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14 August 2013
Jury Convicts Jefferson City Man of Illegal FirearmsRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Jefferson City, Mo., man was convicted in federal court today of illegally possessing six firearms.
Andrew David Brandwein, 39, of Jefferson City, was found guilty of being a felon in possession of firearms.
Evidence introduced during the trial indicated that Brandwein was in possession of six firearms – a Marlin .22 magnum caliber rifle, a Harrington and Richardson .223-caliber rifle, a Weatherby .300 SBY Mag. rifle, a New England Firearms 10-gauge shotgun, a Rossi .30-06 Springfield rifle and a Harrington and Richardson .410 shotgun – on Jan. 8, 2011.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Brandwein has three prior felony convictions for possession of a controlled substance and prior felony convictions for attempting to manufacture a controlled substance, possession of a precursor drug with the intent to manufacture methamphetamine, unlawful possession of a concealable firearm and the distribution, delivery, sale or manufacture of a controlled substance.
His wife, Debra Louise Brandwein, 54, pleaded guilty on Aug. 9, 2013, to tampering with evidence. She admitted that she cleaned two jars that contained methamphetamine in order to protect her husband from prosecution.
Law enforcement officers were dispatched to the Brandwein’s residence on Jan. 8, 2011, when a large barn on the property caught on fire. Officers knocked on the door but received no response. After they used the keys from a truck parked near the barn to enter the house, Andrew Brandwein came out of the back bedroom, and appeared disoriented and confused. Debra Brandwein arrived at the residence a short time later. While in the residence, officers found five firearms sitting on the floor next to a television stand. There was also a loaded Harrington and Richardson .223 rifle lying on the ground next to the truck near the barn.
Andrew Brandwein was arrested; officers found several .223 shells and $2,458 in his pants pockets.
Following the presentation of evidence, the jury in the U.S. District Court in Jefferson City, Mo., deliberated for about two and a half hours before returning the guilty verdicts to U.S. District Judge Brian C. Wimes, ending a trial that began Monday, Aug. 12, 2013.
Under federal statutes, Andrew Brandwein is subject to a sentence of up to 10 years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Special Assistant U.S. Attorney Steven R. Berry. It was investigated by the Cole County, Mo., Sheriff’s Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Osage Fire Protection District, MUSTANG (the Mid-Missouri Unified Strike Team And Narcotics Group) and the Missouri State Highway Patrol.
Individual Arrested in Florida in Connection with a Lottery Scam in JamaicaRead the Press Release
A Jamaican citizen charged in connection with the operation of a fraudulent lottery was arrested Tuesday in Orlando, Fla., following his indictment by a federal grand jury in Fort Lauderdale, Fla., on Aug. 9, 2012, the Justice Department, U.S. Postal Inspection Service, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and U.S. Marshals Service announced today. Oneike Mickhale Barnett was arrested based on charges that he and his co-conspirators ran a lottery scam in Jamaica that fraudulently induced elderly victims in the United States to send them thousands of dollars to cover fees for lottery winnings that victims had not in fact won. The indictment unsealed with Barnett’s arrest forms part of the government’s crackdown on fraudulent lottery scams based in Jamaica.
Beginning in October 2008, Barnett and his co-conspirators are alleged to have contacted victims in the U.S., announced that the victims had won cash and prizes and persuaded the victims to send them thousands of dollars in fees to release the money. The victims never received cash or prizes. The defendant and his co-conspirators allegedly made calls from Jamaica using Voice Over Internet Protocol technology that allowed them to use a telephone number with a U.S. area code. According to the indictment, Barnett convinced victims to send money to middlemen in South Florida, who forwarded the money to Jamaica.
“Lottery scams that target older Americans, such as the one alleged here, are the most pernicious kind of fraud – often swindling seniors out of their life savings,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division. “The Justice Department will continue to combat these schemes and bring those responsible to justice.”
“The alleged lottery scheme in this case is most vile because it targeted the elderly, one of the most vulnerable members in our society,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “While the scam was based in Jamaica, it targeted victims in the United States, including South Florida. We will continue to pursue and prosecute those responsible for these illegal schemes in an effort to bring those responsible to justice and protect those in our society.”
Barnett was charged with conspiracy and 37 counts of wire fraud, and with committing these offenses via telemarketing. If convicted, he faces a statutory maximum sentence of 30 years per count, a possible fine and mandatory restitution.
“This arrest highlights the joint effort between U.S. and Jamaican law enforcement to prosecute those who prey on our nation’s senior citizens,” said U.S. Postal Inspector in Charge for the Miami Division Ronald Verrochio. “The mission of the Postal Inspection Service is to protect consumers by ensuring the nation’s mail system is not used as a tool for fraud.”
Special Agent in Charge for Homeland Security Investigations in Miami Alysa D. Erichs added, “These individuals are preying on some of the most vulnerable members in our communities. We will continue to work with our partners in Jamaica and other law enforcement agencies to put these criminal enterprises out of business.”
Acting U.S. Marshal Neil DeSousa said, “The U.S. Marshals Service in the Southern District of Florida, along with the Jamaica Foreign Field Office and the Organized Crime Drug Enforcement Task Force, remain committed to locating and apprehending criminals who defraud elderly Americans. We will continue to work with the U.S. Postal Inspection Service and Department of Homeland Security on the JOLT task force in the ongoing effort to combat lottery fraud targeting some of our most vulnerable citizens.”
U.S. Attorney Ferrer and Assistant Attorney General Delery both commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations, the U.S. Marshals Service and Jamaica’s Major Organized Crime and Anti-Corruption Task Force. The case is being prosecuted by Assistant U.S. Attorney Bertha Mitrani and Consumer Protection Branch, Civil Division attorneys Jeffrey Steger and Kathryn Drenning.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Individual Arrested in Florida in Connection with A Lottery Scam in JamaicaRead the Press Release
A Jamaican citizen charged in connection with the operation of a fraudulent lottery was arrested Tuesday in Orlando, Fla., following his indictment by a federal grand jury in Fort Lauderdale, Fla., on Aug. 9, 2012, the Justice Department, U.S. Postal Inspection Service, U.S. Immigration and Customs Enforcement's Homeland Security Investigations and U.S. Marshals Service announced today. Oneike Mickhale Barnett was arrested based on charges that he and his co-conspirators ran a lottery scam in Jamaica that fraudulently induced elderly victims in the United States to send them thousands of dollars to cover fees for lottery winnings that victims had not in fact won. The indictment unsealed with Barnett's arrest forms part of the government's crackdown on fraudulent lottery scams based in Jamaica.
Beginning in October 2008, Barnett and his co-conspirators are alleged to have contacted victims in the U.S., announced that the victims had won cash and prizes and persuaded the victims to send them thousands of dollars in fees to release the money. The victims never received cash or prizes. The defendant and his co-conspirators allegedly made calls from Jamaica using Voice Over Internet Protocol technology that allowed them to use a telephone number with a U.S. area code. According to the indictment, Barnett convinced victims to send money to middlemen in South Florida, who forwarded the money to Jamaica.
“The alleged lottery scheme in this case is most vile because it targeted the elderly, one of the most vulnerable members in our society,” said Wifredo Ferrer, U.S. Attorney for the Southern District of Florida. “While the scam was based in Jamaica, it targeted victims in the United States, including South Florida. We will continue to pursue and prosecute those responsible for these illegal schemes in an effort to bring those responsible to justice and protect those in our society.”
“Lottery scams that target older Americans, such as the one alleged here, are the most pernicious kind of fraud - often swindling seniors out of their life savings,” said Stuart F. Delery, Assistant Attorney General for the Justice Department's Civil Division. “The Justice Department will continue to combat these schemes and bring those responsible to justice.”
Barnett was charged with conspiracy and 37 counts of wire fraud, and with committing these offenses via telemarketing. If convicted, he faces a statutory maximum sentence of 30 years per count, a possible fine and mandatory restitution.
“This arrest highlights the joint effort between U.S. and Jamaican law enforcement to prosecute those who prey on our nation's senior citizens,” said U.S. Postal Inspector in Charge for the Miami Division Ronald Verrochio. “The mission of the Postal Inspection Service is to protect consumers by ensuring the nation's mail system is not used as a tool for fraud.”
Special Agent in Charge for Homeland Security Investigations in Miami Alysa D. Erichs added, “These individuals are preying on some of the most vulnerable members in our communities. We will continue to work with our partners in Jamaica and other law enforcement agencies to put these criminal enterprises out of business.”
Acting U.S. Marshal Neil DeSousa said, “The U.S. Marshals Service in the Southern District of Florida, along with the Jamaica Foreign Field Office and the Organized Crime Drug Enforcement Task Force, remain committed to locating and apprehending criminals who defraud elderly Americans. We will continue to work with the U.S. Postal Inspection Service and Department of Homeland Security on the JOLT task force in the ongoing effort to combat lottery fraud targeting some of our most vulnerable citizens.”
U.S. Attorney Ferrer and Assistant Attorney General Delery both commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations, the U.S. Marshals Service and Jamaica's Major Organized Crime and Anti-Corruption Task Force. The case is being prosecuted by Assistant U.S. Attorney Bertha Mitrani and Consumer Protection Branch, Civil Division attorneys Jeffrey Steger and Kathryn Drenning.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Independence Business Owner, Wichita Attorney among 18 Indicted in $18 Million Conspiracy to Traffic in Contraband CigarettesRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that an Independence, Mo., business owner and a Wichita, Kan., attorney are among 18 defendants who have been indicted by a federal grand jury in a more than $17 million, multi-state conspiracy to transport hundreds of thousands of cartons of contraband cigarettes from the Kansas City, Mo., area to the state of New York, where they were sold primarily on Indian reservations.
In addition to the federal indictment, the undercover operation by the Bureau of Alcohol, Tobacco, Firearms and Explosives resulted in a $3.5 million civil forfeiture and a non-prosecution agreement that requires a Winnebago, Neb. company to pay a $300,000 penalty.
“When unscrupulous companies traffic in contraband cigarettes, they are stealing from the public through millions of dollars in lost tax revenue,” Dickinson said. “They also create an illegal and unfair advantage over legitimate businesses that follow the law. When they don’t pay the excise tax on their cigarettes, they are able to unfairly undercut the prices charged by off-reservation retailers.”
Craig Sheffler, 43, and his wife, Nicole Sheffler, 35, both of Independence, Harry Najim, 65, of Wichita, Teddy Frenchman, 39, of Winnebago, Neb., AJ’s Candy & Tobacco, LLC, and William F. Parry, 52, both of Irving, N.Y., Tara Sundown, 48, of Basom, N.Y., Philip Christ, 54, and Salvatore Tornabene, 44, both of Hamburg, N.Y., Gerald E. Barber, 67, of Virginia, Mousa Juma, 62, of Chesapeake, Va., T. Cameron Jones, 57, of Quilcene, Wash., Gholamreza “Reza” Tadaiyon, 50, of Weston, Fla., Payam Kheimehdooz, 42, of Miami, Fla., Mohsen Rostami, 47, of North Lauderdale, Fla., and David Bishop, 43, Mark Bishop, 39, and Piotr Hoffmann, 39, all of Montreal, Canada, were charged in a 44-count indictment returned under seal by a federal grand jury in Kansas City, Mo., on Tuesday, Aug. 12, 2013. That indictment was unsealed and made public today upon the arrests and initial court appearances of several defendants.
The federal indictment alleges that each of the defendants participated in a conspiracy to commit wire fraud and traffic in contraband cigarettes from July 2010 to Jan. 26, 2012.
According to the indictment, Craig Sheffler and Tadaiyon purchased $17,345,610 worth of contraband cigarettes from undercover ATF agents during the undercover operation. Approximately 620,600 cartons of cigarettes – containing 10 packs per carton – were transported to New York without paying the required $4.35 per pack excise tax. The untaxed cigarettes were sold by New York retailers and smoke shops on the reservations in the state of New York. The total state excise tax lost to the state of New York was approximately $8,148,420.
The Defendants
Craig Sheffler is the owner of Cheap Tobacco Wholesale, a cigarette wholesale business in Independence. Najim is a partner in the Adams Jones Law Firm, P.A., in Wichita. Najim was the attorney for Craig Sheffler and Cheap Tobacco Wholesale.
Tadaiyon owns Brand Name Connoisseurs, Corp., a business located in Florida. Neither Tadaiyon nor Brand Name Connoisseurs was a licensed New York tobacco wholesaler authorized to bring cigarettes into the state of New York. Payamkheimehdooz and Rostami worked as drivers for Tadaiyon. According to the indictment, Tadaiyon received approximately $1,280,000 in gross profit from the conspiracy.
Barber was president of the Seneca Cayuga Tobacco Company, an Oklahoma tobacco company that manufactures and distributes its own brands of cigarettes.
Parry owns and operates Wolf’s Run, a business that, among other things, operated a gas station, convenience store, and trucking transport business. Tornabene was a driver for Parry. Sundown operated Jan’s Smoke Shop, a reservation business that, among other things, operated a gas station and convenience store. AJ’s is a tobacco wholesaler located on a reservation. AJ’s owner is identified as an unindicted co-conspirator. None of these defendants or their businesses were licensed to bring cigarettes into the state of New York.
David Bishop is the owner of DKB Trade Concepts, a Canadian corporation located in Montréal, Québec. Mark Bishop and Hoffmann worked as drivers for David Bishop. According to the indictment, David Bishop received approximately $303,000 in wire transfers and approximately $133,000 in cash for his “brokerage fees” during the conspiracy. According to the indictment, Hoffmann received approximately $24,250 in wire transfers.
Jones owns and operates Manufacturer’s Production Exchange in Quilcene, Washington. According to the indictment, Jones received approximately $154,000 for his “brokerage fees” during the conspiracy.
Frenchman is the manager of warehouse operations for HCI Distribution, a tobacco distribution company. HCI Distribution Company is a subsidiary of Ho-Chunk, Inc., headquartered in Winnebago, Neb. (on the Winnebago Tribe reservation).
Juma owned and operated Juma Brothers, Inc., located in Portsmouth, Va., a business that distributed tobacco products and other items to retail businesses.
New York Excise Tax
New York, through the Department of Taxation and Finance, pre-collects an excise tax of $4.35 per pack of cigarettes from wholesalers for sales to Indian nations and tribes. Federal and New York state law requires that tax stamps be affixed to cigarette packages – prior to their sale to consumers – reflecting that the required state taxes have been paid.
Only licensed wholesalers may purchase unstamped cigarettes. This is done either directly through the cigarette manufacturer or through other wholesalers. Under New York State law, it is the obligation of state-licensed stamping agents, i.e. wholesalers, to prepay the excise tax and affix stamps on all cigarette packs.
Under state and federal law, tobacco wholesalers must accurately report the sales of cigarettes to the state(s) where the sale occurs. The state of Missouri requires tobacco wholesalers to accurately report the source of all cigarettes purchased and the disposition of those cigarettes. During the course of the conspiracy, the indictment says, in the reports filed by Cheap Tobacco Wholesale, Craig Sheffler falsely reported that the source of the cigarettes purchased from the ATF undercover operation was Cross Bridge LLC, a defunct Florida corporation.
The Conspiracy
Craig Sheffler made regular purchases of contraband cigarettes from undercover ATF agents in Kansas City. He in turn sold many of the cigarettes to Tadaiyon, whose drivers picked them up directly from the ATF warehouse in Kansas City, Mo. The rest of the cigarettes were shipped to New York, either from the undercover ATF warehouse or from the Cheap Tobacco Wholesale warehouse in Independence.
The indictment cites a series of purchases of cigarettes during the conspiracy, each transaction typically involving thousands of cartons and hundreds of thousands of dollars.
For example, the indictment alleges that on Sept. 29, 2011, Craig Sheffler purchased 15,576 cartons of cigarettes from ATF undercover agents for $580,131 in cash and a check for $33,000. During this transaction, Nicole Sheffler carried an orange bucket into the ATF undercover warehouse which contained two paper bags with approximately $400,000 in cash.
On another occasion, the indictment alleges that Craig Sheffler purchased 352 cases of contraband cigarettes from the ATF undercover agents on Nov. 22, 2011. Rather than paying for the cigarettes, the indictment says, Craig Sheffler outlined a breakdown of payments for the purchases of semi-trucks to be coordinated by his attorney, Najim. Craig Sheffler allegedly agreed to give Najim approximately $625,000 to purchase Peterbilt semi-trucks for the undercover agents. Craig Sheffler allegedly stated he would pay Najim’s law firm $9,000 and $60,000 in cash to Najim.
Parry ordered cigarettes directly, while Sundown and AJ’s placed orders for unstamped cigarettes through Christ and Barber. Barber (through Seneca Cayuga Tobacco Company) then placed orders for those unstamped cigarettes from Tadaiyon and Brand Name Connoisseurs. Tadaiyon would forward the order to David Bishop, who would e-mail the order for the unstamped cigarettes to Jones and to Craig Sheffler.
According to the indictment, through the end of Sept. 22, 2011, after the orders had been placed, Tadaiyon, Mark Bishop and Hoffmann picked up the unstamped cigarettes in Kansas City and transported them to Seneca Cayuga Tobacco Company in Oklahoma. From Seneca Cayuga Tobacco Company, the unstamped cigarettes were allegedly transported to Wolf’s Run, Jan’s Smoke Shop, AJ’s and the Totem Pole Smoke Shop in New York by Wolf’s Run or a common carrier.
After Sept. 22, 2011, according to the indictment, Tadaiyon, Mark Bishop, Hoffmann, Kheimehdooz and Rostami picked up the orders of unstamped cigarettes from the undercover ATF warehouse in Kansas City or at the Cheap Tobacco Wholesale warehouse in Independence, then transported them directly to HCI Distribution in Nebraska. Frenchman, at HCI Distribution, allegedly coordinated with HCI Logistics (another subsidiary of Ho-Chunk, Inc.) to have the unstamped cigarettes transported to Jan’s Smoke Shop, AJ’s and the Totem Pole Smoke Shop in New York.
Parry allegedly sold the unstamped, untaxed cigarettes at Wolf’s Run store. AJ’s and Parry allegedly sold the unstamped, untaxed cigarettes to other smoke shops on the reservations in New York. Sundown allegedly sold the unstamped, untaxed cigarettes at Jan’s Smoke shop.
Non-prosecution Agreement
In addition to the federal indictment, Dickinson also announced today that the U.S. Attorney’s Office in the Western District of Missouri has entered into a non-prosecution agreement with HCI Distribution, in which HCI Distribution acknowledges responsibility for its role in the conspiracy and agrees to take several actions; the U.S. Attorney’s Office will defer criminal prosecution and civil action.
Ho-Chunk, Inc., located in Winnebago, Neb., is a corporation operated by the Winnebago Tribe of Nebraska, a federally recognized Indian tribe. Ho-Chunk, Inc., is the parent company of HCI Distribution, also located in Winnebago, which claims to be one of the largest tribal cigarette and tobacco distributors in the United States, and HCI Logistics, a commercial transportation company in Omaha, Neb.
Under the terms of this agreement, HCI Distribution must pay a monetary penalty of $300,000 and take corrective actions. HCI Distribution must also withdraw its claim in the civil forfeiture case. HCI Distribution had claimed $221,850 plus the proceeds from the sale of the 102 cases of seized cigarettes.
Civil Forfeiture
Following the seizures that occurred as a result of the investigation, the U.S. Attorney’s Office started a civil forfeiture case naming the assets taken up to that point. On Oct. 23, 2012, the court entered a default order of forfeiture as to the following assets:
- $399,206.22 of the $599,206.22 seized from InTrust Bank account in the name of Cheap Tobacco Wholesale, LLC;
- $740,000.00 seized on Jan. 26, 2012;
- $18,260.00 seized on Jan. 26, 2012;
- $266,704.28 seized on Jan. 27, 2012 from Bank of Oklahoma in the name of Seneca-Cayuga Tobacco Company;
- More than 300 cases of seized cigarettes;
- 2009 Cessna T206H Stationair aircraft;
- Two 2012 Peterbilt 389 trucks;
- Two 2012 Peterbilt 386 trucks;
- $615,661 seized.
The seized cigarettes have been sold at auction for $532,500. The 2009 Cessna Aircraft has been sold for $450,000. The four trucks have been sold for the following amounts: $115,000; $115,000; $113,000; and $113,000.
The civil case has been stayed pending the resolution of the criminal case.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorneys Paul S. Becker and Justin G. Davids. It was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, IRS – Criminal Investigation, the Federal Deposit Insurance Corporation – Office of Inspector General and the Kansas City, Mo., Police Department.Illegal Alien Convicted of Passport Fraud, False Claim of U.S. Citizenship and Aggravated Identity TheftRead the Press Release
An illegal alien who attempted to obtain a U.S. passport using fraudulent and illegally obtained documents was convicted by a jury today, after a one-day trial in federal court in Cedar Rapids.
Eduardo Rodriguez-Ayala, age 28, a citizen of Mexico, living in Waterloo, Iowa, was convicted of one count of unlawful possession of an identity document, one count of making false statements in a passport application, two counts of making a false claim of United States citizenship, and two counts of aggravated identity theft. The verdict was returned this morning following about ninety minutes of jury deliberations.
The evidence at trial showed that on August 10, 2012, Rodriguez-Ayala, claiming to be a U.S. citizen, used a fraudulent Arizona birth certificate in his brother’s name to obtain an Iowa identification card and to register to vote. Three days later, on August 13, 2012, Rodriguez-Ayala used the falsely procured Iowa identification card and the fraudulent birth certificate to apply for a U.S. passport. Rodriguez-Ayala later gave a false name and date of birth to State Department agents investigating the passport application. Rodriguez-Ayala eventually admitted he used false documents and his brother’s identity to apply for the U.S. passport.
Sentencing before United States District Court Chief Judge Linda R. Reade will be set after a presentence report is prepared. Rodriguez-Ayala was ordered detained without bond pending sentencing. Rodriguez-Ayala faces a possible maximum sentence of ten years’ imprisonment on the unlawful possession of an identity document charge, a possible maximum sentence of ten years’ imprisonment on the making false statements in a passport application charge, and a maximum sentence of three years’ imprisonment on each of the false claim of U.S. citizenship charges. Rodriguez-Ayala also faces a mandatory sentence of two years’ imprisonment on each of the aggravated identity theft charges, with at least one such sentence to be served consecutive to any other sentence. Rodriguez faces a fine of $1,500,000, $600 in special assessments, and three years of supervised release following any imprisonment.
The case is being prosecuted by Assistant United States Attorney Daniel C. Tvedt and was investigated by agents from the United States Department of State and the Department of Homeland Security, Immigration and Customs Enforcement.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is CR 13-2009.
Houston Man Handed Significant Federal Sentence for Cocaine TraffickingRead the Press Release
HOUSTON - Michael Washington, 38, of Houston, has been handed a sentence of 151 months for conspiracy to possess with the intent to distribute and possession with intent to distribute 8.9 kilograms of cocaine, United States Attorney Kenneth Magidson announced today.
On Tuesday, Oct. 11, 2011, Washington was convicted by a jury’s verdict of conspiracy to possess with the intent to distribute cocaine and aiding and abetting the possession with the intent to distribute cocaine. At the hearing today, U.S. District Judge Gray Miller sentenced Washington to 151 months on both counts of conviction to run concurrently. Washington was further ordered to serve five years of supervised release following completion of his prison term.
During the four-day trial, the jury heard testimony which proved that on June 10-11, 2010, Juan Manzanares supplied cocaine to other co-conspirators Roberto Medrano and Alberto Aguirre who subsequently sold the cocaine to Washington. After receiving one kilogram on June 10, Washington made arrangements to purchase five additional kilograms of cocaine the following day.
On June 11, Manzanares, providing the cocaine, rode with Medrano and Aguirre to Washington’s residence on the 9600 block of Kings Valley in Houston to deliver the cocaine. Unbeknownst to all involved, agents with the Drug Enforcement Administration (DEA) had received information about a possible drug transaction and were monitoring the area.
Surveillance units had established a visual on the house and agents witnessed Aguirre exit the vehicle and enter Washington’s residence. Inside, Washington received the cocaine from Aguirre and paid him approximately $113,000. Aguirre departed the residence carrying a black bag with the money, placed it into the vehicle and left. Surveillance then followed all three vehicles.
Officials conducted a traffic stop on the Chevy, at which time they observed the black bag in the back seat with bundles of U.S. currency exposed. The amount of money recovered from the bag was approximately $113,899.
The co-defendants in the case were sentenced to terms ranging from 60-151 months in federal prison.
This matter was investigated by the DEA in conjunction with the Pasadena Police Department. Assistant United States Attorneys Stuart A. Burns and Bertram Isaacs prosecuted the case.
Four Individuals Sentenced for Their Roles in Large, Multi-state Identity Theft RingRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, two individuals were sentenced for their roles in a large, multi-state, identity theft ring. United States District Judge Paul A. Magnuson sentenced Russell Raymond Royals, age 61, of Cottage Grove, to 120 months in prison; and Desmon Desmond Burks, age 38, of St. Paul, to 252 months in prison. Royals previously pled guilty to one count of conspiracy to commit bank fraud and one count of aggravated identity theft. Burks was convicted on September 6, 2012, following a jury trial, of one count of conspiracy to commit bank fraud, two counts of aiding and abetting bank fraud, and two counts of aggravated identity theft.
Two related defendants were sentenced last month for their roles in this conspiracy. On July 23, 2013, Norman Scott Allen, age 44, of Minneapolis, was sentenced to 80 months in prison on one count of conspiracy to commit bank fraud and one count of bank fraud. On July 22, 2013, Frederick Adrianne Hamilton, age 57, also of Minneapolis, was sentenced to 57 months in prison on one count of conspiracy to commit bank fraud and two counts of bank fraud. Both men were convicted on September 6, 2012 following a jury trial. Twenty-three other defendants have been sentenced in this case thus far, while five more await sentencing.These individuals, along with over 100 others, were involved in a conspiracy from 2006 through December of 2011 to defraud banks, bank customers, and businesses. The co-conspirators used victim information to create counterfeit checks and false identification documents to conduct fraudulent transactions at retail establishments where expensive merchandise was purchased and returned for cash. At banks, the conspirators posed as customers and withdrew money from victims’ bank accounts. The members of the conspiracy conducted these fraudulent transactions throughout Minnesota and in at least 13 other states. Victim information was obtained by members of the conspiracy through multiple sources, including from individuals who stole victim information from their places of employment, from individuals employed at area banks, from those who stole the information from the mail, during vehicle break-ins, and business burglaries, among other sources.
Following sentencing, Patrick Henry, the head of the Minnesota Financial Crimes Task Force, said, “The Minnesota Financial Crimes Task Force led this investigation, but the effort was a success because of the extraordinary collaboration by all of the agencies involved.”
Kelly R. Jackson, Special Agent in Charge of Internal Revenue Service-Criminal Investigations, St. Paul Field Office, which also participated in the investigation, said, “Investigating identity theft is a priority for IRS-Criminal Investigations. Today’s sentencings of Desmon Burks and Russell Royals should serve as a strong deterrent to those who are considering similar conduct. Law enforcement and the U.S. Attorney’s Office are serious about investigating identity theft crimes and holding those accountable who commit these types of crimes.”
In a related case, five individuals were charged with conspiracy to commit bank fraud, bank fraud and aggravated identity theft. Jemall Ronta Williams, Jerome Davis, Jr., Tierra Samantha Catrina House, and Shanell Collette Brewer each pleaded guilty to one count of conspiracy to commit bank fraud and one count of aggravated identity theft. Gordon Lamarr Moore was convicted in April 2013 following a jury trial. During the trial, Moore fled and became a fugitive. On July 8, 2013, he was arrested in at a hotel in Milwaukee, Wisconsin. Moore attempted to again flee, but was ultimately apprehended without incident.
These cases resulted from an investigation conducted by the Minnesota Financial Crimes Task Force, the U.S. Postal Inspection Service, and the IRS-Criminal Investigations. They were prosecuted by Assistant U.S. Attorney Karen B. Schommer and Assistant U.S. Attorney Michelle E. Jones.
The Financial Crimes Task Force was established pursuant to state law and is comprised of local, state, and federal law enforcement investigators dedicated to combating the growing problem of cross-jurisdictional financial crimes. The task force, overseen by an advisory board also created under state law, serves the entire District of Minnesota, presenting its cases to county or federal prosecutors, as appropriate.
The task force and the Minnesota U.S. Attorney’s Office want to remind people to protect themselves from identity theft. For more information, visit http://www.stopfraud.gov/protect-identity.html.
For more information on how to avoid becoming a victim of identity theft, visit https://postalinspectors.uspis.gov/investigations/MailFraud/fraudschemes/mailtheft/IdentityTheft.aspx . The IRS-Criminal Investigations also urges citizens to review the Taxpayer Guide to Identity Theft, which can be found at http://www.irs.gov.
For tips on how to prevent mail theft, visit https://postalinspectors.uspis.gov/investigations/MailFraud/fraudschemes/mailtheft/MailTheft.aspx.Four Charged in Heroin Trafficking ConspiracyRead the Press Release
JOHNSTOWN, Pa. - On Aug. 13, 2013, four residents of Johnstown, Pa., were indicted by a federal grand jury in Johnstown on charges of violating federal narcotics and firearms laws, United States Attorney David J. Hickton announced today.
The seven-count indictment named as defendants the following individuals:
Fred Claycomb, Jr., 50; Matthew John Claycomb, 21; Ronald Paul Copeland, 44; and
Nichelle Seeley, 27.According to the indictment presented to the court, from Jan.1, 2013, through Jan. 25, 2013, Fred Claycomb, Jr., Matthew John Claycomb, Copeland and Seeley conspired to distribute and possess with intent to distribute less than 100 grams of heroin.
In addition, on Jan. 17, Jan. 18 and Jan. 25, 2013, Fred Claycomb, Jr., Matthew John Claycomb, Copeland and Seeley distributed less than 100 grams of heroin on each of these occasions, and on Jan. 25, 2013, Seeley possessed with the intent to distribute less than 100 grams of heroin.
On Jan.25 2013, Matthew John Claycomb was found in possession of a Harrington and Richardson, Model 158, 410 gauge shotgun. On Mar. 1, 2011, Claycomb was convicted in Cambria County, Pa., of firearms not to be carried without a license, which is a crime punishable by imprisonment for a term exceeding one year. Federal law prohibits persons who have been convicted of a crime punishable by imprisonment exceeding one year from possessing firearms.
The law provides for a maximum total sentence for Fred Claycomb, Jr. of 60 years in prison, a fine of $3,000,000, or both; for Matthew John Claycomb, 70 years in prison, a fine of $3,250,000, or both; for Copeland, 40 years in prison, a fine of $2,000,000, or both; and for Seeley, 60 years in prison, a fine of $3,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendants.
Assistant U.S. Attorney Stephanie L. Haines is prosecuting this case on behalf of the government.
The Laurel Highlands Resident Agency of the Federal Bureau of Investigation and the Cambria County Drug Task Force conducted the investigation leading to the indictment in this case.
An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.
According to Mr. Hickton, the case is being prosecuted as part of Project Safe Neighborhoods, a collaborative effort by federal, state and local law enforcement agencies, prosecutors and communities to prevent, deter and prosecute gun crime.
Former Umatilla Tribal Police Officer Pleads Guilty to Abusive Sexual Contact and Making False StatementsRead the Press Release
PORTLAND, Ore. – Fermore Joseph Craig, Jr., 43, of Pendleton, Oregon, pled guilty yesterday before U. S. District Judge Michael W. Mosman to one count of abusive sexual contact and one count of making false statements to the FBI. The maximum sentence for abusive sexual contact is two years in prison, a fine of $250,000, and a lifetime of supervised release. Craig’s conviction for abusive sexual contact will require him to register as a sex offender. The maximum sentence for making false statements to the FBI is five years in prison, a fine of $250,000, and three years of supervised release. Sentencing is scheduled for November 4, 2013. Craig is currently out of custody and under the supervision of a federal court officer, pending the sentencing hearing.
“Sexual assault is always a heinous crime,” stated U.S. Attorney Amanda Marshall. “But when a tribal police officer, whose very duty is to protect the members of a Tribal Nation, commits such an act, the impact is especially egregious as it violates the trust and safety not only of the victim, but the entire tribal community.”
According to the prosecutor’s statements in court, on May 11, 2013, on the Umatilla Indian Reservation, Craig touched the intimate parts of an adult female. Craig admitted that he intentionally touched the victim’s intimate parts to arouse and gratify his own sexual desire, and he did so without the victim’s permission.
When the victim subsequently disclosed the sexual abuse, the FBI and Oregon State Police initiated an investigation and interviewed Craig. On May 13, 2013, during an interview with an FBI special agent and an Oregon State Police trooper, Craig made false statements to the investigators by lying about the sexual contact he had with the victim.
Craig had been employed as a Umatilla Tribal Police Officer for approximately 15 years, but he was not on duty as a police officer at the time the sexual abuse occurred. After the abuse was reported by the victim, Craig was immediately placed on administrative leave. Craig ultimately resigned from the Umatilla Tribal Police Department in June, while the investigation was ongoing.
The case was investigated by the FBI’s Pendleton office and the Oregon State Police. Assistant U.S. Attorney Craig Gabriel prosecuted the case.
Former Lawrence IT Director Pleads Guilty to Fraud and TheftRead the Press Release
BOSTON - A Dover, NH, man was convicted yesterday in federal court of defrauding the City of Lawrence of more than $5,000 while serving as the Director of the city’s Informationi Technology (IT) Department.
Bryan J. Cahoon, 53, pleaded guilty before U.S. District Judge Rya W. Zobel to a one-count Information alleging fraud and theft concerning programs receiving federal funds.
Had the case proceeded to trial the Government’s evidence would have proven that in 2008 and 2009, Cahoon steered municipal contracts and paid internships to his friends and associates, who then performed services for Cahoon’s private company, Networks@Home, which had subcontracted work on projects for City of Lawrence from another company.
According to the Information and disclosed today in open court, Cahoon worked under a contractual arrangement with the City of Lawrence to serve as the city’s IT Director from April 2007 through January 2010. During this time, Cahoon had an ownership interest in a company called Networks@Home, which provided computer networking and telecommunications services. In 2008 - 2009, Networks@Home subcontracted IT-related work at the Lawrence Public Library and other city properties from another technology company. During that time frame, and in his capacity as IT Director for Lawrence, Cahoon steered city contracts just under $25,000, to friends and associates. He also hired acquaintances as interns for the IT Department by means of contracts just under $5,000. Cahoon then utilized the services of the individuals who had been awarded city contracts and paid internships with his assistance to perform work on city projects on behalf of Networks@Home. Effectively, therefore, the City of Lawrence was double billed for the same work, while Cahoon did little to no work in return for the funds he obtained from the city.
A substantial portion of the funds used to pay for work at the Lawrence Public Library, as well as discounts associated with IT equipment and services, came from the federal “E-Rate” program. The E-Rate program provides discounts to assist most local schools and libraries to obtain affordable telecommunications and Internet access.
Judge Zobel scheduled sentencing for Nov. 19, 2013. Cahoon faces up to 10 years in prison, to be followed by three years of supervised release and a $250,000 fine.
United States Attorney Carmen M. Ortiz, Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation - Boston Field Division, Jonathan W. Blodgett, Essex County District Attorney and Glenn A. Cunha, Inspector General for the Commonwealth of Massachusetts, made the announcement. The case is being prosecuted by Assistant U.S. Attorney William F. Bloomer.Former Employee of Exeter Hospital Pleads Guilty to Charges Related to Multi-State Hepatitis C OutbreakRead the Press Release
CONCORD, N.H. –David M. Kwiatkowski, 34, a former employee of Exeter Hospital, pleaded guilty today to eight counts of obtaining controlled substances by fraud and eight counts of tampering with a consumer product, announced United States Attorney John P. Kacavas.
During the plea hearing, Kwiatkowski admitted that he had been employed as a health care technician in Michigan between 2003 and 2007. Beginning in November 2007, he became a “traveling technician,” working through various placement agencies at medical facilities in New York, Pennsylvania, Maryland, Arizona, Kansas, Georgia and New Hampshire.
Kwiatkowski also admitted that, in June of 2010, he became aware that he was infected with the Hepatitis C virus. It is unknown when Kwiatkowski contracted the infection. Hepatitis C is a blood-borne virus that can cause serious damage to the liver. According to the Centers for Disease Control and Prevention (CDC), Hepatitis C causes more deaths annually in the United States than HIV.
Kwiatkowski admitted that while employed as a health care technician at Exeter Hospital in 2011 and 2012, he devised a scheme to divert and steal the controlled substance Fentanyl for personal use and abuse. Fentanyl is a powerful anesthetic intended for patients undergoing medical procedures, among other uses. Kwiatkowski admitted that he would surreptitiously take syringes of Fentanyl prepared for patients, inject himself with the drug and refill the syringes with saline, causing the syringes to become tainted with his infected blood. He then replaced the tainted syringes for use on unsuspecting patients. Consequently, instead of receiving the prescribed dose of Fentanyl together with its intended anesthetic effect, patients actually received saline that was tainted with the same strain of Hepatitis C carried by Kwiatkowski.
Kwiatkowski also admitted that he engaged in this conduct at several other hospitals, including Hays Medical Center in Kansas and Johns Hopkins University Hospital in Maryland.
Kwiatkowski’s conduct initially came to light after several unexplained cases of Hepatitis C were detected at Exeter Hospital in May of 2012. As part of the public health investigation of this Hepatitis C outbreak, at least 32 patients who were treated at Exeter Hospital, six patients from Hays Medical Center, six patients from Johns Hopkins, and one who was treated at the VA Medical Center in Baltimore, Maryland have been found to have a strain of Hepatitis C that has been genetically linked to the strain carried by Kwiatkowski. Kwiatkowski was arrested on July 19, 2012, and he has remained in custody since that date.
Kwiatkowski pled guilty to all 14 charges in the indictment pending against him in New Hampshire. At the same time, he agreed to have two charges recently filed against him in Kansas transferred to New Hampshire and he pled guilty to them as well. Kwiatkowski is scheduled to be sentenced on December 3, 2013 at 9:30 a.m.
United States Attorney John P. Kacavas commented on the defendant’s guilty pleas, saying, “This development marks another step on the road to justice for this defendant and for his many victims. Tragically, for his victims the defendant’s admissions of guilt are too little, too late. I am grateful to New Hampshire’s public health authorities, who finally put a stop to the defendant’s serial conduct by reporting it to law enforcement. And his guilty pleas today are a direct reflection of the strength of a case built by the dedicated investigative efforts of our federal, state, and local law enforcement partners, to whom I am also deeply grateful.”
Kwiatkowski faces up to ten (10) years in prison for each count of tampering with a consumer product and up to four (4) years in prison for each count of obtaining controlled substances by fraud. Each offense also is punishable by a fine of $250,000.00 and a term of supervised release following any sentence of imprisonment.
This investigation, which remains active and ongoing, has involved the cooperative efforts of federal, state, and local law enforcement entities, including the Federal Bureau of Investigation, the Office of Inspector General of the U.S. Department of Health and Human Services, the Drug Enforcement Administration, Office of Criminal Investigations of the Food and Drug Administration, the Office of Inspector General of the Department of Veterans Affairs, the New Hampshire Attorney General’s Office, the New Hampshire State Police, and the Exeter, New Hampshire Police Department. Assistance also was provided by the New Hampshire Drug Task Force, the Marlborough, Massachusetts Police Department, the Boxborough, Massachusetts Police Department, and the United States Attorney’s Offices in the District of Massachusetts, the District of Kansas, the District of Maryland, and the Middle District of Georgia.
Former Congressman Jesse L. Jackson, Jr. SentencedRead the Press Release
To 30 Months in Prison for Conspiring to Defraud Campaign
His Wife, Sandra Stevens Jackson, Sentenced to One Year on Tax ChargeWASHINGTON – Former Congressman Jesse L. Jackson, Jr., 48, was sentenced today to 30 months in prison for conspiring to defraud his re-election campaigns of about $750,000 in funds that were used to pay for personal items and expenses, including high-end appliances and electronics, and then filing misleading reports to conceal seven years of the illegal activities.
Jackson’s wife, Sandra Stevens Jackson, 49, a former Chicago alderman, was sentenced to one year for filing false tax returns as part of the scheme. The judge permitted the Jacksons to stagger their prison sentences, with Mrs. Jackson beginning to serve her sentence following her husband’s release from incarceration.
The sentencings, in the U.S. District Court for the District of Columbia, were announced by U.S. Attorney Ronald C. Machen Jr., Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, and Richard Weber, Chief of the Internal Revenue Service-Criminal Investigation (IRS-CI).“Jesse Jackson Jr.’s journey from the halls of Congress to federal prison is a tragedy of his own making,” said U.S. Attorney Machen. “Jackson’s political potential was unlimited, but he instead chose to treat his campaign account as a personal slush fund, stealing from the people who believed in him so he could live extravagantly. He squandered his great capacity for public service through outright theft. The prison sentence imposed today should serve as a wake-up call to other public officials who believe there are no consequences for betraying the public trust.”
“In a betrayal of his oath of office and his duty to the citizens he represented, Mr. Jackson violated the integrity of our government and disrespected those he served,” said Assistant Director in Charge Parlave. “Mr. Jackson and his wife selfishly supported themselves with campaign funds and went to great lengths to hide their illegal activity, but they can hide no more as they pay the price with today’s sentences. Public corruption will not be tolerated in our community – no matter the position or names of the individuals involved.”
“Today justice is served for the American public,” said IRS-CI Chief Weber. “This case exposed layers of greed and corruption masked by the illusion of success. The Jacksons were granted the privilege of political office to better the lives of others but used it instead for their own selfish benefit. The Jacksons failed to report over a half-million dollars in taxable income over a six year period. Regardless of circumstances, no one is granted an exemption to commit crimes with impunity. IRS-CI remains committed to the fight against political corruption and tax evasion. This case exemplifies the strong impact we are making in this arena working in cooperation with our law enforcement partners.”Jesse Jackson, Jr. pled guilty in February 2013 to one count of conspiracy to commit wire fraud, mail fraud and false statements. Sandra Stevens Jackson also pled guilty in February 2013. In her guilty plea, she admitted to filing false tax returns for calendar years 2006 through 2011. According to the government’s evidence, she knowingly and willfully failed to report nearly $570,000 in taxable income for those tax years. This led to an estimated tax loss of approximately $159,000.
Jesse Jackson, Jr. was elected to Congress in 1995 and served until November 2012 as the representative for the 2nd Congressional District of Illinois. Sandra Stevens Jackson was an alderman in Chicago from May 2007 until January 2013. Additionally, she had various roles in her husband’s re-election campaigns, starting in January 2005, working at different points as treasurer, consultant, and campaign manager.
According to the government’s evidence, Jackson and his wife carried out the fraud scheme from in or about August 2005 until in or about April 2012. Rather than using funds donated to the Campaign as they were intended – for legitimate expenses associated with Jackson’s re-election – they used a substantial portion for personal expenditures.
Jackson, who has residences in Chicago and Washington, D.C., also admitted taking steps to conceal seven years of illegal activities, including the filing of false and misleading reports with the Federal Election Commission (FEC) and the U.S. House of Representatives.
According to the government’s evidence, money was channeled from the Campaign to the Jacksons in the following ways:
DIRECT EXPENDITURES: Jackson made $57,792 in direct expenditures from the Campaign’s bank account from January 2006 through July 2011. In July 2007, for example, he withdrew $43,350 in Campaign funds to purchase an official check made payable to a jeweler for a men’s gold-plated Rolex watch. In addition, he used $14,442 in Campaign funds to pay down balances on person credit cards maintained by the Jacksons.
CREDIT CARD EXPENDITURES: The Campaign maintained a credit card account, “Jackson for Congress,” from at least August 2005 through August 2012. Individual credit card members on this account included Jackson and his wife. During this period, the Jacksons used the credit cards to purchase merchandise and services that were personal in nature, including high-end electronic items; a washer, a dryer, a range and refrigerator; collector’s items; clothing, food and supplies; movie tickets; health club dues; personal travel, including a holistic retreat, and personal dining expenses. Campaign funds were used to pay $582,772 of personal purchases.
OTHER EXPENDITURES: In March 2006, Jackson directed that a $36,000 check from the Campaign be issued to his wife’s business for billboard expenses. Sandra Stevens Jackson transferred this money from the business account to a personal account. Jackson and his wife, who controlled the personal account, used nearly all of the money that purportedly was for billboard expenses to pay down personal debts.
Additionally, Jackson paid a congressional staffer with funds from the campaign account so that the staffer could pay expenses on Jackson’s behalf, or, in some instances, give cash to Jackson. The Campaign issued about $76,150 in checks to the staffer from about October 2008 until about March 2012, even though the staffer actually was entitled to only about $11,409 for her work. The staffer then expended nearly all of the remaining $64,741 for the personal benefit of Jackson and his wife. For example, the staffer used checks from the Campaign to pay for $26,347 worth of work performed on the Jacksons’ home.
According to the government’s evidence, the Jacksons took steps from 2005 until 2012 to ensure that materially false and misleading reports were filed with government entities. These reports were filed with the FEC and the House of Representatives. These actions were critical to carrying out the conspiracy because they enabled the conduct to continue without question for a lengthy period of time and without the questions from regulators and the public that likely would have ensued had truthful, accurate reports been filed.In announcing the sentences, U.S. Attorney Machen, Assistant Director in Charge Parlave and Chief Weber commended the work of those who investigated the case for the FBI and IRS-CI. They also expressed appreciation for the assistance provided by the U.S. Marshals Service on the asset forfeiture aspects of the case. In addition, they commended those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Tasha Harris, Lenisse Edloe and Gail Price, and former Paralegal Specialist Sarah Reis.
Finally, they acknowledged the work of Assistant U.S. Attorneys Matt Graves, Michael K. Atkinson, and Jonathan W. Haray, of the Fraud and Public Corruption Section of the U.S. Attorney’s Office for the District of Columbia, who are investigating and prosecuting the matter, as well as Assistant U.S. Attorneys Catherine K. Connelly and Anthony Saler, of the Asset Forfeiture and Money Laundering Section.
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##Former Campaign Aide Pleads Guilty to Making A False Statement Regarding His Efforts to Thwart Federal InvestigationRead the Press Release
Into Allegations Involving 2010 Mayoral Campaign
- Admits Giving $8,000 to Potential Witness to Leave Town-WASHINGTON – Vernon Hawkins, who worked on an off-the-books get-out-the-vote effort preceding the 2010 District of Columbia mayoral primary, pled guilty today to making a false statement to federal authorities investigating allegations involving his candidate’s campaign.
Hawkins, who was a volunteer advisor for the candidate, pled guilty to the felony charge in the U.S. District Court for the District of Columbia. Among other things, he admitted that he helped provide a potential witness with approximately $8,000 to convince him to get out of town so that he would not be available to meet with federal agents investigating the campaign.
The guilty plea was announced by U.S. Attorney Ronald C. Machen Jr., Valerie Parlave, Assistant Director in Charge of the FBI Washington Field Office’s Criminal Division, and Thomas J. Kelly, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Hawkins, 74, of Washington, D.C., entered the plea before the Honorable Colleen Kollar-Kotelly. No sentencing date was set. The charge carries a statutory maximum of five years in prison, a fine of up to $250,000, and other penalties. The federal sentencing guidelines for the offense will be determined later by the court.
Hawkins is among four people, all associated with the same mayoral campaign, to plead guilty to charges in a continuing investigation of campaign activities during the election.
Thomas W. Gore, 58, the former assistant treasurer of the campaign, was sentenced on July 26, 2013, to six months in prison and six months of home detention for obstruction of justice and other charges; Gore also must perform 200 hours of community service. Howard L. Brooks, 65, a member of the campaign’s finance and treasury teams, was sentenced last year to 24 months of probation and ordered to perform 200 hours of community service for making a false statement to the FBI. Business owner Eugenia C. Harris, 76, pled guilty in July 2012 to one count of conspiring to violate federal campaign finance law and to obstruct justice; one count of engaging in fraud and making false statements, and one count of conspiring to violate District of Columbia campaign law. Harris is awaiting sentencing.
“Today Vernon Hawkins became the fourth person to plead guilty to a felony for trying to cover up corruption in the 2010 mayoral election,” said U.S. Attorney Machen. “Vernon Hawkins was at ground zero of a scheme to design, staff, and execute an off-the-books shadow campaign. After the election, he and his fellow campaign aides sought to impede our investigation by lying to the FBI, shredding documents, creating fake paperwork, and sending witnesses out of the jurisdiction. This guilty plea takes us one step closer to understanding the extent of the deception that tainted the 2010 campaign.”
“Today, Mr. Hawkins admitted he knowingly lied to federal investigators in an attempt to influence the investigation into the 2010 District of Columbia mayoral election,” said Assistant Director in Charge Parlave. “Despite his attempt, the investigation continues and will not end until all those involved in illegal campaign activities are brought to justice.”
**
Campaign Activities:According to a statement of offense signed by the government as well as the defendant, beginning in the spring of 2010 and continuing through the November election, Hawkins was a volunteer advisor for the campaign of a person described in charging documents as “Candidate A.” Hawkins provided advice to the candidate and other members of the campaign on matters such as field operations, staffing and communications. He also had contact with others outside the official campaign, including a person identified in the court documents as “Executive A,” who was the majority owner of a business, and Harris.
During the campaign, “Executive A,” with assistance from Hawkins, Harris and others, funded an unreported, off-the-books effort to support “Candidate A” by providing services and materials for get-out-the-vote activities. Harris arranged for, and paid expenses associated with, these services through her companies, Belle International, Inc., and Details International, Inc.
In approximately June 2010, Hawkins and Harris met to discuss this get-out-the-vote effort. During this meeting, they also discussed “Executive A’s” interest in supporting the campaign of “Candidate A.” Hawkins then drew up a plan and budget.
Sometime after this meeting, Harris and Hawkins met with “Executive A” about the get-out-the-vote plans. Later, there was a three-way telephone call among Hawkins, Harris and “Executive A” to discuss the budget for an off-the books effort funded by “Executive A” to get out the vote. This budget included money for coordinators, canvassers and drivers, and for the rental of vans, among other expenditures. Harris later hired a consultant to coordinate this off-the books effort. In addition, another person became the transportation coordinator for the efforts funded by “Executive A.”
As the primary election approached, Hawkins’s role in the campaign’s get-out-the-vote effort diminished, and his role increased in the efforts being funded by “Executive A.”
The Federal Investigation:
In 2011, a federal investigation began into financing and other activities involving the campaign of “Candidate A” in the mayoral election. Later that year, Hawkins became aware that individuals associated with the campaign of “Candidate A,” as well as people associated with the efforts funded by “Executive A,” were being contacted by federal investigators. The statement of offense details a series of actions that Hawkins admits took place in ensuing months.
In late November or early December 2011, the transportation coordinator told Hawkins that he had received a business card from a government investigator at his door. About one week later, Hawkins relayed this information to Harris. Hawkins and Harris met a few days after that and discussed the fact that people whom Harris had paid to provide services during the campaign were now meeting with representatives of the U.S. Attorney’s Office. Hawkins and Harris discussed the need for these individuals – specifically the transportation coordinator – to be out of town for about two to four weeks to delay meetings with law enforcement.
Hawkins understood from this conversation that Harris had talked with “Executive A” about the need for such people, including the transportation coordinator, to be out of town for a period of time. He also understood that the consultant hired to coordinate the get-out-the-vote effort funded by “Executive A” already was away.In or about December 2011, Hawkins and Harris attempted to persuade the transportation coordinator to leave town for an extended period of time so that he, too, would be unavailable to speak with federal agents. The transportation coordinator later raised concerns with Hawkins that he would miss business opportunities if he left town and that he needed that income.
Hawkins informed Harris about his conversation about income with the transportation coordinator. A few days later, she gave Hawkins an envelope, which he understood contained $4,000 in cash, to give to the transportation coordinator. Hawkins later provided the money to the transportation coordinator in a supermarket parking lot in Southeast Washington.
In or about January 2012, Hawkins again ran into the transportation coordinator, who wanted additional money to go back out of town. Hawkins later provided another envelope, also from Harris, containing what he understood to be $4,000 in cash, in the supermarket parking lot.
Finally, in August 2012, Hawkins, accompanied by his lawyer, participated in a voluntary interview with two FBI agents and representatives of the U.S. Attorney’s Office. During this interview, he stated that he did not know of anyone being asked or told to go out of town, that he never asked anyone to leave town so that they could not meet with investigators, and that he did not help or assist with sending anyone out of town so they would not be able to speak with federal agents in this investigation. Hawkins made these false statements in an attempt to influence the federal investigation into the efforts funded by “Executive A” in the mayoral campaign.The other guilty pleas also involved efforts to impede the investigation. Brooks admitted making a false statement to investigators, and Gore admitted to making false statements and shredding documents. In her guilty plea, Harris admitted that she caused others to shred and destroy a large volume of paper records maintained by her businesses. She also admitted causing others to destroy stored electronic records from her businesses because they could have revealed what took place in the mayoral election. Finally, Harris also admitted that she made arrangements in early 2012 to travel to Brazil for three months in order to evade federal investigators. Efforts were made toward renting a house in Brazil before the trip was cancelled.
In announcing the plea, U.S. Attorney Machen, Assistant Director in Charge Parlave and Special Agent in Charge Kelly commended the work of those who investigated the case for the FBI and IRS-CI. They also expressed appreciation for the work done by those who handled the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Lionel André, Loyaan Egal, Jonathan Haray, Jonathan Hooks, and Ephraim “Fry” Wernick; former Assistant U.S. Attorney Mary Chris Dobbie; Criminal Investigators Matthew Kutz, Mark Crawford and Melissa Matthews; Legal Assistants Krishawn Graham and Nicole Wattelet, Paralegal Specialists Tasha Harris, Shanna Hays, and Corinne Kleinman, and Law Intern Lindsey Frye.
Finally, they acknowledged the work of Assistant U.S. Attorney Ellen Chubin Epstein, who is investigating and prosecuting this matter.
13-280Florida Airline Fuel Supply Company and Its Owner Indicted for Role in Scheme to Defraud Illinois-Based Ryan International AirlinesRead the Press Release
WASHINGTON—A Florida-based airline fuel supply service company and its former owner and operator were indicted yesterday on charges of participating in a scheme to defraud Illinois-based Ryan International Airlines, the Department of Justice announced.
A federal grand jury in the U.S. District Court for the Southern District of Florida in West Palm Beach, Fla., returned an indictment against Sean E. Wagner and his company Aviation Fuel International Inc. (AFI), an airline fuel supply company. The indictment alleges that Wagner and AFI participated in a conspiracy to defraud Ryan, a charter airline company based in Rockford, Ill., by making kickback payments to Wayne Kepple, a former vice president of ground operations for Ryan, in exchange for awarding business to AFI. Wagner was arrested on July 19, 2013, in Weston, Fla., on a one-count criminal complaint in connection with these charges.
Ryan provided air passenger and cargo services for corporations, private individuals and the U.S. government–including the U.S. Department of Defense and the U.S. Department of Homeland Security.
The indictment alleges, among other things, that from at least as early as December 2005 through at least August 2009, Wagner, AFI and others made kickback payments totaling more than $200,000, in the form of checks, wire transfers, cash and gift cards, to Kepple while working at Ryan.
“The conspirators traded contracts for kickbacks and took affirmative steps to hide their illegal scheme, including wiring payments to personal bank accounts and making secret cash payments,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to aggressively prosecute companies and individuals that seek to defraud the government and U.S. taxpayers by thwarting the competitive process.”
Wagner and AFI are charged with one count of conspiracy to commit wire fraud and honest services fraud, as well as two counts of wire fraud and two counts of mail fraud. Each count carries a maximum sentence of 20 years in prison and a $250,000 criminal fine for individuals and a $500,000 criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.
As a result of this ongoing investigation, four individuals have pleaded guilty to date. Three of the individuals have been ordered to serve sentences ranging from 16 to 24 months in prison and to pay more than $220,000 in restitution. The fourth individual, Kepple, pleaded guilty and is currently awaiting sentencing.
The charges are the result of an investigation being conducted by the Antitrust Division’s National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General with assistance from the U.S. Attorney’s Office for the Southern District of Florida. Anyone with information concerning anticompetitive conduct in the airline charter services industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm.
Five Defendants Charged on Securities Fraud Related ViolationsRead the Press Release
153 Defendants Have Been Charged to Date as Part of the Southern District of Florida Securities and Investment Fraud Initiative
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Michael J. De Palma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Paula Reid, Special Agent in Charge, U.S. Secret Service (USSS), Miami Field Office, Ronald Verrochio, Inspector in Charge, U.S. Postal Inspection Service (USPIS), Eric I. Bustillo, Regional Director, Securities and Exchange Commission (SEC), Jon T. Rymer, Inspector General, Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG), David Meister, Director, Division of Enforcement for the U.S. Commodity Futures Trading Commission (CFTC), Cindy Liebes, Director, Federal Trade Commission, Southeast Region (FTC), and Drew J. Breakspear, Commissioner, State of Florida’s Office of Financial Regulation, announce the most recent charges filed in connection with the Southern District of Florida Securities and Investment Fraud Initiative (the Initiative). The Initiative was first announced in December 2010 and designed to combat securities fraud and protect the interests of the investing public.
The Initiative was established to address an increase in investment and securities fraud schemes in the Southern District of Florida. Participating agencies include the U.S. Attorney’s Office, FBI, IRS, USSS, U.S. Postal Inspection Service, SEC, CFTC, FTC, FDIC, and the Florida Office of Financial Regulation. These law enforcement and regulatory agencies have shared intelligence and combined their resources to combat securities and investment fraud, including Ponzi schemes, affinity fraud schemes, prime bank/high-yield investment scams, business opportunity fraud, promoter/micro-cap/“pump and dump” schemes, foreign exchange (FOREX) frauds, false bankruptcy petitions, and other schemes to defraud individual investors. Among the goals of the Initiative is to alert the public about the prevalence of these types of schemes, educate the public on how to avoid falling prey to these schemes, and to highlight the law enforcement response to the problem.
The Southern District of Florida ranks number one in the nation in charging securities and investment fraud defendants and only second in the number of cases charged. Using the strike force model successfully developed in the health care and mortgage fraud areas, the Initiative has yielded similar success. Since its inception in December 2010, the Initiative has resulted in charges against 153 defendants in the Southern District of Florida, resulting in more than $ 1,777,025,689 billion in restitution ordered.
U.S. Attorney Wifredo A. Ferrer stated, “Fraud in the microcap markets is of increasing concern to our community as these markets have proven to be fertile grounds for fraud and abuse. Fraudsters know that these microcap stocks are difficult for the average investor and regulator to monitor. The defendants charged today abused their knowledge of the capital markets hoping to misappropriate money held in pension fund and brokerage accounts to enrich themselves and their co-conspirators.”
“The FBI will continue to target individuals who attempt to undermine the integrity of the securities industry by defrauding innocent investors,” said William J. Maddalena, Assistant Special Agent in Charge, FBI Miami Division. “If you are an individual investor, exercise due diligence before you invest your first dime. Ask yourself: Does it seem too good to be true? If the answer is ‘Yes,” then it probably is!”
IRS Acting Special Agent in Charge Michael De Palma stated, “IRS Criminal Investigation will continue to lend financial expertise to this joint venture to unravel schemes in complex financial crimes. Together with our law enforcement partners, we will use every tool at our disposal to pursue, investigate and bring swindlers to justice.”
Secret Service Special Agent in Charge Paula Reid stated, “This is a great example of how the law enforcement community in the Southern District of Florida continues to identify and penalize those insiders who misuse an honest system for selfish, personal gains. Unfortunately, these types of criminals chose to compromise the integrity of their trade and manipulate the law, policies, and procedures with no regard to trusting investors.”
“These criminals go to great lengths to mask their criminal schemes,” said Postal Inspector in Charge Ronald Verrochio. “We will continue to work with our law enforcement partners to uncover these schemes in an effort to prevent future victimization.”
“Interested only in lining their own pockets, the company officers and promoters charged today used underhanded tactics to cheat investors and manipulate penny stocks,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “Their utter disregard for investors underscores the importance of stamping out microcap fraud.”
Today, we are announcing charges against five individuals in the following four cases:
United States v. Jack Freedman, Case No. 13-60204-CR-Hurley
Jack Freedman, 58, of Fort Lauderdale, was charged by an Information alleging that he conspired to commit securities fraud. Freedman was a promoter for Green Planet Group, Inc., (GNPG) a publicly traded company whose stock was registered with the Securities and Exchange Commission. The defendant is charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of GNPG common stock. The case is being prosecuted by Assistant U.S. Attorney H. Ron Davidson.
United States v. Richard Greene and Peter Santamaria, Case No. 13-60203-CR-Marra
Richard Greene, 57, and Peter Santamaria, 57, both of Broward County, were charged by an Information alleging that the two conspired to commit securities fraud. The defendants are charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of VDO-PH International (VDPH) common stock. VDPH was a Nevada corporation that purported to engage in developing software for business telephone applications. The case is being prosecuted by Assistant U.S. Attorney H. Ron Davidson.
United States v. Mark Balbirer, Case No. 13-20605-CR-Cooke
Mark Balbirer, 49, of Coral Springs, was charged by an Information today charging him with conspiracy to commit mail fraud. Balbirer, a promoter for the South Florida Film Fund (SFFF), located in Broward County, Florida, is alleged to have engaged in a scheme to send illegal kick-back payments to hedge fund fiduciaries in exchange for their investments in SFFF. The case is being prosecuted by Assistant U.S. Attorney Michael Sherwin.
United States v. Sheldon Simon, Case No. 13-60202-CR-Marra
Sheldon Simon, 58, of Palm Beach County, Florida, was charged by an Information alleging that he committed wire fraud involving the artificial inflation of the securities market. Simon was a stock promoter for Ecoemissions Solutions, Inc. (ECMZ), a publicly traded company whose stock was registered with the Securities and Exchange Commission. Simon is charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of ECMZ common stock. Beginning in February 2011, Simon provided another person with advance ECMZ press releases which, once released, were designed and issued to give the investing public the false impression that the fraudulent purchases of ECMZ stock were induced by positive news about the company and to conceal the defendant’s scheme from the regulatory authorities. The case is being prosecuted by Assistant U.S. Attorney Roger Cruz.
The following defendants recently pled guilty:
United States v. Jeffrey L. Schultz, Case No. 13-60075-CR-Rosenbaum
Jeffrey L. Schultz, 62, of Ft. Lauderdale, FL, was charged by an Information on April 9, 2013. Schultz was the President and Chief Executive Officer of Redfin Network, Inc.(RFNN), a Nevada corporation whose common stock was traded in the Pink Sheets over-the-counter securities market. He was charged with securities fraud for engaging in the manipulation of RFNN’s stock price by providing improper payments to others. After entering a guilty plea in June, he is scheduled to be sentenced on August 26, 2013. The case is being prosecuted by Assistant U.S. Attorney Michael Sherwin.
United States v. Stephen F. Molinari, Case No. 13-60105-CR-Rosenbaum
Stephen F. Molinari, 49, was charged by an Information on May 1, 2013. Molinari was a previously registered securities broker who was also the chairman, chief executive officer and controlling shareholder of a mail order prescription drug business. He was charged with mail fraud in connection with his company. After entering a guilty plea in June, he is scheduled to be sentenced on August 26, 2013. The case is being prosecuted by Assistant U.S. Attorney Harold Schimkat.
The following defendants were recently sentenced:
United States v. Thomas Gaffney, Case No. 12-60224-CR- Dimitrouleas
Thomas Gaffney, 47, of Satellite Beach, FL, was charged by an Information on September 21, 2012. Gaffney was the President and Chief Executive Officer of Health Sciences Group, Inc. (HESG), a Delaware corporation whose common stock was traded in the Pink Sheets. He was charged with mail fraud associated with his company. After entering a guilty plea earlier this year, on August 8, 2013, he was sentenced to time served, followed by three years of supervised release with a special condition of eight months of home confinement. The case is being prosecuted by Assistant U.S. Attorney H. Ron Davidson.
United States v. Scott Haire and Douglas P. Martin, Case No. 12-60133-CR-Williams(s)
Scott Haire, 48, of Coral Springs, FL, and Douglas P. Martin, 47, of Loxahatchee, FL, were charged by a Superseding Indictment on September 20, 2012. Haire was President of Wound Management Technologies, Inc. (WDMN) a Texas corporation whose common stock was traded on the Pink Sheets. Haire was also the Chief Financial Officer of VHGI Holdings, Inc. (VHGI), a Delaware corporation purportedly a diversified holding company which was also traded on the Pink Sheets, that identified and acquired business assets. Douglas P. Martin was the Chief Executive Officer of VHGI. Haire and Martin were both charged with conspiracy to commit securities fraud involving VHGI, and Haire was charged with mail fraud and securities fraud in connection with a kickback scheme involving WDMN. Both plead guilty earlier this year. On May 14, 2013, Martin was sentenced to 12 months’ probation. On August 1, 2013, Haire was sentenced to 30 months in prison, followed by three years of supervised release. The case is being prosecuted by Assistant U.S. Attorneys H. Ron Davidson and Jodi Anton.
Mr. Ferrer commended the investigative efforts of the FBI, IRS-CI, USSS, USPIS, SEC, Federal Deposit Insurance Corporation, Office of Inspector General, U.S. Commodity Futures Trading Commission, Division of Enforcement, Federal Trade Commission, and the State of Florida’s Office of Financial Regulation.
An Indictment or Information is merely an accusation and defendants are presumed innocent until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Five Charged with Possession of 31 Stolen FirearmsRead the Press Release
Firearms Taken During Storage Unit BurglarySALT LAKE CITY – A federal grand jury returned a two-count indictment Wednesday morning charging five individuals with possession of 31 stolen firearms. The firearms were taken during a December 2012 burglary at a storage unit on Redwood Road in Salt Lake City. The five, who have prior felony convictions, also are charged with possession of firearms by a restricted person.
Charged in the indictment are Todd Shawn Cook, age 38, of West Bountiful; John Trenton Boren, age 40, of Salt Lake City; John David Hobbs, age 30, and Robert Lee Biggs, age 49, both of West Valley City; and Kenneth Richard Cahoon, age 38, of Centerville.
Several agencies participated in the investigation, including the ATF, Salt Lake City Police, Grantsville Police, the Bountiful Police Department, and the Davis County Metro Narcotics Unit, among others. The case is being prosecuted as a part of Utah Project Safe Neighborhoods, an initiative targeting gun violence and gang activity in Utah.
According to a complaint filed in the case, officers from the Salt Lake City Police Department responded to the Diamond Storage facility on Redwood Road on Jan. 10, 2013, to investigate the burglary of a unit. The lock on the unit had been cut and items taken from the storage unit. The exact date of the burglary was unknown at that time.
The complaint alleges that approximately one week earlier, on Jan. 2, 2013, Biggs was arrested for possessing a stolen vehicle and seven firearms which, given his status as a convicted felon, were illegal for him to have. The seven firearms were later identified as being among the firearms stolen from the Diamond Storage unit. As the investigation continued, law enforcement officers developed evidence they believe shows that Boren, Hobbs, and Cook were involved in the burglary and Cahoon and Biggs subsequently had possession of some of the stolen firearms.
Investigators also confirmed that Hobbs rented a unit at Diamond Storage that was approximately one building away from the burglarized unit. Records from the storage facility also showed that Hobbs accessed the property on Dec. 20, 2012.
The potential penalty for each count in the indictment is up to 10 years in prison and a $250,000 fine. The five defendants are in custody. Boren has a detention hearing Thursday at 10:30 a.m. before U.S. Magistrate Judge Paul Warner. Hobbs has a detention hearing Thursday at 2 p.m., also before Magistrate Judge Warner.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
Essex Woman Involved in Gifting Tables Pyramid Scheme Is SentencedRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that BETTEJANE HOPKINS, 68, of Essex, was sentenced today by Chief United States District Judge Alvin W. Thompson in Hartford to three years of probation, during which she is required to perform 300 hours of community service, for participating in a pyramid scheme known as “Gifting Tables.”
According to court documents, statements made in court and the evidence presented during a trial of her codefendants, a Gifting Table is configured as a four-level pyramid, with eight participants assigned to the bottom row, four participants assigned to the third row, two participants assigned to the second row, and one participant assigned to the top row. The top row participant is referred to as the “Dessert,” the two participants on the second row as “Entrees,” the four participants on the third row as “Soup and Salads,” and the eight participants on the bottom row as “Appetizers.” To join a Gifting Table, new participants were required to pay $5,000, typically cash, to the Dessert, that is, the participant occupying the top position on the pyramid. The $5,000 payment, which was fraudulently characterized as a gift, secured the new participant a position as an Appetizer on the bottom row. Participants progressed from the bottom row of the pyramid by recruiting additional people to join the Gifting Table. When eight new participants joined a Gifting Table, each having made a $5,000 “gift” to the person occupying the Dessert position at the top of the pyramid, the Dessert left the Gifting Table and kept the $40,000 paid by the eight new participants. That particular Gifting Table was then split, with the two participants occupying the Entree position on the second row moving to the top position (Dessert) of two new pyramids. The other incumbent members of the Gifting Table moved up a row on one of the two newly-formed pyramids, and the search for 16 new participants began. The success of the Gifting Tables depended on new participants joining and making the $5,000 “gift.”
From approximately 2008 to 2011, HOPKINS, Donna Bello and Jill Platt oversaw and profited from a Gifting Tables pyramid scheme operating primarily in Connecticut’s shoreline communities. The defendants recruited individuals to join the scheme, prepared and distributed materials to recruits that contained false representations, and affirmatively misrepresented to recruits and participants that Gifting Tables was not a pyramid scheme.
HOPKINS and her codefendants conspired to defraud the Internal Revenue Service by telling recruits and participants that monies given and received during the scheme were tax-free “gifts” under the IRS Code and that lawyers and accountants had approved Gifting Tables as legal ventures that generated tax-free proceeds. They also advised and counseled participants not to report on their tax returns monies received through their participation in the scheme, or deposit a large amount of cash into bank accounts, which would require the bank to report the sum to the IRS.
HOPKINS received at least $89,500 from her participation in the scheme, none of which was reported on her individual income tax return.
On December 18, 2012, HOPKINS pleaded guilty to one count of conspiracy to defraud the Internal Revenue Service.
On February 20, 2013, after a four-week trial, Bello and Platt were convicted of conspiracy to commit wire fraud and conspiracy to defraud the IRS, multiple counts of wire fraud, and filing false tax returns.
Yesterday, Chief Judge Thompson sentenced Bello to 72 months of imprisonment and three years of supervised release, and Platt to 54 months of imprisonment and three years of supervised release. Bello also was ordered to pay a $15,000 fine.
HOPKINS, Bello and Platt were ordered to pay restitution in the amount of $32,000 to several victims of the scheme.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation, and is being prosecuted by Assistant United States Attorneys Douglas P. Morabito and Peter S. Jongbloed.
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(203) 821-3722 [email protected]Eldridge Man Sentenced to 15 Years in Prison for Production of Child PornographyRead the Press Release
DAVENPORT, IA – On August 13, 2013, James Edward Hall, age 75, of Eldridge, Iowa, was sentenced by United States District Judge John A. Jarvey to 15 years in prison for production of child pornography, announced United States Attorney Nicholas A. Klinefeldt. Judge Jarvey also sentenced Hall to a life term of supervised release.
On November 12, 2012, Hall knowingly induced a minor male to conduct certain acts while Hall recorded the activity. On December 5, 2012, pursuant to a search warrant, a search was conducted at Hall’s residence. An onsite preview of Hall’s computer was conducted, and the video of the minor was found on the computer. Hall was interviewed and admitted that he had recorded the 15 year old juvenile male in Hall’s residence.
This case was investigated by the Scott County Sheriff’s Office, and was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.
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Drug Trafficking Organization Leader Sentenced to 40 Years in PrisonRead the Press Release
PHOENIX – On Aug. 12, 2013, Artemio Pena-Torrecillas, 26, of Culiacan, Sinaloa, Mexico, was sentenced by U.S. District Judge Susan R. Boltonto 40 years in prison. Pena-Torrecillas was found guilty by a federal jury on May 30, 2013, of conspiracy to possess with intent to distribute 500 grams or more of methamphetamine, conspiracy to commit money laundering, two counts of possession with intent to distribute methamphetamine, and two counts of possession of firearms in furtherance of a drug trafficking offense.
U.S. Attorney John S. Leonardo stated, “Through the efforts of a long-term investigation by federal and local law enforcement, a leader and other members of a drug trafficking organization have been removed from our community. Our neighborhoods are safer as a result of the removal of these drug dealers who possessed firearms to further their illegal enterprise.”
“Drugs and violence go hand in hand. This deadly combination must be met with combined law enforcement expertise at the local, state, county and federal levels,” said DEA Special Agent in Charge Doug Coleman. “DEA is committed to keeping violent drug traffickers off the streets and putting them where they belong—behind bars.”
Between January 2011 and April 2011, Pena-Torrecillas, along with Cruz Ortega-Ruano, led a Phoenix-based drug trafficking organization (DTO) responsible for the distribution of pound-quantities of exceptionally pure methamphetamine as well as the collection of narcotics proceeds. Law enforcement used sophisticated investigative techniques to dismantle the DTO resulting in a five-defendant indictment against members of the DTO. Pena-Torrecillas was responsible for obtaining pounds of methamphetamine from a source of supply, hiring drug couriers to drive vehicles equipped with sophisticated hidden compartments to transport the drugs, and distributing the drugs to customers. Other co-defendants including Gerardo Diarte-Lara, Francisco Torrecillas-Torres, and Juan Martin Tapia-Bernal assisted the DTO by acting as stash house operators and couriers. Through the investigation into this DTO, law enforcement seized approximately 12 pounds of methamphetamine, over $200,000 in narcotics proceeds, 60 firearms including assault rifles and handguns, high capacity firearm magazines, ammunition, and vehicles from the DTO at three separate stash houses operated by the organization.
In addition to Pena-Torrecillas, four co-defendants entered guilty pleas and were sentenced on Dec. 3, 2012, by U.S. District Judge Frederick J. Martone:- Cruz Ortega-Ruano, 32, of Mexico, was sentenced to 20 years in prison. He was responsible for coordinating the delivery of narcotics and collection of narcotics proceeds for the DTO.
- Gerardo Diarte-Lara, 28, of Mexico, was sentenced to 17.5 years in prison. He served as a trusted narcotics and narcotics proceeds courier for the organization.
- Francisco Torrecillas-Torres, 39, of Mexico, was sentenced to 10 years in prison for his role as a narcotics courier.
- Juan Martin Tapia-Bernal, 46, of Mexico, was sentenced to 23 years in prison. He was a stash house operator and courier for the DTO.
The investigation in this case was conducted by the Drug Enforcement Administration, Bureau of Alcohol, Tobacco, Firearms, and Explosives, Arizona Department of Public Safety, Mesa Police Department, Tempe Police Department, Navajo County Sheriff’s Office, and Pinal County Sheriff’s Office. The prosecution was handled by Jonell L. Lucca and John Z. Boyle, Assistant U.S. Attorneys, District of Arizona, Phoenix.
CASE NUMBER: CR-11-00731-PHX-SRB
RELEASE NUMBER: 2013-064_Pena-TorrecillasFor more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
District Man Sentenced to 14 Months in PrisonRead the Press Release
For Theft of More Than $340,000 in Government Funds
-Defendant Cashed in on Benefits in Name of Deceased Mother-WASHINGTON - Eugene Weatherford, 60, of Washington, D.C., was sentenced today to 14 months incarceration on a federal charge stemming from the theft of more than $340,000 in government money, announced U.S. Attorney Ronald C. Machen Jr., Michael McGill, Special Agent in Charge from the Social Security Administration’s Office of Inspector General, and Patrick E. McFarland, Inspector General for the Office of Personnel Management.
Weatherford pled guilty in May 2013 in the U.S. District Court for the District of Columbia to theft of government funds. He was sentenced by the Honorable Richard W. Roberts. Following his incarceration, Weatherford will be placed on supervised release for 36 months. Weatherford was also ordered to pay $346,522 in restitution and to complete 50 hours of community service.
In connection with the guilty plea, Weatherford admitted that from March 1999 through June 2012, he received and negotiated U.S. Treasury checks issued in the name of his mother, who died in February 1999. These checks included retirement benefits from the U.S. Social Security Administration and annuity benefits from the U.S. Office of Personnel Management.
According to the government’s evidence, following his mother’s death, Weatherford continued to receive and negotiate the U.S. Treasury checks in her name by depositing them into a joint bank account that they shared. In certain instances, Weatherford signed his own name in endorsing the backs of the checks issued in his mother’s name, and in other instances, he left the endorsement blank, aside from instructions to deposit the money into the joint bank account.
Weatherford admitted that, through this scheme, he obtained approximately $255,038 in Social Security retirement benefits and $91,484 in OPM annuity benefits, for a total illicit gain of approximately $346,522.In announcing the sentence, U.S. Attorney Machen, Special Agent in Charge McGill and Inspector General McFarland commended those who investigated the case from the Social Security Administration’s Office of Inspector General and OPM’s Office of Inspector General. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Angela Lawrence and Nicole Wattelet, Assistant U.S. Attorney Catherine Connelly, who assisted with forfeiture issues, and Assistant U.S. Attorney David Last, who prosecuted the case.
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Denver Insurance Executive Michael Van Gilder Sentenced for Insider TradingRead the Press Release
DENVER – Insurance executive Michael Van Gilder, age 45, of Denver, was sentenced today by Senior U.S. District Court Judge Wiley Y. Daniel to serve 5 years’ probation with the first 6 months in home detention with electronic monitoring, U.S. Attorney John Walsh and FBI Denver Special Agent in Charge Thomas Ravenelle announced. In the course of sentencing proceedings, Judge Daniel formally accepted Van Gilder’s guilty plea and adjudged him guilty of a count of securities fraud based on illegal insider trading. In addition, Judge Daniel ordered Van Gilder to pay a fine of $5,000.
The Van Gilder case was prosecuted in conjunction with the U.S. Attorney’s Office for the Southern District of New York. The U.S. Securities and Exchange Commission conducted a parallel civil investigation and substantially contributed to the criminal investigation of the case as well. Van Gilder was indicted by a federal grand jury on October 24, 2012. He pled guilty before Judge Daniel on May 1, 2013. He was sentenced today, August 14, 2013.
According to publicly available records, including the indictment and plea agreement, Van Gilder was the chief executive officer and a member of the board of directors of Van Gilder Insurance Company, an insurance business owned by the defendant’s family. Van Gilder was a close personal friend of a senior executive at Delta Petroleum. Delta Petroleum was a Denver-based oil and gas exploration and development company whose core area of operations was in the Gulf Coast and Rocky Mountain regions. The company’s stock was traded on NASDAQ under the ticker symbol “DPTR.” Van Gilder at times arranged for and provided insurance policies covering certain of Delta’s business operations.
From November 5, 2007 and continuing until at least January 9, 2008, Van Gilder committed securities fraud by trading in securities based on material, non-public information.
Specifically, on November 8, 2007, Delta publicly announced and filed with the U.S. Securities and Exchange Commission (SEC) a quarterly report disclosing its operational performance, revenues, earnings and other financial performance for its quarterly period which ended September 30, 2007. Three days prior to the disclosure, the financial publication Barron’s disseminated an article entitled “Day of Reckoning” focusing on Delta, expressing pessimism about the company and its stock. Following the publication of the article, the price of Delta’s common stock dropped $1.49 per share. Van Gilder was, at the time, a shareholder of Delta and held shares of its common stock and long-term call options to purchase Delta common stock in a brokerage account with Merrill Lynch and Company.
The Barron’s article was brought to Van Gilder’s attention. Based on the article, the defendant called his stockbroker and asked whether he should sell his shares of Delta. Later that day, Van Gilder spoke with the senior Delta executive. According to court documents, the executive conveyed to the defendant that Delta planned on announcing figures in its third quarter financial report that would not miss its third quarter forecasts and projections for its financial and operational performance, a first in a number of quarters that Delta would meet its projected numbers. At the time Van Gilder received this information, the financial and operational performance had not yet been publicly released and was not generally known to the investing public.
Based on this confidential material, Van Gilder decided not to sell his Delta investment but instead instructed his stockbroker to buy more Delta common stock on his behalf. As a result, the stockbroker purchased an additional 1,250 shares of Delta common stock at $15.55 per share. Several hours after he purchased the additional stock, Van Gilder emailed two friends and told them that the Barron’s article was “bogus” and that they should buy Delta stock because Delta “will hit their numbers.” In the November 8, 2007 third quarter results Delta disclosed earnings and other financial figures that were in line with or exceeding previous forecasts and predictions of its performance for the quarter.
In late November 2007, discussions also began for Delta to get a large cash infusion from a privately held investment company called Tracinda, owned by California resident Kirk Kerkorian, through a large equity investment by Tracinda in the oil and gas company. The indictment alleges that the Delta senior executive shared confidential information about the possible investment with defendant Van Gilder, and that, on November 26, 2007, following a series of calls and other communications, Van Gilder contacted his stockbroker and purchased an additional 1,750 shares of Delta common stock at $13.87 and $13.88 per share.
As court documents further relate, this Delta senior executive continued to share information about the confidential discussions about the contemplated Tracinda equity investment in Delta with defendant Van Gilder, as the confidential discussions progressed over the course of early December 2007. As a result, according to court documents, on December 8, 2007, Van Gilder, in turn, emailed his stockbroker to advise him that he “wanted to purchase as much Delta stock as possible” and two days later arranged through the stockbroker to purchase an additional 4,000 shares of Delta common stock at $17.64 per share. Within minutes of execution of these purchases, Van Gilder spoke by phone with a family member, who, several minutes later, instructed his own stockbroker to purchase Delta common stock.
On December 17, 2007, the senior Delta executive advised its board of directors of his discussions with Tracinda. The board authorized the executive to proceed with negotiations with Tracinda. That evening, the executive exchanged a series of text messages with the defendant regarding the board’s decision. Several hours later Van Gilder directed that $40,000 be wire transferred from a bank account to his Merrill Lynch brokerage account.
On December 19, 2007, a representative of Tracinda contacted the senior Delta executive and made an offer for Tracinda to purchase a one-third interest in Delta through a purchase of Delta’s common stock at $17 per share. At the time, Delta’s stock was trading at approximately $14.65 per share. Tracinda’s overture remained confidential. Van Gilder, knowing about the overture, purchased 200 call options, entitling him to purchase up to 20,000 shares of Delta common stock at $20 per share. Delta continued negotiations with Tracinda, and on December 22, 2007, Tracinda agreed to increase its stock purchase to $19 per share. The court documents state that in a series of calls Van Gilder was informed of the progress of the confidential negotiations. Immediately following one of these conversations between Van Gilder and the senior Delta executive, Van Gilder sent an email to two of his family members, with the subject line entitled “Xmas present.” In the email, he advised the family members to purchase Delta stock because “something significant will happen in the next 2-4 weeks.”
On December 24, 2007, Van Gilder, through his stockbroker, purchased 3,000 more shares of Delta common stock at prices ranging between $15.63 and $15.65 per share, and 90 more call options to purchase up to 9,000 additional shares at $20 per share. On December 28, 2007, during the course of working to finalize the Tracinda stock purchase, the senior Delta executive exchanged a series of cell phone text messages with Van Gilder. As a result, the defendant caused $272,212 from a bank account to be wire transferred into his Merrill Lynch brokerage account. The following day Van Gilder emailed his stockbroker, requesting the broker to “get it on Delta asap.”
On December 29, 2007, Delta’s board of directors approved a finalized stock purchase agreement for Tracinda to purchase approximately 35% of Delta’s common stock for $19 per share. On Monday, December 31, 2007, before the commencement of NASDAQ’s regular trading hours, Delta and Tracinda issued a press release announcing the stock purchase agreement. Within an hour of the commencement of regular trading hours that day, Van Gilder’s stockbroker purchased an additional 4,000 shares of Delta common stock at prices ranging from $19.28 to $19.33 per share, and 114 additional call options. By the close of regular hours trading that day, Delta’s common stock price had risen $3.34 from its previous close of $15.51. Over the course of the next three trading days, Delta’s stock price continued to rise, closing at $22.82 per share by January 4, 2008. On January 9, 2008, Van Gilder sold the 290 call options that he had purchased between December 19 and December 24, 2007, realizing a profit of approximately $86,100 on the transaction.
Immediately before sentencing, pursuant to the plea agreement in this case, Van Gilder provided the United States a check for $86,100 to repay these illegally derived trading gains.
“Working closely with our partners in the U.S. Attorney’s Office in the Southern District of New York, the FBI and the SEC, we were able to obtain a conviction and sentence of a well-known Denver executive whose greed got the best of him,” said U.S. Attorney John Walsh.
“To ensure our financial markets operate fairly, the FBI is committed to aggressively pursuing those who commit investment fraud,” said FBI Denver Special Agent in Charge Thomas Ravenelle. “I am confident the results of this investigation will deter others who seek to gain illegally from insider information.”
This case was investigated by the Federal Bureau of Investigation, New York and Denver Divisions, with the assistance of and working with the U.S. Securities and Exchange Commission.
Van Gilder was prosecuted by Assistant U.S. Attorney Ken Harmon and Special Assistant U.S. Attorney Michael Levy from the Southern District of New York.
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.
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Customs and Border Protection Officer and Wife Charged with Fraud over Education Reimbursement ClaimsRead the Press Release
A U.S. Customs and Border Protection officer living in Victoria, B.C. Canada, and his wife were arrested and charged today with conspiracy to defraud the U.S. with respect to claims for filing false claims for educational expenses, announced U.S. Attorney Jenny A. Durkan.
JOHN ERIC WEAVER and his wife JOY WEAVER appeared in U.S. District Court in Tacoma today. WEAVER had been assigned to desk duty since the investigation began, and has now been placed on paid administrative leave.According to the complaint, U.S. Customs and Border Protection (CBP) officers, like other federal employees stationed overseas, are eligible for an education allowance for their minor children. Those expenses include basic tuition for required courses and necessary elective courses, books and supplies required by the school, and local transportation on school days between the school and the employee’s home. The complaint alleges that in 2009 and 2010, JOY WEAVER created fictitious invoices from the school their children attended, claiming tuition that was twice the actual amount of tuition. JOHN ERIC WEAVER submitted the false documents and claims to the CBP Office of Administration. The fraud was discovered in June 2010 when a financial program specialist checked with the school to see if there were costs for books and supplies that should be reimbursed. When the school indicated the invoices did not reflect the accurate cost of tuition and had not been produced by the school, U.S. Immigration and Customs Enforcement’s (ICE) Office of Professional Responsibility (OPR) began its investigation. The invoices submitted by the WEAVERS were determined to be false. The complaint alleges that the couple filed false claims for education reimbursement of more than $8,000.
The charges contained in the complaint are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
Conspiracy to file a false claim is punishable by up to ten years in prison and a $250,000 fine.
The case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Office of Professional Responsibility (OPR) with the assistance of ICE’s Homeland Security Investigations, U.S. Customs and Border Protection’s Office of Internal Affairs, and the Department of Homeland Security’s Office of the Inspector General.The case is being prosecuted by Assistant United States Attorney Marci Ellsworth.
Chiropractor Sentenced to Five Years in Prison for Fraudulent Insurance SchemeRead the Press Release
Fort Myers, Florida - United States District Judge John E. Steele sentenced Dr. Stephen M. Lovell (55, Windermere) to five years in federal prison for conspiracy to commit health care fraud. As part of his sentence, the court also entered a money judgment in the amount of $1.695 million, the proceeds of the offense. A jury found Lovell guilty on February 28, 2013, following a two-week trial.
According to testimony presented at trial, Xtreme Care Rehabilitation Center Inc. (“Xtreme Care”) was operating in Cape Coral, Florida as an unlicensed health care clinic since 2009. The State of Florida licensing requirements were circumvented by the conspirators as a result of the purported exclusive ownership of these clinics by licensed health care practitioners, including licensed chiropractor Dr. Stephen M. Lovell. As a result of the purported ownership of the clinics by a licensed health care practitioner, these clinics avoided greater regulatory scrutiny. In actuality, other conspirators including Francisco Huici Fernandez and Ernesto Diaz were the true owners of the clinics.
In furtherance of the health care fraud, the conspirators caused individuals to be recruited to be involved in staged accidents and received injuries. These individuals would then go to Xtreme Care in exchange for payment. Xtreme Care then billed insurance companies by submitting false claims through the mail for alleged medically necessary treatments that these patients received. Treatment was either never provided to these patients or was not medically necessary. Upon payment by the insurance company, the proceeds of the fraudulent activity were then transferred to corporations created by the conspirators to launder the proceeds of the criminal activity. Ultimately, Lovell and his co-conspirators received the benefits of the fraudulent activity through payments or expenditures for themselves from the corporate bank accounts.
Francisco Huici Fernandez and Ernesto Diaz previously pleaded guilty for their roles in the case. On March 13, 2013, Fernandez was sentenced to five years and ten months in federal prison. On July 15, 2013, Diaz was sentenced to eight years in federal prison.This case was investigated by the Cape Coral Police Department, the Internal Revenue Service Criminal Investigation, the United States Secret Service, Hialeah Police Department, City of Miami Police, Florida Department of Financial Services, along with the assistance of the National Insurance Crime Bureau and the Federal Reserve Board - Office of the Inspector General. It was prosecuted by Assistant United States Attorney Jesus M. Casas.
Charleston Felon Who Purchased A Stolen Pistol Pleads Guilty to Federal ChargeRead the Press Release
CHARLESTON – A Charleston man pleaded guilty in federal court to possession of a stolen firearm, announced U.S. Attorney Booth Goodwin. Brian M. Smith, 30, illegally purchased a Kel Tec 9-millimeter pistol from a person on December 2, 2009. Smith pleaded guilty today before United States District Judge Thomas E. Johnston in Charleston.
Smith purchased the firearm in exchange for $100. The illegal firearm transaction took place at Smith’s Charleston residence. Smith knew or had reasonable cause to believe that the pistol was stolen. On December 3, 2009, Smith was approached by law enforcement officers at an automotive parts store located in Charleston. Police conducted a search of Smith and found the 9-millimeter pistol on his person.
Smith was previously convicted of three counts of burglary in October 2005 in the Circuit Court of Kanawha County. He did not have his rights to possess a firearm restored.
Smith faces up to 10 years in prison and a $250,000 fine when he is sentenced in November.The investigation was conducted by the Charleston Police Department, with assistance by the Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant United States Attorney Erik S. Goes is in charge of the prosecution.
This case is being brought as part of Project Safe Neighborhoods. Project Safe Neighborhoods is a nationwide commitment to reduce gun crime in the United States by networking existing local programs targeting gun crime.
Charges Filed Against Employee Leasing Firm Aracoma Contracting, Llc for Structuring Millions in Cash Out of Bank of MingoRead the Press Release
Company involved in scheme to bilk BrickStreet Mutual Insurance out of millions in insurance premiums also structured over $2 million in cash out of Bank of Mingo
CHARLESTON, W.Va. – An information was filed today alleging that a Williamson employee leasing firm, Aracoma Contracting, LLC (“Aracoma”), structured cash withdrawals from the company’s bank accounts held at the Bank of Mingo. In March 2013, Aracoma’s principals, Jerome Edward Russell, 50, of Williamson, W.Va., and Frelin R. Workman, 58, of Belfry, KY, pled guilty to their involvement in an honest services mail fraud scheme to defraud BrickStreet Mutual Insurance (BrickStreet) of insurance premiums and tax evasion. Today’s charges, filed against the corporation, allege that Aracoma generated the cash to bribe the BrickStreet auditor, Arville Sargent, 52, of Chapmanville, and pay employees cash wages was generated by structuring monies from accounts held at Bank of Mingo. “Structuring” involves the breaking down of cash transactions in amounts of $10,000 or less for the purpose of avoiding a financial institution’s reporting requirements to the Internal Revenue Service (IRS).
Acting on behalf of Aracoma, Russell and Workman formed a longstanding relationship with the Bank of Mingo, and, particularly, one of its employees at the bank’s Williamson branch. From January 2009 through April 2012, Aracoma, through its representatives including Russell and Workman, structured at least $2.2 million out of Bank of Mingo. Russell and Workman also enlisted the assistance of a number of individuals who agreed to appear at the Williamson branch of Bank of Mingo and cash cashier’s checks.
The cash from the bank withdrawals was later brought back to Aracoma’s office to be used to pay cash payroll.
During the scheme, Aracoma sent advance forms to the Williamson branch of Bank of Mingo prior to the structured cash withdrawals, so the bank could prepare the cash ahead of time. Bank of Mingo would then prepare cashier’s checks in the names of the identified individual or individuals and pre-count the requested cash. When an individual or individuals from Aracoma appeared at a Bank of Mingo teller window, a bank representative presented them with the cashier’s check in the individual’s name. The check was immediately endorsed and the individual was given the pre-counted cash.
Despite numerous occasions when multiple individuals appeared at the same teller window at the Williamson branch of Bank of Mingo to endorse cashier’s checks that exceeded $10,000 on Aracoma’s line of credit, Bank of Mingo routinely failed to file a currency transaction report, as required by law.
An investigation determined that the cash structured out of Bank of Mingo by Aracoma was used to pay the company’s payroll in cash, therefore avoiding the payment of employment taxes and also to make bribe payments to a former BrickStreet field auditor, Arville Sargent.Sargent, 52, of Chapmanville, previously pleaded guilty in March to honest services mail fraud and tax evasion. As a field auditor, Sargent purposely allowed four “employee leasing” companies, including Aracoma, to falsify documents drastically understating their actual payroll. In exchange for saving those policyholders millions of dollars in insurance premiums rightfully owed to BrickStreeet, Sargent accepted hundreds of thousands of dollars in cash bribes and other things of value, including a Yamaha Rhino all-terrain vehicle.
Russell and Workman each face up to 25 years in prison and a $500,000 fine when they are sentenced on August 22, 2013.
Sargent faces up to 25 years in prison and a $500,000 fine when he is sentenced on August 28, 2013.
The FBI, the IRS, the West Virginia State Police and the West Virginia Insurance Commission conducted the investigations. This investigation was also handled in coordination with the United States Attorney’s Office for the Western District of Virginia and the IRS’s local Abingdon, Virginia Resident Agency. Assistant United States Attorney Thomas Ryan is in charge of the prosecutions.
Cary Collector of Child Pornography Sentenced to 180 Months ImprisonmentRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announced that in federal court today JOHN WARREN COURTNEY, 47, was sentenced by Senior United States District Court Judge Malcolm J. Howard to 180 months imprisonment, 15 years of supervised release and a $4,000 fine for receipt of child pornography.
COURTNEY pled guilty to a Criminal Information filed on February 15, 2013, charging him of one count of Receipt of Child Pornography. According to the investigation during the years of 2011 and 2012, COURTNEY did knowingly receive 4,883 visual depictions of minors engaged in sexually explicit conduct on files containing digital images and 246 videos, all in violation of Title 18, United States Code, Section 2252(a)(2). The defendant was caught attempting to photograph a child urinating in a public bathroom at Adventure Landing in Raleigh. A subsequent examination of the defendant’s computer revealed numerous videos of nude and partially nude young boys in public restrooms at local restuarants and a swimming pool.
This case was part of the Project Safe Childhood initiative, a national program aimed at ensuring that criminals exploiting children are effectively prosecuted by making full use of all available law enforcement resources at every level. For more information about this important national project, Project Safe Childhood, go to www.projectsafechildhood.gov.
Investigation of this case was conducted by the Federal Bureau of Investigation (FBI) and the Raleigh Police Department. Assistant United States Attorney Jay Exum prosecuted the case for the United States.
Carroll County Company Founder Sentenced to over 3 Years in Prison for $1.9 Million Securities FraudRead the Press Release
Founder and Former President of Gargoyles, Inc. Misrepresented
Company Sales and Customers to InvestorsBaltimore, Maryland - U.S. District Judge Richard D. Bennett sentenced John F. “Jef” Curran, III, age 44, of Westminster, Maryland today to 37 months in prison, followed by three years of supervised release, for securities fraud, in connection with the sale of $1.9 million worth of stock in his company, Gargoyles, Inc. Judge Bennett also ordered that Curran forfeit $1,963,065, and pay restitution of $1,250,768 to repay victims for the money they invested in Gargoyles, Inc.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; and Postal Inspector in Charge Gary R. Barksdale of the U.S. Postal Inspection Service - Washington Division.
According to the statement of facts that is part of his plea agreement, Curran was the founder, president and single largest shareholder of Gargoyles, Inc., located in Westminster, Maryland. Gargoyles was a self-described “advanced materials application company,” purportedly doing business with customers in a variety of settings including the military and law enforcement.From January 2009 to September 2010, Curran sold approximately $1.9 million worth of Gargoyles stock to investors. Curran admitted that he falsely represented to investors and potential investors that Gargoyles had customers, sales contracts and purchase orders for its products when, in fact, it did not. Curran also misrepresented his education to investors.
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 FBI and U.S. Postal Inspection Service for their work in the investigation and thanked the Securities Division of the Office of the Maryland Attorney General for its assistance in the case. Mr. Rosenstein praised Assistant U.S. Attorney Leo Wise, who prosecuted the case.
California Man, Martin Vellozzi, Pleads Guilty to Mail FraudRead the Press Release
MARTIN VELLOZZI, age 56, of Rancho Palos Verdes, California, pleaded guilty as charged today before U.S. District Judge Susie Morgan to one-count Bill of Information charging him with mail fraud for his role in creating and selling non-authentic Merceds-Benz diagnostic equipment, announced U.S. Attorney Dana J. Boente.
According to the court documents, VELLOZZI owned LMV Industries, a California-based company that offered technical information and support for Mercedes-Benz automobiles. Between about 2005 and July 2012, VELLOZZI also produced and sold unauthorized and non-authentic versions of the Mercedes-Benz Star Diagnostic System (SDS), a hand-held computer containing proprietary, confidential software. Such diagnostic devices are used by mechanics to identify problems with and assure the safety of motor vehicles employing electronic control systems. By selling non-authentic, unauthorized SDS that bore Mercedes-Benz logos and trademarks, VELLOZZI mislead purchasers into thinking that the equipment he was selling was authentic and authorized by Daimler AG, when, in fact, they were not.
Furthermore, according to court documents, the “real” SDS sold for between $8,300 and $22,000 each; VELLOZZI sold the non-authentic SDS, which contained Mercedes-Benz logos and trademarks, for approximately $6,000. VELLOZZI worked with a company in Durham, North Carolina and a company in Harahan, Louisiana to manufacture, sell, and repair the “fake” SDS, which were then sent through commercial interstate carrier, including Federal Express and the United Parcel Service, to the purchasers. On some occasions, when one of the fake SDS units VELLOZZI sold would break, the Harahan-based company would provide fixes or “patches” either to VELLOZZI or directly to the customer. VELLOZZI also used cracking software, called “keygens” to “unlock” SDS software, override Mercedes-Benz’s security protections, and make the software (and software updates) work on his unauthorized SDS. In total, VELLOZZI sold approximately ninety-five (95) non-authentic SDS, at approximately $6,000 each.
VELLOZZI faces a maximum term of imprisonment of 20 years, followed by up to 3 years of supervised release, and a $250,000 fine. Sentencing is scheduled for November 20, 2013 at 2:00 pm.
This case is being investigated by agents from the Federal Bureau of Investigation. The prosecution of this case is being handled by Assistant United States Attorney Jordan Ginsberg.
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CHARGING DOCUMENTS: U.S. V. Javier Martin-Artajo and U.S. V. Julien GroutRead the Press Release
U.S. v. Javier Martin-Artajo Complaint
U.S. v. Julien Grout ComplaintBrandon Man Pleads Guilty to Killing Federally Protected Black BearRead the Press Release
Jackson, Miss. -- Ryan C. Murphy, 32, of Brandon, Mississippi, pled guilty in U.S. District Court today to killing a Louisiana Black Bear, a federally protected animal under the Endangered Species Act, U.S. Attorney Gregory K. Davis announced.
Murphy killed the Louisiana Black Bear while bow hunting on November 16, 2012, in Issaquena County, Mississippi. Murphy was immediately sentenced today by U.S. Magistrate Judge F. Keith Ball to a fine of $10,000. He was also ordered to pay $10,000 in restitution to the State of Mississippi and $5,000 to the BEaR Foundation, a non-profit foundation for the restoration of Black Bears in the State of Mississippi. Murphy was placed on two years of probation and prohibited from hunting worldwide for a period of two years. His bow was forfeited as part of his sentence.
This case was investigated by the Mississippi Department of Wildlife, Fisheries, & Parks and the United States Federal Fish and Wildlife Service. It was prosecuted by Assistant U.S. Attorney Darren LaMarca.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:
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Boise Man Pleads Guilty to Conspiracy to Launder Money in Treasure Valley “Spice” CaseRead the Press Release
Defendants Charged with Multiple Counts of Conspiring to Distribute “Spice,” Money Laundering, Smuggling
BOISE – William B. Mabry, 45, of Boise, Idaho, pleaded guilty yesterday in United States District Court to count four of the indictment charging him with conspiracy to launder money, U.S. Attorney Wendy J. Olson announced.
In court yesterday, Mabry admitted that beginning in March 2011, he knowingly entered into a conspiracy with other individuals to conduct financial transactions in connection with a “spice” manufacturing and distribution business. Mabry admitted that he knowingly participated and assisted in the financial activity of the business by engaging in bank and other financial transactions, through both domestic and foreign financial institutions. The transactions consisted of the proceeds of prior illegal spice sales and other specified unlawful activity and, in many cases, the transactions conducted through financial institutions separately consisted of criminally derived property of a value greater than $10,000; most of the transactions occurred in Idaho, Washington and California.
The charge of conspiracy to launder money is punishable by to 20 years in prison, a maximum fine of $500,000 or twice the value of the property involved in the transaction, whichever is greater, and up to three years of supervised release.
Sentencing is set for November 4, 2013, before U.S. District Judge Edward J. Lodge at the federal courthouse in Boise.
Mabry and four co-defendants were indicted by a federal grand jury on May 14, 2013, on charges of conspiracy to distribute a controlled substance analogue; conspiracy to smuggle goods into the United States; conspiracy to sell and transport drug paraphernalia; and conspiracy to launder money. Mark A. Ciccarello, Robert A. Eoff, Troy L. Palmer and Holly F. Ciccarello are set for trial on October 22.
The indictment alleges that between March 1, 2011 and July 9, 2012, within the states of Idaho, Alaska, California, Washington, and Wisconsin, the defendants conspired to purchase and import from China chemicals known as AM2201, UR-144, and XLR11, which they used to treat innocuous plant matter to make “spice”—a synthetic cannabinoid similar to substances listed in Schedule I of the Controlled Substances Act. The indictment further alleges that one or more of the defendants conspired to sell and transport drug paraphernalia for sale, and that they conspired to launder money illegally obtained through their drug, importation and paraphernalia violations. The government is seeking forfeiture of proceeds derived from the alleged criminal activities.
The case is the result of a joint investigation of the Organized Crime and Drug Enforcement Task Force (OCDETF), which included the cooperative law enforcement efforts of the Drug Enforcement Administration (DEA), U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Internal Revenue Service-Criminal Investigation, Boise Police Department, Meridian Police Department, Ada County Sheriff’s Office, Canyon County Sheriff’s Office, and Nampa Police Department. Other federal agencies participating in the OCEDTF program include the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Federal Bureau of Investigation (FBI), and U.S. Marshals Service.
The OCDETF program is a federal, multi-agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations.
Attorney General, Manhattan U.S. Attorney, and FBI Assistant Director-In-Charge Announce Charges Against Two Derivatives Traders in Connection with Multi-Billion Dollar Trading Loss at JPMorgan Chase & CompanyRead the Press Release
Eric Holder, the Attorney General, Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of criminal Complaints against JAVIER MARTIN-ARTAJO and JULIEN GROUT for their alleged participation in a conspiracy to hide the true extent of losses in a credit derivatives trading portfolio maintained by the Chief Investment Office (“CIO”) of JPMorgan Chase & Company (“JPMorgan”). MARTIN-ARTAJO served as a Managing Director and Head of Credit and Equity Trading for the CIO, and GROUT was a Vice President and derivatives trader in the CIO.
Attorney General Eric Holder said: “Our financial system has been hurt in recent years not just by risky bets gone bad, but also, in some cases, by criminal wrongdoing. We will not stop pursuing those who violate the public trust and compromise the integrity of our markets. I applaud U.S. Attorney Bharara, his colleagues in the Southern District of New York, and all of our partners on the President’s Financial Fraud Enforcement Task Force for their longstanding commitment to combating all forms of financial fraud. And I pledge that we will continue to move both fairly and aggressively to bring the perpetrators of financial crimes to justice.”
Manhattan U.S. Attorney Preet Bharara said: “As alleged, the defendants, Javier Martin-Artajo and Julien Grout, deliberately and repeatedly lied about the fair value of billions of dollars in assets on JPMorgan's books in order to cover up massive losses that mounted month after month at the beginning of 2012, which ultimately led JPMorgan to restate its losses by $660 million. The defendants’ alleged lies misled investors, regulators, and the public, and they constituted federal crimes. As has already been conceded, this was not a tempest in a teapot, but rather a perfect storm of individual misconduct and inadequate internal controls. The difficulty inherent in precisely valuing certain kinds of financial positions does not give people a license to lie or mislead to cover up losses; it does not confer a license to create false books and records or to make false public filings. And that goes double for handsomely-paid executives at a public company whose actions can roil markets and upend the economy.”
FBI Assistant Director-in-Charge George Venizelos said: “The complaints tell a story of a group of traders who got in over their heads, and to get out, doubled down on a series of risky positions. In the first quarter of 2012, boom turned to bust, as the defendants, concerned about losing control to other traders at the bank, fudged the numbers on their daily book, and in some cases completely made them up. It brought a whole new meaning to cooking the books.”
In a separate action, the U.S. Securities and Exchange Commission (“SEC”) announced civil charges against MARTIN-ARTAJO and GROUT.
According to the allegations in the criminal Complaints unsealed today in Manhattan federal court:
JPMorgan’s CIO, is a component of the bank’s Corporate/Private Equity line of business, which, according to the bank, exists to manage the bank’s excess deposits – approximately $350 billion in 2012. Since approximately 2007, the CIO’s investments have included a so-called Synthetic Credit Portfolio (“SCP”), which consists of indices and tranches of indices of credit default swaps (“CDS”). A credit default swap is essentially an insurance contract on an underlying credit risk, such as corporate bonds. CDS indices are collections of CDSs that are traded as one unit, while CDS tranches are portions of those indices, usually sliced up by riskiness.
Under U.S. Generally Accepted Accounting Principles (“GAAP”) and according to JPMorgan policy, CDS traders were required to value the securities in their portfolios on a daily basis. Those values, or “marks,” became part of the bank’s daily books and records. Because CDS indices and tranches are not traded over an exchange, traders are required to look to various data points in order to value their securities, such as actual transaction prices, price quotations from market makers, and values provided by independent services (such as Totem and MarkIT). JPMorgan’s accounting policy, which used the same methodology employed by the independent services, provided that the “starting point for the valuation of a derivatives portfolio is mid-market,” meaning the mid-point between the price at which market-makers were willing to buy or sell a security. Through about January 2012, CIO traders generally marked the securities in the SCP approximately to this mid-point, which they sometimes referred to as the “crude mid.”
The SCP was extremely profitable for JPMorgan – it produced approximately $2 billion in gross revenues since its inception – but in the first quarter of 2012, the SCP began to sustain consistent and considerable losses. From at least March 2012, MARTIN-ARTAJO and GROUT conspired to artificially manipulate the SCP marks to disguise those losses. They did so, among other reasons, to avoid losing control of the SCP to other traders at JPMorgan.
Although MARTIN-ARTAJO pressured his traders, including GROUT, to “defend the positions” in early 2012 by executing trades at favorable prices, the SCP lost approximately $130 million in January and approximately $88 million in February. In March 2012, when the market moved even more aggressively against the CIO’s positions, MARTIN-ARTAJO specifically instructed GROUT and the head SCP trader, Bruno Iksil (who has entered a non-prosecution agreement), not to report losses in the SCP unless they were tied to some identifiable market event, such as a bankruptcy filing by a company whose bonds were in the CDS index. MARTIN-ARTAJO explained that “New York” – meaning, among others, JPMorgan’s Chief Investment Officer – did not want to see losses attributable to market volatility.
By mid-March 2012, GROUT was explicitly and admittedly “not marking at mids.” He maintained a spreadsheet that kept track of the difference between the price that GROUT recorded in JPMorgan’s books and records, on the one hand, and the “crude mids,” on the other. By March 15, 2012, according to GROUT’s spreadsheet, the difference had grown to approximately $292 million. In a recorded on-line chat the same day, GROUT explained that he was trying to keep the marks for most of the SCP’s positions “relatively realistic,” with the marks for one particular security “put aside.” That is, GROUT mis-priced that one particular security, of which the SCP held billions of dollars’ worth, by the full $292 million. The following day, Iksil told MARTIN-ARTAJO that the difference had grown to $300 million, and “I reckon we get to 400 [million] difference very soon.” In a separate conversation, Iksil remarked to GROUT that “I don’t know where he [MARTIN-ARTAJO] wants to stop, but it’s getting idiotic.”
In the days that followed, GROUT at times ignored Iksil’s instructions on how to mark the positions, and instead, followed MARTIN-ARTAJO’s mandate to continue to hide the losses. By March 20, 2012, Iksil insisted that GROUT show a significant loss: $40 million for the day. In a recorded call, MARTIN-ARTAJO excoriated Iksil, finally emphasizing, “I didn’t want to show the P&L [the profit and loss].” Throughout the remainder of March 2012, while Iksil continued to try to insist that MARTIN-ARTAJO acknowledge the reality of the losses, GROUT, at MARTIN-ARTAJO’s instructions, continued to hide them. As of March 30, 2012 – the last day of the first quarter of 2012 – GROUT continued to fraudulently understate the SCP’s losses. These incorrect figures in the SCP were not only integrated into JPMorgan’s books and records, but also – as MARTIN-ARTAJO and GROUT were well aware – into the bank’s quarterly financial filing for the first quarter of 2012 with the SEC.
During the course of the mis-marking scheme carried out by MARTIN-ARTAJO and GROUT, the CIO’s Valuation Control Group (“VCG”) was supposed to serve as an independent check on the valuations assigned by traders to the securities that the traders were marking at month-end. The VCG, however, was effectively only staffed by one person and did not perform any independent review of the valuations. Instead, the VCG tolerated valuations outside of the bid-offer spread as presented by MARTIN-ARTAJO and other CIO traders.
In August 2012, after MARTIN-ARTAJO and GROUT were stripped of their responsibilities over the SCP and their scheme was discovered, JPMorgan restated its first quarter 2012 earnings, and recognized an additional loss of $660 million in net revenue attributable to the mis-marking of the SCP. JPMorgan announced that it was restating its earnings because it had lost confidence in the “integrity” of the marks submitted by GROUT, at MARTIN-ARTAJO’s direction.
MARTIN-ARTAJO, 49, a Spanish citizen, and GROUT, 35, a French citizen, are charged in one count of conspiracy; one count of falsifying the books and records of JPMorgan; one count of wire fraud; and one count of causing false statements to be made in JPMorgan’s filings with the SEC. They each face a maximum sentence of five years in prison on the conspiracy count, and 20 years in prison on each of the three remaining counts in the Complaints, and a fine of the greater of $5,000,000 or twice the gross gain or gross loss as to certain of the offenses.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.
Mr. Bharara praised the work of the FBI. He also thanked the SEC and the Department of Justice’s Office of International Affairs.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Eugene Ingoglia and Matthew L. Schwartz are in charge of the prosecutions.
The charges contained in the Complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
U.S. v. Javier Martin-Artajo Complaint
U.S. v. Julien Grout ComplaintAtlanta Attorney Admits to Stealing over $300,000 from Law Firm ClientsRead the Press Release
ATLANTA - Thomas Dickson has pleaded guilty to defrauding more than 50 clients out of funds that were deposited into his law firm’s trust account.
“As a lawyer, Dickson had a duty to act with his clients’ best interests in mind,” said United States Attorney Sally Quillian Yates. “Instead, he used his position at the law firm to steal from clients he was supposed to protect.”
Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated: “The defendant in this matter displayed a reckless disregard for his firm’s many clients by diverting monies due them to his personal account. The FBI will continue to investigate such cases of criminal misconduct and bring them forward for prosecution.”
According to United States Attorney Yates, the charges and other information presented in court: In December 2008, while employed with a large Atlanta law firm, Dickson was retained by tenants in common (TIC) owners of commercial real estate purchased through DBSI, Inc. DBSI, Inc., an Idaho based company, sold TIC investments or fractional ownership interests in commercial real estate to investors across the country. In November 2008, DBSI filed bankruptcy and many of the investors lost their life savings. In December 2008, several TIC property owners retained Dickson to represent their interests in the bankruptcy action. In 2009, Dickson encouraged TIC owners to transfer rents and other income into his law firm’s trust account.
Between February 24, 2010, and January 6, 2012, Dickson directed his law firm’s accounting department to unlawfully transfer over $300,000 from the law firm’s trust account to a business checking account in Plano, Texas. Dickson led the firm’s accounting department to believe that the funds were being transferred on behalf of TIC clients to pay third party expenses. Instead the money was transferred into a personal checking account controlled by Dickson and his wife.
In January 2012, the law firm initiated an internal investigation and Dickson, 52, of Atlanta, Ga., was terminated. In March 2013, Dickson was disbarred by the Georgia State Bar.The charge of wire fraud in this case carries a maximum sentence of 20 years in prison and a fine of up to $250,000.00.
Sentencing is scheduled for October 30, 2013, at 10:00 a.m. before United States District Judge Willis B. Hunt.
This case is being investigated by the Federal Bureau of Investigation.
Assistant United States Attorney Jeffrey Brown is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.Allentown Mortgage Co.'s Former Manager Sentenced for FraudRead the Press Release
PHILADELPHIA – Joel Tillett, 36, of Whitehall, PA, was sentenced today to four years in prison and ordered to pay restitution of $979,562.20 in connection with a mortgage fraud conspiracy. Tillett, the former general manager of Madison Funding, Inc., a now-defunct Allentown mortgage loan origination company, pleaded guilty on May 14, 2013 to conspiracy and to uttering and publishing false documents to obtain a loan insured by the Department of Housing and Urban Development (HUD). The fraud conspiracy caused mortgage lending businesses to issue millions of dollars’ worth of loans that were based on false information.
Between October 2006 and at least June 2008, Tillett conspired to defraud mortgage lenders by submitting loan applications that contained false information about the borrowers which was often supported by falsified, forged, and altered documents. The mortgage lenders, which included Washington Mutual Inc., Countrywide Home Loans, Mortgage IT, International Mortgage Corporation, and Security Atlantic Mortgage Company, relied on the fraudulent representations and provided Madison Funding’s clients with millions of dollars in loans to purchase real estate. Each funded loan generated thousands of dollars’ worth of commissions to Madison Funding and its employees. Many of those loans have since defaulted and some of them were insured by the Federal Housing Administration (“FHA”), which was an agency within HUD. Fannie Mae incurred losses of $1.2 million after purchasing approximately 65 mortgages that were originated at Madison Funding during the time frame of the scheme.
In addition to the prison term, U.S. District Court Judge Harvey R. Bartle ordered three years of supervised release. Tillett must also pay a $200 special assessment.
The case was investigated by the Department of Housing and Urban Development Office of the Inspector General, the Federal Deposit Insurance Corporation Office of Inspector General, and the Federal Housing Finance Agency Office of Inspector General. It is being prosecuted by Assistant United States Attorney Mark B. Dubnoff.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Alabama State Employee Sentenced to Prison for Stolen Identity Refund FraudRead the Press Release
Chequlia Motley of Montgomery, Ala., was sentenced yesterday to serve 36 months in prison for conspiracy and aggravated identity theft, announced Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division and U.S. Attorney for the Middle District of Alabama George L. Beck Jr. Motley pleaded guilty to those charges in May 2013.
According to Motley’s plea agreement, she was a former state employee who stole identities from state databases and sold them to co-conspirators. As evidence presented at the sentencing hearing showed, Motley had previously worked for the Alabama State Employees’ Insurance Board and stole the personal information of over 100 state workers and their family members from the databases maintained by the board. She provided this information to Veronica Temple, Yolanda Moses and Barbara Murry, who used the stolen identities to file false tax returns that fraudulently requested tax refunds from the IRS. Temple, Moses and Murry were previously convicted and each sentenced in February to 57 months in prison.
In addition to the prison sentence, Motley was ordered to pay $179,946 in restitution to the Internal Revenue Service (IRS).
The case was investigated by agents of the IRS - Criminal Investigation. Trial Attorneys Michael Boteler and Jason Poole of the Justice Department’s Tax Division prosecuted the case, with the assistance of the U.S. Attorney’s Office for the Middle District of Alabama and, in particular, Assistant U.S. Attorney Todd Brown.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Alabama Defendant Who Received Fraudulent Federal Refunds into His Bank Account Receives Two Years in Federal PrisonRead the Press Release
Montgomery, Alabama - Anton Miles was sentenced today to two years in federal prison for his involvement in a stolen identity refund fraud scheme, United States Attorney George L. Beck, Jr., and the Internal Revenue Service (IRS) announced. On May 9, 2013, Miles pleaded guilty to one count of theft of government funds.
According to court documents, in January 2012, Miles opened a bank account under his name d/b/a A and M Mobile Car Wash. Between January 2012 and March 2013, approximately 120 false federal income tax refunds that claimed approximately $164,526 were directed to Defendant’s bank account. The Defendant withdrew the fraudulent proceeds deposited into his bank account. The tax refunds were generated through the filing of false tax returns that used stolen identities.
The case was investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Michael Boteler and Charles Edgar, Jr. of the United States Department of Justice, Tax Division, and Assistant United States Attorney Todd Brown, prosecuted the case.
Additional information about the Justice Department's Tax Division and its enforcement efforts may be found at justice.gov/tax.
PRESS CONTACT: Clark Morris
Email: [email protected]
Telephone: (334) 551-1755
Fax: (334) 223-7617Accused Bank Robber Charged with EscapeRead the Press Release
Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced today that a federal grand jury in Cleveland, Ohio, returned an indictment charging Perry T. Johnson, age 22, of Cleveland Ohio, in connection with his escape from the Bedford Heights Jail on August 12, 2013.
The indictment charges that Mr. Johnson escaped from the Bedford Heights Jail, where he was ordered detained by U.S. Magistrate Judge Kenneth S. McHargh, pending the resolution of a separate criminal case. In that case, Johnson pled guilty to robbing two CVS pharmacies in November 2012, brandishing a firearm in connection with one of the robberies, and possessing with the intent to distribute oxycodone that he stole from one of the CVS pharmacies. He is scheduled to be sentenced on August 20, 2013, in connection with that case.
If convicted, the defendant's sentence will be determined by the Court after review of factors unique to this case, including the defendant's prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
This case is being prosecuted by Assistant U.S. Attorneys Matthew B. Kall and Margaret A. Sweeney, following investigation by the U.S. Marshal Service and the Bedford Heights Police Department.
Acadia Parish Rice Mill Owner Pleads Guilty and Is Sentenced for Failure to Report Discharge of Waste Oil into BayouRead the Press Release
LAFAYETTE, La. – United States Attorney Stephanie A. Finley announced today that Southwest Rice Mill Inc. president and owner Frederick Marque De La Houssaye, 60, of Crowley, La., pleaded guilty to one count of negligent discharge of hazardous materials. De La Houssaye was then sentenced to serve 24 months of probation and 160 hours of community service. He was also ordered to pay a $2,500 fine. Southwest Rice Mill was ordered to pay restitution of $1, 012,401. United States Magistrate Judge Patrick J. Hanna handed down the sentence.
According to evidence presented at the guilty plea, from May 27, 2011 to May 31, 2011, De La Houssaye and Southwest Rice Mill Inc. in Crowley, La., negligently discharged waste oil into navigable waters. Mill laborers were performing routine maintenance on May 27, 2011 on a railroad spur, which in part the mill leased from Acadiana Railroad, in an effort to maintain drainage ditches for the mill and Acadiana Railroad. While performing the spur maintenance near the mill with an excavator, a laborer negligently struck the valve of an above-ground storage tank containing waste oil, which is a hazardous substance. After the valve was struck, oil began to shoot 10 to 15 feet from the tank. The tank was near a drainage ditch, and the oil spilled and accumulated in the ditch. The laborer who struck the valve called his supervisor, De La Houssaye. About an hour later, De La Houssaye arrived at the scene. An unknown amount of oil had spilled from the tank and flowed into Bayou Blanc. De La Houssaye ignored his duty to report the spill, and he and the laborers later left the site.Robert Burke, the Crowley District Fire Chief, received a call May 28, 2011 from a resident reporting an oil spill on Bayou Blanc. Burke traced the oil spill back to the drainage ditch at the mill. De La Houssaye told investigators he planned to deal with it after the Memorial Day holiday, which was May, 31, 2011.
Environmental authorities were called to the scene to investigate and began cleanup efforts. The U.S. Coast Guard, U.S. Environmental Protection Agency, Louisiana Department of Environmental Quality, and others conducted an operation that cost federal, state, and local authorities $1, 012,401.
“My office will prosecute to the fullest extent of the law those who pollute our air, land and water,” Finley stated. “Companies and their employees will be held accountable for the damage they do to the environment. Hopefully this case serves as a deterrent to those who would ignore the environmental laws of this nation and state.”
“This country’s environmental laws are aimed at keeping inland waterways from becoming dumping grounds for waste materials,” said Ivan Vikin, Special Agent in Charge of EPA’s criminal enforcement program in Louisiana. “After the rupture of an oil storage tank on his property, the defendant failed to notify authorities who could have minimized the damage caused by thousands of gallons of untreated waste oil flowing directly into Bayou Blanc. Today’s guilty plea demonstrates that companies and their senior managers will be held responsible for environmental crimes.”
“This is an example of the consequences people face when they choose to violate the environmental regulations,” Louisiana Department of Environmental Quality Secretary Peggy Hatch said. “We have seen great strides in the environment throughout the state because the majority of the people care about the environment and want to do the right thing. Hopefully, today’s events will serve as an incentive for everyone to abide by the environmental regulations.”
The U.S. Environmental Protection Agency, U.S. Coast Guard, Louisiana Department of Environmental Quality and Crowley District Fire Department conducted the investigation and cleanup. Assistant U.S. Attorney Myers P. Namie prosecuted the case."Duffel Bag Bandit" Indicted in Idaho for Bank RobberyRead the Press Release
BOISE – U.S. Attorney Wendy J. Olson announced the indictment today of a Boise man currently living in Shreveport, Louisiana, for the March 2013 robbery of a Boise bank.
A one-count indictment filed today in United States District Court for the District of Idaho charges Gerald Edward Massey, 55, with robbing the US Bank located at 10556 Fairview Avenue of $64,500 on March 6, 2013. Massey was arrested by the FBI in Shreveport on Monday; he appeared yesterday in federal court there. An initial appearance in Idaho federal court has not been set.
Massey faces up to 20 years in prison, a maximum fine of $250,000, and up to three years of supervised release.
The case is being investigated by the Federal Bureau of Investigation.
An indictment is a means of charging a person with criminal activity. It is not evidence. The person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
$250,000 Fine Imposed for Fraudulent Sale of Postal UniformsRead the Press Release
Los Angeles resident Carl Wayne Adrian, Sr., and his company, California Uniforms, Inc. were fined $250,000 and ordered to forfeit $135,000 worth of seized Postal uniform items. Adrian Sr. was also sentenced to 12 months of home detention by U.S. District Judge William Q. Hayes.
As revealed during their guilty plea, the defendants participated in a scheme to defraud the Postal Service by providing unlicensed vendors with access to the Postal Service uniform sales reimbursement system in return for a 10% kickback.
Postal Service contracts with vendors wishing to sell licensed Postal uniform items require the vendor to accept payment only at the point of sale from Postal employees with proper identification. Payment for Postal uniforms can only be accepted in the form of uniform allowance cards, which are funded by the Postal Service. Vendors under contract with the Postal Service are given an authorization code which allows them to receive payments.
The vendor licensing agreements allow the Postal Service to insure that its uniforms are sold only by responsible vendors. This control over the sales of Postal uniforms has an important public safety aspect, in that most Americans will willingly open the door to their home to anyone wearing a Postal letter carrier uniform. For this reason, it is a misdemeanor for anyone who is not a letter carrier to wear such a uniform (18 USC 1730).
In December of 2009, Carl Adrian, Sr. received a proposal from Ace Uniforms in San Diego (which had recently lost its license to sell Postal uniforms) that he and his company, California Uniforms (which at that time possessed a valid license to sell Postal uniforms) process the uniform allowance card purchases made at Ace Uniforms, Inc. stores in San Diego and Phoenix, falsely representing the purchases to be the sales of California Uniforms, in return for a kickback of 10% of the amount paid by the Postal Service. Adrian admitted that he agreed to this proposal and during the period from December 9, 2009, through August 31, 2010, he and his firm improperly processed payments totaling approximately $105,000 for Postal uniform items sold at Ace Uniforms.
On August 31, 2010, the Postal Service canceled the contract with California Uniforms, Inc. that allowed the firm to sell Postal uniforms. Thereafter, the company contacted Monica Lauer of Merchandise Center, Inc. (who possessed a valid license to sell Postal uniforms), and proposed that Merchandise Center process the uniform allowance card purchases made at California Uniforms, Inc. stores in San Diego and Los Angeles, falsely representing the purchases to be the sales of Merchandise Center, in return for a kickback of 10% of the amount paid by the Postal Service. During the period from August 31, 2010, through October 13, 2011, Merchandise Center improperly processed payments totaling $410,000 for Postal uniform sold at California Uniforms.
This is one of a series of cases involving this scheme to defraud. On February 2, 2012, defendant Ace Uniforms, Inc. and its owner, Marc Stein, pled guilty to Conspiracy to Provide Kickbacks for their part in the scheme. Both Ace Uniforms and California Uniforms agreed to forfeit to the government all Postal uniforms found at their locations during the execution of search warrants at their business locations. Ace 3 Uniforms and Stein are scheduled to be sentenced before Judge Hayes on September 23, 2013, at 9:00 a.m.
On August 21, 2012, Monica Lauer and Merchandise Center, Inc. also pled guilty to Conspiracy to Accept Kickbacks for their role in the scheme. Lauer and Merchandise Center are also scheduled to be sentenced before Judge Hayes on September 23, 2013, at 9:00 a.m.
On August 22, 2013, Carl Wayne Adrian, Jr., the manager of the San Diego store for California Uniforms, pled guilty to Criminal Infringement of a Copyright. Postal uniforms bear the Sonic Eagle logo, which is copyrighted and trademarked by the Postal Service. Adrian Jr. admitted that he directed his employees to continue selling the Postal uniform items in inventory, including those bearing the Sonic Eagle logo, after California Uniform's license to distribute Postal uniforms had been revoked, thereby infringing upon the Sonic Eagle copyright held by the Postal Service. On October 9, 2012, Adrian Jr. was sentenced to one year probation and a fine of $500.
Pacific Area Field Office Special Agent in Charge Scott Pierce said: “The Postal Service manages over 30,000 contract actions each fiscal year. About $11 billion were spent on postal contracts in FY 2012. Due to the sheer volume of contracts and the huge dollar amounts involved, the Postal Service can be susceptible to losses in the hundreds of millions to fraud every year. Special Agents of the United States Postal Service Office of Inspector General actively investigate allegations of fraud, waste, and misconduct by contractors and postal employees who handle contracts. This case is an excellent example of the successful partnership between the Office of Inspector General and the U.S. Attorney’s office to aggressively pursue and prosecute cases where contract improprieties are uncovered.”
Criminal Case No. 12cr3650-WQH DEFENDANTS California Uniforms, Inc.
Los Angeles, California
Carl Wayne Adrian, Sr.
Los Angeles, CaliforniaDate of Incorporation: 8-15-67
SUMMARY OF CHARGESCount 1 - Adrian Sr.
Wire Fraud, in Violation of Title 18, United States Code, Section 1343
Maximum Penalties: 20 years in custody and/or $250,000 fine, $100 special assessment.Count 6 - California Uniforms, Inc.
Wire Fraud, in Violation of Title 18, United States Code, Section 1343
Criminal Case No. 12cr3136-WQH DEFENDANTS
Maximum Penalties: 5 years probation, $500,000 fine, $400 special assessment.Merchandise Center, Inc.
North Hollywood, CaliforniaMonica Lauer
Los Angeles, CaliforniaDate of Incorporation: 12-17-86
SUMMARY OF CHARGESConspiracy to Accept Kickbacks, in Violation of Title 18, United States Code, Section 371, and Title 41, United States Code, Sections 8702 and 8707
Maximum Penalties: 5 years in custody and/or $250,000 fine, $100 special assessment for the individual, and 5 years probation, a $500,000 fine and a $400 special assessment for the corporation.
Criminal Case No. 12cr0235-WQH DEFENDANTSAce Uniforms, Inc.
San Diego, CaliforniaMarc Stein
San Diego, CaliforniaDate of Incorporation: 1-12-95
SUMMARY OF CHARGESConspiracy to Provide Kickbacks, in Violation of Title 18, United States Code, Section 371, and Title 41, United States Code, Sections 52 and 53
Maximum Penalties: 5 years in custody and/or $250,000 fine, $100 special assessment for the individual, and 5 years probation, a $500,000 fine and an $400 special assessment for the corporation
Criminal Case No. 12cr3452-JMA DEFENDANTSCarl Adrian, Jr.
SUMMARY OF CHARGES
San Diego, CaliforniaCriminal Infringement of a Copyright, in Violation of Title 18, United States Code, Sections 2319 and 2 Maximum Penalties: 1 year in custody and/or $100,000 fine, $25 special assessment
AGENCYUnited States Postal Service, Office of Inspector General
13 August 2013
Wildlife Researcher Sentenced for Golden Eagle TheftRead the Press Release
United States Attorney Laura E. Duffy announced that Julian resident John David Bittner was sentenced today following his plea of guilty to the unlawful taking of a Golden Eagle, in violation of the Bald and Golden Eagle Protection Act.
At the sentencing hearing today, Magistrate Judge David H. Bartick observed that although Bittner had devoted his life to wildlife, he had apparently placed his own financial interests ahead of the need to comply with federal permitting requirements. Bittner was paid by power companies, developers and others to track the birds for environmental impact studies.
Judge Bartick cited the fact that Bittner captured and banded birds without federal and state permits, placed unpermitted devices on birds, conducted aerial surveys after authorization was denied, used wild birds in educational programs without a permit, failed to immediately send eagle carcasses to the National Eagle Repository (where there is a lengthy waiting list for Native Americans to obtain plumage for religious ceremonies) and failed to provide to the government the data he had obtained about this wildlife. After considering the scientific concerns associated with placing multiple tracking devices on a single bird, and the failure to send eagle carcasses to the National Eagle Repository, Judge Bartick concluded that "it cannot be said that there was no harm in this case."
Judge Bartick sentenced Bittner to three years’ probation, a $7,500 fine, and ordered Bittner to provide the government with the raw data compiled from tracking birds from 2007-2012. Bittner had previously withheld this data, but now it can be used by government biologists to evaluate the effect of proposed projects on the bird population.
According to court documents and admissions in his guilty plea, Bittner is the founder of a non-profit organization and makes his living by “banding” birds and gathering data on the movement of those birds. Bittner performs these services to assist companies with environmental impact statements needed for the construction and maintenance of power lines and wind power generators. In order to “band” a bird, the creature must be trapped, captured or taken out of its nest. Such activity is considered a "take" of the bird and requires a permit under both the Migratory Bird Act and the Bald and Golden Eagle Protection Act. These permits are issued by the federal Bird Banding Lab (“BBL”) in Laurel, Maryland, under the auspices of the U.S. Geological Survey. There are 2000 federal Master Bander permits issued throughout the entire United States, and only 181 Master Banders are authorized to band Golden Eagles.
Bittner first obtained a federal bird banding permit while living in Ohio on July 15, 1964. On August 13, 1980, the BBL sent a letter to Bittner, advising him that his permit was revoked due to "various discrepancies in your bird banding operation." This action was taken after the State of Ohio had revoked Bittner's 1979 state banding permit, and requested that the federal government remove Ohio from the list of states in which Bittner was permitted to band birds. The BBL subsequently agreed to keep Bittner’s permit status as inactive, rather than revoked.
Bittner had no active federal permit to band birds from 1980 until April 30, 1997, when Bittner obtained authorization to band all non-endangered species of migratory birds, and later, to band California Condors and Golden Eagles. Like all such permits, his permit limited the permitted activities to specific states and stated that the federal permit was not valid "unless accompanied by any required State permits or licenses."
In California, a state permit is required to band Golden Eagles, as well as other migratory birds. Since 2000, Bittner has not possessed a valid permit from the State of California, due in large part to his failure to provide the required data in reference to past activities. The lack of a permit from the State of California invalidated the federal permit held by Bittner with respect to collecting and banding of 936 birds in California during the period from 2000-2011.
Bittner's federal banding permit expired on January 31, 2010. On February 13, 2010, Bittner emailed the BBL, stating: "My permit expired on January 31, 2010 but was just renewed on July 14, 2009 only five months before. Permits are supposed to be valid for two years. What's up?" A BBL biologist responded, noting that Bittner’s permit was not automatically renewed in July 2009, and reminding Bittner that he owed BBL data on 300-400 bands he had already conducted. Eventually, on August 12, 2010, the federal permit was renewed.
Despite not having a valid federal or California bird banding permit, during the period from January 31, 2010 through August 12, 2010, Bittner illegally trapped and marked 164 birds (including 37 eagles); 144 of those birds were trapped in San Diego or Imperial County. Of the 144 birds trapped in San Diego and Imperial Counties, 29 were Golden Eagles, and the banding cards filled out at the time the birds were marked indicated that Bittner – the only person in the organization who previously held a permit – was personally present on at least 18 of those occasions. As Judge Bartick noted in sentencing Bittner, during the time when no permits were in effect, the defendant's non-profit organization was paid over $500,000 by various clients for its services.
According to Paul Schmidt, the Fish and Wildlife Service's Assistant Director for Migratory Birds in 2009, "The Bald Eagle population has rebounded in the past decades, and its recovery poses the challenge of managing a healthy population still protected under the Bald and Golden Eagle Protection Act. But unlike the Bald Eagle, the Golden Eagle population is not expanding, and may be in decline." The Bald and Golden Eagle Protection Act continues to protect these birds by prohibiting anyone without a permit from "taking" Bald or Golden eagles, including their parts, nests and eggs. “Taking” such birds includes pursuing, shooting, shooting at, poisoning, wounding, killing, capturing, trapping, collecting, molesting or disturbing.
United States Attorney Laura E. Duffy observed, "It is a sacred trust to preserve our natural heritage for future generations. This trust mandates that we observe both the spirit and letter of our law designed to protect the environment."
DEFENDANT Criminal Case No. 13cr1391-W John David Bittner SUMMARY OF CHARGESUnlawful Taking of a Golden Eagle, in Violation of Title 16, United States Code, Section 668(a).
AGENCY
Maximum Penalties: 1 year in custody and/or $100,000 fine, $25 special assessment.U.S. Fish and Wildlife Service
Utica Area Man Sentenced in Insurance Fraud CaseRead the Press Release
United States Attorney Richard S. Hartunian announced today that a Utica man has been sentenced for his role in an insurance fraud scheme.
DAVID MORGAN, age 55, Utica, NY, was sentenced by United States District Court Judge Norman A. Mordue in Syracuse. MORGAN was sentenced to 21 months imprisonment and ordered to pay restitution in an amount exceeding $1.4 million. MORGAN will also serve three years of supervision following his release from incarceration.
DAVID MORGAN pled guilty on July 31, 2012 to mail fraud. MORGAN admitted that in or about 2005 he agreed to assist other conspirators in an insurance fraud scheme. The scheme involved a staged motor vehicle accident on Harbor Lock Road in Utica on March 20, 2006. On that date, Joseph Dellerba and Cynthia Morgan, David’s wife, claimed to have been injured while passengers in a Ford van which was struck by a Ryder truck driven by Michael Matrulli. In fact, the collision was staged, and Dellerba and Morgan were not passengers at the time of the impact. Dellerba and Morgan claimed to have been injured as a result of the accident and submitted false insurance claims, including claims for personal injuries, no fault benefits and disability benefits. Dellerba and Morgan sought medical treatment for non-existent injuries or injuries that they claimed were the result of the collision. David Morgan and his wife subsequently initiated a civil lawsuit seeking a monetary recovery as a result of injuries suffered by Cynthia in the fictitious accident. That suit was settled with a payment of $30,000 to the Morgans.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation Division and the New York State Department of Financial Services, Criminal Investigations Unit. The case was prosecuted by Assistant United States Attorney Edward R. Broton.
Two Indicted on Federal Child Enticement ChargesRead the Press Release
Little Rock - Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, announced that the Indictments of Kenneth Wayne Thompson, age 21, of Bradford, and Benjamin Cade Vardell, age 19, of Jonesboro were unsealed yesterday after they turned themselves in to the United States Marshal and made their initial appearance before United States Magistrate Judge H. David Young. Thompson and Vardell were each indicted by a federal grand jury August 7, 2013, on one count of enticement of a minor to engage in criminal sexual conduct. Each indictment also includes a forfeiture allegation for their cell phones used in the crime.
On December 21, 2012, Jonesboro Police Department detectives responded to a runaway juvenile call. During the course of that investigation, the detectives were given the juvenile's phone by consent of the mother. Several of the individuals who had contacted the juvenile were interviewed based on the messages they sent to the juvenile. They were subsequently arrested by local police departments resulting in these charges.
If convicted, they face a statutory sentence of not less than 10 to not more than life incarceration and/or $250,000 fine with not less than 5 years up to a lifetime of supervised release. Thompson and Vardell's trials are set for September 16, 2013.
This case was investigated by the Jonesboro Police Department and the United States Secret Service Department. The case is being prosecuted by Assistant United States Attorney Marsha Clevenger.
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 exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit
Two Guilford Women Sentenced to Federal Prison for Overseeing Gifting Tables Pyramid SchemeRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, and Phil Hall, Acting Special Agent in Charge of IRS Criminal Investigation in New England, announced that two Guilford women who oversaw a pyramid scheme known as “Gifting Tables” were sentenced today in Hartford federal court. Chief United States District Judge Alvin W. Thompson sentenced DONNA BELLO to 72 months of imprisonment and three years of supervised release, and JILL PLATT to 54 months of imprisonment and three years of supervised release. BELLO also was ordered to pay a $15,000 fine.
“These significant sentences are appropriate for two individuals who profited from an illegal pyramid scheme and conspired to conceal their income from the IRS,” stated Acting U.S. Attorney Daly. “The investigation into this and other Gifting Tables schemes in Connecticut is ongoing. Hopefully, this successful prosecution and the prison terms imposed today will serve as a strong deterrent and end this criminal activity.”
According to the evidence presented during the trial, a Gifting Table is configured as a four-level pyramid, with eight participants assigned to the bottom row, four participants assigned to the third row, two participants assigned to the second row, and one participant assigned to the top row. The top row participant is referred to as the “Dessert,” the two participants on the second row as “Entrees,” the four participants on the third row as “Soup and Salads,” and the eight participants on the bottom row as “Appetizers.” To join a Gifting Table, new participants were required to pay $5,000, typically cash, to the Dessert, that is, the participant occupying the top position on the pyramid. The $5,000 payment, which was fraudulently characterized as a gift, secured the new participant a position as an Appetizer on the bottom row. Participants progressed from the bottom row of the pyramid by recruiting additional people to join the Gifting Table. When eight new participants joined a Gifting Table, each having made a $5,000 “gift” to the person occupying the Dessert position at the top of the pyramid, the Dessert left the Gifting Table and kept the $40,000 paid by the eight new participants. That particular Gifting Table was then split, with the two participants occupying the Entree position on the second row moving to the top position (Dessert) of two new pyramids. The other incumbent members of the Gifting Table moved up a row on one of the two newly-formed pyramids, and the search for 16 new participants began. The success of the Gifting Tables depended on new participants joining and making the $5,000 “gift.”
From approximately 2008 to 2011, BELLO, 57, and PLATT, 65, oversaw and profited from this Gifting Tables pyramid scheme. The defendants recruited individuals to join the scheme, prepared and distributed materials to recruits that contained false representations, and affirmatively misrepresented to recruits and participants that Gifting Tables was not a pyramid scheme. Also, in May 2010, the defendants attempted to intimidate a participant who had questioned the legality of the Gifting Table scheme.
BELLO and PLATT also conspired to defraud the Internal Revenue Service by telling recruits and participants that monies given and received during the scheme were tax-free “gifts” under the IRS Code and that lawyers and accountants had approved Gifting Tables as legal ventures that generated tax-free proceeds. In addition, BELLO and PLATT filed false tax returns that failed to report income generated from the scheme.
Evidence at trial included several emails, including an email sent by PLATT in March 2009 that told a participant: “It’s sort of a joke that I refer to our freezer as the ATM.” Later in March 2009, BELLO complained to a co-conspirator and another individual about two recalcitrant recruits, stating: “They have had enough parties. Its [sic] costing us a small fortune in their food and wine delights. No more parties until they commit with the cash.”
In June 2009, BELLO sent an email that said “I am not a . . . saint . . . . I’m teaching you all how to make an extra 80 grand a year . . . . Isn’t that enough?”
Later in October 2009, BELLO emailed a participant: “as women we like our own stash. Keep it in a safe. Keep it quiet because rather not have red flags raised. Hiring accountants and atterneys [sic] is costly.”
On February 20, 2013, after a four-week trial, BELLO and PLATT were convicted of conspiracy to commit wire fraud and conspiracy to defraud the IRS, multiple counts of wire fraud, and filing false tax returns.
BELLO and PLATT were ordered to pay restitution in the amount of $32,000 to several victims of the scheme.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation, and is being prosecuted by Assistant United States Attorneys Douglas P. Morabito and Peter S. Jongbloed.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]Tax Preparer Pleads Guilty in Manhattan Federal Court to Tax Fraud Scheme Involving over $7 Million in Bogus DeductionsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that MARK GOLDBERG, a Bronx-based tax preparer, pled guilty today in Manhattan federal court to charges related to his participation in a scheme to file fraudulent tax returns on behalf of numerous clients, falsely claiming more than $7 million in bogus deductions, including school tuition credits and expenses. GOLDBERG pled guilty before Chief U.S. District Judge Loretta A. Preska.
Manhattan U.S. Attorney Preet Bharara said: “Mark Goldberg’s fraudulent tax return preparation business spanned neighborhoods and family lines, as he manufactured bogus deductions – including false school tuition credits and expenses – for hundreds of clients throughout the Bronx, including for his relatives and himself. Tax fraud, particularly when it exploits credit and refund programs that are supposed to provide important benefits to those truly entitled to them, threatens the integrity of our tax system and victimizes all law-abiding taxpayers. We will continue to be aggressive in rooting out such fraud.”
According to the Indictment, statements made during the plea proceedings, and other documents filed in Manhattan federal court:
GOLDBERG ran a tax preparation and multi-service business named E&M Multi-Services, Inc. (“E&M”) out of a storefront building in the Bronx. Through that business, he prepared, and oversaw the preparation of, hundreds of federal and New York State tax returns that claimed false deductions, expenses, and credits, including tuition credits and expenses, unreimbursed employee business expenses, medical and dental expenses, charitable gifts, and earned income tax credits.
Between 2005 and 2012, GOLDBERG caused the preparation and filing of tax returns for his clients that included over $7,000,000 of fabricated and fraudulently-inflated deductions, resulting in the payment of refunds to which his clients were not lawfully entitled.
GOLDBERG, 40, of Bronx, New York, pled guilty to one count of subscribing to a false and fraudulent tax return for himself, one count of aiding and assisting in the preparation of a false tax return for a relative, and one count of wire fraud. He faces a maximum sentence of 26 years in prison, and is scheduled to be sentenced by Chief Judge Preska on December 17, 2013 at 10 a.m. In addition, GOLDBERG agreed as part of his guilty plea not to contest the forfeiture by the Internal Revenue Service of over $500,000 in an account maintained by GOLDBERG in the name of E&M, representing the fees generated by GOLBERG as part of his tax fraud scheme.
Mr. Bharara praised the investigative efforts of the Internal Revenue Service, Criminal Investigation and the New York State Department of Taxation and Finance. Mr. Bharara also thanked the U.S. Department of Justice’s Tax Division and the Bronx District Attorney’s Office for their assistance.
The case is being prosecuted by the Office’s Complex Frauds Unit. Assistant United States Attorneys Stanley J. Okula, Jr. and Paul Monteleone, and Special Assistant United States Attorneys Jorge Almonte (of the Tax Division) and Graham Van Epps (of the Bronx D.A.’s Office) are in charge of the prosecution.
Goldberg, Mark Indictment
Tampa Man Sentenced to 5 Years in Prison on Tax Fraud ChargesRead the Press Release
Tampa, Florida - U.S. District Judge James E. Whittemore sentenced James Earl Smiley (41, Tampa) yesterday to 5 years and one month in federal prison for committing stolen identity refund fraud. As part of his sentence, the court also entered a forfeiture money judgment in the amount of $98,719.65, representing the proceeds of the offense.
Smiley pleaded guilty on March 6, 2013, to one count of theft of government property and one count of aggravated identity theft.
According to the plea agreement and court documents, in October 2012, Smiley was stopped by the Tampa Police Department. He had several Turbo Tax Visa debit cards and receipts in his possession. The debit cards were not in Smiley's name, or in the name of his passenger. Further investigation revealed that the debit cards were funded with fraudulent tax return proceeds. On numerous occasions, Smiley was captured on video surveillance using the fraudulent debit cards. He admitted that the cards contained proceeds from fraudulently filed tax returns. None of the victims, including deceased individuals and others whose names appeared on the debit cards, had given Smiley or his passenger the authority to use their identities.
This case was investigated by the Internal Revenue Service Criminal Investigation, the United States Secret Service, the Tampa Police Department, the Hillsborough County Sheriff's Office, and the Collier County Sheriff's Office. It was prosecuted by Assistant United States Attorney Kelley C. Howard-Allen.
Southington Man Pleads Guilty to Mortgage Fraud and Money Laundering OffensesRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that HENRY J. PAPALE, 62, of Southington, pleaded guilty today before Senior United States District Judge Ellen Bree Burns in New Haven to federal wire fraud and money laundering offenses stemming from a mortgage fraud scheme.
According to court documents and statements made in court, in 2007, PAPALE used credit information of others to purchase four homes in Florida and obtain mortgage loans. He submitted fraudulent invoices, work authorizations and wire transfer instructions to a settlement agent in Florida, each of which purported to be from a construction company for restoration on the properties. In fact, the construction company was fictitious and no work was performed on the properties. Following the closing on each property, the settlement agent wire transferred loan proceeds, in amounts that corresponded to the price for restoration work, to a bank account in Southington that it believed belonged to the fictitious construction company, but was actually held by certain of PAPALE’s family members. A total of $360,307.23 was transferred to PAPALE’s family members in this manner.
Based on PAPALE’s representations, a member of PAPALE’s family then turned the majority of the fraudulently obtained loan proceeds over to PAPALE, who deposited them into his own bank account. PAPALE transferred $255,500 in fraudulently obtained loan funds from his bank account to an investment trading account.
PAPALE pleaded guilty to one count of wire fraud, which carries a maximum term of imprisonment of 20 years, and one count of money laundering, which carries a maximum term of imprisonment of 10 years. Judge Burns has scheduled sentencing for November 5, 2013.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorneys Jonathan N. Francis and Michael S. McGarry.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]South Carolina Man Sentenced for Traveling to Have Sex with Eight Year OldRead the Press Release
GAINESVILLE, Ga. – David Alan Wolf has been sentenced to 14 years for enticing a minor to engage in sexual activity.
“After this defendant used the internet to arrange for a sexual encounter with a vulnerable, eight-year-old girl, he then traveled to Atlanta in an effort to commit this repugnant act” said United States Attorney Sally Quillian Yates. “Thankfully, there was no eight-year-old, and law enforcement arrested him. Sexual predators have no place in our community and we will see to it that they are caught, prosecuted, and punished.”
“The Barrow County Sheriff’s Office will continue to be vigilant in our attempt to apprehend those who prey on our children,” said Barrow County Sheriff Jud Smith. “Our Investigators are working very hard every day to keep these predators off the streets and protect our communities.”
According to United States Attorney Yates, the criminal information, and material presented in court: In August 2012, a Barrow County investigator, operating undercover and posing as a thirty-four-year-old female with an eight-year-old daughter, was contacted online by an individual later identified as David Alan Wolf. Wolf indicated that he was interested in engaging in sex acts with the investigator’s eight-year-old daughter, including oral sex and intercourse. Wolf and the undercover investigator communicated online for close to two weeks. During that time, Wolf described in detail his sexual fantasies and the sex acts he would perform on the eight-year-old girl. On August 28, 2012, Wolf traveled from South Carolina to Georgia to meet the investigator and her fictitious daughter and was arrested upon his arrival.
Wolf, 63, of Rock Hill, S.C., was sentenced today by United States District Judge William C. O’Kelley to 14 years in prison to be followed by lifetime supervised release. He was also ordered to pay a fine of $5,000. The defendant will be required to register as a sex offender when he is released from prison.
This case was investigated by the Barrow County Sheriff’s Office.Assistant United States Attorney Jill E. Steinberg is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.
Sex Trafficking Sting Nets Nine ArrestsRead the Press Release
United States Attorney Brendan V. Johnson announced that nine men have been arrested and federally indicted as a result of a sex trafficking undercover operation conducted during the 2013 Sturgis Motorcycle Rally, which ended August 11. All nine men were indicted for Commercial Sex Trafficking.
The arrests were a result of investigations by the South Dakota Internet Crimes Against Children Task Force. All of the defendants allegedly negotiated with law enforcement agents posing as pimps, and agreed to pay for sex with underage girls, ranging from 12-15 years of age.
Five of the defendants are from South Dakota, and four are from out-of-state.- Jerry Lane Golliher, age 31, of Rapid City, South Dakota.
- Eric D. Murphy, age 27, of Rapid City, South Dakota.
- John Miller, age 24, of Rapid City, South Dakota.
- Michael Francis Fox Jr., age 43, of Owings Mills, Maryland.
- Scott B. Falk, age 29, of Kenai, Alaska.
- Timothy Charles Gravens, age 54, of Grapevine, Texas.
- Miguel Angel Aguilar, age 19, of Brighton, Colorado.
- James Eugene Larive Jr., age 42, of Belle Fourche, South Dakota.
- Curtis Ray Austin, age 20, of Rapid City, South Dakota.
Falk, Fox, Gravens, and Aguilar are in the custody of the U.S. Marshals Service and are scheduled to make an initial appearance before a United States Magistrate Judge in Rapid City on August 14, 2013. The remaining defendants will be taken into federal custody and will be making an initial appearance at a future date.
The crime of Commercial Sex Trafficking carries a mandatory minimum sentence of 10-15 years in prison up to a life maximum, and/or a $250,000 fine. The mandatory minimum prison sentence is determined by the age of the victim.
The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty.
The undercover operation and arrests were a joint effort between the South Dakota Division of Criminal Investigation, the Federal Bureau of Investigation, the Rapid City Police Department, and the Pennington County Sheriff’s office. Assistant U.S. Attorney Sarah Collins is prosecuting the cases.Seven Oncologists Charged with Importing Unapproved DrugsRead the Press Release
Seven Ohio oncologists were charged with importing cancer medications that had not been approved by the Food and Drug Administration, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
The doctors were charged with causing the shipment of misbranded drugs, a misdemeanor violation of the Food, Drug and Cosmetic Act. Their names, ages and the city where they practiced medicine are:
Ranjan Bhandari, 56, Liverpool.
Timmappa Bidari, 68, Parma.
David Fishman, 62, Euclid.
Su-Chiao Kuo, 60, Brunswick.
Marwan Massouh, 54, Westlake.
Poornanand Palaparty, 62, Cleveland.
Hassan Tahsildar, 55, Euclid.
“These doctors used drugs that had not been approved by the FDA,” Dettelbach said. “Our office is committed to working with our partners to make sure patients are getting medicine that has been properly inspected.”
“FDA’s regulatory standards are designed to ensure the safety and quality of the medical devices and drugs distributed to American consumers,” said Antoinette V. Henry, Special Agent in Charge, FDA’s Office of Criminal Investigations. “We will continue to work to investigate all persons, including medical professionals, who disregard regulatory requirements and jeopardize the public health by participating in the distribution of misbranded products.”
The doctors are accused of obtaining drugs, including Zometa, Kytril, Taxotere, Gemzar, Eloxatin and others, from outside the United States, where the drugs were not approved by the FDA, according to the charges.
A drug may be considered misbranded even if it is identical in composition to an FDA-approved drug (that is, a drug labeled and packaged in compliance with the FDA’s standards) and even if it was made by the same manufacturer in the same facility as the FDA-approved version.
If convicted, the doctors face up to one year in prison and fines up to $100,000. Their sentences will be determined by the court after reviewing factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
These cases are being prosecuted by Assistant U.S. Attorney Michael L. Collyer following investigations by the FDA – Office of Criminal Investigations and the Department of Health and Human Services – Office of Inspector General.
Anyone suspecting health care fraud, waste or abuse can report it by calling the U.S. Department of Health and Human Services, Office of Inspector General at 800-447-8477. To learn more about health care fraud prevention and enforcement go to www.stopmedicarefraud.gov
A charge is not evidence of guilt. The defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.