. Smith, Estevan Almanza-Mendoza, age 28, a native and citizen of Mexico, in the United States illegally, was charged in a one-count indictment by a federal grand jury in Harrisburg Wednesday.
The indictment alleges that Almanza-Mendoza, an alien who has been convicted on December 21, 2009, of Illegal Re-Entry into the United States by a Previously Deported Alien, was previously arrested and deported from the United States on January 11, 2010, did knowingly and unlawfully reenter the United States. He was located by federal immigration agents in York County, Pennsylvania.
This investigation was conducted by the U.S. Department of Homeland Security, Immigration and Customs Enforcement. It is being prosecuted by Special Assistant United States Attorney Brian G. McDonnell.
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.
Metro Denver Man Sentenced to over 11 Years in Federal Prison for Firearm and Drug CrimesRead the Press Release
DENVER – Juan Antonio Martinez, age 25, of Denver, was sentenced earlier this week by Chief Judge Marcia S. Krieger to serve 135 months (over 11 years) in federal prison for firearm and drug crimes, U.S. Attorney John Walsh and ATF Special Agent in Charge Andrew Traver announced. Following his prison sentence, Chief Judge Krieger ordered Martinez to serve 5 years on supervised release. The defendant appeared at the sentencing hearing in custody, and was immediately remanded at its conclusion.
Martinez was first charged by Criminal Complaint on February 2, 2012. He was indicted by a federal grand jury in Denver on February 8, 2012. He pled guilty to selling crack cocaine and firearms on March 20, 2013. Martinez was sentenced by Chief Judge Krieger on August 5, 2013.
According to court documents, including the stipulated facts in Martinez’s plea agreement, between November 3, 2011 and February 3, 2012, the ATF conducted a series of controlled purchases of crack cocaine from the defendant and his co-conspirator. The conspiracy involved the sale of approximately 236.928 grams of crack.
In addition to the sale of crack cocaine, the defendant also contacted the informant and offered to sell an SKS Rifle for $650 and a sawed-off shotgun for $350. The defendant ultimately sold both firearms to the informant for a total of $1,000 in cash. The sawed-off shotgun was not registered in the National Firearms Registry and thus was contraband. Prior to possessing both firearms, Martinez was convicted in 2006 of possession with intent to distribute a Schedule II controlled substance. This conviction made Martinez a prohibited person, meaning it was a violation of law for him to possess any firearm.
“When a felon possesses a firearm and illegal drugs, he commits a serious federal offense – and as today’s prison sentence demonstrates, the court agrees,” said U.S. Attorney John Walsh.
“This investigation exemplifies ATF’s core mission,” said Denver Special Agent in Charge, Andrew Traver. “We make it a top priority to target convicted felons who continue to engage in illicit crime gun trafficking and drug dealing in our communities.”
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Denver Police Department, the Aurora Police Department and the Lakewood Police Department as part of the Project Safe Neighborhoods initiative.
The defendant was prosecuted by Assistant U.S. Attorney Richard Hosley, chief of the U.S. Attorney’s Office Major Crimes section.
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Mental Health Counselor Receives Six-Year Prison Sentence for Defrauding Medicaid of $6.1 MillionRead the Press Release
Defendant Used Proceeds To Purchase $500,000 In Jewelry And Vehicles
CHARLOTTE, N.C. – A mental health counselor who admitted overseeing a health care scheme that defrauded Medicaid of at least $6.1 million for sham mental and behavioral health services was sentenced to 72 months in prison today, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Linda Smoot Radeker, 72, of Shelby, N.C. was also sentenced to serve two years under court supervision and to pay $6,156,674.68 as restitution to Medicaid.
U.S. Attorney Tompkins is joined in making today’s announcement by Attorney General Roy Cooper, who oversees the North Carolina Medicaid Investigations Division (MID); John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI); and Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region.
In September 2012, Radeker pleaded guilty to one count of health care fraud conspiracy and two counts of money laundering. In her plea agreement filed with the court, Radeker admitted that from 2008 to 2011 she obtained at least $6.1 million in fraudulent reimbursement payments from false claims submitted to Medicaid. According to filed court documents and today’s sentencing hearing, Radeker, a licensed professional counselor enrolled with North Carolina Medicaid, falsely claimed in billings submitted to Medicaid that she was the attending clinician for services provided to Medicaid recipients, when no such services were provided. Court records show that Radeker “rented out” her Medicaid provider number to a network of co-conspirators operating in Gaston and Cleveland Counties and elsewhere and, in return, kept a percentage of the fraudulent Medicaid reimbursements, sometimes as much as 50%.
Court records show that the co-conspirators used on the fraudulent claims primarily the Medicaid numbers of children whose parents thought were being enrolled in after school programs located in Shelby, Kings Mountain and Bessemer City, N.C. These after school programs were, in fact, owned and operated by Radeker’s co-conspirators.
According to court documents, Radeker made several large purchases using criminal proceeds including $21,500 to purchase a 2010 Ford Ranger and $44,440 to purchase a 2010 Lincoln MKS SUV. Radeker also used Medicaid money to purchase a recreational vehicle (RV) and at least $500,000 in jewelry.
In making today’s announcement, U.S. Attorney Tompkins stated, “Health care fraud harms all of us – government programs, private insurers, health care providers and individual patients. We remain committed to finding and prosecuting those who steal from important health care programs and putting a stop to the egregious assault of precious health care resources.”
North Carolina Attorney General Roy Cooper said, “This type of fraud hurts patients who really need care, wastes taxpayers’ money, and drives up health care costs for all of us. Our investigators and attorneys will continue to work with their federal partners to find and root out Medicaid cheaters.”
“Instead of assisting North Carolina families in need, Linda Radeker exploited them, using their Medicaid benefits to file false claims for her own profit. Today’s sentencing should be a warning to those who abuse their position of trust within the medical community, the FBI and our law enforcement partners will investigate and prosecute such fraud to the fullest extent of the law,” said John A. Strong, Special Agent in Charge, FBI Charlotte.
“The State’s Medicaid program is intended to serve those in need – not purchase luxury vehicles for criminals at taxpayer expense,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General for the region including North Carolina. “Along with our law enforcement partners, we will ferret out and prosecute those defrauding our government health programs.”
“This is a very serious matter because health care fraud damages everyone,” said Jeannine A. Hammett, Special Agent in Charge, IRS-Criminal Investigation. “Ms. Radeker received money she was not entitled to and she created false documents to hide the true nature of the funds.”
In sentencing the defendant, U.S. Chief District Judge Frank D. Whitney noted that “health care costs have been skyrocketing” and that “legitimate providers like [Radeker] . . . take scarce resources and stretch them even further” through theft and fraud. Judge Whitney observed that this was a “glaring example of health care fraud” where Radeker “personally pocketed in excess of $3 million.” In announcing the six year sentence, Judge Whitney stated that we have to make it clear that we trust health providers and that the trust placed on the individual is critical. Radeker breached that trust and the message has to be sent to others.
Radeker will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation into Radeker was handled by the FBI, MID, IRS, and HHS-OIG. Special Assistance to the Task Force was provided by the North Carolina Division of Medical Assistance, Program Integrity Section. The prosecution was handled by Assistant U.S. Attorneys Kelli Ferry and Jenny Grus Sugar of the U.S. Attorney’s Office in Charlotte.
The investigation and charges are the work of the Western District’s joint Health Care Fraud Task Force. The Task Force is multi-agency team of experienced federal and state investigators, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing of all whistle blower complaints, and the creation of investigative teams so that individual agencies may focus their unique areas of expertise on investigations. The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.
If you suspect Medicare or Medicaid fraud please report it by phone at 1-800-447- 8477 (1-800-HHS-TIPS), or E-Mail at [email protected].
Mayfield Men Charged with Production of Child PornographyRead the Press Release
Defendants Produced Sexually Explicit Images of Seven-Year-Old Child
ALBANY, NEW YORK — United States Attorney Richard S. Hartunian, Matthew Scarpino, Resident Agent in Charge, Homeland Security Investigations, and Captain Timothy Munro, New York State Police Troop G, Bureau of Criminal Investigation, announce the filing of two criminal complaints charging RICHARD HASTINGS, age 21, and ROBERT HASTINGS, age 18, of Mayfield, New York, with production of child pornography.1 The defendants are brothers who live together. If found guilty of production of child pornography, each of the defendants faces a statutory minimum of at least fifteen years of imprisonment and up to a maximum sentence of thirty years of imprisonment, and a maximum fine of $250,000. The defendants had their initial appearances in Albany on August 8, 2013 before United States Magistrate Judge Randolph F. Treece. Both defendants were detained. They will have detention hearings on August 9, 2013 at 1:30 p.m.
According to the complaints:
Between July 27, 2013 and July 29, 2013, RICHARD HASTINGS produced sexually explicit photographs of a seven-year-old child, posted some of those photographs on a website, and e-mailed some of them to an undercover investigator with Queensland (Australia) Police
Services. In addition, on August 2, 2013, his brother, ROBERT HASTINGS, produced a sexually explicit video of the child.
This case is being investigated by Homeland Security Investigations and the New York State Police. This case is being prosecuted by Assistant United States Attorney Sean O’Dowd.
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1The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty.
Martin Man Sentenced for Sexual AbuseRead the Press Release
United States Attorney Brendan V. Johnson announced that a Martin, South Dakota, man convicted of Sexual Abuse of a Minor was sentenced on August 2, 2013, by Chief Judge Jeffrey L. Viken, U.S. District Court.
Edwin Johnson, age 62, was sentenced to 5 years of imprisonment, followed by 5 years of supervised release. Johnson was also ordered to pay $100 to the Federal Crime Victims Fund and $542.40 in restitution.
Johnson was indicted by a federal grand jury on November 19, 2012, and pled guilty to the charge on April 18, 2013.
The charge relates to Johnson having sexual intercourse with a 15-year old girl over 50 times in Bennett County in 2010 and 2011.
This case was investigated by the Martin Police Department, the South Dakota Division of Criminal Investigation, and the Federal Bureau of Investigation.
Johnson was immediately turned over to the custody of the U.S. Marshal.Maria Lourdes Moe Sentenced in U.S. District CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Helena, on August 8, 2013, before U.S. District Judge Sam E. Haddon, MARIA LOURDES MOE, a 42-year-old resident of Helena, was sentenced to a term of:
Prison: 66 months
Special Assessment: $100
Supervised Release: 4 years
MOE was sentenced after a federal district court trial in which she was found guilty of conspiracy to possess with intent to distribute methamphetamine.
Assistant U.S. Attorney Paulette L. Stewart prosecuted the case for the United States.
Because there is no parole in the federal system, the "truth in sentencing" guidelines mandate that MOE will likely serve all of the time imposed by the court. In the federal system, MOE 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, the Missouri River Drug Task Force, the Drug Enforcement Administration, and the Spokane Regional Drug Task Force.
Manhattan U.S. Attorney Charges 23 Members of Bronx Drug Trafficking Crew with Distributing Crack Cocaine, Cocaine, Marijuana, Mdma and OxycodoneRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Brian R. Crowell, the Special Agent-in-Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), Raymond W. Kelly, the Commissioner of the Police Department for the City of New York (“NYPD”), Joseph Anarumo Jr., the Special Agent-in-Charge of the New York Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), James T. Hayes, Jr., the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s (“ICE”) Homeland Security Investigations (“HSI”), and Anthony J. Annucci, the Acting Commissioner of the New York State Department of Corrections and Community Supervision (“DOCCS”), announced charges today against 23 members of a criminal organization known as the Burnside Money Getters (“BMG”) for conspiracy to distribute crack cocaine, cocaine, marijuana, MDMA (commonly known as ecstasy), and Oxycodone. The defendants allegedly controlled the areas from West Burnside Avenue to West Tremont Avenue, and from Sedgwick Avenue to Jerome Avenue, in the University Heights neighborhood of the Bronx, New York.
Of the 23 defendants named in the Indictment, 22 were taken into custody as part of a coordinated operation involving federal, state, and local law enforcement officers, two were in state custody on other charges, and one defendant, JONATHAN CRUZ, remains at large. The defendants who were taken into custody today were presented in Manhattan federal court this afternoon. The case is assigned to U.S. District Judge Sidney H. Stein.
Manhattan U.S. Attorney Preet Bharara said: “Today’s takedown is the fourth our Office has announced of a Bronx drug trafficking crew this year alone. Alleged drug trafficking gangs like the Burnside Money Getters not only pollute the neighborhoods they infiltrate with poisonous drugs and guns, but they also strike fear into the residents living in those neighborhoods. I want to thank our law enforcement partners for continuing to work with this Office in our efforts to pursue and prosecute those who think they can carry out illegal drug activity and inject violence into our communities in the process.”
DEA Special Agent-in-Charge Brian R. Crowell said: “Known throughout the West Bronx as the ‘light side’, ‘dark side’ and ‘D block’, the Burnside Money Getters bullied community members and residents living in the vicinity of the gangs’ daily criminal activity. As evidenced in this one year investigation, drug trafficking was the main source of profit for this gang which employed violence, threats and the use of guns in the course of their lives of crime. The residents within the 46th precinct will benefit from this joint federal, local and state law enforcement initiative bringing 23 alleged gang members to justice and giving families and residents a quality of life without fear or exposure to drugs and the violence associated with the drug trafficking of this gang.”
NYPD Commissioner Raymond W. Kelly said: “Drugs kill those it addicts, destroy families, and ruin entire neighborhoods. It’s always a good day when its traffickers are brought to justice. I want to commend the agents, prosecutors, and, of course, our detectives particularly, for the dangerous but crucial job they performed in going undercover to penetrate these narcotics crews.”
ATF Special Agent-in-Charge Joseph Anarumo Jr. said: “This investigation demonstrates the outstanding achievements that can be reached when local, state and federal law enforcement agencies work together for a common goal, which is to protect the public.”
ICE HSI Special Agent-in-Charge James T. Hayes said: “The BMG gang members arrested today allegedly peddled a wide variety of illegal drugs throughout the Bronx and violently and relentlessly defended their “turf.” HSI continues to work to rescue communities affected by transnational gang crime and violence.”
NYS DOCCS Acting Commissioner Anthony J. Annucci said: “The critical commission of helping keep our communities safe and secure is our highest priority. I acknowledge and greatly appreciate the work carried out today by the various law enforcement agencies, including our own Community Supervision officers. This cooperation will always be key in the effectiveness of these joint efforts.”
According to the Indictment unsealed today in Manhattan federal court:
From 2007 through August 2013, BMG had over 20 members who were engaged in the sale of crack cocaine, cocaine, marijuana, MDMA, and Oxycodone. During the course of the investigation, undercover officers with the NYPD made several purchases of crack cocaine and other narcotics from drug dealers in the area controlled by BMG. During the buys, officers were able to purchase significant street level quantities of cocaine and crack cocaine. In addition, BMG members possessed and discharged firearms during the course of the conspiracy to secure and enforce their drug territory. Several defendants were also intercepted on Title III court-authorized wiretaps discussing the sale of various narcotics and the use and purchase of firearms.
During the arrests and searches, agents and officers seized what is believed to be crack cocaine, MDMA and marijuana, as well as $14,000 in cash, ammunition, and counterfeit money.
KEYEWANIE BLACKLEDGE, ABDUL RAHM ABDULLAH, KWAME ANDERSON, CLEMENT BOATENG, FRANK BOATENG, TROY CARTER, MALIK CROCKER, SHONDELL CROCKER, JONATHAN CRUZ, JOVAN FIELDS, MARK FRIERSON, GLEN GILLIARD, DAIVON HENRY, LARRINGTON HENRY, MARKEEN JORDAN, MARIO MARTINEZ, MAURICE MARTINEZ, NATHANIEL MEDINA, ROBERT PIZARRO, RAYMOND RODRIGUEZ, JOSHUA TORRES, BENJAMIN TOWNES, and SHAQUAN WILSON, are each charged with one count of conspiring to distribute and possessing with intent to distribute crack cocaine, cocaine, marijuana, MDMA and Oxycodone. Each defendant faces a mandatory minimum penalty of 10 years in prison and a maximum penalty of life in prison.
A chart identifying the defendants’ ages, and residencies is attached.
Mr. Bharara praised the outstanding investigative work of the DEA, the NYPD, the ATF, ICE HSI, and DOCCS. He added that the investigation is continuing.
The Office’s Violent Crimes Unit is overseeing the case. Assistant U.S. Attorneys Andrew Bauer and Jessica Ortiz are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Click here to view chart(s)
Lee Police Chief Indicted for Extortion and Money Laundering Alleged Activity Includes Coercing Payment from Individuals Facing Prostitution Charges and Diverting Money Through Children’s Toy FundRead the Press Release
BOSTON – A federal grand jury in Springfield returned an indictment today against Lee Police Chief Joseph Buffis for extortion and three counts of money laundering.
It is alleged that in February 2012 Buffis, 55, of Pittsfield, acting in his official capacity as Lee Police Chief, extorted a $4,000 “donation” from two individuals who were facing prostitution-related charges. The “donation” was made payable to the Edward J. Laliberte Toy Fund, a holiday toy fund that Buffis controlled. Buffis deposited the $4,000 check into the Toy Fund’s bank account and quickly withdrew $3,990 which he then deposited into a joint bank account that he operated with his wife. The diverted money was then used to pay for various personal expenses. Buffis is alleged to have lied to law enforcement about the disposition of the funds.“To be entrusted to serve and protect is a great honor and privilege. The alleged actions of Chief Buffis disgrace the many incredible law enforcement stewards who uphold and enforce the law. Actions like these threaten the credibility of our justice system, and we will not stand idly by and allow the trust of our communities to be violated,” said United States Attorney Carmen M. Ortiz.
Berkshire District Attorney David F. Capeless said, “The allegations contained in the federal indictment describe a serious breach of the public trust, and my Office will continue to work with United States Attorney Ortiz and her Office to see that justice is done and order restored. It should be made clear that these accusations are made against one man, Joseph Buffis, not the Lee Police Department or any other members of its force. My Office will continue to work proudly alongside the Lee Police Department to ensure safety and justice in the town of Lee and throughout Berkshire County.”“This is another example of a successful investigation and extraordinary teamwork between the FBI, the Massachusetts State Police, United States Attorney and Berkshire District Attorney’s Offices. The conduct charged in this indictment demonstrates law enforcement’s commitment to pursue public corruption at any level. We will not tolerate these acts, especially from those who have sworn to serve and protect the community and its citizens,” said FBI Special Agent in Charge Vincent B. Lisi.
If convicted, Buffis faces a maximum of 20 years in prison on each of the counts followed by five years of supervised release, and $250,000 fine. Buffis will be summoned to appear in court for his initial appearance.
U.S. Attorney Ortiz; District Attorney Capeless; FBI Special Agent in Charge Lisi; and Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police, made the announcement today. The U.S. Attorney’s Office would like to thank District Attorney Capeless and the Massachusetts State Police Berkshire Detective Unit for uncovering the alleged violations and initiating the investigation which led to today’s indictment.
The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow of Ortiz=s Springfield Branch Office.
We are seeking the public’s assistance in this case. For those who have donated cash or toys to the Edward J. Lalilberte Toy Fund or for those who have applied to the Edward J. Laliberte Toy Fund, please contact the Federal Bureau of Investigation, Springfield Resident Agency, at (413) 732-0159. Please contact the FBI if you have any information, questions or concerns regarding this matter.
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.
Lake Charles Man Sentenced to 20 Years in Prison for Receiving Child PornographyRead the Press Release
LAKE CHARLES, La. – United States Attorney Stephanie A. Finley announced today that David Shelton, 35, of Lake Charles, was sentenced by U.S. District Judge Patricia Minaldi to 20 years in prison and a lifetime of supervised release for receiving child pornography.
According to the evidence presented at the guilty plea and sentencing, authorities detected the defendant using the E-Mule file sharing program to download child pornography. A search of his home was conducted July 12, 2012. Federal agents discovered approximately 80 movies and 1,292 images of child pornography that had been downloaded by the defendant to his computer. Most of the images were of children about 9 years of age. Some of the images were sadistic prepubescent child pornography. Shelton pleaded guilty on April 11, 2013.“The individual in this case used his computer to download images of abused children,” Finley said. “His actions contributed to a worldwide trade of such material. Our office will not stop prosecuting those who download images and videos depicting abuse of children. This case should send a clear message that there are serious consequences for this type of criminal activity.”
“Child pornography distributors enable the re-victimization of innocent children who have already experienced horrific abuse,” said Homeland Security Investigations New Orleans Special Agent in Charge Raymond R. Parmer, Jr. “These predators do severe damage to our society, and HSI will continue to investigate and seek prosecution wherever these criminals may be found.”
Homeland Security Investigations and the Lake Charles Police Department investigated the case. Assistant U.S. Attorney John Luke Walker prosecuted the case.This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The U.S. Attorney’s Office and the U.S. Department of Homeland Security/Homeland Security Investigations/Immigration & Customs Enforcement (ICE) encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at (866) DHS-2ICE. Investigators are available at all hours to answer hotline calls. Tips or other information can also be submitted to ICE online at www.ice.gov/exec/forms/hsi-tips/tips.asp.
LSUE Academic Assistance Director, Assistant Director Plead Guilty to Stealing Federal FundsRead the Press Release
LAFAYETTE, La. – United States Attorney Stephanie A. Finley announced today that Dr. Marvette J. Thomas, 60, of Grambling, La., and Carra Sergeant, 60, of Ragley, La., pleaded guilty before U.S. District Judge Elizabeth E. Foote to theft of government funds.According to evidence presented at the guilty plea, Thomas served as director of the office of academic assistance, and Sergeant served as assistant director of academic assistance at Louisiana State University at Eunice (LSUE). From Sept. 1, 2008 until Feb. 28, 2012, Thomas and Sergeant used their positions to take funds from federal grants meant for the Upward Bound and Student Support Services projects, which are designed to assist students at LSUE in their education efforts and goals. They used grant funds for their personal benefit and attempted to cover up their activities by altering receipts and submitting false records.
They admitted to buying clothes, shoes, handbags, cosmetics, jewelry, children’s clothing, personal electronic devices, cookware, tools, toys, recreational vehicle parts, pet supplies, household items, outdoor items, exercise equipment, religious books, and gifts for family, friends and co-workers. LSU auditors, U.S. Department of Education-Office of Inspector General and the FBI estimate that Thomas spent at least $68,464 and Sergeant $74,653. Additionally, they allowed and encouraged subordinate co-workers to make personal purchases as well. The co-workers’ purchases total $16,050. A total of $159,167 was illegally spent under Thomas’ and Sergeant’s watch.
“The defendants in this case were entrusted with managing funds that were supposed to benefit students seeking to expand their education,” Finley stated. “They now potentially face years in jail, fines and other penalties for their actions. We will continue to pursue cases where taxpayer money is used for personal benefit.”
“These federal programs exist so that individuals can pursue and make their dream of a higher education a reality,” said Neil E. Sanchez, Special Agent in Charge, U.S. Department of Education/Office of Inspector General, South Central Region. “That’s why OIG special agents will continue to aggressively pursue those who seek to enrich themselves at the expense of our nation’s students.”Thomas and Sergeant face up to 10 years in prison, a $250,000 fine, restitution, and three years of supervised release for theft of government funds. A sentencing date of December 12, 2013 was set.
The FBI, U.S. Department of Education-Office of Inspector General and Louisiana State University auditors conducted the investigation. Assistant U.S. Attorney Myers P. Namie is prosecuting the case.
Kenneth J. Gonzales Resigning as U.S. Attorney for the District of New MexicoRead the Press Release
ALBUQUERQUE – Kenneth J. Gonzales is resigning as U.S. Attorney for the District of New Mexico today in anticipation of taking his judicial oath as a U.S. District Judge tomorrow, Aug. 9, 2013.
Mr. Gonzales was commissioned as U.S. Attorney by President Obama on April 30, 2010, after the U.S. Senate unanimously confirmed his appointment. He was sworn in as the 44th U.S. Attorney for the District of New Mexico on May 3, 2010. As U.S. Attorney, Mr. Gonzales served as the top federal law enforcement official in New Mexico and represented the United States interests in civil cases. He also served as the Co-Chairman of the Border and Immigration Subcommittee of the Attorney General’s Advisory Committee (AGAC) in addition to serving on the AGAC’s Native American Issues Subcommittee, Civil Rights Subcommittee, Environmental Issues Working Group, and Resource Allocation Working Group.
“It has been an honor and a privilege to serve the United States and the people of New Mexico as U.S. Attorney and to work alongside the fine women and men of the U.S. Attorney’s Office (USAO), our partner federal, state, local and tribal law enforcement agencies, and the federal officials and employees we work with and represent on a daily basis,” said Mr. Gonzales. “I am profoundly grateful for the trust placed in me by the President and the Attorney General, and am humbled by the opportunity to continue to serve the public as a federal judge.”
Shortly after assuming the mantle of U.S. Attorney, Mr. Gonzales restructured the USAO’s Criminal Division in Albuquerque to enable the Office to more expeditiously prosecute reactive cases and devote more time and expertise to significant investigations and prosecutions. As reorganized, the Criminal Division was comprised of the General Crimes & Border Security Section (General Crimes), the OCDETF & Gangs Section (OCDETF), the Major Economic Public Integrity & Nation Security Section (Major Crimes), and the first Indian Country Crimes Section ever constituted in any USAO.
Although the Obama Administration and Justice Department identified public safety in Indian Country as a national priority, for Mr. Gonzales, who grew up in the vicinity of the Pueblos of Pojoaque, Tesuque and Nambe, this was a personal priority. Accordingly, one of his first acts as U.S. Attorney was to replace the USAO’s Violent Crimes Section with an Indian Country Crimes Section devoted solely to combating crime in New Mexico’s Indian Country pursuant to a community prosecution strategy. The strategy, based on the community policing model, requires immersion into in the community; getting to know the community’s leaders, police and social services providers; and developing a sense of confidence and trust in the community. By fostering relationships of trust and developing confidence in the justice system, Mr. Gonzales sought to create an environment that encouraged members of New Mexico’s Native communities to more readily report crimes, fact witnesses to come forward, and victims to trust that federal prosecutors would seek justice for them. To implement this strategy, Mr. Gonzales assigned Assistant U.S. Attorney (AUSAs) in the Section as Tribal Liaisons to individual pueblos and tribes, and tasked them with getting to know their assigned communities so that the USAO was better equipped to meet the public safety needs of each pueblo and tribe. Examples of the cases routinely prosecuted by the Indian Country Crimes Section include a life sentence for Nathan Jack who was convicted of suffocating his common-law wife by packing her throat with dirt; a 40 year sentence for Reehahlio Carroll for the felony murder of a nun during a burglary; and a 50 year sentence for a Navajo man who kidnapped and sexually assaulted a disabled teenager.
Mr. Gonzales also implemented two Indian Country pilot projects and expanded on a third. The first was one of only three community prosecution teams funded by the Justice Department as part of its on-going efforts to increase engagement, coordination and action on public safety in tribal communities. Mr. Gonzales’ community prosecution team is stationed in the Eastern Agency of the Navajo Nation. The second was the Tribal Special AUSA Pilot Project sponsored by the Justice Department’s Office on Violence Against Women in response to the epidemic of violence against Native women. Through this pilot project, tribal prosecutors are trained in federal law, procedure and investigative techniques to increase the likelihood that violent offenses against Native women are prosecuted in federal court or tribal court, or both. With respect to the third, Mr. Gonzales supported the Navajo Nation Department of Public Safety’s application to continue the Dlo’ ayazhi Indian Country Project Safe Neighborhoods (PSN) Pilot Project in the Crownpoint District and to expand the program to the Shiprock District. This project – the first PSN project in Indian Country – supports an anti-gang, anti-drug and anti-firearms violence school-based prevention program and a domestic violence reduction program.
Mr. Gonzales charged the General Crimes Section with prosecuting immigration, firearms, bank robbery and non-Indian Country violent crime as well as reactive narcotics cases and discrete white collar crime cases thus enabling the OCDETF and Major Crimes Sections to focus on long-term, proactive investigations and prosecutions. The Section also prosecutes cases brought under “the worst of the worst” anti-violence initiative implemented by Mr. Gonzales in summer of 2010. Under this initiative, the USAO and federal law enforcement agencies work with New Mexico’s District Attorneys and state, local and tribal law enforcement agencies to target violent or repeat offenders for federal prosecution with the goal of removing them from communities in New Mexico for as long as possible. Examples of the cases routinely prosecuted by the General Crimes Section include a sentence of life imprisonment for Jeremiah Jackson for killing two women while fleeing the scene of a bank robbery; 40 and 35 year sentences for two El Salvadorans for the felony murder of a cook at a Denny’s Restaurant; the conviction after trial of an El Paso man for possession of 32 pounds of heroin with a retail value of $2.9 million, one of the top ten heroin seizures in the U.S. that year; and a 40 year sentence for an Albuquerque armed career criminal convicted on drugs and firearms charges. In addition, AUSAs in this Section and in the Las Cruces Branch Office prosecuted more than 2500 felony immigration cases and more than 2400 misdemeanor immigration cases.
The OCDETF Section was charged with targeting and dismantling large-scale drug trafficking organizations, prosecuting gang violence, and facilitating enforcement actions against prescription drug trafficking. AUSAs in this Section and in the USAO’s Las Cruces Branch Office lead the investigation and prosecution of major drug trafficking organizations through the OCDETF Program, the centerpiece of the DOJ counter-narcotics strategy that uses prosecutor-led, multi-agency task forces to combat the most serious drug cartels. Given statistics reflecting that, per capita, New Mexico has the nation’s highest heroin and prescription drug overdose death rates and that its drug addiction rates are among the highest in the nation, Mr. Gonzales worked with federal law enforcement agencies and partnered with state, local and tribal law enforcement agencies to investigate and dismantle the drug trafficking organizations that distribute narcotics within New Mexico. Their accomplishments included investigations that resulting in the arrests and prosecution of: 84 defendants in Chaves County on narcotics and firearms charges in Sept. 2011; 20 members of a methamphetamine ring operating in Eddy County in Nov. 2011; eight members of an Albuquerque prescription drug trafficking ring in Feb. 2012; 15 members of an Albuquerque methamphetamine trafficking ring in March 2012; ten members of a Las Cruces methamphetamine trafficking ring in May 2012; 14 members of a Santa Fe cocaine trafficking ring in June 2012; 25 defendants from San Miguel County on drug trafficking charges in Aug. 2012; 18 defendants from Lincoln and Otero Counties on drug trafficking charges in Aug. 2012; 20 individuals on marijuana and cocaine trafficking charges in Sept. 2012; nine defendants on methamphetamine trafficking charges in Oct. 2012; 19 members of an Albuquerque drug trafficking and money laundering ring in Dec. 2012; 21 individuals in Albuquerque on prescription drug charges in Feb. 2013; and 29 individuals from Dona Ana County on drug trafficking charges in May 2013.
Significant accomplishments in the area of political corruption by the Major Crimes Section include a 70 month sentence for Laurie Chapman, the former facilities manager for the New Mexico Corrections Department (NMCD), for soliciting and accepting bribes in exchange for steering NMCD jobs to a roofing company; the conviction after trial of former Albuquerque Police Officer Brad Ahrensfield for obstruction of justice; the convictions after trial of Joseph and Elizabeth Kupfer on tax evasion charges, and Joseph Kupfer and Armando Gutierrez for theft of $2.5 million in federal “Help America Vote Act” funds and obstruction of justice charges; guilty pleas from the former Executive Director of the Taos County Housing Authority and her husband for stealing more than $785,000 in federal funds; and the indictment of former Santa Ana Pueblo Governor Bruce Sanchez for allegedly embezzling $3.6 million from the Indian Pueblo Federal Development Corporation.
The Major Crimes Section’s accomplishments also include a 70 month sentence for a Washington, D.C.-based financial consultant following his conviction after trial on wire fraud charges; a 12 year sentence for Doug Vaughan for operating a Ponzi scheme that defrauded more than 600 investors of $74 million; a 27 month sentence for Albuquerque real estate developer Vincent Garcia for bank fraud; and the indictment of Governor Susana Martinez’s former campaign manager on computer intrusion and false statement charges. On the national security front, the Major Crimes Section recently secured guilty pleas from a former Los Alamos National Laboratories scientist and his wife for violating the Atomic Energy Act and other charges relating to their communication of classified nuclear weapons data to a person they believed to be a Venezuelan government official, and the indictment of a scientist formerly employed by Sandia National Laboratories for allegedly using U.S. government resources and equipment to conduct research for Chinese research institutions.
Mr. Gonzales developed a strong partnership with the Justice Department’s Civil Rights Division that resulted in the joint prosecution of several significant cases and initiation of numerous investigations. This partnership extends not only to criminal matters, but also to civil matters and Mr. Gonzales established a Civil Rights Unit, comprised of AUSAs from both the Criminal and Civil Divisions, to support this important partnership and facilitate its work. Significant accomplishments in the civil rights arena include the conviction of three Farmington men for the racially-motivated assault on a young disabled Navajo man which included the branding of a swastika into the victim’s arm – this was the first case brought under the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act. They also include the conviction of three former corrections officers in Albuquerque for beating a DUI suspect and attempting to obstruct the investigation into that beating. On the civil front, the USAO obtained a favorable settlement for a disabled tenant in a Fair Housing Act case against his landlord, and reached a settlement with an Albuquerque restaurant under the Americans with Disabilities Act that ensures equal access for individuals with disabilities who use service animals. The USAO’s Civil Division, together with the Special Litigation Unit of the Civil Rights Division, is investigating allegations that Albuquerque Police Department officers engaged in a pattern or practice of use of excessive force, including deadly force, in violation of individuals’ Fourth Amendment rights. In addition to case related work, attorneys from the Civil Rights Division and USAO have collaborated in community outreach activities by making presentations at civil rights and Indian Country conferences and training programs, and have participated in community meetings relating to civil rights concerns within the District of New Mexico.
The USAO’s Civil Division, together with the Justice Department’s Commercial Litigation Branch secured an $11.75 million payment from Science Applications International Corporation to settle allegations that it violated the False Claims Act by charging inflated prices under federal grants to train first responder personnel to prevent and respond to terrorism attacks. It also has developed an affirmative environment justice practice and works with the Justice Department’s Environmental and Natural Resources Division in representing the United States in matters concerning the stewardship of the nation’s natural resources and public lands.
Under Mr. Gonzales’s stewardship, the USAO’s prosecution of cases brought under Project Safe Childhood (PSC), a Justice Department initiative that combats the epidemic of child sexual exploitation and abuse, increased by almost 60% and the number of defendants sentenced to prison terms exceeding 60 months increased by more than 230%.
In July 2011, Mr. Gonzales established a new Asset Recovery Unit staffed with USAO and U.S. Marshal Service personnel and tasked the Unit with responsibility for the USAO’s criminal and civil forfeitures and financial litigation. The new Unit was part of Mr. Gonzales’s multi-pronged approach to combating and dismantling criminal organizations; targeting individuals who were profiting from their illicit activities; and putting the USAO in a stronger position to recover debts owed to the people of the United States. The Asset Recovery Unit’s success is best demonstrated by the $9,841,037 it collected in calendar year 2012, including $8,735,655 collected for criminal and civil fines, penalties and debt, and $1,105,382 from criminal and civil forfeitures, which is almost tripled the amount collected by the USAO in 2011.
Mr. Gonzales, a native New Mexican from Pojoaque, received both his undergraduate and law degrees from the University of New Mexico. After graduating from law school, he served as a Judicial Law Clerk to New Mexico Supreme Court Chief Justice Joseph F. Baca and then joined Senator Jeff Bingamans Washington Office as a Legislative Assistant. From 1999 to May 2010, when he began his tenure as U.S. Attorney, Mr. Gonzales was an AUSA in the USAO for District of New Mexico and prosecuted a wide range of federal offenses. Since 2001, he has served as a Judge Advocate in the United States Army Reserve, and currently holds the rank of Major. He has served as Senior Trial Counsel for the Office of the Staff Judge Advocate, 18th Airborne Corps, Fort Bragg, North Carolina, in support of Operation Enduring Freedom. He presently is assigned to The Judge Advocate Generals Legal Center and School in Charlottesville, Virginia, where he is an Adjunct Professor of Criminal Law.
The U.S. Attorney’s Office for the District of New Mexico is charged with enforcing federal criminal laws in New Mexico, and with representing the federal government in civil litigation in the District. The Office is staffed by 76 AUSAs, four Special AUSAs, 66 support staff members and 14 contractors at offices in Albuquerque and Las Cruces. First Assistant U.S. Attorney Steven C. Yarbrough will be Acting U.S. Attorney until a new U.S. Attorney is nominated by the President and confirmed by the Senate.Justice Department Signs Agreement with the City of Fort Morgan, Colo. to Ensure Civic Access for People with DisabilitiesRead the Press Release
The Justice Department announced today an agreement with the city of Fort Morgan, Colo., to improve access to all aspects of civic life for persons with disabilities. The agreement was reached under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA).
PCA ensures that people with disabilities have an equal opportunity to participate in civic life. As part of PCA, Justice Department staff survey state and local government facilities, services and programs in communities across the country to identify changes needed to comply with the ADA. The agreements detail the actions a city must take to improve access to the city. This agreement is the 208th entered into under the department’s PCA initiative.
Under the agreement, which may be viewed at www.ada.gov/fort-morgan-pca/fort-morgan-pca-sa.htm, the city will remove barriers to accessibility at the animal shelter, cemetery, city complex, city hall, library and museum, municipal court, police department and airport, as well as City Park, Fulton Heights Park, Gateway Park, Jaycee Park, Old Fort Park and Optimist Park. The city will also request the school district to remove barriers to access within the areas of the high school and the middle school that are currently used for emergency shelters.
The agreement also requires the city to address emergency management policies and procedures for persons with disabilities, develop a method for providing information for persons with disabilities about the existence and location of the city’s accessible services, establish and implement a policy to make the city’s web pages accessible and i mplement a plan to make sidewalks and curb cuts accessible throughout the city.
“Access to a city government’s programs, services and activities is one of the most basic civil rights guaranteed to community members, including those with disabilities,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division. “By signing this agreement, the city of Fort Morgan, Colo. is committing to ensuring its doors are open to people with disabilities.”
“One of the important roles the Department of Justice plays is ensuring that anyone can access their government,” said Walsh, U.S. Attorney for the District of Colorado. “With the signing of this agreement with Fort Morgan, those with disabilities will be able to interact with their government, free of any barriers that may have previously blocked their access.”
Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The agreement requires the actions to be completed within three years. The department will actively monitor compliance with the agreement throughout this timeframe.
This agreement is among the first to be posted on the department’s newly redesigned PCA web page and may be viewed at www.ada.gov/civicac.htm . The web page allows users to identify PCA agreements in two different ways: by geographic location using a clickable map or a state list and by chronological order, when the agreement became effective.
People interested in finding out more about the ADA, today’s agreement with the city of Fort Morgan, the Project Civic Access initiative or the ADA Best Practices Tool Kit for State and Local Governments may access the ADA web page at www.ada.gov or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).
Informational: Federal Court ArraignmentsRead the Press Release
The United States Attorney's Office announced that during a federal court session in Great Falls, on August 8, 2013, before U.S. Magistrate Judge Keith Strong, the following individuals were arraigned:
FRANCIS KAY ONSTAD, a 60-year-old resident of Valier, appeared on Counts I, II-XXII, XXIII - XXVIII, and XXX - XXXIII.
DELYLE SHANNY AUGARE, a 57-year-old resident of Browning, appeared on Counts I, II - XXVIII, and XXXIV - XXXVII.
GARY JOSEPH CONTI, a 67-year-old resident of Three Forks, appeared on Counts I, II - XXVIII, and XXIX.
DOROTHY MAY STILL SMOKING, a 64-year-old resident of East Glacier, appeared on Counts I, and II - XXV.
KATHERYN ELIZABETH SHERMAN, a 66-year-old resident of East Glacier, appeared on Counts I, and II - XXV.
CHARLOTTE B. NEW BREAST, a 52-year-old resident of East Glacier, appeared on Counts I, II-XXII, and XXVII.
The defendants pled not guilty to the charges and were released on special conditions.
CHARGES:
Count I: Conspiracy to Defraud The United States
Penalty: 5 years imprisonment, $250,000 fine and 3 years supervised release
Counts II-XXII: Scheme to Defraud the United States and the Blackfeet Tribe/Wire
Penalty: 20 years imprisonment, $250,000 fine and 3 years supervised release
Count XXIII: Federal False Claims Act Conspiracy
Penalty: 10 years imprisonment, $250,000 fine and 3 years supervised release
Count XXIV: Federal False Claims Act
Penalty: 5 years imprisonment, $250,000 fine and 3 years supervised release
Count XXV: Theft of Federal Property by Fraud
Penalty: 10 years imprisonment, $250,000 fine and 3 years supervised release
Counts XXVI & XXVII: Theft from an Indian Tribal Government Receiving Federal Grants
Penalty: 10 years imprisonment, $250,000 fine and 3 years supervised release
Count XXVIII: Money Laundering
Penalty: 10 years imprisonment, $250,000 fine and 3 years supervised release
Count XXIX: Bankruptcy Fraud
Penalty: 5 years imprisonment, $250,000 fine and 3 years supervised release
Counts XXX-XXXII, XXXV: Willful Failure to File Tax Return
Penalty: 1 year imprisonment, $25,000 fine and 1 year supervised release
Counts XXXIII-XXXIV, XXXVI-XXXVII: Income Tax Evasion
Penalty: 5 years imprisonment, $100,000 fine and 3 years supervised release
Assistant U.S. Attorney Carl E. Rostad is the prosecutor for the United States.
The investigation was conducted by a team of agents and auditors working with the U.S. Attorney's Guardians Project, including the Office of Inspector General for the Department of Interior, the Federal Bureau of Investigation, and the Criminal Investigation Division of the Internal Revenue Service.
The charge, an indictment, information or complaint, is merely an accusation and all persons named as defendants are presumed innocent until proven guilty. A pre-trial conference and a trial date will be set and the United States will be required to prove the allegations set forth in the indictment beyond a reasonable doubt.
Indictment Charges Serial Bank Robber in New HeistsRead the Press Release
PHILADELPHIA - Carl Anthony Goodwin, 28, of Philadelphia, PA, was charged today by indictment in several robberies in Philadelphia, one of which was committed while he was a resident of a halfway house, announced United States Attorney Zane David Memeger. Goodwin is charged with five robberies, one attempted robbery, and escape from the residential reentry center.
Goodwin had been released to the Kintock Residential Reentry Center at 301 East Erie Avenue (“Kintock”) after completing a 30-month prison sentence for two attempted robberies on banks in Philadelphia. According to the indictment, on June 17, 2013, Goodwin robbed the Dunkin Donuts store at 3705 Germantown Ave. It is further alleged that on June 19, 2013, Goodwin escaped from confinement at the Kintock Residential Reentry Center. It is further alleged that on June 20, 2013 and July 2, 2013, Goodwin robbed the Citizens Bank branch, at 6324 Stenton Ave., and that on June 21, 2013, Goodwin attempted to rob the Bank of America branch located at 3705 Aramingo Avenue. Goodwin is also charged with the June 24, 2013 robbery of the Beneficial Bank branch at 5301 Chew Ave., and the July 7, 2013 robbery of the Wells Fargo Bank branch at 861 East Allegheny Avenue.
If convicted of all charges, Goodwin faces a maximum possible sentence of 125 years in prison, a fine of up to $1.75 million, three years of supervised release, and a $700 special assessment.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Paul G. Shapiro.
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 Mother and Grandmother Indicted and Charged with Social Security Fraud and Theft of Government FundsRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that Oriana Merino, age 31 and Raquel Cuni, age 65, both of Harrisburg, were indicted Wednesday and charged with theft of government funds and social security fraud.
According to U.S. Attorney Peter J. Smith, from March 2010 to May 2013, Merino and Cuni received Supplemental Security Income and disability benefit payments as Representative Payees for their son/grandson and used the money for themselves. The child had been removed from the home and transferred to the custody of Dauphin County Children and Youth Services.
This case is being investigated by Social Security Office of Inspector General and is being prosecuted by Assistant United States Attorney Daryl F. Bloom.
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 15 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.
Fort Polk Man Sentenced for Sexual Abuse of A MinorRead the Press Release
LAKE CHARLES, La. – United States Attorney Stephanie A. Finley announced today that Satonius Gaines, 19, of Fort Polk, La., was sentenced by U.S. District Judge Patricia Minaldi to 18 months in prison with five years of supervised release for sexual abuse of a minor.
According to evidence presented at the guilty plea, Gaines admitted that on July 22, 2012, he engaged in oral sex with a 13-year-old minor on the Fort Polk Military base. He pleaded guilty May 1, 2013.
The U.S. Army Criminal Investigation Command and the FBI conducted the investigation. Assistant U.S. Attorney Daniel J. McCoy prosecuted the case.Former Wilton Manors Resident Sentenced for Defrauding the State of Florida Unemployment Compensation ProgramRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Richard Walker, Special Agent in Charge, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, and Cynthia R. Lorenzo, Interim Executive Director, Florida Department of Economic Opportunity, announce that defendant Denny Ray Hughes, 40, formerly of Wilton Manors, FL, was sentenced before U.S. District Court Judge William P. Dimitrouleas, in connection with his previous conviction for wire fraud, in violation of Title 18, United States Code, Section 1343, and aggravated identity theft, in violation of Title 18, United States Code, Section 1028A for his role in defrauding the Unemployment Compensation Programs of both the State of Florida and the Commonwealth of Massachusetts.
At the hearing, Judge Dimitrouleas sentenced defendant Hughes to 41 months in prison for the wire fraud and a consecutive 24 months in prison for the aggravated identity theft, for a total imprisonment of 65 months, to be followed by three years of supervised release, and ordered that he pay $219,970 in restitution to the State of Florida and $70,524 in restitution to the Commonwealth of Massachusetts.
According to the indictment and court documents, between January 2011 and April 2012, defendant Hughes obtained the personal identifying information of approximately 21 individuals, including their names, dates of birth, and social security numbers, and in order to obtain and build wage credits for the purported employees filed or caused to be filed fraudulent quarterly UCT-6 forms with the Florida Department of Revenue classifying them as employees of Mortgage Relief America, LLC (MRA). Alternatively, defendant Hughes submitted falsified W-2’s to the Florida Department of Economic Opportunity to create the appearance that these individuals had previously worked for MRA. The defendant thereafter classified these individuals as laid off employees and fraudulently filed applications with the Florida Department of Economic Opportunity seeking unemployment compensation benefits on their behalf utilizing their personal identifying information. Once these fraudulent unemployment compensation applications had been submitted to the Florida Department of Economic Opportunity, the defendant made materially false, misleading, and fraudulent claims to the Florida Department of Economic Opportunity Unemployment Compensation Program over the internet and/or over the telephone on either a weekly or bi-weekly basis, and thereby caused unemployment compensation funds from the Florida Department of Financial Services to be deposited directly into the defendant’s bank account via electronic funds transfers. Moreover, the investigation also disclosed that Hughes devised a similar scheme by creating another fictitious company under the name of Commonwealth Global Corp (CWGC) located in Massachusetts. In that scheme, Hughes utilized personal identifying information of at least 23 individuals to fraudulently apply for and receive approximately $70,524.00 in Massachusetts UI benefits.
Mr. Ferrer commended the investigative efforts of the U.S. Department of Labor, Office of the Inspector General and the Florida Department of Economic Opportunity. This case is being prosecuted by Assistant U.S. Attorney Marc Anton.
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.
Former Union President Pleads Guilty to TheftRead the Press Release
LAFAYETTE, La. – United States Attorney Stephanie A. Finley announced today that Calvin Sanders Sr., 52, of Franklin, La., pleaded guilty before U.S. District Judge Elizabeth E. Foote, to embezzling union funds.According to evidence presented at the guilty plea, Sanders admitted that he was president of the United Food and Commercial Workers, Local 638C, union from June 2007 to February 2010, and that he was responsible for maintaining their financial records and funds. He admitted to not maintaining the necessary financial records needed to explain and clarify the reports he is required to submit under federal law. Sanders admitted he made unauthorized withdrawals from Local 638C’s general and strike fund checking accounts, in addition to paying for his personal utility bills with Local 638C funds. The evidence established that he took $24,028 in union funds.
Sanders faces up to five years in prison, a $10,000 fine, restitution, and three years of supervised release for embezzling union funds. A sentencing date of Dec. 12, 2013, 2013 was set.
The U.S. Department of Labor-Office of Labor Management Standards conducted the investigation. Assistant U.S. Attorney James T. McManus is prosecuting the case.
Former Heber City, Utah, Resident Sentenced to Prison for Filing False Claims for Tax RefundsRead the Press Release
The Justice Department and Internal Revenue Service (IRS) announced that April J. Rampton, 42, formerly of Heber City, Utah, was sentenced today to 21 months in prison for filing false claims for income tax refunds. U.S. District Judge Dee Benson also ordered Rampton to pay $230,678.36 in restitution to the IRS and to serve three years of supervised release upon her release from prison.
Rampton was convicted at trial in December 2012 of nine counts of filing false claims for refund. According to the indictment and the proof at trial, in July 2011, Rampton filed a false individual income tax return, based on false Forms 1099-OID, which sought a refund of more than $225,000. On these false Forms 1099-OID, Rampton listed items of debt, such as her home mortgage and credit cards, as if the bank or loan holder had withheld the entire amount of her debt as a federal income tax payment. Rampton received a refund check from the IRS, photocopied the check, and showed it to friends and family members. Rampton then began preparing returns for friends, family members, acquaintances and strangers, all using false Forms 1099-OID that sought tax refunds corresponding to their debts.
This case was investigated by IRS-Criminal Investigation and prosecuted by Trial Attorneys Michael Romano and Stuart Wexler of the Justice Department’s Tax Division.
Former Army Sergeant First Class Pleads Guilty to Government Theft ChargesRead the Press Release
WASHINGTON – Mauricio Espinoza, 34, pleaded guilty today in the Eastern District of North Carolina to conspiring to commit mail fraud and wire fraud, to steal and convert monies belonging to the U.S. Government, and to smuggle currency into the United States as well as to theft and conversion of government property.
According to the Indictment and information in the public record, between July, 2009 and January, 2010, while deployed to Afghanistan, former Sergeant First Class Espinoza, 34, and former-Staff Sergeant Philip Wooten, 36, (who previously pled guilty to the same offenses) stole federal monies entrusted to them and which were earmarked for operational and reconstruction efforts.
Espinoza deployed to Afghanistan from July 2009 through July 2010 with a small detachment from the United States Army 7th Special Forces Group. Espinoza’s duties included that of Paying Agent. Wooten, who was assigned to the same detachment, was the Field Ordering Officer (FOO). As the FOO, Wooten was responsible for contracting with local vendors for various operational and reconstruction efforts in Afghanistan. As the Paying Agent, Espinoza was responsible for making payments to the local vendors to whom Wooten awarded contracts and for properly accounting for the expenditure of federal funds under his control. Together, as the Paying Agent and the Field Ordering Officer, Espinoza and Wooten were entrusted with U.S. funds allocated for military operations and reconstruction efforts in Afghanistan. Before their deployment and thereafter, the two soldiers planned how they would steal those funds.
Beginning in or about July 2009, Espinoza signed for and withdrew U.S. funds in the form of Afghani currency from the U.S. Finance Office on the military installation known as Kandahar Air Field (KAF). The funds were meant to finance purchases (such as provisions for the Special Forces Team) and construction projects near the team’s forward operating base. Espinoza knew that he would have to periodically return to the United States Finance Office at KAF in Kandahar, Afghanistan, to review the status of the funds that he withdrew. In advance of each trip to the Finance Office, Espinoza and Wooten falsified receipts from Afghani vendors to reflect greater amounts than were actually paid for goods and services that the Afghans had provided. Espinoza then handed in the falsified, inflated receipts to the Finance Office and kept for himself and his co-conspirator the difference between the inflated numbers and the amounts
actually paid. Thereafter, and while still at the military base in Kandahar, the conspirators arranged with an Afghani national to have the stolen funds converted into U.S. dollars.
Once in possession of the U.S. dollars, Espinoza and his co-conspirator then converted a portion of the stolen funds into U.S. postal money orders, $30,000 of which Espinoza shipped to the United States via an international carrier. Espinoza also purchased a Harley-Davidson motorcycle with some of the stolen funds.
In addition, Espinoza wired and caused to be wired some of the money electronically through Western Union to various locations in the United States and Peru. Espinoza directed at least one recipient of the wired money to transfer funds to his own bank account.
The total loss to the government exceeded $200,000.
“The greed exhibited by this former Army NCO and his co-conspirator subvert the actions of our brave service members putting their lives on the line each day in Afghanistan. This Office will continue to vigorously prosecute those who steal from the American taxpayer,” commented United States Attorney for the Eastern District of North Carolina Thomas G. Walker.
"Mauricio Espinoza disgraced his country, the Army, and his Special Forces brothers, said John Strong, Special Agent in Charge of the Charlotte Division of the FBI. “Not only did he steal from funds earmarked for use by his Operational Detachment in the Afghanistan war effort, he submitted false paperwork to try and hide his crimes. He violated the essential trust our Special Forces leaders must have in these elite warriors when operating in combat conditions in a foreign land. The results of this joint investigation prove those that violate this sacred trust will be held accountable."
“This guilty plea by a former senior non-commissioned officer in the Army’s Special Forces demonstrates the effectiveness of joint investigations by the Defense Criminal Investigative Service and other law enforcement partners,” stated Special Agent in Charge John F. Khin, Southeast Field Office, DCIS. “Former Sergeant First Class Espinoza was held accountable for conspiring with others to steal Government funds intended for our Warfighters and military operations in Afghanistan, and using the money for personal benefit. DCIS continues to aggressively combat corruption and fraud that waste precious American taxpayer dollars, especially in these times of reduced Defense spending.”
"SIGAR's agents work relentlessly to protect the American taxpayer and the reconstruction efforts in Afghanistan,” stated Special Inspector General for Afghanistan Reconstruction John F. Sopko. The Espinoza case demonstrates their outstanding work and the success of working joint investigations.”
At sentencing, set for November 7, 2013, Espinoza faces up to 5 years imprisonment for the conspiracy charge and up to 10 years imprisonment for the theft charge.
Wooten plead guilty to a criminal information on Dec. 13, 2011, which charged conspiring to commit mail fraud and wire fraud, to steal and convert monies belonging to the
U.S. Government and to smuggle currency into the United States along with aiding and abetting theft and conversion of government property. Wooten is set to be sentenced on Oct. 2, 2013.
The case was investigated by the Defense Criminal Investigation Service, United States Postal Inspection Service, Office of the Special Inspector General for Afghanistan Reconstruction, United States Army Criminal Investigation Command, and the FBI from Fayetteville, NC; Fort Walton Beach, FL; and Panama City, FL. Special assistance was provided by the U.S. Immigration and Customs Enforcement – Homeland Security Investigation. The case was prosecuted by Assistant U.S. Attorney Banumathi Rangarajan of the Eastern District of North Carolina and Fraud Section Trial Attorney Wade Weems, on detail from the Special Inspector General for Afghanistan Reconstruction (SIGAR).
Former Air Force Employee and Two Contractors Charged with Bribery, Theft of Government Funds, Fraud, and Making False Statements Relating to Air Force ContractsRead the Press Release
PENSACOLA, FLORIDA – A federal grand jury has returned a 34-count indictment charging three individuals with conspiracy, bribery, theft of government funds, disclosing or obtaining contractor bid and proposal information, honest services mail fraud, money laundering conspiracy, and making false statements. The indictment was announced by Pamela C. Marsh, United States Attorney for the Northern District of Florida. Two of the three, who were charged, John Norman Sims and Ronald Benton Powers, were arrested on federal warrants today and made their initial appearances in United States District Court in the District of Columbia and the Middle District of Florida. The third defendant, George Guyton Cannady is expected to make his initial appearance on the charges within the next several days.
The indictment charges Sims (51), formerly of Niceville, Fla., and currently living in North Carolina; Cannady (63), a North Carolina resident; and Powers (58), of Jacksonville, Fla., with conspiring to defraud the United States Air Force (USAF) of approximately $5.4 million worth of contracts to support a USAF activity. The indictment charges that Sims, a retired USAF officer, while a contractor and civilian employee of the USAF, accepted bribes from Cannady, the owner of a company obtaining contracts from the USAF, and from Powers, who also owned companies providing services to the USAF. The bribes were allegedly paid to Sims so that he would continue to steer valuable USAF contracts to companies owned by Cannady and Powers.
According to the indictment, the three defendants agreed to obtain contracts from the USAF by using the insider knowledge, expertise, and access of Sims with respect to military operations and USAF activity, the expertise and knowledge of Cannady as a contractor with experience supporting USAF activity, and the expertise and ability of Powers to locate, lease, and provide equipment and items necessary for the USAF activity. Additionally, the indictment alleges that Sims improperly provided acquisition requirements and pricing data for future USAF contracts to Cannady and Powers, and that Sims would shape the requirements for USAF contracts to match equipment or items that Powers possessed or could readily obtain. The defendants are also charged with making false statements to USAF investigators and USAF officials concerning their financial relationships with each other and their activities.
Sims was also charged in a separate count of the indictment with the unauthorized possession of classified materials after his employment with the USAF ended.
A trial date for the three defendants will be set when the three defendants appear in this District on their arraignment on the charges. If convicted at trial, each of the three defendants face up to twenty years imprisonment, three years of supervised release, and up to a $250,000 fine on the charges in the indictment.The indictment results from an investigation by agents of the United States Air Force Office of Special Investigations and the FBI. United States Attorney Pamela C. Marsh, Assistant United States Attorney Stephen M. Kunz, and Department of Justice Trial Attorney Robert Wallace, Jr., are prosecuting this case.
An indictment is merely a formal charge by a grand jury that a defendant has committed a violation of federal criminal law. All defendants are presumed innocent unless and until the government proves their guilt beyond a reasonable doubt to the satisfaction of a jury at trial.
Federal Prisoner Receives an Additional 184 Months’ Imprisonment for Crimes Committed While IncarceratedRead the Press Release
Mark Nowell Basnight Sentenced to Additional Prison Time for Attempting to Distribute Heroin in Prison and Committing Identity Theft as Part of a Scheme to Defraud Financial Institutions
GRAND RAPIDS, MICHIGAN – United States Attorney for the Western District of Michigan Patrick Miles announced today that Mark Nowell Basnight, age 39, of East Lansing, Michigan, was sentenced yesterday to serve 184 months in prison for attempting to possess heroin with intent to distribute it in a federal prison, and for his role in a scheme to defraud financial institutions that included the production of false identification documents, one of which included the means of identification of a real individual residing in Lansing, Michigan. He was joined in the announcement by FBI Special Agent in Charge, Robert D. Foley. U.S. District Judge Robert Jonker’s sentence provided that all 184 months of imprisonment for these offenses will be served consecutively to the 7 years that remain to be served on Basnight’s 2009 federal court conviction for participating in a conspiracy to manufacture 100 or more marijuana plants. In handing down the sentence, the court emphasized that Basnight committed these offenses while in federal custody and that the evidence revealed that he began planning these or similar
offenses even while he awaited sentencing in 2009.In 2011, while incarcerated at a federal prison in West Virginia, Basnight attempted to obtain heroin from a source in Lansing, Michigan, so that he could distribute the heroin for profit in the federal prison. Basnight sent the source a book containing an order for heroin and containing vitamins secreted in the binding so that the source could see how he could send him drugs at the prison. At about the same time, Basnight and the source planned a scheme to defraud at least six financial institutions in several states. The scheme included the production of false identification documents, including driver’s licenses from Michigan and other states that contained the picture of another co-conspirator, who would use these false documents to obtain bank loans by fraud. One of the false identification documents contained the real personal identifiers of an individual residing in Lansing, Michigan, that were obtained by a co-conspirator through an individual that provided cleaning services to a local bank after it closed for the day.
“One of the primary goals of our federal prison system is to rehabilitate those convicted of federal crimes so that they can return as productive members of our communities,” said U.S. Attorney Miles. “This Office will vigorously prosecute those who choose to thwart this very important goal by continuing to commit crimes while serving time in our federal prisons.” FBI Special Agent in Charge, Robert D. Foley, agreed, stating, “This case is particularly troubling given that a federal prisoner committed identity theft, rather than taking steps toward being rehabilitated. Those individuals who choose to conduct further criminal activity while serving time in our federal prisons will face severe penalties for their illegal actions.”
The investigation of this case, which resulted in the conviction of five individuals in addition to Basnight, was conducted by the FBI. The case was prosecuted by Assistant U.S. Attorney Ron Stella.
END
Federal Grand Jury Indicts Two Men for Obstruction of Justice in the Boston Marathon Bombing InvestigationRead the Press Release
BOSTON – A federal grand jury today returned a two-count indictment against two men previously charged with conspiracy to obstruct justice in the Boston Marathon bombing investigation.
Dias Kadyrbayev, 19, and Azamat Tazhayakov, 19, nationals of Kazakhstan who were residing in New Bedford on student visas, were charged today with conspiracy to obstruct justice and obstructing justice with the intent to impede the Boston Marathon bombing investigation. Kadyrbayev and Tazhayakov were originally charged on May 1, 2013, via criminal complaint.Today’s indictment alleges that on the evening of April 18, 2013, after the FBI posted photographs of the two men suspected of carrying out the Marathon bombings (who were later identified as Tamerlan Tsarnaev and Dzhokhar Tsarnaev), Kadyrbayev received a text message from Dzhokhar Tsarnaev suggesting that he go to Tsarnaev’s “room and take what’s there.” Kadyrbayev, Tazhayakov, and another conspirator, according to the indictment, then went to Tsarnaev’s dormitory room and removed several items, including Tsarnaev’s laptop computer and a backpack containing fireworks, and brought them to Kadyrbayev and Tazhayakov’s apartment in New Bedford. Later that night, Kadyrbayev, with Tazhayakov’s knowledge and agreement, placed Tsarnaev’s backpack, which contained several items including fireworks, in a garbage bag, and put it in a trash dumpster outside their New Bedford apartment.
If convicted Kadyrbayev and Tazhayakov face up to 20 years in prison on the obstruction of justice count and up to five years in prison on the conspiracy count, each to be followed by up to three years of supervised release and a $250,000 fine. Both face the possibility of being deported.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation’s Boston Field Division, made the announcement today. This investigation was conducted by the FBI's Boston Division, the Massachusetts State Police, and member agencies of the Boston Joint Terrorism Task Force (JTTF), which is comprised of more than 30 federal, state and local enforcement agencies. The University of Massachusetts Dartmouth Department of Public Safety, the City of New Bedford, New Bedford Police Department, Dartmouth Police Department, U.S. Department of Transportation – Office of Inspector General, U.S. Treasury Inspector General for Tax Administration (TIGTA), Essex County Sheriff’s Office, and Internal Revenue Service, Criminal Investigations provided assistance to this investigation.
The case is being prosecuted by Assistant U.S. Attorneys B. Stephanie Siegmann and John A. Capin of Ortiz’s Anti-Terrorism and National Security Unit with the assistance of the Counterterrorism Section of the Justice Department’s National Security Division.
The details contained in the indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Fairborn, Ohio, Man Pleads Guilty to Sex TraffickingRead the Press Release
Thuron L. Hammersley, 44, of Fairborn, Ohio, pleaded guilty in U.S. District Court today to one count of transporting an individual from Ohio to Kentucky for purposes of engaging in prostitution. He also admitted to enticing a woman to travel from Kentucky to Ohio to engage in prostitution and obstructing the investigation into his activities.
Carter M. Stewart, U.S. Attorney for the Southern District of Ohio; Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division of the U.S. Department of Justice; Kevin R. Cornelius, Special Agent in Charge, FBI, Cincinnati Field Office; Richard Biehl, Chief, Dayton, Ohio, Police Department; and John Sedlak, Chief, Miamisburg, Ohio Police Department announced the plea entered today before U.S. District Judge Timothy S. Black.
According to court documents, Hammersley met the women on the website plentyoffish.com and placed ads for them on the internet site backpage.com, offering the women as “escorts.” He directed the men who responded to the ads to motels in Kentucky and Ohio, where they engaged in sexual activity for money. He also enticed another woman to travel from Kentucky to the Dayton area to engage in prostitution. Hammersley enticed her by offering her employment, paying for her bus ticket and paying for condoms. Hammersley collected the money paid by the men.
The plea agreement includes a recommended sentence of 78 months in prison followed by five years of supervised release. Under the terms of the plea agreement, the court will review a pre-sentence investigation report before determining whether or not to accept the recommended sentence.
The case was investigated by the FBI and the Dayton and Miamisburg police departments. Assistant U.S. Attorneys Vipal Patel and Alex R. Sistla and Department of Justice Trial Attorney Betsy Biffl prosecuted the case.
Fairborn Man Pleads Guilty to Interstate Transportion for Purpose of Illegal Sexual ActivityRead the Press Release
CONTACT: Fred Alverson
Public Affairs Officer
DAYTON – Thuron L. Hammersley, 44, of Fairborn, Ohio pleaded guilty in U.S. District Court today to one count of transporting an individual from Ohio to Kentucky for purposes of engaging in prostitution. He also admitted enticing a woman to travel from Kentucky to Ohio also to engage in prostitution and obstructing the investigation into his activities.
Carter M. Stewart, U.S. Attorney for the Southern District of Ohio, Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division of the U.S. Department of Justice, Kevin R. Cornelius, Special Agent in Charge, Federal Bureau of Investigation, Cincinnati Field Office (FBI), Dayton Police Chief Richard Biehl and Miamisburg Police Chief John Sedlak announced the plea entered today before U.S. District Judge Timothy S. Black.
According to court documents, Hammersley met the women on the website www.plentyoffish.com and placed ads for them on the internet site www.backpage.com offering the women as “escorts.” He directed the men who responded to the ads to motels in Kentucky and Ohio, where they engaged in sexual activity for money. He also enticed another woman to travel from Kentucky to the Dayton area to engage in prostitution. Hammersley enticed her by offering her employment, by paying for her bus ticket, and by paying for condoms. Hammersley collected the money paid by the men.
The plea agreement includes a recommended sentence of 78 months in prison followed by five years of supervised release. Under the terms of the plea agreement, the Court will review a pre-sentence investigation report before determining whether or not to accept the recommended sentence.
The case was investigated by the FBI and the Dayton and Miamisburg police departments. Assistant U.S. Attorneys Vipal Patel and Alex R. Sistla and Department of Justice Trial Attorney Betsy Biffl prosecuted the case.
East St. Louis Man Pleads Guilty to Firearm OffenseRead the Press Release
On August 8, 2013, DeLawrence C. Borders, a 23-year old East St. Louis, Illinois, man pled guilty in United States Federal District Court, in East St. Louis, to unlawful possession of a firearm by a previously convicted felon, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. Borders is scheduled for sentencing on November 12, 2013, at which at which time he faces a maximum sentence of 10 years in prison, a fine of up to $250,000, not more than 3 years of supervised release, and a mandatory special assessment of $100.
Court proceedings revealed that on January 23, 2013, law enforcement officials on detail in East. St. Louis, Illinois, observed a group of individuals standing on the sidewalk in front of a convenience store. As police vehicles approached the crowd, two individuals ran inside the store. An officer, who stopped his vehicle in front of the store, identified Borders as one of the individuals who ran inside. Borders admitted to running inside the store, due to having a gun on him and throwing the gun behind a display case. He also admitted to knowing he was not to possess a firearm, as a previously convicted felon. Borders agreed to forfeit the weapon.
This case was investigated the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and the Great Lakes Regional Fugitive Task Force. This case is assigned to Special Assistant United States Attorney Neal C. Hong for prosecution.
Eagle Butte Man Charged with Assault with A Dangerous Weapon and Assault Resulting in Serious Bodily InjuryRead the Press Release
United States Attorney Brendan V. Johnson announced that an Eagle Butte, South Dakota, man has been indicted by a federal grand jury for Assault with a Dangerous Weapon and Assault Resulting in Serious Bodily Injury.
Joseph Anthony Little Star, age 19, was indicted on July 19, 2013. He appeared before U.S. Magistrate Judge Mark A. Moreno on August 5, 2013, and pled not guilty to the Indictment.
The maximum penalty upon conviction is at least 10 years and up to life in custody, a $250,000 fine, or both; 5 years of supervised release; and a $100 special assessment to the Federal Crime Victims Fund. Restitution may also be ordered.
The charges relate to an incident that allegedly occurred in July 2013 in Eagle Butte when Little Star assaulted a victim under the age of 18 with shod feet and a metal bar, causing serious bodily injury.
The charges are merely an accusation and Little Star is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Federal Bureau of Investigation and the Cheyenne River Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Mikal Hanson is prosecuting the case.
Little Star was remanded to the custody of the U.S. Marshals Service. A trial date has not been set.Dupree Man Sentenced for First Degree Burglary and Simple AssaultRead the Press Release
United States Attorney Brendan V. Johnson announced that a Dupree, South Dakota, man convicted of First Degree Burglary and Simple Assault was sentenced on August 5, 2013, by U.S. District Judge Roberto A. Lange.
William Vandervier, age 26, was sentenced to 21 months of custody for First Degree Burglary and 6 months of custody for Simple Assault, to run concurrently; 3 years of supervised release; and $110 to the Federal Crime Victims Fund.
Vandervier was indicted by a federal grand jury on November 15, 2012, and pled guilty to First Degree Burglary and Simple Assault on May 15, 2013.
The conviction arose from an incident that occurred in November of 2011 in Dupree when Vandervier unlawfully entered an occupied structure during the night and assaulted an adult female victim with whom he previously had a relationship.The investigation was conducted by the Cheyenne River Sioux Tribe Law Enforcement Division. The case was prosecuted by Assistant U.S. Attorney Mikal Hanson.
Vandervier was remanded to the custody of the U.S. Marshals Service to begin serving his sentence.Diana Shipping Services S.A. and Two Engineers Convicted in "Magic Pipe" CaseRead the Press Release
NORFOLK, Va. – Diana Shipping Services S.A., a Panamanian corporation, Ioannis Prokakis, 61, and Antonios Boumpoutelos, 56, both citizens of Greece, were convicted today after a twelve-day bench trial on charges related to the illegal discharge of waste oil and oil-contaminated waste water from the M/V Thetis, a cargo vessel operated by Diana Shipping Services.
All the defendants were convicted of conspiracy, knowing failure to fully maintain an oil record book, falsification of records and concealing tangible object in a federal investigation. In addition, Diana Shipping Services and Prokakis were also convicted of obstruction of justice.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia and Robert G. Dreher, of the Justice Department’s Environment and Natural Resources Division, made the announcement after the verdicts were given by United States District Judge Mark S. Davis.
Diana Shipping Services, S.A. faces a maximum fine of $5.5 million and five years of probation. Prokakis and Boumpoutelos face a maximum sentence of 5 years for the conspiracy conviction, 6 years per failure to maintain an oil record book conviction, and 20 years per falsification of record conviction. Prokakis faces an additional 5 year sentence for obstruction of justice. All three defendants will be sentenced on November 8, 2013.
Diana Shipping Services S.A., Prokakis, and Boumpoutelos, were indicted on May 22, 2013, in an eleven-count superseding indictment alleging the illegal discharging of waste oil and oil-contaminated waste water in violation of the Act to Prevent Pollution from Ships. According to court records, in September 2012, crewmembers of the M/V Thetis, a cargo vessel operated by Diana Shipping Services, reported that the vessel was discharging its bilge waste and sludge illegally by various means, including a “magic pipe” that bypassed the oily water separator. Coast Guard inspectors boarded the vessel when it entered port in Norfolk and discovered the “magic pipe” and that the oily water separator was non-functioning. The inspectors were also presented with an oil record book that contained false entries made by the ship’s Chief Engineer, Ioannis Prokakis and the Second Engineer Antonios Boumpoutelos. During the inspection, Prokakis lied to inspectors about the “magic pipe” and told other members of the engineering crew to not disclose its existence to the Coast Guard inspectors.
This case was investigated by the Coast Guard Investigative Service. Assistant United States Attorney Joseph L. Kosky and Trial Attorney Kenneth E. Nelson with the Department of Justice’s Environment and Natural Resources Division, Environmental Crimes Section, are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Demolition Company Owner Pleads Guilty to Violating Clean Air ActRead the Press Release
CONTACT: Fred Alverson
Public Affairs Officer
DAYTON – Lamont P. Pryor, 47, of Lima, Ohio pleaded guilty in U.S. District Court to violating the Clean Air Act in connection with his company’s handling of asbestos during the demolition of the former Piqua Medical Center in 2008.
Carter M. Stewart, U.S. Attorney for the Southern District of Ohio, Randall K. Ashe, Special Agent in Charge of the U.S. Environmental Protection Agency (U.S. EPA), Ohio Attorney General Mike DeWine and Scott J. Nally, Director of the Ohio Environmental Protection Agency (Ohio EPA) announced the pleas entered today before U.S. District Judge Timothy S. Black.
“The dangers of improperly handled asbestos are well-known and well documented,” U.S. Attorney Stewart said. “Knowingly failing to handle the material properly is a crime and must be punished.”
According to court documents, Pryor and his company, Avalon Commonwealth Inc., removed scrap metal from the hospital as part of the demolition process. The scrap metal was removed and sold, but the rest of the demolition debris, including friable asbestos, was piled in areas around the hospital, exposed to the wind and elements. Pryor knew that he was not supposed to leave the friable asbestos outside the hospital, exposed to the elements, but instead was supposed to properly deposit the asbestos that was generated as result of his renovation and demolition activities at the hospital at a licensed asbestos waste disposal facility. Pryor knowingly failed to do so.
A representative of the Regional Air Pollution Control Agency (RAPCA), the local air pollution control agency serving Miami County and the city of Piqua, inspected the site in December 2008, saw the damaged asbestos outside the hospital, and asked that demolition be halted while the investigation took place.
“This defendant put his workers and the residents of a Piqua neighborhood at risk of asbestos exposure just to cut corners,” Attorney General DeWine said. “We cannot tolerate a knowing choice to violate the law and risk the health of Ohio families, and our Environmental Enforcement Unit will continue to investigate criminal environmental activity within the state.”
“There is no safe level of exposure to asbestos,” said Randall Ashe, Special Agent in Charge of EPA’s criminal enforcement program in Ohio. “Despite knowing that the Piqua Hospital contained friable asbestos, the defendant failed to notify authorities before demolition as required by law nor did he employ qualified workers to remove it legally and safely. As a result, asbestos was broken up and piled in areas around the hospital, threatening the environment and jeopardizing the safety of the general public. Today’s plea clearly shows that anyone who tries to make money by breaking the law will ultimately pay the price.”Pryor pleaded guilty to three counts of violating the asbestos removal provisions of the Clean Air Act. The plea agreement includes an agreed-to sentence of 13 months in prison. The court will review the terms of the agreement before determining whether or not to accept all the terms, including the sentence.
The case was investigated by the U.S. EPA's Criminal Investigation Division, Bureau of Criminal Investigation’s Environmental Enforcement Unit in Ohio Attorney General DeWine’s Office, the Ohio EPA Office of Special Investigations and RAPCA. It was prosecuted by Assistant U.S. Attorney Alex Sistla and Special Assistant U.S. Attorney Brad Beeson with the U.S. EPA.
# # #Closing Agent Admits Participating in Large-Scale Mortgage Fraud SchemeRead the Press Release
NEWARK, N.J. – A paralegal today admitted participating in a long-running, large-scale mortgage fraud scheme that defrauded financial institutions of at least $2 million, U.S. Attorney Paul J. Fishman announced.
Linda Cohen, 55, of Orange, N.J., pleaded guilty before U.S. District Judge Esther Salas to an information charging her with one count of conspiring to commit bank fraud and one count of transacting in criminal proceeds.
According to documents filed in this case and statements made in court:
Cohen worked as a paralegal who handled real estate closing for S.B., an attorney licensed in New Jersey. Cohen acted as the settlement agent for fraudulent mortgage loans brokered by conspirator Klary Arcentales, 45, of Lyndhurst, N.J., on behalf of Premier Mortgage Services. As closing agent, Cohen furthered the scheme by convening closings, receiving funds from lenders, and preparing “HUD-1” reports that purported to reflect the sources and destinations of funds for mortgages on subject properties. Those HUD-1s were neither true nor accurate. Cohen routinely certified HUD-1s in which she purported to have received a down payment from the buyer when no down payment had been made. At or following the closings, Cohen disbursed mortgage loan proceeds directly to Premier Mortgage Services, Arcentales, and other conspirators. Cohen created shell bank accounts into which she funneled the proceeds of her fraudulent activity.
The count of conspiracy to commit bank fraud to which Cohen pleaded guilty is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine, and the count of transacting in criminal proceeds is punishable by a maximum penalty of 10 years in prison and a fine of $250,000 or twice the gross amount of any gain or loss. Sentencing is scheduled for Nov. 18, 2013.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s guilty plea. He also thanked the Social Security Administration-Office of Inspector General, under the direction of Special Agent in Charge Edward Ryan, for its role in the investigation.
The government is represented by Assistant U.S. Attorneys Zach Intrater and Rahul Agarwal of the Newark office.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. 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.
13-331
Defense counsel: Brian Daly Esq., Middletown, N.J.
Cohen, Linda Information
Carlos Alberto Aguilar Sentenced for Illegal ReentryRead the Press Release
CARLOS ALBERTO AGUILAR, age 40, a citizen of Honduras, was sentenced yesterday by U. S. District Judge Martin L.C. Feldman to 10 months imprisonment, announced U.S. Attorney Dana Boente. In addition to the term of imprisonment, Judge Feldman ordered that AGUILAR be placed on three years of supervised release following the term of imprisonment, during which time the defendant will be under federal supervision and risks an additional term of imprisonment should he violate any terms of supervised release.
According to court documents, on April 17, 2013, AGUILAR pled guilty to a one-count indictment admitting he was an alien who was previously removed and was knowingly and unlawfully found in the United States, in Jefferson Parish, Louisiana on December 18, 2012, without the Attorney General or Secretary of the Department of Homeland Security, having expressly consented to his re-application for admission into the United States. AGUILAR’s sentence was subject to enhancement based on a previous felony conviction.
This case was investigated by United States Immigration and Customs Enforcement - Enforcement and Removal Operations and the Jefferson Parish Sheriff’s Office. The case was prosecuted by Special Assistant United States Attorney Robert Weir.
Cameron County Man Convicted on Charges Related to Armed CarjackingRead the Press Release
The United States Attorney's Office for the Middle District of Pennsylvania announced that following a three-day trial before U.S. District Court Judge Christopher C. Conner, an Emporium, Pennsylvania man was convicted late Wednesday on charges of carjacking, brandishing a gun during a crime of violence and receiving a stolen firearm stemming from an armed carjacking.
According to United States Attorney Peter J. Smith, on August 8, 2012, Thomas Edward Smith, age 58, pretended to be working on a car parked along a street in Emporium and flagged down an employee of Citizens & Northern Bank. Smith entered the vehicle and pulled out a handgun. Smith then directed the victim to drive to the Citizens & Northern Bank branch in Emporium. Smith told the victim this would be "the worst day of her life," that the victim and the bank had taken his house away from him in a bank foreclosure, and that the victim and another bank employee were now "going to pay for it." The victim jumped out of the vehicle to escape from Smith, who then also fled from the vehicle.
Smith was indicted in September 2012.
Sentencing is scheduled for November 15, 2013.
The case was investigated by the Emporium Borough Police Department, the Pennsylvania State Police, and the Federal Bureau of Investigation. Prosecution was handled by Assistant United States Attorney George J. Rocktashel.
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 life 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.
California Man Sentenced to 61 Months for Bank Fraud and Identity Theft SchemeRead the Press Release
RICHMOND, Va. – Anthony Romey Carter, 52, of Elk Grove, California, was sentenced today to 61 months in prison, followed by 5 years of supervised release, for conspiracy to commit bank fraud and aggravated identity theft. He was also ordered to pay $226,677.00 in restitution to Wells Fargo Bank.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; and William G. Frantzen, Special Agent in Charge of the United States Secret Service’s Richmond Field Office, made the announcement after sentencing by Senior United States District Judge Robert E. Payne.
“Defendant Carter stole from Wells Fargo Bank and the account holders who entrusted their money to that institution,” said United States Attorney Neil H. MacBride. “Theft of identities and funds will not be tolerated and we are committed to prosecuting these twenty-first century thefts.”
Carter pleaded guilty on May 10, 2013. According to court documents, Carter admitted to participating in a conspiracy involving the unauthorized withdrawal of hundreds of thousands of dollars from accounts held at Wells Fargo Bank. Members of the conspiracy created false forms of identification for several Wells Fargo accountholders using personal identifying information obtained without lawful authority. Between November 2012 and December 2012, Carter traveled from California to bank branches in Virginia and South Carolina, where he posed as the individual accountholders. Using customer account information and false forms of identification, Carter personally withdrew over $225,000 from numerous Wells Fargo accounts. Carter and his co-conspirators divided the stolen proceeds among themselves following the withdrawals.
This case was investigated by the United States Secret Service. Assistant United States Attorneys Dominick S. Gerace and Michael Gill prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.California Businessman Pleads Guilty to Conspiracy to Defraud the Internal Revenue ServiceRead the Press Release
The Justice Department announced today that Gary Mach, a Palm Desert, Calif. resident who operated Crystal Springs Pool Service (CSPS), pleaded guilty to conspiracy to defraud the Internal Revenue Service (IRS).
According to the plea agreement, beginning around January 2002 and continuing through December 2010, Mach failed to report substantial income he earned from CSPS, a pool servicing business operated throughout Riverside County, Calif. Mach and others established fictitious trusts which they used to receive income and hold assets in an attempt to conceal the assets and income from the IRS.
According to court documents, Mach purported to operate a trust called “Quintessential,” and directed that his paychecks be made payable to Quintessential. He also opened a bank account in the name of Quintessential where he deposited CSPS proceeds. Mach admits that he did not report to the IRS any of the income he earned from CSPS between 2002 and 2010 and used Quintessential to conceal income from the IRS. In furtherance of the conspiracy, Mach also attempted to impede an IRS summons issued to a bank for business account records. Mach closed his bank account after the bank complied with the IRS summons.
As stated in the plea agreement, the agreed upon total unreported income for the tax years 2002 through 2010 is $1,410,430 and the total tax due and owing is $270,725. Mach has also agreed that he should be ordered to pay restitution for the amount of total tax due and owing.
Mach’s sentencing is scheduled for Nov. 14, 2013, before U.S. District Judge John A. Kronstadt and he faces a maximum penalty of five years in prison, three years of supervised release and a fine of $250,000 or twice the gain or loss resulting from his offense.
Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division, commended the efforts of special agents of IRS - Criminal Investigation, who investigated the case, Tax Division Trial Attorneys Sonia M. Owens and Mark L. Williams, who prosecuted the case, and Assistant U.S. Attorneys Sandra R. Brown and Paul Rochmes of the U.S. Attorney’s Office for the Central District of California, who assisted with the prosecution.
Buffalo Man Convicted Following Jury Trial of a Drug ChargesRead the Press Release
BUFFALO, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Alexi Caliz, 50, of Buffalo, N.Y., was convicted of possessing, with the intent to distribute. cocaine. The charge carries a mandatory minimum sentence of 5 years and a maximum of 40 years in prison, a $5,000,000, fine or both.
Assistant U.S. Attorneys John M. Alsup and Melissa M. Marangola, who handled the trial, stated that on August 10, 2012, detectives with the Niagara Falls Transit Authority intercepted a suspicious package found to contained approximately 980 grams of cocaine concealed inside a muffler. Agents with the Drug Enforcement Administration, assisted by officers with the Buffalo Police Department and the Town of Cheektowaga Police assisted in the search of the defendant’s residence after he signed for and accepted the package.The verdict is the culmination of an investigation on the part of the Drug Enforcement Administration, under the direction of Special Agent in Charge Brian R. Crowell, the Buffalo Police Department, under the direction of Commissioner Daniel Derenda, the Niagara Falls Transit Authority Police, under the direction of Chief George Gast, and Town of Cheektowaga Police Department, under the direction of Chief David J. Zack.
Sentencing is scheduled for December 5, 2013 at 9:00 a.m. before Chief U.S. District Judge William M. Skretny who presided over the trial.Baltimore Men Plead Guilty to Armed Robbery SpreeRead the Press Release
Co-Conspirators Admit Committing at Least a Dozen Armed Robberies of Stores and Businesses
Baltimore, Maryland - Quindell Ryeshawn Gardner, age 22, of Baltimore, Maryland pleaded guilty today to a commercial robbery conspiracy and possession of a firearm in furtherance of a crime of violence. On August 5, 2013, co-conspirator Tavon McPhaul, also age 22, of Baltimore, pleaded guilty to the same charge.
The guilty pleas were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Commissioner Anthony W. Batts of the Baltimore Police Department; Chief James W. Johnson of the Baltimore County Police Department; and Anne Arundel County Police Chief Kevin Davis.Police Commissioner Anthony Batts said, “I want to extend my deep appreciation to all of the local, state and federal partners who demonstrate an ongoing commitment to making Baltimore safer.”
“I’m happy that law enforcement partners were able to come together and build cases against these individuals,” said Chief Kevin Davis of the Anne Arundel County Police Department, “Clearly our citizens and business community are now much safer.”
According to their plea agreements, Gardner, McPhaul and others robbed stores in the Baltimore area. After deciding which place to rob, the conspirators would steal a car to use during the robbery. They also used a gun during the robberies to steal cash and cigarettes.
Gardner and McPhaul admitted that they committed approximately 22 and 12 armed robberies, respectively, with Gardner going into the store to commit the robbery and McPhaul driving the getaway vehicle. Between June 28 and July 4, 2012, Gardner and McPhaul robbed five Baltimore area convenience stores, including a convenience store in the 6300 block of Eastern Avenue in Baltimore on July 4, 2012, with Gardner using a short-barreled shotgun in each of the robberies.
Gardner was arrested following two convenience store robberies on July 4, 2012, after a car chase. Gardner’s clothing matched that of the individual who participated in both robberies that day. McPhaul, who was driving the getaway car, escaped on foot. While running, McPhaul attempted to wipe the firearm clean with a blanket. A sawed-off shotgun was recovered along the path of McPhaul’s escape. The vehicle driven by McPhaul during the robbery was found to be stolen.
Gardner, McPhaul and the government have agreed that if the Court accepts their plea agreements, Gardner will be sentenced to between 15 and 25 years in prison and McPhaul will be sentenced to between 11 and 15 years in prison. U.S. District Judge Marvin J. Garbis has scheduled sentencing for Gardner for October 21, 2013 at 10:00 a.m., and McPhaul is scheduled to be sentenced on October 15, 2013.
United States Attorney Rod J. Rosenstein praised the FBI, the Baltimore City and Baltimore County Police Departments and Anne Arundel County Police Department for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Benjamin M. Block, who is prosecuting the case.
25-year Sentence for Miami County Man Who Producted Sexually Explicit Videos of Children He BabysatRead the Press Release
CONTACT: Fred Alverson
Public Affairs Officer
DAYTON – Kevin Dwayne Todd, 42, of Ludlow Falls, Ohio was sentenced in U.S. District Court to 300 months in prison for producing sexually explicit videos of pre-pubescent children he babysat and offering online to trade the videos. Todd will be under court supervision for the rest of his life.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Kevin R. Cornelius, Special Agent in Charge, Federal Bureau of Investigation (FBI), William Hayes, acting special agent in charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Ohio and Michigan, Franklin County Sheriff Zach Scott, Miami County Sheriff Charles A. Cox, and Darke County Sheriff Toby L. Spencer announced the sentence handed down today by U.S. District Judge Timothy S. Black.
“Sexual exploitation of children by someone who has the responsibility of caring for them is a devastating crime,” U.S. Attorney Stewart said. “As a sex offender, he must now register with law enforcement anywhere he lives, works or goes to school once he gets out of prison.”
According to court documents, an undercover investigator with the Franklin County Internet Crimes Against Children Task Force (ICAC) responded to an ad Todd posted on the internet in November 2012 seeking people looking for “taboo.” Through a series of emails, Todd asked the undercover investigator to meet and trade videos and pictures of child pornography. They arranged a meeting and officers arrested Todd on November 24, 2012 when he showed up for the meeting. Investigators found DVDs and other storage media containing pornographic videos and photos in Todd’s car.
Forensic examination found that Todd had produced the videos of the females between August 2010 and November 2012 in the bathroom of his residence.
Todd has been held without bond since his arrest. He pleaded guilty on March 7, 2013 to one count of sexual exploitation of children.
This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the U.S. Attorneys Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.
U.S. Attorney Stewart commended the cooperative investigation by the agencies involved, as well as Assistant U.S. Attorney Sheila Lafferty, who is representing the United States in this case.
"King Tweet" Sentenced to More Than Fifteen Years in Prison for Possessing A FirearmRead the Press Release
Tampa, FL - U.S. District Judge Virginia Hernandez-Covington yesterday sentenced Daniel Arroyo (39, Tampa) to 15 years, eight months in federal prison for being a felon in possession of a firearm. The court also ordered Arroyo to forfeit the stolen firearm, which was used to facilitate the offense. Arroyo pleaded guilty on February 21, 2013.
According to court documents, Arroyo, also known as "King Tweet," worked with a prostitute to steal from her "johns." On August 8, 2011, Arroyo stole a Springfield Model XD-9 semiautomatic handgun from a "john," but the gun owner unexpectedly called law enforcement to report the theft. Law enforcement eventually recovered the gun at an abandoned house, where Arroyo and the prostitute had hidden it, to be retrieved later.
Arroyo is a convicted felon. His prior felony convictions include attempted murder in the first degree, aggravated battery (deadly weapon), carrying a concealed firearm, robbery, discharge of a firearm from a vehicle (occupied), and battery on a law enforcement officer. He is prohibited from possessing a firearm or ammunition under federal law.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the Hillsborough County Sheriff's Office, and Tampa Police Department. It was prosecuted by Assistant United States Attorney Thomas N. Palermo.
It is another case prosecuted as a part of the Department of Justice’s “Project Safe Neighborhoods” program - a nationwide, gun-violence reduction strategy. Acting United States Attorney A. Lee Bentley, III, along with Julie Leon, Special Agent in Charge, ATF, is coordinating the Project Safe Neighborhoods effort here in the Middle District of Florida in cooperation with federal, state, and local law enforcement officials.
Wednesday 7 August 2013
Wyoming Co. Pill Dealer with $570,000 in Illegal Drug Proceeds Pleads Guilty to Federal ChargeRead the Press Release
Police seize hundreds of thousands in cash, firearms from Lester’s Wyoming residences
BECKLEY – A 55-year-old pill dealer who illegally sold prescription painkillers in Wyoming County pleaded guilty today to a federal charge, announced U.S. Attorney Booth Goodwin. Delbert Lester, of McGraws, Wyoming Co., W.Va., entered a guilty plea to possession of oxycodone with intent to distribute before United States District Judge Irene C. Berger in Beckley. From January 11, 2011 through May 4, 2013, Lester illegally sold prescription pills to a confidential informant working in cooperation with law enforcement authorities on eight separate occasions. Lester, who maintained two residences in McGraws, W.Va., lived at one residence and conducted illegal pill transactions at the other.
On May 9, 2013, law enforcement agents executed search warrants on Lester’s two residences. During the searches, agents recovered 190 30-milligram oxycodone pills and 155 10-milligram oxycodone pills. Agents also recovered a total of $570,000 in cash and several firearms including two loaded .22 caliber semi-automatic pistols.
Lester faces up to 20 years in prison when he is sentenced on December 4, 2013.
According to his plea agreement, Lester will forfeit the $570,000 in illegal drug proceeds that was seized from his residence.
The investigation was conducted by the Southern Regional Drug and Violent Crime Task Force, with assistance from the Internal Revenue Service. Assistant United States Attorney Haley Bunn is in charge of the prosecution.
This case is being prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers in communities across the Southern District.
White River Man Charged with First Degree Burglary and Assault with A Dangerous WeaponRead the Press Release
United States Attorney Brendan V. Johnson announced that a White River, South Dakota, man has been indicted by a federal grand jury for First Degree Burglary and Assault with a Dangerous Weapon.
Albert Kelly, age 50, was indicted on July 17, 2013. He appeared before U.S. Magistrate Judge Mark A. Moreno on August 5, 2013, and pled not guilty to the Indictment.
The maximum penalty upon conviction is up to 25 years in custody, a $250,000 fine, or both; 5 years of supervised release; and $100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The charge is merely an accusation and Kelly is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Federal Bureau of Investigation and the Rosebud Sioux Tribe Law Enforcement Services. Assistant U.S. Attorney Marie H. Ruettgers is prosecuting the case.
Kelly was remanded to the custody of the U.S. Marshals Service pending trial, which has been set for September 24, 2013.Vermilion Man Sentenced to 17 1/2 Years in Prison for Defrauding Nearly 100 Clients Out of $4.4 MillionRead the Press Release
A Vermilion man was sentenced to 17 1/2 years in prison and ordered to pay more than $4.4 million in restitution for financial crimes that victimized nearly 100 clients, law enforcement officials said today.
Richard A. Zakarian, age 48, pleaded guilty this year to two counts each of wire fraud and mail fraud and one count of making and subscribing false income tax returns. Zakarian was a certified financial planner and a self-employed tax preparer who owned and operated several business ventures.
Zakarian operated two schemes – one to defraud investment clients (many of whom were also clients of his tax-preparation business), another to defraud clients whose payroll taxes he handled through a company known as Ben Franklin Payroll Service.
Many of the payroll tax victims were churches, charities and other non-profit organizations that Zakarian lured as clients through purported grants from charity he claimed to operate. Court documents further detail Zakarian’s falsification of his tax returns to conceal his fraudulently generated income from the investment scheme.
“This defendant preyed on non-profits, churches and small businesses that struggled to make ends meet while making their communities better,” Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, said. “He never meant to help them, only to defraud them. This was a systemic, deliberate pattern of behavior that took place over years.”
Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigations’ Cleveland Office, said: “Zakarian orchestrated multiple financial schemes that all had one common thread, monetary benefit to him. Authorities will continue to bring those to justice that choose to unlawfully violate the trust of their clients.”
Documents filed in U.S. District Court detail the following schemes:
THE INVESTMENT SCHEME
From September 2002 through August 2012, Zakarian devised a scheme to defraud investment clients by inducing them to invest their retirement funds, and occasionally other savings, through him as their account representative through false and fraudulent misrepresentations. He primarily targeted clients from his tax-preparation business when they received their tax refunds or sought his financial advice.
Zakarian misled clients to believe their funds would be placed in safe, guaranteed-return investments when, in fact, he diverted the funds to pay personal and business expenses and invested in risky investments for which he had a consistent history of incurring large losses.
Zakarian recruited 25 investment clients, often targeting tax preparation clients who he knew to have available funds and to be vulnerable to his pitch through their lack of financial sophistication and/or prior relationship of trust in him.
While some received a return on part or all of their investment, 23 clients incurred combined out-of-pocket losses of more than $1 million. In addition, the clients did not receive hundreds of thousands of dollars of gains on their investments that Zakarian falsely reported to them during the scheme.
A number of clients were retired, out of work, or nearing retirement. Most invested through Zakarian by moving their money from in traditional, relatively safe and dependable stocks, bonds and mutual funds.
In one case, Zakarian convinced a recently retired client to pay an early-withdrawal penalty to move money from a certificate of deposit purchased upon retirement. He induced another client to redeem a life insurance annuity to generate investment funds and talked her out of using the money to pay off her home mortgage or car loans.Until mid-2009, Zakarian obtained use of clients funds primarily by having them place their investments with companies offering self-directed IRA services, and then having those companies transfer the funds to Zakarian as investments in promissory notes he issued. Zakarian initially issued the notes personally, as Zakarian Tax Consultants, but later issued them through a shell real estate company, Viewcrest Properties. Zakarian touted the IRA companies to his clients and misled many clients into believing that they were investing in those companies or that the use of the companies would assure the safety of their investments. Due to Zakarian’s misrepresentations, many clients did not realize their investments involved promissory notes.
THE PAYROLL TAX SCHEME
Zakarian began his separate payroll tax scheme in 2010 that continued through August 2012.
He induced clients to retain Ben Franklin Payroll Service, which he owned and operated, leading them to believe the company would and did file the client’s required employment tax returns and reports and pay the clients’ federal, state and local tax obligations.
The funds should have been forwarded to various taxing authorities to pay the income taxes of his clients’ employees. In reality, he failed to file many of the returns and diverted substantial portions of the clients’ funds to pay his own personal and business expenses and invest in highly-leveraged, risky investments with a consistent history of sustaining large losses.
Zakarian devised the scheme in hopes of raising money to be able to pay victims of his investment fraud scheme described above. He hoped to generate large, quick profits, which he would use to cover his operating expenses, repay his investment clients, pay his clients’ employment taxes and have money left over; instead, he consistently lost money.
He attempted to solicit for-profit clients by offering services well below market rates and below his own operating costs, such as a rate of $1 per employee per pay period. Later in 2010, after this failed to generate as many clients as he envisioned, Zakarian developed a new plan to solicit churches, charities and other non-profits through a purported “grant” program. These organizations were targeted as they typically had tight budgets sensitive to payroll costs. Zakarian’s primary objective was to gain access to their operating accounts.
Zakarian began marketing Ben Franklin Payroll Service as being affiliated with Zakarian Charities and the Benjamin Franklin Foundation, organizations established “as an effort to give back to the community.” He offered payroll grants from the Benjamin Franklin Foundation to non-profit organizations to cover two years of free payroll service through Ben Franklin Payroll Service.
To make the grant process appear legitimate, the application required the applicant to submit a one- or two-page narrative history and mission statement, a copy of the IRS tax-exempt determination letter, a list of the Board of Directors, an IRS Form 990 and an annual report, if available. About two weeks after receiving the client’s application, Zakarian sent a congratulatory letter, announcing that the Benjamin Franklin Foundation had awarded a two-year renewable grant.
Rather than forwarding the monies withdrawn to from his clients’ accounts directly to taxing authorities, Zakarian instructed his employees to transfer the tax funds to a Ben Franklin Payroll Service operating account. Clients were sent false quarterly employment tax returns and payroll summaries, giving the false impression that their payroll taxes were being properly handled.
In total, Ben Franklin had at least 72 clients who incurred combined losses of more than $3.4 milllion from Zakarian’s fraudulent diversion of their employment tax funds entrusted to his company. Just over half of the losses were incurred by at least 29 non-profit organizations, with the rest being incurred by at least 43 businesses.
Zakarian also filed false federal income returns for the years 2006 through 2009, failing to report the income he received from the investment scheme. He filed the 2006 through 2008 returns deliquently in December 2009 after the Ohio Division of Securities requested copies. On the 2006 and 2007 returns, Zakarian also falsely claimed substantial losses on the investments he made with the fraudulently obtained client funds, and used those losses to offset other income he earned those years.
This case was prosecuted by Assistant U.S. Attorneys Robert J. Patton and John M. Siegel, following an investigation by the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation, the Lorain Police Department, and the Lorain County Prosecutor’s Office. The investigators also received assistance from the Ohio Department of Commerce, Division of Securities.