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Tuesday 16 July 2013
Lower Brule Woman Sentenced for Simple AssaultRead the Press Release
United States Attorney Brendan V. Johnson announced that Deborah Beardsley, age 50, of Lower Brule, South Dakota, pled guilty to a Superseding Information that charged her with Simple Assault.
Beardsley was sentenced on July 15, 2013, by U.S. Magistrate Judge Mark A. Moreno to 6 months of imprisonment and a $10 special assessment to the Federal Crime Victims Fund.
The charge stems from an incident occurring on February 12, 2013, when Beardsley and her uncle were drinking together and an argument ensued about Beardsley’s daughter. Beardsley became upset at the victim and retrieved a butcher knife, raised it shoulder high and swung it down in an attempt to stab the victim. The victim was able to avoid being stabbed, but both parties have stipulated that Beardsley swung the knife with the intent to do bodily harm to the victim.
The investigation was conducted by the Bureau of Indian Affairs, and Assistant U.S. Attorney Meghan N. Dilges prosecuted the case.
Beardsley was immediately turned over to the custody of the U.S. Marshals Service.Local Couple Indicted on Charges of Selling Stolen MerchandiseRead the Press Release
St. Louis, MO – CHRISTIAN OUNANIAN and GINA VOGEL were indicted on charges of selling merchandise stolen from Walgreens and CVS drug stores.
According to the indictment, Ounanian owned Xtra Wholesale in St. Louis City. Between 2007 and September 2012, Ounanian and Vogel hired people to steal over the counter drugs and other items from Walgreens and CVS stores. The shoplifters were paid for the items and Ounanian and Vogel conspired to resell the items.
Ounanian and Vogel, both of St. Louis City, were each indicted by a federal grand jury on one felony count of conspiracy to transmit stolen goods and one felony count of interstate transportation of stolen goods. They are expected to appear in federal court later this week.
If convicted, conspiracy to transmit stolen goods carries a maximum penalty of five years in prison and/or fines up to $250,000. Interstate transportation of stolen goods carries a maximum of 10 years in prison and/or fines up to $250,000. In determining the actual sentences, a Judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by Federal Bureau of Investigation. Assistant United States Attorney Anthony Franks is handling the case for the U.S. Attorney’s Office.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Leader in Bank Fraud Scheme Sentenced to PrisonRead the Press Release
Baltimore, Maryland - U.S. District Judge Richard D. Bennett sentenced Lemoyne Veney, age 44, of Clarksville, Maryland, today to 51 months in prison, followed by five years of supervised release, for bank fraud conspiracy and aggravated identity theft. Judge Bennett also ordered Veney to pay restitution of $87,928.16.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Acting Special Agent in Charge Lisa Quinn of the United States Secret Service – Baltimore Field Office; and Harford County Sheriff L. Jesse Bane.
According to his plea agreement, from November 2007, through February 2011, Veney conspired with Theresa Smithrick, Kevin Pittman, and others in a scheme to use stolen personal identifying information (PII) to fraudulently obtain money from financial institutions. Specifically, in 2010 Veney met Smithrick, who was employed as a clerk at the Baltimore City District Court. Veney asked Smithrich to help him to gather personal identifying information, which she agreed to do. On approximately eight occasions, Veney gave Smithrick a sheet with eight to 10 names and accompanying PII, with some fields missing, such as driver’s license number, date of birth, or middle name. Smithrick completed the missing fields by accessing a secure Maryland Motor Vehicle Administration database and faxed the completed sheets to another co-conspirator, as directed by Veney. The co-conspirator who received the completed sheets provided driver’s licenses to Veney in exchange for the PII. In turn, Veney and other co-conspirators used the stolen PII, as well as the counterfeit driver’s licenses, to perpetuate the scheme.
Veney also created false businesses and supporting business documents, which he shared with his co-conspirators, including Kevin Pittman, so that he and his co-conspirators might incorporate some of the fraudulent businesses with the Maryland Department of Assessments and Taxation (“MDAT”) and other states’ departments of state. Veney and a co-conspirator would either sell the business information to others, or keep the information and attempt to establish related business checking accounts.
For example, Veney provided Pittman with fake identification, counterfeit supporting business documents, and counterfeit checks that Veney made in his home, which contained the stolen PII of unwitting victims but the pictures of Veney, Pittman and other conspirators. Pittman then used the counterfeit documents and compromised identities provided by Veney to incorporate fraudulent businesses. Veney also established matching business checking accounts for those fraudulent businesses for use in the scheme. Veney drove Pittman to various financial institutions in Frederick, Columbia and other locations in Maryland, where Pittman used the fake documents to open business and personal bank accounts. Pittman deposited the counterfeit business checks into these fraudulently opened bank accounts, then withdrew the funds before the checks could be identified as fraudulent. Pittman was paid a commission for each transaction. Veney also drove Pittman to supermarkets, where they cashed counterfeit checks, or purchased gift cards and other merchandise, with counterfeit checks drawn on real persons’ accounts, using the fraudulent identification documents provided by Veney as proof of identity.
As a result of the scheme, more than 50 victims lost a total of at least $70,000.
Theresa Smithrick age 47, of Baltimore, and Kevin Pittman, now using the name “Breona Pittman,” age 34, of Chesapeake, Virginia, both pleaded guilty to their roles in the scheme. Smithrick was sentenced to three months of home detention followed by three months of probation and was ordered to pay restitution of $71,752.72. Pittman was sentenced to 39 months in prison and was ordered to pay restitution of $87,928.16.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
United States Attorney Rod J. Rosenstein thanked the U.S. Secret Service and Harford County Sheriff’s Office for their work in the investigation. Mr. Rosenstein praised Assistant U.S. Attorney Mark W. Crooks, who prosecuted the case.
La Cosa Nostra Member Sentenced to 137 Months in PrisonRead the Press Release
PHILADELPHIA – Damion Canalichio, 43, of Turnersville, NJ, was sentenced today to 137 months in prison and a $1,000 fine for his participation in a racketeering conspiracy involving loan sharking and illegal gambling. In addition to his prison term, U.S. District Judge Eduardo C. Robreno ordered three years of supervised release.
On Feb. 5, 2013, after a four-month trial, a jury convicted Canalichio of conspiring to conduct and participate in the affairs of the Philadelphia La Cosa Nostra (LCN) Family through a pattern of racketeering activity. The evidence at trial proved that, in furtherance of the racketeering conspiracy, Canalichio, as a “made” member, engaged in loan sharking and illegal sports bookmaking activities on behalf of the mob. Canalichio exploited the violent reputation of the Philadelphia LCN Family in extending usurious loans and collecting payments on the loans, leaving the borrowers in fear of physical harm if they did not pay promptly. Canalichio also directed and supervised the participation of associates in his crew to carry out these racketeering crimes.
The case is being investigated by the FBI, the Internal Revenue Service-Criminal Investigation, the Pennsylvania State Police, the New Jersey State Police, the Philadelphia Police Department, and the U.S. Department of Labor’s Office of Inspector General Office of Labor Racketeering and Fraud Investigations, and the U.S. Department of Labor’s Employee Benefits Security Administration. Additional assistance was provided by the New Jersey Department of Corrections.The case is being prosecuted by Assistant U.S. Attorneys Frank A. Labor III and Suzanne B. Ercole, and Trial Attorney John S. Han of the Department of Justice’s Organized Crime and Gang Section. Valuable prosecutorial assistance was provided by the Pennsylvania Office of the Attorney General.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525KC Man Sentenced to 15 Years for Illegal FirearmRead the Press Release
Project Ceasefire
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was sentenced in federal court today for illegally possessing a firearm.
Quardale M. Lewis, 33, of Kansas City, was sentenced by U.S. Chief District Judge Fernando J. Gaitan to 15 years in federal prison without parole. Lewis was sentenced as an armed career offender due to his prior felony convictions.
On March 15, 2013 Lewis pleaded guilty to being a felon in possession of a firearm. Lewis admitted that he was in possession of a Hi-Point .45-caliber pistol on July 25, 2011. Lewis discarded the firearm while fleeing from police officers during a car stop.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Lewis has two prior felony convictions for possession of a controlled substance with the intent to distribute as well as prior felony convictions for burning or exploding, endangerment of a child, assault, unlawful use of a weapon and possession of a controlled substance.
This case was prosecuted by Assistant U.S. Attorney David A. Barnes. It was investigated by the Kansas City, Mo., Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Project Ceasefire
Project Ceasefire, launched in October 1999, is a cooperative initiative by federal and local law enforcement and the Kansas City Crime Commission that targets for federal prosecution persons who unlawfully use or possess firearms.KC Man Pleads Guilty to Resisting Federal OfficerRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man pleaded guilty in federal court today to resisting a federal officer after he threatened workers at a local Social Security office and fought with Federal Protective Service (FPS) security officers.
Leonard C. Williams, 46, of Kansas City, pleaded guilty before U.S. District Judge Greg Kays to the charge contained in a Sept. 4, 2012 federal indictment.
Williams entered the Social Security Administration office at 2021 Independence Ave., Kansas City, on Aug. 1, 2012. Williams was upset about a letter he had received and repeatedly told an employee that he would return with a gun. Employees then called for the assistance of the FPS officers.
FPS officers ordered Williams, who was leaving the building, to stop. He ignored the order, and when an officer attempted to handcuff Williams he resisted. Williams shoved the officer and struck him in his struggle to resist detention and leave the office. Officers brought Williams to the ground and he began kicking. An officer sprayed him with pepper spray as he continued kicking, striking several officers. When officers handcuffed Williams, he became compliant. Williams threatened to return and shoot the officers in the back.
During the struggle to detain Williams, one officer sustained a cut above his left eyebrow and a contusion of the abdominal wall. Another officer sustained a laceration on his neck, and another sustained an elbow abrasion.
As a result of Williams’ actions, the Social Security office was shut down for the remainder of the afternoon of Aug. 1, 2012, and was closed the entire next day.
Under federal statutes, Williams is subject to a sentence of up to 20 years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Special Assistant U.S. Attorney Kate Hoey. It was investigated by the Federal Protective Service.
Irene Paster and Yolanda Paster Pleads Guilty in U.S. Federal CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Butte, on July 11, 2013, before U.S. District Judge Sam E. Haddon, IRENE PASTER, age 65, and YOLANDA PASTER, age 40, residents of Big Sky, pled guilty to willful failure to file a tax return. Sentencing has been set for October 25, 2013. They are currently released on special conditions.
In an Offer of Proof filed by Assistant U.S. Attorney Chad C. Spraker, the government stated it would have proved at trial the following:
A married person filing a joint return must file a tax return if his or her income exceeds $18,700 in gross income for the 2009 calendar year. During the 2009 calendar year, IRENE PASTER and her spouse had gross income totaling $91,322.
IRENE filed an extension of time to file an IRS Form 1040 for the 2009 tax year, which created an extension date of October 15, 2010. IRENE however, willfully failed to file a 2009 return on or before October 15, 2010.
An unmarried person, who is not a surviving spouse or head of household, must file a tax return if his or her income exceeds $9,350 in gross income for the 2009 calendar year. During the 2009 calendar year, YOLANDA PASTER, Irene's daughter, had a gross income totaling $60,413.
YOLANDA filed an extension of time to file an IRS Form 1040 for the 2009 tax year, which created an extension date of October 15, 2010. YOLANDA, however, willfully failed to file a 2009 return on or before October 15, 2010.
They each possible penalties of 1 year in prison, a $100,000 fine and 1 year supervised release.
The investigation was a cooperative effort between the Federal Bureau of Investigation, the Criminal Investigation Division of the Internal Revenue Service, and the U.S. Secret Service.
Investigation Leads to Indictment of Eleven People on Federal Gun and Drug ChargesRead the Press Release
Six People Arrested Today With the Help of FBI SWAT
BOISE – U.S. Attorney Wendy J. Olson announced the arrests earlier today of Jeramie Ethan Mahler, 26, of Star, Idaho; Michelle Christina Ritch, 35, Nearia “Nick” William Pinnell, 42, Wendy Demirdjian Harrison, 52, and Daniel Eric Vaughan, 51, all of Nampa, Idaho; and Scott Vicente Hernandez, 42, of Oakland, California, on federal charges of conspiring to distribute methamphetamine. The Treasure Valley Metro Violent Crimes Task Force, assisted by FBI SWAT, executed the federal arrest warrants today at four Treasure Valley locations.
On July 9, 2013, a federal grand jury in Boise returned a superseding indictment charging eleven defendants, including the six named above, with conspiracy to distribute over 500 grams of methamphetamine; two defendants also face charges for illegally possessing firearms. Hernan Gomez-Gutierrez, 30, a Mexican national, and Carlos Eberardo Tovar, 28, of Nampa, charged in the original indictment filed on May 16, 2013, were arrested previously. Both are set for trial on September 10 before U.S. District Judge Edward J. Lodge at the federal courthouse in Boise. Two defendants, Darrell Ray Zirschry, 32, of Nampa, and Bobbi Eileen Woolsey, 35, of Boise, are currently in custody on state charges. The final defendant, Juan Luis Mojica-Barragan, 24, a Mexican national, has an outstanding warrant for his arrest.
The charge of conspiracy to distribute over 500 grams of methamphetamine is punishable by a minimum term of ten years up to life in prison and a maximum fine of $10 million. Two defendants, Gomez-Gutierrez and Mojica-Barragan, were also indicted for distributing methamphetamine and cocaine, which is punishable by up to twenty years in prison and a maximum fine of $1 million. Zirschry is charged with unlawfully possessing a firearm, which is punishable by up to ten years in prison and a maximum fine of $250,000. Mahler is charged with brandishing and discharging a firearm in furtherance of a drug trafficking crime, which is punishable by a minimum term of ten years up to life in prison and a maximum fine of $250,000.
The indictment is the result of an investigation by the Treasure Valley Metro Violent Crimes Task Force and the Drug Enforcement Administration. The Treasure Valley Metro Violent Crimes Task Force is comprised of federal, state and local agencies, including the Federal Bureau of Investigation, Bureau of Alcohol, Tobacco, Firearms and Explosives, Boise Police Department, Ada County Sheriff’s Office, Caldwell Police Department, Nampa Police Department, Meridian Police Department, Canyon County Sheriff’s Office, and Idaho Department of Probation and Parole.
The case is being prosecuted by the Special Assistant U.S. Attorney hired by the Treasure Valley Partnership and the State of Idaho to address gang crimes. The Treasure Valley Partnership is comprised of a group of elected officials in southwest Idaho dedicated to regional coordination, cooperation, and collaboration on creating coherent regional growth. For more information, visit treasurevalleypartners.org.
An indictment is a means of charging a person with criminal activity. It is not evidence. A person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Individual Plead Guilty of Threatening Interstate CommunicationsRead the Press Release
SAN JUAN, Puerto Rico – Yesterday evening Joseph Joel Morales-Serrano entered a straight plea and was sentenced to time-served and three years of supervised release for his violation of 18 U.S.C. section 875(c), a Class D felony, which is Threatening Interstate Communications, announced Rosa Emilia Rodríguez-Vélez, United States Attorney for the District of Puerto Rico.
On May 6, 2013, at approximately 11:31 p.m., the defendant Joseph Joel Morales Serrano using Twitter name, “Carlito anti Bhatia@leonidadpr,” stated the following directly to Pedro Julio Serrano: “watch out in the march, it can end like in Boston asshole.” Joseph Joel Morales Serrano knowingly sent this message in interstate commerce, online from Puerto Rico and Pedro Julio Serrano received it while in New York.
Defendant admitted that the message contained a true threat to injure Pedro Julio Serrano insofar that it referenced the April 15, 2013 terrorist attack in Boston. The defendant also admitted to law enforcement officers after his arrest that he was trying to upset Pedro Julio Serrano by making his threat.
The victim, Pedro Julio Serrano felt threatened upon receipt of this message, contacted the FBI, and was under the guard of New York Police Department officers for a period of time.
This is the first case in the District of Puerto Rico that has resulted in a felony conviction for threatening hate speech against an individual and specific group in our community.
The case was prosecuted by Assistant United States Attorney Luke Cass.Indictment: Former Branch Manager Embezzled $99,000+ from Garden City BankRead the Press Release
WICHITA, KAN. – A former branch manager at Landmark National Bank in Garden City, Kan., has been charged with embezzling more than $99,999 from the bank, U.S. Attorney Barry Grissom said today.
Sheri L. Green, 52, Garden City, Kan., was charged with one count of misapplication of bank funds. The indictment alleges that she stole the money from the bank over a period of time from Aug. 16, 2012, to Dec. 26, 2012.
If convicted, she faces a maximum penalty of 30 years in federal prison and a fine up to $250,000. The FBI investigated. Assistant U.S. Attorney Lanny Welch is prosecuting.
OTHER INDICTMENTS
Gonzalo Ramirez, 28, Dodge City, Kan., and Mariza Tinoco, 22, Dodge City, Kan., are charged with brandishing a firearm during an aggravated robbery, which was a crime of violence in aid of racketeering; and one count of unlawful possession of a firearm after a felony conviction. The crimes are alleged to have occurred July 24, 2008, in Dodge City, Kan.If convicted, they face a penalty of not less than seven years in federal prison and a fine up to $250,000 on the charge of brandishing a firearm; and a maximum penalty of 10 years and a fine up to $250,000 on the other charge. The Dodge City Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Assistant U.S. Attorney Lanny Welch is prosecuting.
Mario Diaz, 25, Wichita, Kan., and Vanity Johnson, 24, Wichita, Kan., are charged with one count of bank fraud and one count of aggravated identity theft. The indictment alleges the defendants used checks stolen from the home of an account holder and the account holder’s Social Security number to change the contact information on the account holder’s account at Intrust Bank and to forge and present for payment nine checks for a total of $12,253.31. The crimes are alleged to have occurred at various times from Feb. 4, 2013, to March 26, 2013, in Sedgwick County, Kan.
If convicted, they face a maximum penalty of 30 years and a fine up to $1 million on the bank fraud count, and a mandatory two years to run consecutively and a fine up to $250,000 on the identity theft charge. The Wichita Police Department and the U.S. Postal Service - OIG investigated. Assistant U.S. Attorney Debra Barnett is prosecuting.
Jimmie L. Banks, 50, Hutchinson, Kan., is charged with possession with intent to distribute methamphetamine. The crime is alleged to have occurred June 12, 2012, in Reno County, Kan.
If convicted, he faces a penalty of not less than five years and not more than 40 years in federal prison and a fine up to $5 million. The Hutchinson Police Department investigated. Special Assistant U.S. Attorney Michelle Jacobs is prosecuting.
Juan Carlos Triana-Mireles, 27, a citizen of Mexico, is charged with unlawfully re-entering the United States after being convicted of an aggravated felony and deported. He was found June 21, 2013, in Sedgwick County, Kan.
If convicted, he faces a maximum penalty of 20 years in federal prison without parole and a fine up to $250,000. ICE’s Enforcement and Removal Operations investigated. Assistant U.S. Attorney Brent Anderson is prosecuting.
Sergio Tapia-Martinez, 39, a citizen of Mexico, is charged with one count of unlawfully re-entering the United States after being convicted of an aggravated felony and deported, one count of possession of false identification documents, and one count of aggravated identity theft. The crimes are alleged to have occurred June 10, 2013, in Sedgwick County, Kan.
If convicted, he faces a maximum penalty of 20 years in federal prison without parole and a fine up to $250,000 on the re-entry charge, a maximum penalty of 10 years and a fine up to $250,000 on the false document charge and a mandatory two years to run consecutively on the aggravated identity theft charge. Immigration and Customs Enforcement and the Kansas Department of Revenue investigated. Assistant U.S. Attorney Brent Anderson is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Illinois Man Sentenced for Failure to Register as A Sex OffenderRead the Press Release
Andrew C. Henley, a 25-year old, Illinois, man was sentenced on July 15, 2013, in federal district court in East St. Louis, Illinois, on one count of failure to register as a sex offender, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. Henley was sentenced to 34 months in prison, five years of supervised release, and ordered to pay a $100 special assessment.
The violation occurred between 2011 and 2012, when after registering as a Sex Offender in the State of Illinois on July 11, 2011, Henley traveled to the State of Michigan. Henley knew that he was required to either update his sex offender registration in Illinois to reflect this change of address, or register as a sex offender in Michigan. Henley failed to comply with either requirement, thus violating the federal Sex Offender Registration and Notification Act (SORNA). Henley was apprehended on August 23, 2011, in Kalamazoo, Michigan for a domestic assault, following an altercation with his girlfriend. Officers learned that Henley had not registered as a sex offender in Illinois, nor had he updated his sex offender registration in Missouri.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by 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 sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
The case was investigated by the United States Marshals Service and prosecuted by Assistant United States Attorney Daniel T. Kapsak.
Homero Varela Sentenced to 135 Months for his Conviction on Federal Drug-Trafficking and Financial CrimesRead the Press Release
ALBUQUERQUE – Homero Varela, 30, of Albuquerque, N.M., was sentenced today to 135 months in federal prison followed by five years of supervised release for his conviction on drug-trafficking and money laundering charges. Varela also was ordered to pay a $150,000 money judgment and to forfeit his right, title and interest in his Albuquerque residence.
Varela’s sentence was announced by U.S. Attorney Kenneth J. Gonzales, Special Agent in Charge Joseph M. Arabit of the El Paso Field Division of the DEA, Special Agent in Charge Carol K.O. Lee of the Albuquerque Division of the FBI, and Dawn Mertz, Special Agent in Charge of the Phoenix Field Office of IRS Criminal Investigation.
Varela was arrested in Jan. 2012, on a 29-count federal indictment charging him and 14 co-defendants with drug trafficking, money laundering and currency structuring offenses. The indictment charged Varela and his 14 co-defendants with conspiracy to distribute cocaine, methamphetamine and marijuana in New Mexico between May 2011 and January 2012. It also charged Varela and two co-defendants with participation in a money laundering conspiracy. Varela also was charged with distributing methamphetamine, money laundering, and using a communications device to facilitate drug trafficking offenses. The indictment included provisions seeking forfeiture of property constituting, or derived from proceeds obtained from the defendants’ illegal drug trafficking and financial crimes.
On Jan. 29, 2013, Varela pleaded guilty to the following three counts of the indictment: Count 1, charging him with conspiracy to distribute controlled substances; Count 5, charging him with conspiracy to launder money; and Count 6, charging him with money laundering. In entering his guilty plea, Varela admitted using cellular telephones on a regular basis to facilitate the distribution of illegal drugs in and about Albuquerque and his money laundering activities.
In his plea agreement, Varela acknowledged the nature and extent of his drug trafficking activities by admitting that he distributed half a kilogram of methamphetamine to a DEA source in July 2011 and again in Sept. 2011. He also admitted facilitating the distribution of 244 kilograms of marijuana and 26 kilograms of cocaine in early Nov. 2011. The marijuana and cocaine were seized on Nov. 10, 2011, when law enforcement authorities arrested co-defendant Ramon Gonzales, Sr., as he was transporting the drugs. Varela also admitted that he and co-defendant Roy Madrid arranged for others transport a large amount of currency to Mexico in July 2011. On July 22, 2011, law enforcement authorities seized $112,270 from individuals who were taking drug proceeds from Varela’s drug trafficking activities to Mexico. Varela also acknowledged the nature and extent of his money laundering activities in his plea agreement.
Seven of Varela’s co-defendants have entered guilty pleas. Another six co-defendants have entered not guilty pleas to the indictment and are pending trial. The 14th co-defendant, Manuel Villa-Mayorquin, has not been apprehended and is considered a fugitive. The charges in the indictment against the seven co-defendants who have not pleaded guilty are only accusations, and they are presumed innocent unless proven guilty beyond a reasonable doubt.
This case was investigated by DEA, IRS and FBI with support from the New Mexico State Police, the Albuquerque Police Department and, the El Paso County Sheriff’s Office. The case is being prosecuted by Assistant U.S. Attorney Reeve Swainston and Assistant U.S. Attorneys Stephen R. Kotz and Cynthia L. Weisman are handling the related forfeiture proceedings.
The indictment in this case was the result of a multi-agency investigation into a major drug trafficking and money laundering organization operating out of the Albuquerque metropolitan area that was designated as part of the Organized Crime Drug Enforcement Task Force (“OCDETF”) program. OCDETF is a nationwide Department of Justice program that combines the resources and unique expertise of federal agencies, along with their local counterparts, in a coordinated effort to disrupt and dismantle major drug trafficking organizations.Hartford Man Admits Producing Child PornographyRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that ELIEZER MALDONADO, 25, of Hartford, pleaded guilty today before United States District Judge Stefan R. Underhill in Bridgeport to one count of production of child pornography.
According to court documents and statements made in court, on June 8, 2012, Homeland Security Investigations and Hartford Police conducting a child exploitation investigation executed a state search warrant at MALDONADO’s residence. On that date, MALDONADO admitted that on multiple occasions he had engaged in sexual acts with a minor victim who was under the age of 12. He also admitted that he had used a smartphone to take several photographs of the minor victim engaged in sexually explicit poses, and then posted the images to an online file-sharing service, and had traded additional images of child pornography with others via email and online storage accounts.
Investigators seized MALDONADO’s smartphone. Subsequent forensic examination of the device revealed eight images of the minor victim engaged in sexually explicit conduct. Examination of MALDONADO’s email and online storage accounts also revealed approximately 5,500 images and 267 videos of child pornography. The vast majority of these images and videos depicted prepubescent children under the age of 12.
Judge Underhill has scheduled sentencing for October 8, 2013, at which time MALDONADO faces a mandatory minimum term of imprisonment of 15 years and a maximum term of imprisonment of 30 years.
MALDONADO has been detained since his arrest on June 8, 2012.
This case is being investigated by ICE Homeland Security Investigations in Hartford, with the assistance of ICE HSI in Philadelphia, the Connecticut State Police and the Hartford Police Department. The case is being prosecuted by Assistant United States Attorneys Sarala V. Nagala and Anastasia E. King.
This prosecution is part of the U.S. Department of Justice’s Project Safe Childhood Initiative, which is aimed at protecting children from sexual abuse and exploitation. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
To report cases of child exploitation, please visit www.cybertipline.com.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
[email protected]Harlan County Mining Company Sentenced for Violation of Health and Safety StandardsRead the Press Release
LONDON, KY - A federal judge imposed a fine and ordered a period of probation for a Harlan County underground mining company, which violated mandatory safety and health standards established by the Mine Safety Health Administration (MSHA).
According to a sentencing document filed with the court on Monday, Manalapan Mining Company, Inc., received three years of probation and a $150,000 fine for allowing miners to work in hazardous conditions.
The sentence represents the largest criminal fine in the last 20 years imposed on a mining company in the Eastern District of Kentucky (district includes 67 counties). Mine officials previously pleaded guilty and were sentenced for their roles in the case.
As part of the probationary period, a probation officer is permitted to visit the mine to observe business practices. In addition, the conditions prohibit the company from attempting to hide assets. Specifically, the company can’t sell or transfer assets, without first notifying the probation officer, until the fine is paid off. Manalapan will pay $5,000 per month over a three year period to satisfy the fine. If the company fails to make payments, probation officers can conduct unannounced examinations of the company’s finances and records.
According to court records, from June 11, 2011 until June 29, 2011 the defendants allowed miners at the Harlan County P1-mine to work under roof conditions and operate electrical equipment that did not meet MSHA’s mandatory safety standards. Specifically, miners used mobile bridge carriers without a canopy, which is needed to protect miners from roof falls. Court records state that the canopies were available but never installed.
Under MSHA regulations, certain mine officials are required to perform daily inspections of the working sections of the mine and examine the equipment before allowing miners to work. After inspecting the mine, these officials are required to make written records of any hazardous conditions and address safety issues prior to the miners working in those sections of the mine.
Two of the defendants admitted they intentionally failed to document the hazardous working conditions in the mine and falsely signed and certified records stating that there were no hazardous conditions.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Joseph A. Main, Assistant Secretary of Labor, Mine Safety and Health Administration, jointly announced the sentence today.
The investigation was conducted by MSHA. The case was prosecuted by Assistant U.S. Attorney Patrick H. Molloy and Jason Grover with the Department of Labor.
Harlan County Mine Officials Sentenced for Violating Safety StandardsRead the Press Release
LONDON, KY - Former officials from an underground coal mine operation in Harlan County, KY., were sentenced today for violating mine safety standards.
U.S. District Judge Gregory Van Tatenhove sentenced mine foreman, Bryant Massingale, 53, of Cawood, KY., mine superintendent, Joseph Miniard, 54, of Smith, KY., and operations manager, Jefferson Davis, 47, of Harlan, KY., for violations of the Mine Safety and Health Administration’s (MSHA) mine safety standards.
Miniard received a $3,000 fine and three years of probation for a misdemeanor and felony offense of failing to report and record a hazardous condition. Judge Van Tatenhove ordered Miniard to serve his initial six months in home incarceration to be followed by a six month period of home detention. Massingale was fined $3,000 and sentenced to three years of probation, with six months to be served in home confinement, for failing to report and record a hazardous condition. Davis was fined $5,000 and sentenced to three years of probation for a misdemeanor offense of failing to provide protective canopies over persons operating mining equipment.
Judge Van Tatenhove scheduled a hearing to determine what fine, if any, to impose for Manalapan Mining Company.
According to court records, from June 11, 2011 until June 29, 2011 the defendants allowed miners at the Harlan County P1-mine to work under roof conditions and operate electrical equipment that did not meet MSHA’s mandatory safety standards. Specifically, miners used mobile bridge carriers without a canopy, which is needed to protect miners from roof collapses. Court records state that the canopies were available but never installed.
Under MSHA regulations, certain mine officials are required to perform daily inspections of the working sections of the mine and examine the equipment before allowing miners to work. After inspecting the mine, these officials are required to make written records of any hazardous conditions and address safety issues prior to the miners working in those sections of the mine.
Massingale and Miniard admitted they intentionally failed to document the hazardous working conditions in the mine and falsely signed and certified records stating that there were no hazardous conditions.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Joseph A. Main, Assistant Secretary of Labor, Mine Safety and Health Administration, jointly announced the sentences today.
The investigation was conducted by MSHA. The case was prosecuted by Assistant U.S. Attorney Patrick H. Molloy and Jason Grover with the Department of Labor.
Greensboro Man Sentenced for Smuggling Goods from the United StatesRead the Press Release
NORFOLK, Va. – Muhaned Abbas Mohamed, 26, of Greensboro, N.C., was sentenced today to 24 months in prison, followed by three years of supervised release, for conspiracy to smuggle goods from the United States and to make a false and fictitious statement in connection with the acquisition of a firearm from a licensed dealer.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia and Carl J. Vasilko, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ Washington Field Division, made the announcement after sentencing by Senior United States District Judge Robert G. Doumar.
Mohamed pled guilty on February 25, 2013. According to court documents, on September 21, 2011, United States Customs inspectors in Norfolk received a tip from the Greensboro Police Department indicating that a shipping container sent from a business in Greensboro to the Port of Norfolk and destined for Port Said, Egypt contained hidden contraband. U.S. Customs inspectors in Norfolk located a container sent from an auto parts business in Greensboro. The bill of lading indicated that inside the container were auto parts consisting of four chopped cars and three motorcycles. Upon further inspection, six Mossberg 12 gauge pistol grip pump action shotguns were found concealed in the rear seat of one of the cars. Further investigation revealed that Mohamed had concealed the shotguns, failed to disclose the bill of lading, failed to obtain the required license from the Department of Commerce needed to export the shotguns, and that Mohamed had made a straw purchase of the six shotguns on August 18, 2011 at a Federal Firearms Licensee in Greensboro for a business partner in Egypt.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, with the assistance of Homeland Security Investigations Border Enforcement Security Task Force, Customs and Border Protection and the Greensboro Police Department. Assistant United States Attorney Darryl J. Mitchell 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.Fugitive Apprehended and Sentenced to Federal Prison for Role in Prostitution ConspiracyRead the Press Release
Tampa, FL - United States District Judge James D. Whittemore sentenced Blanca Ceballos (49, Orlando) yesterday to three years in federal prison for conspiring with others to promote a prostitution ring in Polk County. Ceballos pleaded guilty on November 7, 2007.
According to the indictment and testimony in court, Ceballos, who was a citizen of the Dominican Republic, conspired with others to operate numerous houses of prostitution in the Middle District of Florida. She aided that conspiracy by arranging for the transport of women to the houses to work as prostitutes, and by collecting and depositing the proceeds from their prostitution activity. In 2007, Ceballos pleaded guilty and then failed to appear for sentencing before the court in 2008. Ceballos apparently fled the United States at that time and law enforcement was unable to apprehend her. She was arrested in April 2013 when she flew back into the United States from the Dominican Republic.
This case was investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI). It was prosecuted by Assistant United States Attorney Jay L. Hoffer of the Tampa Division.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc.
Former Security Guard Sentenced to 27 Months in Prison for Using Identifying Information from Nursing Home Residents in Identity Theft and Tax Fraud Scheme-He Stole Identification Information from Nursing Home Residents-Read the Press Release
WASHINGTON – Derek Johnson, a former security guard at a nursing home, was sentenced today to 27 months in prison for various crimes committed in a far-reaching identity theft and tax fraud scheme. Johnson stole identifying information from current and former residents of the nursing home, which was used to obtain more than $400,000 in fraudulent tax refunds.
Johnson is among nine people who have pled guilty so far in one of the largest prosecutions to date involving the use of stolen identifying information. He is the first of the defendants to be sentenced. All told, the case involves the filing of returns seeking more than $20 million in fraudulent refunds.
The sentence, in the U.S. District Court for the District of Columbia, was announced by U.S. Attorney Ronald C. Machen Jr.; Thomas J. Kelly, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); Gary R. Barksdale, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service; Eric M. Thorson, Inspector General, U.S. Department of Treasury; and Kathy A. Michalko, Special Agent in Charge, Washington Field Office, U.S. Secret Service.
Johnson, 34, of District Heights, Md., pled guilty in February 2013 to three charges: conspiracy to defraud the United States with respect to claims; aiding and abetting in the making of false claims for refund, and aiding and abetting in fraud and related activity involving identification information. He was sentenced by the Honorable James E. Boasberg.
Judge Boasberg ordered Johnson to pay a total of $435,764 in restitution to the IRS. Upon completion of his prison term, Johnson will be placed on three years of supervised release.
According to evidence presented to the Court by Assistant U.S. Attorney Sherri L. Schornstein, Johnson was among participants in a massive identity theft and false tax refund scheme involving an extensive network of more than 100 people, many of whom were receiving public assistance. The scheme also involves bank tellers and postal carriers. From 2006 to date, they allegedly caused the filing of at least 7,000 fraudulent federal income tax returns seeking more than $20 million in refunds. The case remains under investigation.
According to the government’s evidence in this case, the refunds were sought in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners.
“Derek Johnson was hired to protect the residents of a nursing home, but instead he stole these vulnerable citizens’ identities to file for bogus tax refunds,” said U.S. Attorney Machen. “His callous conduct was typical of these criminals who exploit senior citizens, people with disabilities, drug addicts, and prisoners in an effort to fleece the taxpayers. Today Mr. Johnson became the first member of this $20 million tax fraud ring to be sentenced for his crimes, but there are many more to come.”
“Criminal conspiracies involving financial fraud of this magnitude are often described as a house of cards. The underlying structure oftentimes falls apart and exposes the individuals responsible without warning,” said Special Agent in Charge Kelly. “Identity theft is a loathsome, despicable crime that victimizes honest Americans and causes immense hardship to those individuals whose identities were stolen. Today’s sentence is a reminder that the IRS will remain vigilant in our investigation of these schemes and will continue to work with prosecutors to combat this type of criminal conduct.”
“The Treasury Office of Inspector General is proud to be a part of this joint effort to stop those who prey on the most vulnerable and unsuspecting victims,” said Inspector General Thorson.
Johnson worked from August 2009 to January 2010 as a security guard at the Grant Park Nursing Home in Northeast Washington. This facility provides short-term rehabilitation care for residents with conditions such as stroke, fractures, joint replacements, amputations, and circulatory problems, as well as long-term care for dementia and Alzheimer’s patients.
The government’s evidence showed that Johnson provided identifying information about current and former nursing home residents to others in the conspiracy. More than 150 fraudulent federal tax forms were filed in the names of these current and former residents with the IRS, claiming fraudulent tax refunds totaling about $404,832. Some of the refund checks were negotiated by Johnson. Other checks were negotiated by co-conspirators. Johnson endorsed his name on 45 checks totaling $90,809, which included 31 checks totaling $30,932 payable to then current or former nursing home patients, and deposited the funds into his own bank account. He kept a portion of the money and provided the rest to one or more of the others in the scheme.
One resident of the nursing home, who had not worked in many years, was recovering from a stroke. His Social Security benefits were reduced as a result of this crime. The IRS reported the man’s filing to the Social Security Administration, which led to the reduction in benefits. His benefits are being restored.
Johnson also endorsed and deposited another 14 checks in the names of others, totaling $30,923.
At sentencing, the government pointed out that tax fraud is a drain on the U.S. treasury and takes away money that could go to a wide variety of essential programs.
In announcing the guilty plea, U.S. Attorney Machen, Special Agent in Charge Kelly, Inspector in Charge Barksdale, Inspector General Thorson, and Special Agent in Charge Michalko commended those who investigated the case. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Donna Galindo, and Assistant U.S. Attorney Sherri L. Schornstein, who is prosecuting the case.
13-246Former Postal Service Contractor Sentenced to 51 Months for Stealing Credit Cards from the MailRead the Press Release
BOSTON – A former contractor to the United States Postal Service was sentenced today for stealing credit cards from a mail-sorting facility while on the job, and then using the credit cards to commit fraud.
Gerald K. Acholonu, 33, of Braintree, was sentenced by U.S. District Judge Richard G. Stearns to four years and three months in prison, to be followed by three years of supervised release, forfeiture, and restitution of $183,992 to the credit card company. In March 2013, Acholonu pleaded guilty to credit card fraud and stealing mail.
From August 2010 through May 2011, Acholonu worked for a contractor that sorted mail for the U.S. Postal system. In late April 2011, another employee spotted Acholonu leaving his employer’s restroom with a tray of U.S. mail. Investigators then searched Acholonu’s trash at home and found 11 stolen Discover credit cards and other evidence that he had used or was planning to use the Discover customers’ identities by setting up telephone accounts in their names. Further investigation proved that Acholonu was involved with theft of almost 400 other Discover credit cards. Using these cards, Acholonu and others tried to ring up nearly $430,000 in fraudulent transactions, about $184,000 of which were successful.
When agents arrested Acholonu, they found further evidence of identity theft and thus obtained a warrant to search his apartment. That search turned up USB thumb-drives that contained information associated with 21 victims of identity fraud who were unassociated with the Discover fraud. This information included the new victims’ true names, personal identifying information, credit card numbers, and credit reports in their names. It also included digital images of Acholonu’s Social Security card and driver’s license, both modified to remove his own information, such as his name or picture, apparently with the intent of modifying those documents further for other identities. Acholonu’s laptop computer itself had been purchased under the name of another identity theft victim who had experienced approximately $30,000 in fraud against his credit and whose name and other personal identifying information were found handwritten on a piece of paper at Acholonu’s residence.
U.S. Attorney Carmen M. Ortiz; Kevin Niland, Inspector in Charge of the U.S. Postal Inspection Service; and Rafael Medina, Special Agent in Charge of the U.S. Postal Service, Office of Inspector General, Northeast Area Office, made the announcement today. The case was prosecuted Scott L. Garland and Eric Christofferson, respectively of Ortiz's Cybercrimes and Economic Crimes Units.Former Law Enforcement Officers Sentenced for Theft of Government FundsRead the Press Release
Jackson, Miss. – Two former law enforcement officers were sentenced today by U.S. District Judge Tom S. Lee for theft of government funds and property.
Zach Robinson, a former Deputy with the Hinds County Sheriff’s Office, and Kent Daniels, a former Jackson Police Officer and Investigator for the Hinds County District Attorney’s Office, were each sentenced to twelve months in federal prison. They were also ordered to pay joint restitution in the amount of $21,996.00.
In March, 2013, Robinson and Daniels pled guilty to robbing a motel room which they believed was being used by a drug dealer. They took $23,000 and seven iPads which had actually been placed in the room by the FBI.
This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorneys Jerry Rushing and Mike Hurst.
###If you believe you have been a victim of fraud from a person or an organization soliciting relief funds on behalf of storm victims, contact the National Center for Disaster Fraud toll free at:
(866) 720-5721
You can also fax information to:
(225) 334-4707
or e-mail it to:
Making sure that victims of federal crimes are treated with compassion, fairness and respect.
Training and seminars for Federal, State, and Local Law Enforcement Agencies.
Help us combat the proliferation of sexual exploitation crimes against children.
Former IRS Official Sentenced in Manhattan Federal Court for Violating Conflict of Interest and Audit Disclosure LawsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that DENNIS LERNER, a former employee of the Internal Revenue Service (“IRS”), was sentenced today in Manhattan federal court to three years of probation for violating a criminal conflict of interest law and to illegally disclosing confidential audit information during the time he was an IRS employee. LERNER pled guilty in March 2013 to one count of violating a criminal conflict of interest law and one count of illegally disclosing confidential audit information while he was an IRS employee before United States District Judge John F. Keenan, who also imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Whether you cheat on complying with the tax laws or cheat on enforcing the tax laws, you corrupt our tax system. Dennis Lerner discredited his office and the integrity of the audit process by disregarding his responsibilities as an IRS Examiner in order to land himself a job. This Office will not hesitate to root out corruption wherever we find it, including among government officials.”
According to the allegations in the Criminal Complaint and the Criminal Information, along with statements made at Lerner’s plea and during today’s sentencing proceeding:
From June 2010 until his resignation in August 2011, LERNER worked as an International Examiner in the New York office of the IRS. For several months leading up to his resignation from the IRS, one of his chief responsibilities involved conducting an audit of an international bank (“Bank-1”) related to approximately $1 billion in allegedly unreported income. Shortly before his resignation, LERNER led negotiations on behalf of the IRS which resulted in a proposed $210 million settlement between Bank-1 and the IRS. The settlement was still pending final approval at the time of his departure. Unbeknownst to his colleagues and supervisors, LERNER applied for, interviewed for, and accepted the position of Tax Director at Bank-1 during the time period in which he was representing the IRS in the Bank-1 settlement discussions. He also sent multiple emails to an individual in which he expressed both his dissatisfaction with his job at the IRS and his hope that he would secure the Bank-1 job. At no time did he notify the IRS of his efforts to obtain employment with Bank-1.
LERNER also engaged in improper disclosure of IRS tax return information during the time period that he worked as an IRS International Examiner. Specifically, he revealed the identity of a bank he was auditing to an individual who was not employed by the IRS.
In addition to his probation, LERNER, 60, of Edgewater, New Jersey, was ordered to pay a $10,000 fine and a $200 special assessment fee.
Mr. Bharara praised the outstanding investigative work of the Treasury Inspector General for Tax Administration, which included the assistance and cooperation of IRS management.
The case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorney Randall W. Jackson is in charge of the prosecution.
Former Bank Ceo Sentenced for Money Laundering and Bank FraudRead the Press Release
Jackson, Miss. -- Larry Barnette Hill, 58, of Meadville, Mississippi, was sentenced in federal court today to 78 months in federal prison followed by five years of supervised release for money laundering and bank fraud, announced U.S. Attorney Gregory K. Davis and FBI Special Agent in Charge Daniel McMullen. Hill was also ordered to pay $1,243,703 in restitution to People’s Bank of the South.
From 2004 through 2012, while serving as CEO of People’s Bank of the South in Bude, Mississippi, Hill fraudulently withdrew money from the bank’s Payroll Clearing Account and deposited those funds into the bank accounts of his family members and into a “shell” bank account he created for his own use. He also used the bank’s credit card to pay personal expenses without the bank’s authorization and he used third-party checks issued in the name of People’s Bank for his own personal benefit including making payments on a personal loan at another bank.
Hill concealed his fraudulent activities by creating false general ledger tickets at the bank which appeared to be for bank expenses and inflating the bank’s budget each month in order to cover up his embezzlement.
This case was investigated by the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation’s Office of Inspector General. It was prosecuted by Assistant U.S. Attorney Mike Hurst.
###If you believe you have been a victim of fraud from a person or an organization soliciting relief funds on behalf of storm victims, contact the National Center for Disaster Fraud toll free at:
(866) 720-5721
You can also fax information to:
(225) 334-4707
or e-mail it to:
Making sure that victims of federal crimes are treated with compassion, fairness and respect.
Training and seminars for Federal, State, and Local Law Enforcement Agencies.
Help us combat the proliferation of sexual exploitation crimes against children.
Florida Health Care Medical Director and Six Therapists<br /> Arrested for Alleged Roles in $63 Million Fraud SchemeRead the Press Release
The former medical director at defunct health provider Health Care Solutions Network (HCSN) and six therapists were arrested today, accused of conspiring to fraudulently bill Medicare and Florida Medicaid more than $63 million.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer; Special Agent in Charge Michael B. Steinbach of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office, made the announcement after the indictment was unsealed following the arrests.
The former HCSN medical director, Roger Rousseau, 71, of Miami, was indicted on July 11, 2013, and charged with conspiracy to commit health care fraud and two counts of health care fraud. In addition, six therapists from Miami – Doris Crabtree, 61; Angela Salafia, 65; Liliana Marks, 46; Ruben Busquets, 49; Alina Fonts, 47; and Blanca Ruiz, 59 – were also charged in the same indictment with conspiracy to commit health care fraud. Fonts was also charged with two counts of health care fraud, and Crabtree, Salafia, Marks and Busquets were each charged with two counts of making false statements related to health care matters. The indictment also seeks forfeiture of proceeds from the alleged healthcare fraud offenses.
According to the indictment, HCSN purported to provide intensive mental health treatment to Medicare and Medicaid beneficiaries in Miami and Hendersonville, N.C., from approximately 2004 through 2011 for purported mental health services that were not medically necessary and often never provided. The indictment also alleges that in Miami, HCSN paid kickbacks to assisted living facility owners and operators who, in exchange, referred beneficiaries to HCSN. In total, HCSN is alleged to have fraudulently billed Medicare and Medicaid approximately $63.7 million, from which HCSN allegedly received payments totaling approximately $28 million.
Rousseau served as the medical director for HCSN in Florida, and the indictment alleges that he routinely signed what he knew to be fabricated and altered medical records without ever reviewing the materials, and, in most instances, without ever meeting with the patient. The indictment also alleges that Crabtree, Salafia, Marks, Busquets, Fonts and Ruiz fabricated HCSN medical records to support false and fraudulent claims for partial hospitalization program services that were not medically necessary and were not provided.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Southern District of Florida. The case is being prosecuted by Fraud Section Trial Attorney Allan J. Medina.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Florida Health Care Medical Director and Six Therapists Arrested for Alleged Roles in $63 Million Fraud SchemeRead the Press Release
The former medical director at defunct health provider Health Care Solutions Network (HCSN) and six therapists were arrested today, accused of conspiring to fraudulently bill Medicare and Florida Medicaid more than $63 million.
U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer; Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; Special Agent in Charge Michael B. Steinbach of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office, made the announcement after the indictment was unsealed following the arrests.
The former HCSN medical director, Roger Rousseau, 71, of Miami, was indicted on July 11, 2013, and charged with conspiracy to commit health care fraud and two counts of health care fraud. In addition, six therapists from Miami – Doris Crabtree, 61; Angela Salafia, 65; Liliana Marks, 46; Ruben Busquets, 49; Alina Fonts, 47; and Blanca Ruiz, 59 – were also charged in the same indictment with conspiracy to commit health care fraud. Fonts was also charged with two counts of health care fraud, and Crabtree, Salafia, Marks and Busquets were each charged with two counts of making false statements related to health care matters. The indictment also seeks forfeiture of proceeds from the alleged healthcare fraud offenses.
According to the indictment, HCSN purported to provide intensive mental health treatment to Medicare and Medicaid beneficiaries in Miami and Hendersonville, N.C., from approximately 2004 through 2011 for purported mental health services that were not medically necessary and often never provided. The indictment also alleges that in Miami, HCSN paid kickbacks to assisted living facility owners and operators who, in exchange, referred beneficiaries to HCSN. In total, HCSN is alleged to have fraudulently billed Medicare and Medicaid approximately $63.7 million, from which HCSN allegedly received payments totaling approximately $28 million.
Rousseau served as the medical director for HCSN in Florida, and the indictment alleges that he routinely signed what he knew to be fabricated and altered medical records without ever reviewing the materials, and, in most instances, without ever meeting with the patient. The indictment also alleges that Crabtree, Salafia, Marks, Busquets, Fonts and Ruiz fabricated HCSN medical records to support false and fraudulent claims for partial hospitalization program services that were not medically necessary and were not provided.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Southern District of Florida. The case is being prosecuted by Fraud Section Trial Attorney Allan J. Medina.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
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.
Felon Sentenced to 100 Months in Prison for Possession of A FirearmRead the Press Release
DENVER – Daniel S. Prieto, age 33, was sentenced yesterday by U.S. District Court Judge R. Brooke Jackson to serve 100 months (over 8 years) in federal prison for possession of a firearm by a prohibited person, United States Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives Special Agent in Charge Andrew Traver announced. After serving his prison sentence, Judge Jackson ordered Prieto to serve 3 years on supervised release. Prieto, who appeared at the hearing in custody, was remanded at the conclusion of the hearing.
Prieto and co-defendant Saul Galvan, age 26, were indicted by a federal grand jury in Denver on December 4, 2012. Each faces one count of being a felon in possession of a firearm. Prieto requested a jury trial. That trial started on March 11, 2013, before Judge Jackson. That same day, in Judge Jackson’s courtroom, co-defendant Galvan pled guilty to being a felon in possession of a firearm. Galvan was sentenced that same day by Judge Jackson to serve 21 months in federal prison, followed by 3 years on supervised release. On March 13, 2013, following a three-day jury trial, Prieto was convicted of being a felon in possession of a firearm.
According to court documents, including a sentencing statement filed by the government, on August 3, 2012, a Greely Police Officer, who was parked at a street corner, heard the music from a vehicle from over 100 yards away. The officer then pulled over the vehicle for a violation of a Greeley Municipal Ordinance for loud music as it passed his location. The driver, Prieto, and passenger, Galvan occupied the vehicle. When the officer approached the vehicle he observed a glass pipe with white residue in the center console area of the vehicle. The officer assumed that the white residue was methamphetamine based on his experience. In addition, the officer observed an open box of beer bottles inside the vehicle and could smell the odor of alcohol.
Based on the pipe and alcohol as probable cause, officers pulled the defendants out of the vehicle. Officers on both sides of the vehicle observed firearms between the seats and their respective doors. The firearm located by Galvan was a Hi-Point .45 caliber pistol with one .45 caliber round of ammunition in the chamber. The firearm located by Prieto was a Jimenez Arms .380 caliber pistol with a fully loaded magazine and one round of ammunition in the chamber. Record checks determined that Prieto and Galvan were prior convicted felons. Both were then transported to jail.
“Felons in possession of firearms will be prosecuted, and face stiff prison sentences that take years of their life away from them and their families,” said U.S. Attorney John Walsh. “Thanks to the Greeley Police Department and the ATF, two felons sitting in a car in possession of firearms are now sitting in federal prison.”
“This investigation illustrates the collaborative effort of law enforcement agencies at the federal, state, and local levels working together to keep crime guns out of the hands of convicted felons,” said Special Agent in Charge Andrew Traver, ATF Denver Field Division. “We will continue to combine resources to protect our citizens and make our communities a safer place to live.”
This case was investigated by the Greely Police Department and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).
Prieto and Galvan were prosecuted by Assistant U.S. Attorney Jeremy Sibert.
####
Federal, State and Local Officials to Hold Press Conference to Discuss Continuing Efforts to Combat Drug Trafficking and Addiction in Northern New MexicoRead the Press Release
ALBUQUERQUE – Federal, state and local officials will hold a press conference on WEDNESDAY, JULY 17, 2013 at 10:00 A.M. to discuss their continuing efforts to combat drug trafficking and addiction in northern New Mexico, including a new push to encourage the public to anonymously report drug trafficking in their neighborhoods through the DEA’s tip line.
WHO: U.S. Attorney Kenneth J. GonzalesSpecial Agent in Charge Joseph M. Arabit, El Paso Division of the DEA
Secretary Gorden Eden, Jr., New Mexico Department of Public Safety
WHAT: Press conference to discuss a multi-agency continuing collaborative effort to
Mayor Alice A. Lucero, City of Espanola
Deputy Director Jose Ramirez, New Mexico HIDTA
Chairman Herman L. Silva, Northern New Mexico Anti-Drug Summit
Implementation Team
Members of the Northern New Mexico Anti-Drug Summit Implementation Teamcombat drug trafficking and addiction in northern New Mexico.
WHEN:WEDNESDAY, JULY 16, 2013
10:00 A.M.
WHERE: DEA Tip Line Billboard US Highway 84/285 one mile north of Junction 503 (West Side)Pojoaque, NM
(Map Attached) OPEN PRESSNOTE: All media must present government-issued photo ID (such as driver’s license) as well as valid media credentials. Press inquiries regarding logistics should be directed to Ron Lopez at (505) 224-1466 or (505) 249-4702.
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Federal Jury Convicts Former Denton County Insurance Agent in FraudRead the Press Release
Defendant Used Elderly as Straw Buyers
DALLAS — Following a three-day trial before U.S. District Judge Reed C. O’Connor, a federal jury in Dallas deliberated just one hour before convicting Vincent Bazemore, 39, formerly of Aubrey, Texas, on all counts of an indictment charging four counts of mail fraud related to a scheme he ran to defraud various life insurance companies. Today’s announcement was made by U.S. Attorney Sarah R. Saldana of the Northern District of Texas.
Bazemore is currently in federal custody, serving a five-year sentence on a federal securities fraud conviction in the district in 2009. He faces a maximum statutory penalty of 20 years in federal prison, a $250,000 fine and restitution on each of the four counts of conviction. In addition, there is a penalty enhancement as Bazemore was found to have committed these offenses while he was pre-trial release on the securities fraud case, and under this enhancement, Bazemore is subject to an additional 10 years imprisonment to run consecutive to any sentence that he may receive on any of the mail fraud counts. Sentencing is set for December 12, 2013, before Judge O’Connor.
The government presented evidence at trial that between October 2007 and April 2009, Bazemore, an insurance agent, engaged in a scheme to obtain substantial commissions by inducing life insurance companies to issue policies on applications of individuals who appeared to be wealthy and seeking insurance for estate planning purposes, when in fact, the applicants were of modest financial means, and the policies were intended to be transferred to investors.
Further evidence presented in court showed that Bazemore solicited elderly individuals to apply for policies by representing that the life insurance was an investment with no financial cost or exposure and would result in a sizable monetary benefit to the individual’s heirs. Bazemore prepared the applications and related documents, on behalf of the applicants that contained forged signatures and falsified financial information to induce the life insurance companies into issuing the policies. Bazemore also submitted the false and fraudulent applications and related documents to financial institutions to obtain premium financing on the policies. In fact, the applicants were of modest financial means and that the policies were obtained for the purpose of being transferred to investors. Bazemore had agreements with insurance companies and managing agents which provided that he would receive, for each policy issued on an application he submitted, a commission of 95 to 105 percent of the first year’s premium paid on the policy.
Today’s announcement is related to efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit http://www.stopfraud.gov/.
The case is being investigated by the FBI and prosecuted by Assistant U.S. Attorneys Christopher Stokes and P.J. Meitl.
Federal Grand Jury Criminal Indictments AnnouncedRead the Press Release
TULSA, Okla. — The results of the July 2013 Federal Grand Jury were announced today by Danny C. Williams Sr., United States Attorney for the Northern District of Oklahoma.
The following named individuals have been charged with a federal crime or crimes by the return of an indictment by the Grand Jury. The return of an indictment is a method of informing the defendant of alleged violations which must be proven in a court of law beyond a reasonable doubt to overcome the defendant’s presumption of innocence.
Roy Dee Robinson. Firearm Possession by a Felon. Robinson, 52, of Vinita, Oklahoma, is charged with possessing a 20-gauge shotgun after prior convictions for burglary, driving under the influence and possessing a firearm after a felony conviction. If convicted, the maximum sentence is a term imprisonment up to 10 years, a $250,000 fine, and the forfeiture of the shotgun involved in the offense. The Federal Bureau of Investigation is the lead agency in the case.
Kennan Anthony Lamirand. Possession of Firearm and Drug Conspiracy. Lamirand, 33, of Tulsa, is accused of possessing a pistol with ammunition as convicted felon, possessing a firearm in furtherance of a drug trafficking crime and possessing methamphetamine with the intent to distribute. Upon conviction Lamirand would face a 5 year minimum to life imprisonment, up to a $5,000,000 fine and shall forfeit the pistol with ammunition. The Oklahoma Bureau of Narcotics and Dangerous Drugs is the lead agency.
Wayde Martin White and John Heath Neighbors. Possession of Synthetic Marijuana with Intent to Distribute. White, 53, and Neighbors, 42, both of Pryor, Oklahoma, are accused of drug conspiracy and possession of synthetic marijuana XLR-11 with the intent to distribute. Upon conviction, the defendants would face 20 years maximum imprisonment, up to a $1,000,000 fine and shall forfeit two vehicles. U.S. Department of Homeland Security is the lead agency.
Michael Kukla. Wire Fraud, Money Laundering, Falsified Tax Returns. Kukla, 64, of Tulsa, is charged with wire fraud, money laundering and filing false tax returns. Kukla owned and operated Real Estate Closing Company (RECC), and worked as a title insurance agent at First American Title Insurance Company. The RECC maintained accounts at Arvest Bank and First American Title Insurance Company. Kukla is accused of transferring account funds for personal expenses and defrauding the insurance company about one account which was used to transfer funds and pay outstanding payments. From 2007-2009, Kukla filed false tax returns to the Internal Revenue Service of a lesser taxable amount than he actually earned. Upon conviction, Kukla would face a maximum of 20 years imprisonment and shall forfeit at least $2 million dollars representing proceeds obtained as a result of the wire fraud. The Internal Revenue Service and Federal Bureau of Investigation are the lead agencies in the case.
Christopher Matthew Campbell and Kelsey Campbell. Drug Conspiracy and Possession of a Firearm by a Felon. Christopher Campbell, 30, and his wife Kelsey Campbell, 29, both of Tulsa are accused of drug conspiracy and possession of 50 grams or more of methamphetamine with intent to distribute. Those counts are punishable by five to forty years and up to a $5,000,000 fine. Further, Christopher Campbell, a convicted felon, is charged with possession of a 20 gauge shotgun and ammunition, which is punishable for up to ten years and a $250,000 fine. The Government is also seeking the forfeiture of four vehicles and a shotgun. The Bureau of Indian Affairs and the Tulsa Police Department are the lead agencies.
Jorge Camacho. Illegal Alien in Possession of Methamphetamine with Intent to Distribute. Camacho, 20, of Oklahoma City, is charged with possession of methamphetamine with the intent to distribute. Upon conviction, Camacho would face up to 40 years imprisonment with minimum 5 years and $5,000,000 fine. The Tulsa Police Department, Special Investigation Division and Drug Enforcement Administration are the lead agencies.
Stanley Eugene Hill. Attempted Bank Robbery and Firearm Possession. Hill, 26, of Tulsa, is charged for his participation in the September 23, 2009, attempted robbery of Arvest Bank. He is also charged with using a firearm during the attempted bank robbery. Upon conviction, Hill faces a statutory maximum sentence for the attempted robbery of up to twenty-five years as well as a twenty-five year minimum sentence on the firearms count. By statute, the firearms sentence must run consecutive to any sentence imposed for Hill’s commission of the attempted robbery.
Daniel Munoz-Prieto, Keith Beets, Jerod Cody Linthicum and Javier Ponce. Possession of Methamphetamine with Intent to Distribute. Munoz-Prieto, 30, Beets, 36, Linthicum, 29, and Ponce, 25, all of Tulsa, are charged with possessing controlled substances with intent to distribute from January 2013 until July 2013. Linthecum and Ponce are charged with possessing 50 or more grams of methamphetamine with intent to distribute. Munoz-Prieto and Ponce are charged with possessing 500 or more grams of methamphetamine with intent to distribute. Upon conviction, the defendants would face a mandatory 10 years minimum up to 40 years imprisonment and $1,000,000 fine. The Federal Bureau of Investigation is the lead agency.
Leonardo Zaavedra, Noe Vergara Wuences and Andre Zaavedra. Drug Conspiracy and Firearms Charges. L. Zaavedra and A. Zaavedra, 20, both of Tulsa, along with Vergara Wuences, 37, of Austin, Texas, are charged with possessing 500 grams or more of methamphetamine with intent to distribute and with possessing firearms in furtherance of drug trafficking crimes. Upon conviction, the defendants would face a mandatory minimum of 5 years imprisonment up to 10 years and a $4,000,000 fine. The Federal Bureau of Investigation is the lead agency.
Samuel Garcia-Escalera. Alien in the United States After Deportation. Garcia-Escalera, 35, was arrested in Tulsa and charged with having returned to the United States unlawfully after being deported in February 2006 near Laredo, Texas. Upon conviction, Garcia-Escalera would face a maximum of two years imprisonment and/or a fine of $250,000. The U.S. Immigration and Customs Enforcement is the lead agency in the case.
Isiah Bernard Adams. Failure to Register as a Sex Offender.Adams, 48, of Tulsa, is charged with failure to register as a sex offender after moving from Jackson County, Missouri to Oklahoma. If convicted, Adams maximum sentence is a term of imprisonment up to 10 years and/or a fine of $250,000. The United States Marshals Service is the lead agency.
Shane Allen Boggs. Failure to Register as a Sex Offender. Boggs, 41, of Rochester, Minnesota, is charged with failure to register as a sex offender after traveling interstate. If convicted, Boggs maximum sentence is a term of imprisonment up to 10 years and/or a fine of $250,000. The United States Marshals Service is the lead agency.
Nicole Renee Hughes and John Wallace Hunter. Drug Trafficking in Indian Country. Hughes, 31, of Vinita, Oklahoma and Hunter, 68, of Bristow, Oklahoma are charged with possessing 50 grams or more of methamphetamine in Indian Country with intent to distribute it. If convicted, the defendants face imprisonment for maximum of 40 years and a mandatory minimum 5 years. Additionally they face a fine of up to $5,000,000. The Bureau of Indian Affairs is the lead agency in the case.
Darrell Robert Smith. Failure to Register as a Sex Offender. Smith, 29, of Tulsa, is charged with failure to register as a sex offender after traveling from Audrain County, Missouri to Oklahoma. If convicted, Smith faces 10 years imprisonment and/or a fine of $250,000. The United States Marshals Service is the lead agency.
Ubaldo Esparza-Ortiz. Alien in the United States After Deportation. Esparza-Ortiz, 26, was arrested in Tulsa and charged with having returned to the United States unlawfully after being deported in May 2012 near Del Rio, Texas. Upon conviction, Esparza-Ortiz would face a maximum of twenty years imprisonment. The U.S. Immigration and Customs Enforcement is the lead agency.
Edgar Hernandez Madriz. Felon in Possession of a Firearm and Ammunition and Witness Tampering. If convicted, Madriz faces a maximum 10 years imprisonment and $250,000 fine. The Federal Bureau of Investigation and the Creek Nation Lighthorse Police are the lead agencies in the case.Father and Son Charged with Tax EvasionRead the Press Release
United States Attorney Brendan V. Johnson announced that a father and son have been indicted by a federal grand jury for tax evasion.
Theodore John Nelson, Jr., a/k/a Ted Nelson, age 66, and Steven A. Nelson, age 43, both of Letcher, South Dakota, face charges of conspiracy to defraud the United States, multiple counts of failure to file income tax returns, and impeding the Internal Revenue Service.
They appeared before U.S. Magistrate Judge John E. Simko on July 10, 2013, and pled not guilty to the charges.
Upon conviction, the maximum penalty for the conspiracy charge is 5 years in prison and/or a $250,000 fine, plus restitution. The failure to file charges each carry a maximum penalty of 1 year in prison and/or a $10,000 fine, plus restitution. The impeding charge carries a maximum penalty of 3 years in prison and/or a $5,000 fine.
The charges are merely accusations and both men are presumed innocent until and unless proven guilty.
The investigation is being conducted by the Internal Revenue Service. Assistant U.S. Attorney John E. Haak is prosecuting the case.
Both men were released on bond pending trial, which has been set for September 10, 2013.District Man Sentenced to 10-Year Prison Term in 1995 Slaying in Northwest Washington-Defendant Admitted Shooting Victim, A Friend, Then Fleeing the Scene-Read the Press Release
WASHINGTON – Maurice Fair, 35, of Washington, D.C., was sentenced today to 10 years in prison on a charge of voluntary manslaughter while armed for a slaying in 1995 at an apartment in Northwest Washington, U.S. Attorney Ronald C. Machen Jr. announced.
Fair pled guilty in May 2013 in the Superior Court of the District of Columbia. The plea agreement, which was contingent upon the Court’s approval, called for a 10-year prison term. The Honorable Herbert B. Dixon, Jr. accepted the plea and sentenced Fair. Upon completion of his prison term, Fair will be placed on five years of supervised release. Judge Dixon ordered that Fair participate in mental health treatment while incarcerated and after his release.
According to the government’s evidence, the victim, James W. Belton, 18, was fatally shot on Oct. 5, 1995. Fair, who was then 17, had gone to Mr. Belton’s apartment, in the 1400 block of Sheridan Street NW, to smoke marijuana. While there, he shot Mr. Belton twice in the head with a .38-caliber revolver, causing Mr. Belton’s death. At the time of the murder, no arrests or leads were developed linking the defendant to the slaying.
On July 4, 2004, Fair approached police and told them he had set his mother’s house on fire. He was transported to a hospital for a mental health evaluation. While at the hospital, the defendant, spontaneously, told hospital staff that he shot and killed a man eight years earlier with a .38-caliber gun. He was not arrested for the homicide at that time.
Fair was arrested and interviewed on Oct. 23, 2007 by detectives from the Metropolitan Police Department (MPD) in relation to the death of Mr. Belton. He told police that while visiting Mr. Belton on Oct. 5, 1995, he became paranoid and thought that Mr. Belton and another individual (who was not present) were going to rob and hurt him. He subsequently shot Mr. Belton in the head. At the time that Mr. Belton was shot, he was seated on a couch, unarmed, and had not done anything to suggest to Fair that he was going to rob or hurt him. After the shooting, Fair left the scene on a bicycle. Fair, who has been incarcerated since 2007, will receive credit for the time he has already served.
In announcing the sentence, U.S. Attorney Machen praised the work of the MPD detectives and officers who investigated the case. He also acknowledged the effort of those who worked on the case from the U.S. Attorney’s office, including Paralegal Specialist Kelly Blakeney, and Victim/Witness Advocate Marcia Rinker. Finally, he praised the work of Assistant U.S. Attorneys Ed Burley, who indicted the case, Steve Snyder, who worked on the investigation, and Cynthia G. Wright, who prosecuted the matter.
13-245Diamond Electric Mfg. Co. Ltd. and an Autoliv Inc. Executive Agree to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. CarsRead the Press Release
Osaka, Japan-based Diamond Electric Mfg. Co. Ltd. has agreed to plead guilty and to pay a $19 million criminal fine for its role in a conspiracy to fix prices of ignition coils installed in cars sold in the United States and elsewhere, the Department of Justice announced today. This is the first case in the department’s antitrust investigation involving parts sold directly to an automobile company headquartered in the United States – Ford Motor Co. The department also announced that an Autoliv Inc. executive has agreed to plead guilty for his role in a conspiracy to fix the prices of certain seatbelts sold to Toyota Motor Corp. for installation in cars manufactured and sold in the United States and elsewhere.
Diamond Electric has agreed to cooperate with the department’s ongoing investigation. Takayoshi Matsunaga, a current employee of Autoliv and former vice president of the Toyota Global Business Unit at Autoliv Japan, agreed to serve one year and one day in a U.S. prison, to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation. The plea agreements for both Diamond Electric and Matsunaga are subject to court approval.According to a one-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Diamond Electric engaged in a conspiracy, by agreeing during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of ignition coils it sold to Ford Motor Co., Toyota Motor Corp., Fuji Heavy Industries Ltd. and certain of their subsidiaries, in the United States and elsewhere, on a model-by-model basis. According to the charge, Diamond Electric and its co-conspirators carried out the conspiracy from at least as early as July 2003 until at least February 2010.
“Today’s prosecutions brings the total to 10 companies and 15 executives held accountable for fixing prices on parts used to manufacture cars in the United States,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The Antitrust Division and its law enforcement partners will protect American businesses and consumers from harmful price-fixing cartels and bring those responsible to justice.”
Diamond Electric manufactures and sells ignition coils. Ignition coils are part of the fuel ignition system. They are responsible for quickly releasing electricity to the spark plugs for ignition.
According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Matsunaga, a Japanese national, engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of certain seatbelts sold to Toyota in the United States and elsewhere. According to the charge, Matsunaga’s involvement in the conspiracy lasted from on or about May 2008 until at least February 2011.
“Those who engage in price fixing, bid rigging and other fraudulent schemes harm the automotive industry by driving up costs for vehicle makers and buyers,” said Robert D. Foley III, Special Agent in Charge, FBI Detroit Division. “The FBI is committed to pursuing and prosecuting these individuals for their crimes.”
According to the charge, Matsunaga and his co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and discussions to coordinate bids submitted to Toyota. Matsunaga is the 15th individual to agree to plead guilty in the department’s ongoing antitrust investigation into price fixing and bid rigging in the auto parts industry.
Stockholm-based Autoliv Inc. is a manufacturer of automotive occupant safety systems, including certain seatbelts. In June 2012, Autoliv agreed to plead guilty and to pay a $14.5 million criminal fine for its role in a conspiracy to fix the prices of certain seatbelts, airbags and steering wheels installed in U.S. cars.Including Diamond Electric and Matsunaga, 10 companies and 15 executives have pleaded guilty or agreed to plead guilty in the division’s ongoing investigation into price fixing and bid rigging in the auto parts industry and have agreed to pay a total of $828 million in criminal fines. DENSO, Nippon Seiki Ltd., Tokai Rika Co. Ltd., Furukawa Electric Co. Ltd, Yazaki Corp., G.S. Electech Inc., Fujikura Ltd., Autoliv Inc. and TRW Deutschland Holding GmbH have already pleaded guilty. Additionally, 12 individuals have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. Two additional executives have agreed to serve time in prison and are currently awaiting sentencing.
Diamond Electric and Matsunaga are charged with price fixing in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations and 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.
Defendants Charged in String of Armed Robberies at Bay Area Walmart and Safeway StoresRead the Press Release
The Grand Jury today returned an indictment against three individuals for their involvement in a spree of armed robberies of commercial businesses in and around the Bay Area and the subsequent attempted cover-up of those robberies, announced United States Attorney Melinda Haag.
The Grand Jury charged Melvin Landry, Jr., 22, and Dominique Martin, 22, both of Oakland, with conspiracy to commit robbery affecting interstate commerce, robbery affecting interstate commerce ("Hobbs Act robbery"), and the use of a firearm during and in relation to a crime of violence. Landry is charged with 4 counts of Hobbs Act robbery and using a firearm during those robberies. Martin is charged with 2 counts of Hobbs Act robbery and using a firearm during those robberies. According to a previously-filed criminal complaint, between 2012 and continuing into 2013, Landry and Martin robbed Wal-Mart stores in Fremont, San Leandro, and Sacramento, as well as a Safeway store in Oakland, each time brandishing a firearm at employees during the robberies. The loss amount from these robberies was at least $275,000, a large portion of which was cash.
The Grand Jury also charged Landry with obstruction of justice and attempted bribery of a federal official. According to the criminal complaint, following his initial arrest in early July, Landry offered $60,000 in cash, a Rolex watch, and a luxury vehicle if Federal Bureau of Investigation (FBI) agents would allow him to escape. The Grand Jury also charged Cassandra Dam, 29, of Oakland, with making false statements to federal agents in connection with their investigation into Landry and Martin.
The criminal complaint specifies that additional robberies are also under investigation and anyone with information is asked to contact the FBI San Francisco Division at (415) 553-7400.
The maximum statutory penalty for use/possession of a firearm in furtherance of the Hobbs Act robbery, a crime of violence, in violation of 18 U.S.C. Section 924(c), is life imprisonment and a fine of $250,000, but carries a mandatory minimum consecutive prison term of 5 years for the first Section 924(c) conviction, and a 25-year mandatory minimum consecutive term in prison for each second or successive 924(c) conviction. The maximum statutory penalty for Hobbs Act robbery and conspiracy to commit Hobbs Act robbery, in violation of 18 U.S.C. Section 1951(a), is 20 years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Kathryn Haun is the Assistant United States Attorney who is prosecuting the case with the assistance of Kevin Costello and Daniel Charlier-Smith. The prosecution is the result of an investigation by the FBI, the Fremont Police Department, the Alameda County District Attorney’s Office, the Alameda County Sheriff’s Department, the Oakland Police Department, the San Leandro Police Department, the Sacramento Police Department, the Pinole Police Department, and the San Rafael Police Department.
Please note, indictments and complaints contain only allegations against an individual and, as with all defendants, those named herein must be presumed innocent unless and until proven guilty.
Crawford County Woman Pleads Guilty to Theft of Government FundsRead the Press Release
KANSAS CITY, KAN. – A Crawford County woman has pleaded guilty to receiving more than $45,000 in federal aid she did not qualify to receive, U.S. Attorney Barry Grissom said today.
Jody Gayle Simmons, 48, Arma, Kan., pleaded guilty to one count of theft of government funds. In her plea, she admitted to fraudulently receiving a total of $45,046 from the Social Security Administration's Supplemental Security Income program, the U.S. Department of Agriculture's food stamp program, the Temporary Assistance for Needy Families program funded by the U.S. Department of Health and Human Services, and a one-time stimulus payment made to her pursuant to the American Recovery and Reinvestment Act of 2009.
In her plea, she admitted to falsely reporting that her husband moved out of their residence so that his income would not disqualify her from receiving assistance.
Sentencing is set for November 6, 2013, at 1:30 p.m. She faces a maximum penalty of 10 years in federal prison and a fine up to $250,000. Grissom commended the Social Security Administration – Office of the Inspector General, and Special Assistant U.S. Attorney Trey Alford for their work on the case.
Cordell Veterinarian to Serve Year in Prison and Pay over $892,000 in Restitution for Making False Statements to Defraud BankRead the Press Release
Oklahoma City, Oklahoma – Today, DAVID L. STURGEON, 63, from Cordell, Oklahoma, was sentenced by United States District Judge Joe Heaton to serve 12 months and one day in federal prison for making false statements to defraud the Bank of Cordell, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma. In addition, Judge Heaton ordered that Sturgeon serve five years of supervised release upon his release from prison and pay $892,854.15 in restitution to two bank victims.
Sturgeon is a large animal veterinarian who operates the Washita Veterinarian Clinic and lives in Cordell, Oklahoma. Sturgeon also bought and sold cattle as a manager partner of 20/20 Cattle and Consulting L.L.C and S&D Cattle L.L.C. According to an Information filed on February 21, 2013, from December 2007 through December 2008, Sturgeon secured several loans based on a revolving line of credit extended by Bank of Cordell. Under the loan agreements, loan advances were to be used by Sturgeon for the purchase of cattle which served as collateral for the loan funds advanced. Proceeds from the sale of the cattle were to be used by Sturgeon to pay off the loans owed to Bank of Cordell. During this same time, Sturgeon had two commodities trading accounts with R.J. O’Brien, a commodities firm located in Chicago, Illinois ("RJO"), that he used to make trades in agricultural commodities.
In 2008, RJO required Sturgeon to make certain deposits in his trading accounts to meet margin calls. During the plea hearing today, Surgeon admitted that on August 6, 2008, he represented to the Bank of Cordell that he needed a loan advance of $36,000 to purchase 70 head of cattle for the purpose of influencing the Bank of Cordell to advance him the loan. However, Sturgeon admitted that the loan was not used to purchase cattle and his statements were falsely made so he could fraudulently divert loan funds to make margin calls on the two RJO commodities accounts.
Sturgeon was charged on February 21, 2013. He pled guilty on March 7, 2013. At the sentencing hearing today, Judge Heaton took into account relevant conduct to the offense of conviction and ordered that restitution of $599,364.29 be paid to Bank of Cordell and $293,489.86 to Farm Credit Bank. Sturgeon is to report to the Bureau of Prisons on August 19, 2013, to begin serving his prison sentence.
This case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant U.S. Attorneys Ross N. Lillard, III, and Robert J. Troester.
Cliffton Man Sentenced to Prison for Making Threats Against Fruita Oil Refinery and Conveying False InformationRead the Press Release
DENVER – Michael Leroy Schonlau, age 37, of Clifton, Colorado, was sentenced yesterday by Chief U.S. District Court Judge Marcia K. Krieger to serve 15 months for willfully making a threat and maliciously conveying false information, and for being a felon in possession of a firearm, U.S. Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. Chief Judge Krieger was presiding over the sentencing hearing in U.S. District Court in Grand Junction. Following his prison sentence, Schonlau was ordered to serve 3 years on supervised release. The defendant appeared at the sentencing hearing on bond, and was ordered to report to a Bureau of Prisons facility within 15 days of designation.
Schonlau was indicted by a federal grand jury in Denver on August 21, 2012. He pled guilty before Chief Judge Krieger on April 1, 2013. He was sentenced on July 15, 2013.
According to the stipulated facts contained in the defendant’s plea agreement, on August 5, 2012, at approximately 4:00 p.m., the defendant called the Federal Bureau of Investigation (FBI) using his cellular telephone. It was determined that the defendant was located at an area known as the Gilsonite Refinery in Fruita, Colorado, at the time of the call, though he refused to directly identify his whereabouts.
Schonlau stated that he was in possession of an explosive device which was connected to a 200 million gallon propane tank on the property, and he had his hand on a “Dead Man’s Switch.” He indicated he could see all around him, and that he would detonate the tank if anyone came near. He further indicated that he had already told his family that he would not be coming home.
Police quarantined the area because of the possible explosion. The major highway through Fruita, Highway 6 & 50, and surrounding roads were closed, businesses and homes were evacuated, and the Union Pacific Railroad was shut down for approximately two hours during this threat event.
After telephone calls with an FBI negotiator, the defendant was eventually persuaded to leave the refinery. Police moved into the area of the refinery and the Grand Junction Bomb Squad searched extensively for explosives. None were found. Law enforcement surveilled the defendant has he left in a green truck, and they stopped him after he left the refinery. The officer conducting the traffic stop found an unloaded Ruger Single Six revolver underneath the front passenger seat of the vehicle. The defendant was previously convicted of Felony Theft in May 2004, and thus was prohibited from possessing a firearm.
It was eventually determined the defendant did not possess the materials necessary to carry out his threat to detonate explosives at the refinery. The site contained several large propane tanks and other explosive substances, and the defendant had brought with him two barbeque-sized propane tanks, which he left at the refinery. However, no detonation or explosives device was found, meaning he had no way of igniting any flammable substance.
“Thanks to the FBI, and the FBI’s hostage negotiator, the defendant was located, identified, and apprehended,” said U.S. Attorney John Walsh. “Schonlau’s prison sentence is just as his actions closed down most of Fruita for several hours.”
This case was investigated by the Federal Bureau of Investigation (FBI), the Mesa County Sheriff’s Office, the Mesa County Bomb Squad, and the Fruita Police Department.
Schonlau was prosecuted by Assistant U.S. Attorney Michelle Heldmyer.
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Career Criminal Facing at Least 20 Years in Prison on Federal Firearm ChargesRead the Press Release
Ocala, Florida - Acting United States Attorney A. Lee Bentley, III announces that Ellis Michael Cook (37, Gainesville) pleaded guilty today to two counts of possessing a firearm and ammunition by a prohibited person (convicted felon - armed career criminal) and possessing a firearm in furtherance of a drug trafficking crime. Cook faces a mandatory minimum sentence of 20 years in federal prison, up to a maximum penalty of life in federal prison for the offenses. A sentencing date has not yet been set.
According to the facts presented in the change of plea hearing, on January 30, 2013, at approximately 12:30 a.m., a deputy with the Marion County Sheriff's Office observed Cook driving a stolen motorcycle in the parking lot of an Ocala convenience store. When confronted about the stolen motorcycle, Cook ran from the deputy and discarded a backpack that had been in his possession. After being apprehended by the deputy, Cook warned the deputy that there was a firearm in the backpack. A subsequent search of Cook's backpack revealed a loaded .45 caliber pistol, assorted ammunition, 42.9 grams of methamphetamine, heroin, ecstasy pills, marijuana and drug paraphernalia.
Cook has an extensive criminal record that includes prior convictions for burglary, possession of cocaine with intent to sell, and trafficking in cocaine. As such, Cook qualifies for enhanced federal penalties as both an Armed Career Criminal and Career Offender.
This case was investigated by the Marion County Sheriff's Office, the Florida Department of Law Enforcement (FDLE) and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). It is being prosecuted by Assistant United States Attorney Robert E. Bodnar, Jr.
Canal Fulton Man Indicted on Two Counts of Inducing A Minor to Engage in Sexually Explicit ConductRead the Press Release
A Canal Fulton man was indicted on two counts of inducing a minor to engage in sexually explicit conduct, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
William P. Lacey, aka “Ponch,” age 54, on two occasions in February 2013, did persuade, induce, entice and coerce a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of the conduct, according to the indictment.
The case was prosecuted by Assistant United States Attorney Linda Barr following an investigation by the Federal Bureau of Investigation’s Safe Streets Task for and the Summit County Sheriff’s Office.
If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including each defendant’s prior criminal record (if any), his role in the offenses and the characteristics of the violations. In all cases, the sentences will not exceed the statutory maximum and in most cases they will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
California Truck Driver Pleads Guilty to Meat Theft ScamRead the Press Release
United States Attorney Deborah R. Gilg announced that Artak Medjbarian of Sherman Oaks, California pled guilty to conspiring with others to attempt to steal $163,000 worth of beef products from a Nebraska Beef facility in Omaha, Nebraska. Medjbarian, age 33, was charged in May 2012 by a federal grand jury in a scheme with others to steal loads of meat cargo, by pretending to be the legitimate freight haulers to whom authority to transport the loads had been given. The Indictment specifically charged a conspiracy to commit wire fraud and to engage in the interstate transportation of stolen property.
The Indictment alleged that Medjbarian used the identity of a legitimate trucking company in Arizona to bid on hauling a load of meat from Nebraska Beef to California. Due to discrepancies with respect to the documentation forwarded by unknown co-conspirators on Medjbarian’s behalf, the freight brokers contacted the owners of the true Lopez Trucking, and determined that Lopez Trucking did not have trucks operating under their authority in the State of Nebraska on January 27, 2012, the day Medjbarian showed up at Nebraska Beef pretending to have the transport authority of Lopez Trucking. The Omaha Police were contacted and Medjbarian was initially arrested on local charges.
The guilty plea was entered before the Honorable Laurie Smith Camp. Judge Smith Camp set the sentencing of this matter for October 7, 2013. Medjbarian is detained pending sentencing. Medjbarian faces a maximum penalty of up to five years in prison on the conspiracy conviction.
In addition to the Omaha Police Department, the case was also investigated by the Nebraska State Patrol and by the Federal Bureau of Investigation.California Economist Sentenced in Manhattan Federal Court to Four Years in Prison for Evading over $1.5 Million in Taxes Due to IRSRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that DAVID GILMARTIN, a Ph.D. economist, was sentenced today in Manhattan federal court to four years in prison for failing to file tax returns since 1989, evading payment of his taxes, and obstructing attempts by the Internal Revenue Service (“IRS”) and the State of New York to assess and collect his personal income taxes. GILMARTIN was convicted of tax evasion and mail-fraud charges in January 2013, after a one-week jury trial before U.S. District Judge Miriam Cedarbaum, who imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “For more than 20 years, David Gilmartin thumbed his nose at the government, failing to pay his taxes and ignoring repeated warnings to do so. Everyone must pay their fair share of taxes, and those like Gilmartin who do not, will be punished.”
According to the indictment and evidence introduced at GILMARTIN’s trial:
GILMARTIN, who holds a Ph.D. in economics, willfully failed to file income tax returns and pay income taxes on over $1.7 million in consulting income from 1989 through 2010. He justified his failure to pay taxes by claiming that he could not identify a provision in the tax code that made him liable for the payment of income taxes. Despite numerous IRS notices, meetings, and letters, and despite GILMARTIN’s friends telling him that he would go to jail, GILMARTIN refused to file his tax returns or pay his income taxes.
GILMARTIN evaded his taxes by providing a false social security number to one employer, and by providing false withholding forms to employers that claimed that he was exempt from taxes, to keep his employers from withholding taxes from his paychecks. In order to prevent the IRS from assessing and collecting his taxes, from 1995 through 2002, GILMARTIN paid nearly $500,000 from his paychecks directly to his banks for credit card purchases and payments on a line of credit, rather than deposit them in a bank account that he knew the IRS would try to levy. From 2008 until his arrest, GILMARTIN cashed over $338,000 in paychecks rather than deposit them into a bank account, also to prevent the IRS from collecting his taxes.
As a result of his evasion efforts, GILMARTIN owes more than $1.5 million in income taxes and interest to the IRS, and more than $99,000 to the State of New York.
In addition to the prison term, Judge Cedarbaum also sentenced GILMARTIN, 69, of Phelan, California, to three years of supervised release. GILMARTIN was also ordered to pay $1.67 million in restitution, and $2,500 in the costs of prosecution.
Mr. Bharara thanked the Internal Revenue Service-Criminal Investigation and the Tax Division of the Department of Justice for their work on this case.
This case is being prosecuted by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Stanley J. Okula, Jr. and DOJ Tax Division Assistant Chief Nanette L. Davis are in charge of the prosecution.
Brooklyn Money Launderer Senteced to 37 Months in Prison in Connection with $77 Million Medicare Fraud SchemeRead the Press Release
BROOKLYN, NY – Earlier today, Anatoly Kraiter, 35, of Brooklyn, New York, was sentenced today to 37 months in prison for his role as a money launderer for a $77 million Medicare fraud scheme. In addition to the prison term, U.S. District Judge Nina Gershon of the Eastern District of New York sentenced Kraiter to three years of supervised release and ordered him to forfeit $100,000. Kraiter’s surrender date is September 16, 2013.
The sentence was announced by U.S. Attorney for the Eastern District of New York Loretta E. Lynch; Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Special Agent-in-Charge Thomas O’Donnell of the HHS Office of Inspector General (HHS-OIG).
Kraiter pleaded guilty on July 24, 2012 to one count of conspiracy to commit money laundering. Including Kraiter, 13 individuals were convicted in this case, either through guilty plea or trial conviction.
According to court documents, from 2008 to 2010, Kraiter opened and operated numerous shell companies and bank accounts through which he laundered the proceeds of health care fraud from Brooklyn clinic SZS Medical Care PLLC (“SZS Medical”). The owners and operators of SZS Medical, along with closely related medical clinics Bay Medical Care PC and SVS Wellcare Medical PLLC (collectively, “the Bay Medical clinics”) committed a $77 million Medicare fraud from 2005 to 2010. According to court documents, the Bay Medical clinics submitted more than $77 million in claims to Medicare, seeking reimbursement for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.
The government’s investigation included the use of a court-ordered audio/video recording device hidden in a room at the clinic, in which the conspirators paid cash kickbacks to corrupt Medicare beneficiaries. The conspirators were recorded paying approximately $500,000 in cash kickbacks during a period of approximately six weeks from April to June 2010. This room was marked “PRIVATE” and featured a Soviet-era poster of a woman with a finger to her lips and the words “Don’t Gossip” in Russian. The purpose of the kickbacks was to induce the beneficiaries to receive unnecessary medical services or to stay silent when services not provided to the patients were billed to Medicare.
To generate the large amounts of cash needed to pay the patients, the conspirators used a network of external money launderers, including Kraiter. According to court documents, Kraiter conspired with others to accept checks from the Bay Medical clinics, which were made payable to various shell companies Kraiter and his co-conspirators controlled. These checks did not represent payment for any legitimate service, but rather were written to launder the Bay Medical clinics’ fraudulently obtained health care proceeds. Kraiter admitted at his change of plea hearing that he deposited such checks into bank accounts he controlled, intending these transactions to hide and disguise the fact that these funds were proceeds of a crime. He admitted that he knew these funds were proceeds of health care fraud.
According to court documents, Kraiter and his co-conspirators negotiated and cashed these checks and provided the cash back to the owners and operators of the Bay Medical clinics. Such cash was then diverted to the personal use of the owners and operators of the Bay Medical clinics, and used to pay illegal cash kickbacks to the Bay Medical clinics’ purported patients.
This case is being prosecuted by Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Shannon Jones and William Campos of the Eastern District of New York. The case was investigated by the FBI and HHS.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Boca Raton Resident Convicted of Filing False Tax Returns, Access Device Fraud, and Aggravated Identity TheftRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division, Michael J. DePalma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announce that Harvey Zitron, of Boca Raton, was convicted by a federal grand jury on all ten counts charged in the indictment.
According to the indictment, Zitron was charged with filing fraudulent IRS United States Individual Income Tax Returns, Forms 1040, for 2004 and 2005 (Counts 1 and 2), and Amended Individual Income Tax Returns, Forms 1040X for 2003, 2004 and 2005 (Counts 3-5), all in violation of Title 26, United States Code, Section 7206(1). In addition, he was charged with three counts of access device fraud, in violation of Title 18, United States Code, Section 1029(a)(2) (Counts 6, 8 and 10), and two counts of aggravated identity theft, in violation of Title 18 United States Code, Section 1028A(a)(1) (Counts 7 and 9). The trial was held before the Honorable Robert N. Scola, U.S. District Court Judge. Sentencing is set for October 8, 2013.
According to the evidence presented at trial, Zitron used companies to write checks to friends or acquaintances who cashed the checks and returned the cash to Zitron. Zitron then failed to declare this income on his tax returns. He also opened credit card accounts in the names of his son and ex-wife, and charged more than $1,000 in a single year on those accounts without their authorization or knowledge.
Zitron faces a maximum sentence of three years for each count of tax fraud, ten years for each count of access device fraud, and two consecutive years for each count of aggravated identity theft.
Mr. Ferrer commended the investigative efforts of the IRS-CI and the FBI. This case was prosecuted by Assistant U.S. Attorney Harry Wallace and Department of Justice Tax Division Attorney Kevin J. Lombardi.
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.
Belleville Man Sentenced to over 10 Years in Prison for Receipt and Possession of Child PornographyRead the Press Release
Joseph Millard, 50, of Belleville, Illinois, was sentenced in the United States District Court to 121 months in prison for Receipt and Possession of Child Pornography, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. Millard was also ordered to pay $10,000 in restitution to the victims of his offenses and a fine in the amount of $10,000. Following his prison sentence, Millard will be on federal supervised release for 10 years and will also be required to register as a sex offender for the remainder of his life.
Court documents establish that in January 2012, during an undercover Internet investigation, agents from the Illinois Attorney General High Tech Crimes Bureau determined that Millard was offering for download child pornography files using a peer-to-peer file sharing network. Agents obtained and executed a search warrant for Millard’s residence, during which Millard was interviewed and admitted that he had been downloading child pornography from the Internet for approximately 10 years. During a forensic examination of Millard’s computers, agents recovered numerous video and image files containing child pornography that Millard had downloaded from the Internet.
This case is part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
The investigation was conducted by the Illinois Attorney General High Tech Crimes Bureau. The case was prosecuted by Assistant United States Attorney Ali Summers.
Behavioral Analyst Pleads Guilty to Health Care FraudRead the Press Release
NASHVILLE, Tenn. – July 16, 2013 - Jenny Lynn Hall, formerly known as Jenny Lynn Unterstein, 37, of Smithville, Tenn., pleaded guilty yesterday in U.S. District Court, to health care fraud, announced David Rivera, Acting U.S. Attorney for the Middle District of Tennessee.
Hall was a licensed and board-certified behavioral analyst with a Ph.D. in applied behavioral analysis and provided services to individuals with mental, behavioral or developmental disabilities. At the plea hearing, Hall admitted to creating false documents and forging signatures in 2009 and 2010 to obtain payment from Medicaid for behavioral analysis services that she never provided.
Hall will be sentenced by U.S. District Court Chief Judge William Haynes on October 7, 2013. She faces a maximum penalty of 10 years in prison and a $250,000 fine, as well as forfeiture of proceeds derived from the fraud.
This investigation was conducted by agents of the Department of Health and Human Services Office of Inspector General and the Tennessee Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney William F. Abely.Ashland, Ohio, Trio Indicted for Labor Trafficking and Other CrimesRead the Press Release
A five-count indictment was filed charging three people from Ashland, Ohio, with engaging in a labor trafficking conspiracy and related crimes for holding a woman with cognitive disabilities and her child against their will and forcing the woman to perform manual labor for them, law enforcement officials said today.
According to the indictment, Jordie L. Callahan, 26, Jessica L. Hunt, 31, and Dezerah L. Silsby, 21, used a combination of violence, threats, sexual assaults, humiliation and monitoring to establish and continue a pattern of domination and control over their victims, identified only as S.E. and her child B.E. A fourth person, Daniel K. Brown, 33, of Ashland, was charged in a criminal information filed today with one count of conspiracy.
The conspiracy between Callahan, Hunt, Silsby and Brown took place between August 2010 and October 2012. The object of the conspiracy included holding S.E. in a condition of forced labor and involuntary servitude; obtaining S.E.’s and B.E.’s public assistance benefits; and intentionally causing painful injuries to S.E. so they could use the narcotic pain medications she was prescribed.
According to court documents, the defendants’ tactics included beating S.E., threats of beatings to S.E. and B.E., taunting and threatening the victims with pit bulls and snakes, causing the victims to sleep in unsafe and unsanitary conditions, restricting S.E. and B.E.’s access to the bathroom, preventing them from eating regular and suitable meals and forcing S.E. to eat dog food and crawl on the floor while wearing a dog collar.
Callahan and Hunt recruited S.E. and B.E. to live with them in their two-bedroom apartment in Ashland, knowing that S.E. has a cognitive disability and that S.E. and B.E. received monthly public assistance payments.
According to the indictment, in or around September 2010, Callahan and Hunt forced S.E. to have her and B.E.’s public assistance benefits issued on a debit card rather than paper check. They then took control of the card, forced S.E. to give them the PIN and used the card for their own benefit and the benefit of their family and friends.
On multiple occasions between August 2010 and October 2012, Callahan and Hunt threatened S.E. and B.E. with serious physical harm, including death, if S.E. did not clean up the apartment, care for their numerous pit bull dogs, snakes and other reptiles, purchase items at the store and perform other labor and services. On one occasion, Callahan pointed a firearm at S.E.’s head and threatened to kill her if she did not perform the labor and services he and other conspirators commanded. Callahan also forced S.E. on multiple occasions to engage in sex acts with him and threatened that he and Hunt would kill S.E. if she told anyone about the forced sexual acts .
In August 2011, Silsby, at the direction of Callahan and Hunt, smashed S.E.’s hand with a rock with such force that S.E. needed to go to the hospital emergency room. In December 2011, Callahan and Hunt injured S.E.’s back with such force that she needed medical treatment. In March 2012, Callahan kicked S.E. in the hip with such force that she needed medical treatment. After each incident, Callahan and Hunt forced S.E. to give them the narcotic pain pills and prescriptions for the medication as stated in the indictment.
Callahan and Hunt used a video camera to monitor S.E. and B.E.’s activities and conversations in the apartment. They often forced S.E. to walk to the store to buy groceries, cigarettes, dog food and other items for Callahan, Hunt and Hunt’s four sons and to pay for these purchases with her public assistance card. They allotted S.E. only a brief time period to complete the shopping and warned her that she was not allowed to speak with anyone while she was out. They frequently required B.E. to remain with them at the apartment while S.E. was out and threatened physical harm to B.E. and S.E. if S.E. broke any of their rules.
The indictment also states that Callahan and Hunt threatened to contact Ashland County Job and Family Services and have B.E. taken away if S.E. purchased any items at the store other than those they ordered or if she told anyone about their unlawful conduct.
In June 2011, after S.E. and B.E. had attempted to flee the apartment, Callahan and Hunt ordered Brown and Silsby to find S.E. and B.E. and bring them back to the apartment. Brown and Silsby lured S.E. and B.E. into their vehicle by promising to take them to Dairy Queen, only to drive them afterwards back to the apartment.
On multiple occasions, Callahan and Brown locked S.E. and B.E. in a room with a window that was nailed shut and a door that had been locked from the outside according to court documents.
As stated in the indictment, in October 2011, Callahan and Hunt forced S.E. to hit her child while they recorded a video, and threatened to inflict much greater physical harm on both S.E. and B.E. if S.E. did not comply. One month later, Callahan and Hunt again forced S.E. to strike B.E. while they captured a video recording of the staged incident on Callahan’s cell phone. Callahan and Hunt repeatedly threatened have B.E. taken away by showing the videos to authorities in order to secure S.E.’s compliance to the conspirators’ commands.
Callahan, Hunt and Silsby face one count each of the following: conspiracy; forced labor; theft of government benefits; and acquiring a controlled substance by deception. Callahan and Hunt face an additional charge of tampering with a witness.
The case is being prosecuted by Assistant U.S. Attorneys Chelsea Rice and Thomas E. Getz and Trial Attorney Victor Boutros of the Civil Rights Division’s Human Trafficking Prosecution Unit, following an investigation by the FBI and Ashland Police Department, with assistance from the Ashland County Prosecutor’s Office.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Albuquerque Man Sentenced to Fifteen Years for Hobbs Act Robberies and Unlawful Possession of a FirearmRead the Press Release
ALBUQUERQUE – Alfonso Lezine, 40, of Albuquerque, N.M., was sentenced this afternoon to 15 years in federal prison followed by three years of supervised release for robbing four Albuquerque-area businesses and being a felon in possession of a firearm, announced U.S. Attorney Kenneth J. Gonzales, Thomas G. Atteberry, Special Agent in Charge of the Phoenix Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives, and Chief Ray Schultz of the Albuquerque Police Department.
Lezine was arrested in Aug. 2012, on a six-count indictment charging him with four counts of violating the Hobbs Act by robbing businesses engaged in interstate commerce; one count of using a firearm during a crime of violence; and one count of being a felon in possession of a firearm. The indictment alleged that Lezine committed four commercial robberies in Albuquerque between Oct. 2011 and March 2012.
On April 16, 2013, Lezine pleaded guilty to Counts 1, 3, 4 and 5 of the indictment, each of which charged him with a Hobbs Act robbery, and Count 6, which charged him with unlawful possession of a firearm. In entering his guilty plea, Lezine admitted robbing the following Albuquerque businesses: (1) the Family Dollar, located at 2001 2nd Street NW, on Oct. 15, 2011; (2) the same Family Dollar on March 6, 2012; (3) the Allied Cash Advance, located at 3821 Menaul NE, on March 20, 2012; and (4) the Family Dollar, located at 9550 Sage Road SW, on March 14, 2012. Lezine also admitted that he unlawfully possessed a firearm on March 20, 2012. According to court records, Lezine was prohibited from possessing firearms and ammunition because he previously had been convicted of residential burglary and a Hobbs Act robbery and using a firearm in relation to a crime of violence in California.
This case was brought as part of a federal anti-violence initiative that targets “the worst of the worst” offenders for federal prosecution. Under this anti-violence initiative, the U.S. Attorney’s Office 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 repeat offenders from communities in New Mexico for as long as possible.This case was investigated by the Albuquerque office of the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Albuquerque Police Department, with assistance from the District Attorney’s Office for the Second Judicial District of the State of New Mexico, and was prosecuted by Assistant U.S. Attorney Jon K. Stanford.
Additional Indictments in Operation Black WidowRead the Press Release
United States Attorney Brendan V. Johnson announced that two Watertown, South Dakota, men have been indicted by a federal grand jury for their involvement in a drug conspiracy that is part of Operation Black Widow.
In May of 2013, ten individuals were arrested and indicted as part of Operation Black Widow, an extensive multi-year investigation into a wide variety of alleged criminal activity, including illegal gun and drug trafficking.
William Patrick Holmes, age 42, and Todd Karl Bramer, age 46, were indicted by a federal grand jury on July 9, 2013, for conspiracy to distribute 100 kilograms or more of marijuana. They appeared before U.S. Magistrate Judge John E. Simko on July 11, 2013, and pled not guilty to the indictment.
If convicted, the two face a mandatory minimum of 5 years and a maximum of 40 years in custody. The charge is merely an accusation and both men are presumed innocent until and unless proven guilty.
The previously filed indictment that charged six individuals with conspiracy to distribute 50 grams or more of methamphetamine was superseded to add the marijuana conspiracy count. Two of the methamphetamine conspiracy defendants, Eric Allen Block and Patricio Rodriguez Pena, were also charged with Holmes and Bramer in the marijuana conspiracy.
The investigation is being led by the U.S. Bureau of Alcohol, Tobacco, Firearms & Explosives, with assistance from the Watertown Police Department, the Codington County Sheriff, the SD Division of Criminal Investigation, and the Drug Enforcement Administration.
Both Holmes and Bramer were released on bond pending trial.
Monday 15 July 2013
Wichita Man Pleads Guilty to Filing False Tax ReturnsRead the Press Release
WICHITA, KAN. – A Wichita man has pleaded guilty to using stolen identities to file false tax returns, U.S. Attorney Barry Grissom said today.
Anthony Hopkins, 40, Wichita, Kan., pleaded guilty to one count of conspiracy to submit false tax claims. In his plea, he admitted to fraudulently collecting income tax refunds based on false tax returns. Hopkins prepared and filed tax returns knowing the claims were false and that he had no authority to file the claims or to collect the refunds. The tax returns were created using the identities of victims and the tax information forming the basis for the refunds were entirely false. The income tax refunds were deposited to pre-paid debit cards in the names of the victims whose identities were stolen. The cards were delivered to Hopkins.
Hopkins is set for sentencing Oct. 3. Co-defendant Ashley Allen, 24, Wichita, Kan., pleaded guilty to the same count. She is set for sentencing July 29. Each of them faces a maximum penalty of 10 years in federal prison and a fine up to $250,000. Grissom commended the Internal Revenue Service and Assistant U.S. Attorney Aaron Smith for their work on the case.
Washburn Man Sentenced to Ten Years in Prison for Unlawful Possession of A Pipe BombRead the Press Release
A man who possessed a pipe bomb during an attempted theft was sentenced today to ten years in federal prison.
David Risse, 39, from Washburn, Iowa, received the prison term after an April 11, 2013, guilty plea to one count of possession of an unregistered firearm.
The evidence in the case showed that on November 10, 2012, deputies from the Black Hawk County Sheriff’s Office responded to a report of a larceny in progress in Elk Run Heights, Iowa. Risse was observed attempting to steal and load a riding lawn mower onto a trailer. Risse ran off when deputies arrived. After Risse was apprehended, he was placed in handcuffs for transport to jail. As Risse was about to be put in the squad car, he removed a pipe bomb from his waist band and threw it on the ground. The pipe bomb, a metal tube capped at both ends with a fuse hanging out of it, was filled with gun powder and capable of being detonated. Risse had previously been convicted of numerous offenses, including assault with injury, assault domestic abuse, possession of marijuana with intent to deliver, two burglaries, six thefts, and three convictions for operating while intoxicated.
Risse was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Risse was sentenced to the legal maximum of ten years’ imprisonment. A special assessment of $100 was imposed. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Risse is being held in the United States Marshal’s custody until he can be transported to a federal prison.
This case was prosecuted as part of Project Safe Neighborhoods, a cooperative local, state and federal program aimed at the enhanced prosecution of gun crimes. The case was prosecuted by Assistant United States Attorney Daniel C. Tvedt and investigated by the Black Hawk County Sheriff’s Office and the Bureau of Alcohol, Tobacco, and Firearms.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is CR 13-2004.
Valmeyer Man Sentenced to 151 Months in Prison for Child PornographyRead the Press Release
A Valmeyer man was sentenced in federal district court on July 15, 2013, for Distribution of Child Pornography (Count 1) and Possession of Child Pornography (Count 2), the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. Alan L. Mitchell, 52, of Valmeyer, Illinois, was sentenced to 151 months’ imprisonment, to be followed by a five year term of supervised release. Mitchell was ordered to pay $3,000 in restitution to one of the victims depicted in his collection of child pornography, and the forfeiture of the computers used to commit the charged offenses was ordered.
Mitchell pled guilty to the charges on March 28, 2013.
As is indicated in a graphic factual stipulation filed at the time of defendant’s guilty plea, on September 6, 2012, an undercover agent assigned to the United States Secret Service Southern Illinois Cybercrime Unit searched a peer-to-peer file sharing network and was able to download child pornography movies from Mitchell’s computer. Officers next obtained a federal search warrant for Mitchell’s Valmeyer home and executed it on October 23, 2012. Mitchell, who resided in the basement of the home, made a voluntary statement to investigating agents. He indicated that he had been knowingly and intentionally downloading child pornography for the last year or two from a peer to peer network, and that he realized he was also sharing child pornography with other users.
Forensic review of a Seagate 320 GB hard disk drive revealed approximately 162 video files and 18 still images which contained child pornography. Forensic review of a Western Digital 160 Gigabyte laptop revealed approximately 205 video files and 50 still images which contained child pornography. Forensic review of a Fujitsu laptop revealed approximately four images of child pornography. A Toshiba 60 GB hard drive revealed two video files and three still images of child pornography. Mitchell’s collection included files which depicted penetration of minors who appeared to be under the age of five. There were also images that depicted bondage.
“The movies possessed by Mitchell are, in essence, crime scene photos depicting the rape and sexual assault of child victims,” said United States Attorney Wigginton. “I commend the dedicated efforts of the law enforcement officers who must regularly subject themselves to this depraved material as they search computers with immense storage capacity for evidence.”
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
The case was investigated by the United States Secret Service Southern Illinois Cybercrime Unit. The case was prosecuted by Assistant United States Attorney Suzanne M. Garrison.
U.S. Trustee Program Announces Settlement with CitiGroup Inc. Protecting Consumers’ Personal Information in Bankruptcy CasesRead the Press Release
Nationwide Agreement Requires Citigroup to Protect Personal Information of Nearly 150,000 Consumers
WASHINGTON — The U.S. Trustee Program (USTP) today announced the unsealing of a settlement with Citigroup Inc. (Citi) that protects the personal information of nearly 150,000 consumers in 85 jurisdictions around the country. Citi agreed to redact proofs of claim filed in bankruptcy cases nationwide in which the personal information of consumer debtors and third parties, including Social Security numbers and birthdates, had not been properly redacted as required by the bankruptcy rules. Citi also agreed to notify all affected consumers and offer them one year of free credit monitoring. An independent auditor appointed under the settlement is reviewing the accuracy of the correction process.
The settlement, approved by the U.S. Bankruptcy Court for the Southern District of New York on March 13, 2012, had been sealed to prevent potential wrongdoers from learning of the breach and seeking to victimize the affected consumers. On July 11, 2013, the bankruptcy court granted the parties’ motion to unseal the proceedings.
“Under this unprecedented settlement, nearly 150,000 consumers whose personal information was placed at risk through no fault of their own have received notice of the improper disclosure and can further protect their information through free credit monitoring,” stated Clifford J. White III, Director of the Executive Office for U.S. Trustees. “Creditors in bankruptcy cases have a legal duty to protect certain personal information of their customers. This settlement should remind all major financial institutions and other creditors that violations cannot be tolerated.”
The settlement resolved the objection of the U.S. Trustee for Region 2, Tracy Hope Davis, to a motion Citi filed under seal in September 2011. Citi’s motion disclosed that between 2007 and 2011 its subsidiaries, including CitiMortgage Inc., Citibank N.A. and CitiFinancial Inc., filed proofs of claim in thousands of consumer bankruptcy cases seeking payment of amounts alleged to be owed by debtors. In April 2011, Citi discovered that certain personal information that should have been redacted under bankruptcy court rules, including consumers’ Social Security numbers and birth dates, had not been properly redacted.
The U.S. Trustee agreed that the information should be redacted, but objected to Citi’s motion because it did not disclose the nationwide scope of the breach. In addition, Citi did not propose a verifiable solution to correct the problem or provide assurance that the matter would be made public and the seal lifted once the information was redacted and affected consumers received notice.
On March 13, 2012, the bankruptcy court approved the settlement calling for the redaction and electronic filing of replacement claims at Citi’s expense. The settlement also included specific consumer protections, including: assurance that the original claims would not be overwritten or altered in the replacement process; notification to the affected debtors and third parties that their personal information was not properly redacted and of its correction; and an offer of one year of free credit monitoring.
Under the settlement, the court also appointed an independent auditor to review and file certifications with the court confirming that Citi’s investigation to determine the scope of the breach was adequate, that Citi filed properly redacted claims and did not overwrite or replace the original claims in the process, and that Citi’s policies and procedures for future filings are reasonably calculated to prevent recurrence of the redaction error.
On July 19, 2012, Citi certified to the bankruptcy court the successful redaction and replacement of the filings in the Southern District of New York. During that process, Citi discovered additional redaction issues and, in accordance with the settlement, filed a plan of corrective action expanding the scope of the settlement to include the redaction of approximately 50,000 additional bankruptcy filings.
Courts in 60 other jurisdictions served by the USTP have entered the settlement under seal and accepted the redacted replacement filings. Courts in the remaining jurisdictions handled the correction of the filings according to their local rules and orders, and Citi is otherwise following the terms of the settlement in those jurisdictions.
On June 4, 2013, the independent auditor certified to the U.S. Bankruptcy Court for the Southern District of New York and the 60 other participating courts that Citi had mailed letters notifying affected consumers of the privacy breach, its correction and the availability of one year of free credit monitoring at Citi’s expense. The independent auditor is reviewing Citi’s redaction and replacement process and is expected to issue its certification on that process by the end of the year.
Consumer debtors who believe they were affected may contact Citigroup Customer Service at 1-866-613-5636.
The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.
The settlement is filed in In re Matter of Citi Replacement Filings, No. 11-00405 (Bankr. S.D.N.Y.).
Contact:Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411Settlement Agreement (Stipulation and Order) [PDF - 1.07 MB]