Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
13 August 2013
Securities Broker Sentenced to Three Years in Prison for Investment FraudRead the Press Release
Orlando, FL - U.S. District Judge Charlene Honeywell today sentenced Gurudeo "Buddy" Persaud (47, Orlando) to three years in federal prison for mail fraud. As part of his sentence, the court also ordered Persaud to pay $948,340.00 in restitution to the victims of his scheme.
According to the plea agreement, Persaud, a licensed securities broker, formed White Elephant Trading Company LLC in 2007. White Elephant was a private equity fund that purportedly invested in securities on the national markets. Persaud solicited investors by telling them that he would generate profits using his trading skills and that he would make all trading decisions. Persaud guaranteed investors rates of return of between 6% and 18% that were payable in a short period of time. However, Persaud used a trading strategy that was based on lunar cycles and the gravitational pull between the moon and the Earth. Furthermore, Persaud did not invest all of the money that he received from investors, but instead used money from later investors to pay earlier investors and used significant portions of the money for his own personal use. Persaud defrauded investors out of more than $1million.
This case was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney David Haas.
Second Man Pleads Guilty to Preparing False Tax ReturnsRead the Press Release
FOR IMMEDIATE RELEASE
August 13, 2o13
MINNEAPOLIS—Earlier today in federal court in St. Paul, a man pleaded guilty to conspiring to file false tax returns after admitting he had used the identity information of several children to generate false dependents. Rotimi Williams specifically pleaded guilty to one count of conspiracy to obstruct the lawful functioning of the Internal Revenue Service (“IRS”) and four counts of identity theft. Williams, who was indicted along with Ayo Aseph on April 15, 2013, entered his plea before United States District Judge Paul A. Magnuson.
In his plea agreement, Williams admitted that from about April 15, 2008, through about April 15, 2011, he conspired with others to obstruct the IRS in its legal obligation to collect income taxes. During that time, Williams was in the business of preparing and filing federal and state income tax returns for clients, his main office located in Brooklyn, New York. Williams had several clients in Minnesota, including Aseph.
Williams, who had clients in Minnesota and New York, admitted to generating false tax returns for certain New York clients by adding the names, social security numbers, and birthdates of children who were not their dependents. Williams did this in order to lower the amount of federal taxes owed, and, thereby, qualify for refunds, by claiming additional dependents on their tax returns. The dependent information involved minors from Minnesota, and were added to certain New York clients’ tax returns.
On June 12, 2013, Williams’ co-defendant, Ayo Aseph, pleaded guilty to one count of conspiracy. In his plea agreement, Aseph admitted that Williams prepared his tax returns starting in 2007, and that Williams was his employer until 2011. In 2008, Aseph, at Williams’ direction, obtained the identities of children not his own to claim on his income tax return for that year. Aseph admittedly gave his brother money in exchange for the identification information of two children that his brother knew. The identification information of a third child was also provided by one of Aseph’s co-workers. Those three children were claimed as dependents on Aseph’s 2009 tax return as well. And, for his 2010 tax return, one of the children as well as two other children were claimed as dependents.
For their crimes, both defendants face a potential maximum penalty of five years in prison for conspiracy. In addition, Williams faces a potential maximum penalty of 15 years on each count of identity theft. Judge Magnuson will determine their sentences at a future hearing, yet to be scheduled.
This case is the result of an investigation by the IRS-Criminal Investigations. It is being prosecuted by Assistant U.S. Attorney John Docherty.
According to the IRS, approximately 60 percent of taxpayers use tax professionals to prepare and file their tax returns, with these paid preparers now collectively responsible for more than 80 million individual tax returns annually. “Tax return preparer fraud” is one of the IRS’s “Dirty Dozen Tax Scams.” For more information about the fight against tax fraud or how to choose a reliable tax return preparer, visit http://www.irs.gov/uac/Tips-for-Choosing-a-Tax-Return-Preparer.Per U.S. Department of Justice policy, the U.S. Attorney’s Office is not allowed to provide the age and city of residence for defendants charged in criminal tax cases.
Red Lake Man Sentenced for Assaulting A Man with an Axe HandleRead the Press Release
MINNEAPOLIS—Yesterday in federal court in Fergus Falls, a 48-year-old Red Lake man was sentenced for assaulting a man with an axe handle. On August 12, 2013, United States District Judge John R. Tunheim sentenced Joseph William Howard, Jr., to 105 months on one count of assault resulting in serious bodily injury. Howard was indicted on February 22, 2012, and pleaded guilty on May 29, 2012.
In his plea agreement, Howard admitted that on January 13, 2012, he assaulted the victim at a Redby residence. According to a law enforcement affidavit filed in the case, authorities were called to the residence, located on the Red Lake Indian Reservation, on that day. There, they found the victim, whose face had been severely beaten and lacerated. Officers also discovered blood splattered on the bed and walls in the room where the victim was staying. A bloody axe handle was ultimately uncovered behind the dryer in that home’s utility room. As a result of the assault, the victim suffered multiple fractures, and his left eye was so badly damaged that it had to be surgically removed.This case was the result of an investigation conducted by the Red Lake Tribal Police Department and the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorney Deidre Y. Aanstad.
Because the Red Lake Indian Reservation is a federal-jurisdiction reservation, some of the crimes that occur there are investigated by the FBI in conjunction with the Red Lake Tribal Police Department. Those cases are prosecuted by the U.S. Attorney’s Office.Pittsburgh Man Charged with Possession Sexual Images of MinorsRead the Press Release
PITTSBURGH, Pa. - An Allegheny County man has been indicted by a federal grand jury in Pittsburgh on a charge of possession of material depicting the sexual exploitation of a minor, United States Attorney David J. Hickton announced today.
The one-count indictment named Kelly Eugene Jones, 39, as the sole defendant.
According to the indictment, on Feb. 15, 2013, Jones possessed visual depictions, namely, images in computer graphics files, the production of which involved the use of minors engaging in sexually explicit conduct.
The law provides for a maximum total sentence of 20 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Jessica Lieber Smolar is prosecuting this case on behalf of the government.
The Federal Bureau of Investigation and the Allegheny County District Attorney Investigations Unit 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.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Overseer of Manatee County Marijuana Grow Houses Convicted at TrialRead the Press Release
TAMPA, FLORIDA - Acting United States Attorney A. Lee Bentley, III announces that a federal jury yesterday found Do Nguyen (39, Bradenton) guilty of conspiracy to possess with intent to distribute 100 or more marijuana plants. Nguyen faces a maximum penalty of 40 years in federal prison. His sentencing hearing will be scheduled at a later date. Nguyen was indicted on November 6, 2012.
According to testimony and evidence presented at trial, Nguyen managed five separate marijuana grow houses throughout Manatee County from mid-2010 through October 2011. The houses were located in Bradenton, Parrish, and Duette. Nguyen recruited and employed three workers at the houses. Between March and October 2011, law enforcement executed a series of searches at the homes and recovered approximately 3,387 marijuana plants, worth approximately $5 million, along with extensive growing equipment and paraphernalia. During the time period of the conspiracy, Nguyen also paid a relative (Minh Tran), who worked as a driver for UPS, to deliver packages to him containing multiple pounds of marijuana from California. Tran pleaded guilty to conspiracy to distribute 100 kilograms or more of marijuana in May 2013. His sentencing is scheduled for September 23, 2013.
This case was investigated by the Manatee County Sheriff's Office, Bradenton Police Department, and the Drug Enforcement Administration. It is being prosecuted by Assistant United States Attorney Patrick Scruggs.
Oklahoma Woman Sentenced to Two Years in Federal Prison on Tax Evasion ConvictionRead the Press Release
Defendant, a Former Resident of Arlington, Texas, Must Also Pay More Than $228,000 in Restitution to the IRS
DALLAS — Jessica Pillow Venable has been sentenced to 24 months in federal prison and ordered to pay $228,060 in restitution to the Internal Revenue Service (IRS) following her guilty plea in April 2013 to an indictment charging two counts of tax evasion. The Court ordered that she surrender to the Bureau of Prisons on August 26, 2013. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas (NDTX).
Venable, a former resident of Arlington, Texas, was charged by indictment in the NDTX on January 23, 2013, and shortly thereafter formally stated that she intended to plead guilty and requested that jurisdiction of her case be transferred to the Western District of Oklahoma (WDOK). At the time of her guilty plea, Venable was 26, according to the petition she filed with the Court.
According to the indictment and other documents filed in the case, Venable willfully failed to report income embezzled from Dream Machines of Texas for tax years 2009 and 2010. According to the judgment filed in the case, the $228,060 in restitution ordered paid to the IRS is a condition of supervised release. This is in addition to her obligation, pursuant to a separate settlement agreement, to pay $400 per month to the victim of the embezzlement.
This case was investigated by IRS Criminal Investigation. Assistant U.S. Attorneys Joseph Revesz of the NDTX and Charles Brown of the WDTX prosecuted.
Ohio Man Pleads Guilty in Connection with A Multi-year Marijuana Distribution ConspiracyRead the Press Release
Longtime drug dealer assaulted W.Va. State Trooper during January 2012 traffic stop
HUNTINGTON, W.Va. – U.S. Attorney Booth Goodwin today announced that an Ohio man pleaded guilty to federal charges in connection with a multi-year marijuana distribution conspiracy. Robin Earl Slater, 51, of Langsville, Ohio, pleaded guilty to four federal charges: conspiracy to distribute 100 kilograms or more of marijuana; possession of firearms in furtherance of a marijuana conspiracy; convicted felon in possession of firearms; and obstruction of justice.
Slater admitted today that he conspired to distribute over 100 kilograms of marijuana by supplying the drug to lower-level dealers in Putnam and Kanawha counties, as well as out of state.
On January 23, 2012, a West Virginia State Trooper followed Slater into a store parking lot after observing the defendant commit several traffic violations in St. Albans, W.Va. During an attempt to flee, Slater bit the police officer on the arm and pepper sprayed him. Slater was arrested a short time after the violent altercation. Following Slater’s arrest, police recovered $24,515, six firearms and drug ledgers from his vehicle.
U.S. Attorney Goodwin said, “We owe it to our law enforcement officers to do everything we can to protect them on the job. We’ve seen too many tragic, senseless law enforcement deaths in situations just like this: routine encounters that suddenly turn violent.” Goodwin continued, “Law enforcement officers risk their lives every day to keep the rest of us safe. I will spare no effort in prosecuting anyone who attacks them.”
Slater told police that the money he had was from individuals to whom he had supplied marijuana. Slater also admitted that he possessed firearms to protect himself and the proceeds of his drug activity.
Slater faces a mandatory minimum of 15 years in prison and up to life in prison when he is sentenced on November 18, 2013 by Chief United States District Judge Robert C. Chambers.Slater has two prior felony drug convictions related to the distribution of marijuana.
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.
The West Virginia State Police, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Putnam County Sheriff’s Department conducted the investigation. Assistant United States Attorney Steven Loew is in charge of the prosecution.
Ninth Individual Sentenced in Connection with Costa Rica-based Business Opportunity Ventures That Defrauded AmericansRead the Press Release
Michael Kerry Deevy, a Canadian citizen, was sentenced today in connection with a series of business opportunity fraud ventures based in Costa Rica, the Justice Department and the U.S. Postal Inspection Service announced. Beginning in 2006, Deevy and his co-conspirators in Costa Rica are alleged to have fraudulently induced purchasers in the U.S. to buy business opportunities from companies known as Cards-R-Us Inc., Premier Cards Inc. and Nation West. The business opportunities cost purchasers thousands of dollars each, with most paying at least $10,000. Today’s sentencing forms part of the government’s continued nationwide crackdown on business opportunity fraud.
“Business opportunity fraud schemes such as this one can crush the dreams – and wipe out the savings – of Americans who simply want to operate their own small businesses,” said Stuart F. Delery, Assistant Attorney General for the Civil Division. “The Department of Justice will continue to prosecute those who engage in these schemes, whether they set up shop here or abroad.”
“Business opportunity schemes target believers in a system that rewards those who are willing to sacrifice and work hard in the hope of getting ahead,” said U.S. Attorney for the Southern District of Florida Wifredo Ferrer. “In this particular case, the business opportunity fraud ventures were based in Costa Rica and targeted purchasers in the United States, including South Florida. Today’s sentence will hopefully send a message to those who are contemplating engaging in schemes such as this that, no matter where you are, we will pursue and prosecute you and bring you to justice for these illegal schemes.”
Deevy was sentenced by U.S. District Court Judge Patricia A. Seitz in Miami to 60 months in prison and 5 years’ supervised release. Deevy also was ordered to pay $4,541,914 in restitution. Prior to Deevy’s sentencing today, 11 other individuals were charged in connection with related business opportunity fraud ventures based in Costa Rica. Deevy is the ninth of those individuals to be convicted and sentenced in the U.S.
On April 11, Deevy pleaded guilty to one count of conspiracy, three counts of mail fraud and nine counts of wire fraud in connection with the business opportunity scheme. Deevy was arrested in Costa Rica in 2011 and extradited to the U.S. in 2012 following his indictment by a federal grand jury in Miami on Nov. 29, 2011. The indictment alleged that Deevy and his co-conspirators purported to sell greeting card and vending machine business opportunities, including assistance in establishing, maintaining and operating these businesses. Each company operated for several months, and after one company closed, another one opened.
Co-conspirators at the companies made numerous false statements to potential purchasers of the business opportunities. They indicated that purchasers likely would earn substantial profits; prior purchasers of the business opportunities were earning substantial profits; purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the companies worked with third party “locators” familiar with the potential purchasers’ areas who would secure, or had already secured, high-traffic locations for the prospective buyers’ merchandise display racks or machines.
In addition to these “locators,” the companies also employed various other types of sales representatives, including fronters, references and closers. Fronters spoke to prospective purchasers when they initially contacted the company in response to an advertisement. References told potential buyers that they had purchased one of the business opportunities and were making a profit. Closers subsequently spoke to potential purchasers to finalize deals. In pleading guilty, Deevy admitted that he was a fronter and reference for Cards-R-Us Inc., Premier Cards Inc. and Nation West.
“This investigation shows the resolve of the U.S. Postal Inspection Service to protect the American public from predatory business opportunity frauds,” said Ronald Verrochio, U.S. Postal Inspector in Charge, Miami Division. “We will continue to work with our law enforcement partners in the United States and overseas to root out these schemes.”
Assistant Attorney General Delery commended the investigative efforts of the U.S. Postal Inspection Service. The case was prosecuted by Assistant Director Jeffrey Steger and Trial Attorney Alan Phelps with the Consumer Protection Branch of the U.S. Department of Justice’s Civil Division.
Ninth Individual Sentenced in Connection with Costa Rica-Based Business Opportunity Ventures That Defrauded AmericansRead the Press Release
Michael Kerry Deevy, a Canadian citizen, was sentenced today in connection with a series of business opportunity fraud ventures based in Costa Rica, the Justice Department and the U.S. Postal Inspection Service announced. Beginning in 2006, Deevy and his co-conspirators in Costa Rica are alleged to have fraudulently induced purchasers in the U.S. to buy business opportunities from companies known as Cards-R-Us Inc., Premier Cards Inc. and Nation West. The business opportunities cost purchasers thousands of dollars each, with most paying at least $10,000. Today’s sentencing forms part of the government’s continued nationwide crackdown on business opportunity fraud.
“Business opportunity schemes target believers in a system that rewards those who are willing to sacrifice and work hard in the hope of getting ahead,” said U.S. Attorney for the Southern District of Florida Wifredo Ferrer. “In this particular case, the business opportunity fraud ventures were based in Costa Rica and targeted purchasers in the United States, including South Florida. Today’s sentence will hopefully send a message to those who are contemplating engaging in schemes such as this that, no matter where you are, we will pursue and prosecute you and bring you to justice for these illegal schemes.”
“Business opportunity fraud schemes such as this one can crush the dreams – and wipe out the savings – of Americans who simply want to operate their own small businesses,” said Stuart F. Delery, Assistant Attorney General for the Civil Division. “The Department of Justice will continue to prosecute those who engage in these schemes, whether they set up shop here or abroad.”
Deevy was sentenced by U.S. District Court Judge Patricia A. Seitz in Miami to 60 months in prison and 5 years’ supervised release. Deevy also was ordered to pay $4,541,914 in restitution. Prior to Deevy’s sentencing today, 11 other individuals were charged in connection with related business opportunity fraud ventures based in Costa Rica. Deevy is the ninth of those individuals to be convicted and sentenced in the U.S.
On April 11, Deevy pleaded guilty to one count of conspiracy, three counts of mail fraud and nine counts of wire fraud in connection with the business opportunity scheme. Deevy was arrested in Costa Rica in 2011 and extradited to the U.S. in 2012 following his indictment by a federal grand jury in Miami on Nov. 29, 2011. The indictment alleged that Deevy and his co-conspirators purported to sell greeting card and vending machine business opportunities, including assistance in establishing, maintaining and operating these businesses. Each company operated for several months, and after one company closed, another one opened.
Co-conspirators at the companies made numerous false statements to potential purchasers of the business opportunities. They indicated that purchasers likely would earn substantial profits; prior purchasers of the business opportunities were earning substantial profits; purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the companies worked with third party “locators” familiar with the potential purchasers’ areas who would secure, or had already secured, high-traffic locations for the prospective buyers’ merchandise display racks or machines.
In addition to these “locators,” the companies also employed various other types of sales representatives, including fronters, references and closers. Fronters spoke to prospective purchasers when they initially contacted the company in response to an advertisement. References told potential buyers that they had purchased one of the business opportunities and were making a profit. Closers subsequently spoke to potential purchasers to finalize deals. In pleading guilty, Deevy admitted that he was a fronter and reference for Cards-R-Us Inc., Premier Cards Inc. and Nation West.
“This investigation shows the resolve of the U.S. Postal Inspection Service to protect the American public from predatory business opportunity frauds,” said Ronald Verrochio, U.S. Postal Inspector in Charge, Miami Division. “We will continue to work with our law enforcement partners in the United States and overseas to root out these schemes.”
Assistant Attorney General Delery commended the investigative efforts of the U.S. Postal Inspection Service. The case was prosecuted by Assistant Director Jeffrey Steger and Trial Attorney Alan Phelps with the Consumer Protection Branch of the U.S. Department of Justice’s Civil Division.
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.
Nine Individuals Indicted for One of the Largest International Penny Stock Frauds and Advance Fee Schemes in HistoryRead the Press Release
Defendants Planned to Open Next Fraudulent Call Center in Brooklyn
BROOKLYN, NY – Earlier today, the Federal Bureau of Investigation (FBI) arrested six men in New York, Arizona, New Jersey, Florida and California for engaging in an international fraud conspiracy that spanned the globe from North America to Europe and Asia. A seventh defendant was also arrested today on a provisional arrest warrant in Ontario, Canada. The arrests resulted from an indictment charging nine defendants with 24 counts of securities fraud, wire fraud and false personation of Internal Revenue Service (IRS) employees in connection with the sale of securities and conspiracy.1 As set forth in court filings, the defendants masterminded securities fraud and advance fee schemes that victimized investors in approximately 35 nations and generated more than $140 million through various brokerage and bank accounts under their control. To uncover the international aspects of the scheme and gather evidence, the FBI used wiretaps in the United States and undercover agents in foreign countries.
The indictment and arrests are the result of one of the largest international penny stock investigations ever conducted by the Department of Justice and the FBI and mark the unveiling of a multi-year, ongoing investigation, which included significant assistance from the Royal Canadian Mounted Police (RCMP), as well as from other U.S. law enforcement agencies and law enforcement authorities in England, as well as assistance from Thailand and China.
The defendants are charged in two separate but interrelated schemes. According to the indictment, the defendants first engaged in an international ‘pump and dump’ scheme during which they fraudulently ‘pumped up’ the share price of worthless penny stocks and then ‘dumped’ billions of shares of those stocks by unloading them on unsuspecting victim investors across the globe. Second, the defendants operated boiler rooms in at least four countries that induced investors in penny stocks, including many of the same victims from the ‘pump and dump’ scheme, to pay advance fees that the defendants promised would enable the victim-investors to sell their penny stocks and recover losses that they incurred. In reality, the defendants simply stole the fees without providing any services, fraudulently extracting millions of additional dollars from their victims.
The charges and arrests were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, FBI, New York Field Office; Toni Weirauch, Special Agent-in-Charge, IRS, Criminal Investigation, New York; James C. Spero, Special Agent-in-Charge, Homeland Security Investigations, Department of Homeland Security, Buffalo; and Robert O’Malley, Special Agent-in-Charge, Treasury Inspector General for Tax Administration (TIGTA).
The ‘Pump and Dump’ Scheme
As alleged in the indictment, defendants Sandy Winick, Gary Kershner, Joseph Manfredonia, Cort Poyner, Songkram Roy Shachaisere and William Seals orchestrated one of the largest international penny stock frauds in history. First, the defendants gained controlling interests of huge quantities of worthless stock in 11 public companies known in the industry as ‘file cabinet businesses’ – thinly traded companies with minimal assets and non-existent business operations, which in many cases were mere shell companies. They then ‘pumped up’ the share prices of the companies’ stock by engaging in fraudulent and illegal sales campaigns, which included distributing false press releases, announcing non-existent business ventures and fake mergers, posting false information on social media sites and bribing stock promoters and brokers.
These efforts fraudulently inflated share prices so that the pump and dump defendants could trade billions of shares of penny stocks that they owned and controlled at a profit, ultimately generating more than $120 million worth of fraudulent stock sales in accounts under their control. As a result of the defendants’ efforts, investors in 35 countries were defrauded in connection with their purchase of the companies’ stock.
To avoid detection, the defendants, many of whom operated from outside the United States, were often careful to use “throwaway phones.” In fact, defendant Poyner was intercepted on a wire communication reminding others in the scheme to use such mobile devices to avoid being caught. The defendants also knew that they should not draw attention to their illegal trading scheme. For example, defendant Winick boasted about the superiority of the charged scheme compared to another more obvious scam, stating: “That deal is obviously a pump and dump. We know enough to be subtle.”
The Advance Fee Scheme
As the indictment alleges, defendants Winick, Gregory Curry, Kolt Curry and Gregory Ellis perpetrated a second scheme in which they fraudulently induced penny stock victims to pay advance fees, on the promise that the victims would then either be able to sell their securities to other waiting investors or join lawsuits to reclaim their losses. In reality, the advance fees were nothing more than a con, as neither the investors nor the lawsuits existed. To hoodwink the penny stock owners, the advance fee defendants invented fake trading companies and a fake law firm and then posed as employees of those entities while soliciting advance fees from the penny stock victims.
To facilitate the scheme, the defendants established boiler rooms or call centers from which members of the conspiracy would solicit advance fees from the unsuspecting penny stock victims. The call centers were located in various locales around the world, including Canada, Thailand and the United Kingdom. Recently, the defendants began planning to open a new call center in Brooklyn, New York. Some of the victims were told that they either needed to pay the advance fee to remove restrictions that were placed upon their penny stock, which prevented the victims from selling their stock in the market, or to join investors in a pending or anticipated lawsuit to recover losses that they incurred while owning the penny stock. Victims were then told that the advance fees were needed to convert the warrants of their stocks to a saleable security. In several instances, the advance fee defendants even pretended to be IRS employees collecting a bogus advance tax from victim investors before they could unload their penny stocks.2 The victims were directed to send payment of the advance fees to banks around the world, including bank accounts in New York City. The fraud proceeds were then transferred through a funds transfer network, located in Getzville, New York, to an account maintained in Beirut, Lebanon. Ultimately, these defendants generated more than $20 million in fraudulently obtained advance fees.
Defendant Kolt Curry described the Advance Fee Scheme in the following way over an intercepted wire communication: “I would say that 100 percent of these stocks are like uh pink uh… just dumps . . . . so … ya know they’re totally, they’re like, so a lot of these guys are dying . . . . to get rid of this crap. . . . The money is good, it’s easy. It’s easy money. Definitely easy money, and it’s good money.” In fact, while bragging about his prowess as a fraudster, defendant Kolt Curry further stated, “I had a guy send me a million dollars over one phone call . . . . He actually sent me almost two million dollars over the period of the hit . . . . I guess in the industry they coin it as a smash and grab.” As for the group’s recent plans to open a call center in Brooklyn, New York, defendant Kolt Curry said, “I tell you what man . . . hitting the Americans would be like taking money from a baby.”
“As alleged in the indictment, the defendants used our securities markets as a platform from which to run elaborate fraudulent schemes to victimize unsuspecting investors across the globe. Where others saw citizens of the world, the defendants saw a pool of potential marks. They cheated, lied and swindled investors into buying billions of shares of worthless stock, then turned around and used a second scam to cheat those investors again. But today, the defendants were the marks, and it was law enforcement that ran the table,” stated United States Attorney Lynch. “As this case shows, we are committed to preserving the rule of law and protecting our investors and markets from fraud. I would like to thank our partners at FBI for their hard work on this important investigation.” Ms. Lynch also thanked the Royal Canadian Mounted Police, Financial Crime Intelligence Unit in Vancouver and the Integrated Market Enforcement Team in Toronto, the IRS, the Department of Homeland Security, TIGTA and the Serious Organized Crime Agency in the United Kingdom. Throughout the course of the investigation, significant assistance was also provided by the United States Embassies in Ottawa, Toronto, London, Bangkok and Beijing. Ms. Lynch also expressed her grateful appreciation to the Securities and Exchange Commission for its cooperation and assistance in the investigation.
FBI Assistant Director-in-Charge Venizelos stated, “As alleged in the indictment, the defendants overstated the value of penny stocks and sold them to unwitting investors worldwide. By tricking victims into paying advance fees with the promise of realizing larger gains or recovering losses, some of the defendants dipped into the pockets of those they had betrayed—not once, but twice. The investing public has the right to trade in an uncorrupted market, and we have a responsibility to uphold the public’s confidence in the integrity of our financial markets. While the charges announced today are significant, they are but one example of what’s left to come as we continue to work with our partners in this ongoing investigation.”
“The criminals behind this scheme were shameless in heartlessly defrauding hundreds of victims out of their savings and retirement accounts for their own enrichment,” said James C. Spero, special agent in charge of Immigration and Customs Enforcement Homeland Security Investigations (HSI) in Buffalo. “HSI is committed to working with our partners at the FBI and the U.S. Attorney’s Office to hold these perpetrators accountable and recover as much money as possible for their victims.”
IRS Special Agent-in-Charge Weirauch stated, “Illegal activity in the investment industry continues to bring financial ruin to unsuspecting American investors. IRS-Criminal Investigation is proud to be part of the multi-agency team that stopped this international investment scam. We stand ready to bring our forensic accounting skills to the fight against other investment schemes and white collar crimes.”
“Impersonation of an employee of the Internal Revenue Service is a violation of federal law,” said Robert E. O’Malley, Special Agent in Charge for the TIGTA. “Taxpayers should exercise extreme caution when contacted by individuals representing themselves as IRS employees, and immediately verify those individuals’ employment by contacting the IRS through their website at www.irs.gov. If the individuals cannot be verified as IRS employees, they should immediately contact TIGTA.”
The defendants have been charged with: one count of conspiracy to commit securities fraud, two counts of conspiracy to commit wire fraud, 15 counts of wire fraud, four counts of securities fraud and two counts of false personation of an officer of the United States. If convicted, the defendants will face up to 20 years’ imprisonment for each count of conspiracy to commit wire fraud, substantive wire fraud and substantive securities fraud and up to five years’ imprisonment for conspiracy to commit securities fraud. The defendants face up to three years in prison for each count of false personation of an officer of the United States. In addition, all proceeds of fraudulent schemes are subject to forfeiture. The defendants will be presented for arraignment later today at the United States Courthouses in Brooklyn, New York; Los Angeles, California; Miami, Florida; and Tucson, Arizona. The defendants in Los Angeles, Miami and Tucson are expected to be removed to Brooklyn.
The government’s case is being prosecuted by Assistant United States Attorneys Christopher A. Ott, Sylvia Shweder and Melanie Hendry.
This prosecution was the result of efforts by President Barack 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. For more information on the task force, visit http://www.StopFraud.gov.
The Defendants
SANDY WINICK
Citizenship: Canada
Age: 55
Bangkok, ThailandGREGORY CURRY
Citizenship: Canada
Age: 63
Bangkok, ThailandKOLT CURRY
Citizenship: Canada
Age: 38
Ontario, CanadaGREGORY ELLIS
Citizenship: Canada
Age: 46
Ontario, CanadaGARY KERSHNER
Citizenship: United States
Age: 72
Tucson, ArizonaJOSEPH MANFREDONIA
Citizenship: United States
Age: 45
Tom’s River, New JerseyCORT POYNER
Citizenship: United States
Age: 44
Boca Raton, FloridaSONGKRAM ROY SAHACHAISERE
Citizenship: United States
Age: 43
Huntington Beach, CaliforniaWILLIAM SEALS
Citizenship: United States
Age: 51
Fallbrook, California_____________________________
1The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
2 The investigation showed that the identities used were fictitious and no IRS employees were involved in the scheme.
Minneapolis Man Sentenced to 30 Years in Prison for Committing Sexual Abuse Against A ChildRead the Press Release
MINNEAPOLIS—Yesterday in federal court in Fergus Falls, a 32-year-old Minneapolis man was sentenced for committing aggravated sexual abuse against a child. On August 12, 2013, United States District Judge John R. Tunheim sentenced Joseph Valerian Parshall to 360 months in prison on two counts of aggravated sexual abuse against a child under the age of 12. Parshall was indicted on September 21, 2011, and was convicted on February 7, 2012.
According to the indictment and evidence presented at trial, Parshall committed two sexual acts against the child between February 1 and July 27, 2011. A law enforcement affidavit filed in the case states that on July 27, 2011, the Red Lake Tribal Police Department was informed of the abuse. The Federal Bureau of Investigation’s Fugitive Task Force arrested Parshall on August 31, 2011, in Minneapolis.
This case was the result of an investigation by the Red Lake Tribal Police Department and the FBI. It was prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw. Because the Red Lake Indian Reservation is a federal-jurisdiction reservation, some of the crimes that occur there are investigated by the FBI in conjunction with the Red Lake Tribal Police Department. Those cases are prosecuted by the U.S. Attorney’s Office.Milwaukee Man Facing Life Imprisonment for Witness RetaliationRead the Press Release
United States Attorney James L. Santelle announced that today a federal grand jury indicted Kyle T. Collins, age 35, of Milwaukee, on one count of Retaliation Against a Federal Witness. If convicted of the charge, Collins faces a maximum penalty of life in prison without parole.
The charge relates to allegations that on June 14, 2013, Collins physically assaulted and threatened to kill a female who had testified earlier this year in the federal sex-trafficking trial of Tyrone McMillian. The female witness had been included in McMillian’s indictment as one of four minors that McMillian had trafficked in the sex trade between 2006 and 2009. The jury hearing that case found McMillian guilty of seven sex-trafficking counts. McMillian faces life in prison on four of those counts.
In documents previously filed publicly in connection with the allegations against Collins, the federal witness and two other individuals described to law enforcement officers Collins’ attack on the witness. According to those documents, in the early morning hours of June 14, 2013, Collins confronted the federal witness in a nightclub and told her that he knew she had testified against McMillian. A short while later, the witness left the nightclub and Collins again confronted her. Collins physically assaulted the witness outside of the nightclub and dragged her by her hair towards a waiting car where he was heard to say, “I’m going to kill this snitch.” Although Collins had dragged her halfway into the car, the witness was able to break free and run away. Collins was arrested a short while later.
In announcing the indictment, United States Attorney Santelle commented: “Attacks of any type on witnesses strike at the very heart of our criminal justice system, and witness intimidation and witness retaliation threaten the mission of all of us who work to keep our community safe and secure. That the alleged victim in this case is a young woman who, as a minor, was previously victimized by a sex trafficker makes this conduct all the more egregious and troubling. Today’s charge makes clear once again that the weight of the federal criminal justice system will be brought to bear on those who would in any manner, through any means attempt to harm or otherwise influence individuals who have the courage and the commitment to step forward and provide information about the criminal activities of others.”
The indictment was the result of an investigation by the Milwaukee Police Department. The case has been assigned to Assistant United States Attorney Joseph R. Wall.The public is cautioned that an indictment is merely the formal method of charging an individual and does not constitute evidence of guilt. An individual is presumed innocent until such time, if ever, that the government establishes his or her guilt beyond a reasonable doubt.
# # #Midwest City Man to Serve 27 Years in Federal Prison for Producing Child PornRead the Press Release
Oklahoma City, Oklahoma – JACK RUSSELL OWENS, 62, of Midwest City, Oklahoma, was sentenced by United States Chief District Judge Vicki Miles-LaGrange to serve 324 months in federal prison for producing child pornography, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.
According to court records, Owens, a former professional photographer, made pornographic images of prepubescent girls in his Midwest City home. He used both regular cameras and hidden video cameras. He took the pictures and videos in the bathroom, in and around the backyard pool, and in the attic. Some of the pornographic pictures taken by Owens were surreptitious; others were not. Evidence showed that Owens, who frequented girls gymnastics events and went to nudist resorts, had been taking pictures of young girls—both clothed and unclothed—since the 1980s. In addition, evidence also showed that Owens had touched the genitals of a 9-year-old girl on more than one occasion. Owens had told the child, now a young adult, that she would get in trouble if she reported him.
In addition to homemade child pornography, Owens also possessed approximately 20,000 images of child pornography that he had downloaded from the Internet on two different home computers and an external hard drive. The bulk of Owens’s collection depicted girls between the ages of 5 and 11.
Owens’s misconduct came to light when a local citizen, through a chance encounter, observed child pornography on one of Owens’s computers and reported it to the Midwest City Police Department. Owens pled guilty to producing child pornography on May 8, 2013.
This case was part of Project Safe Childhood, the flagship program in the Department of Justice’s National Strategy for Child Exploitation Prevention and Interdiction, and was the result of an investigation conducted by the Midwest City Police Department and the Edmond Police Department, in conjunction with the AT&T Digital Crime lab at the University of Central Oklahoma. The case was prosecuted by Assistant U.S. Attorneys Brandon Hale and Chris Stephens.
Man Indicted for Embezzling from VA Program and Identity TheftRead the Press Release
BOSTON – A Massachusetts man was charged today with embezzling money from a Veterans Affairs program and identity theft.
Riccardo D’Orsainville, a/k/a “Riccardo Lloyd-D’Or,” was indicted for embezzling money from a program receiving federal funds, and for using the identity of other persons to open bank accounts.
The indictment alleges that between July 2012 and January 2013, D’Orsainville embezzled more than $66,000 in program payments and more than $2,000 in U.S. Treasury checks which were intended for the Boston Veterans Affairs Research Institute, Inc., (BVARI), where D’Orsainville was employed through a temporary agency as an executive assistant. BVARI is a federally funded non-profit organization which conducts medical research and educational activities for the Veterans Affairs health care system. It is further alleged that D’Orsainville used the identities of co-workers to open unauthorized corporate bank accounts under BVARI’s name, where he deposited the stolen checks and withdrew the funds for his own use.
If convicted, D’Orsainville faces a maximum penalty of up to 15 years in prison, to be followed by three years of supervised release and a $250,000 fine.
United States Attorney Carmen M. Ortiz and Jeffrey G. Hughes, Special Agent in Charge, Department of Veterans Affairs, Office of Inspector General, Northeast Field Office made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Shelbey D. Wright of Ortiz’s Health Care Fraud Unit.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Man Convicted of Attempted Online Enticement for a Minor and Traveling from Alabama to Engage in Illicit Sexual ConductRead the Press Release
PANAMA CITY, FLORIDA – Following a two-day trial, Jeffrey Monroe Roy (48), of Mobile, Alabama, was found guilty of using the Internet in an attempt to persuade, induce, and entice a minor to engage in sexual activity and of traveling from Mobile, Alabama, to Panama City, Florida, with the intent to engage in sexual conduct with a 13 year old female.
Evidence presented during trial proved that on June 13, 2012, law enforcement officers, acting in an undercover capacity posted an advertisement on Craigslist posing as a 13 year old female. Roy responded to the posting, and over the next three days, Roy engaged in email chats and telephone calls that were sexual in nature with a person who the defendant believed to be a 13 year old female named Jaz. During his communications with Jaz, Roy discussed numerous sexual situations and attempted to entice the 13 year old female to engage in sexual activity with him. After making arrangements to meet the 13 year old female, Roy drove from Mobile, Alabama on June 16, 2012 to meet with 13 year old Jaz at a predetermined location, where he was arrested and found to be in possession of Viagra, condoms, a camera, a knife, handcuffs, a first aid kit, and a deck of 52 sex position cards.
As a result of the guilty verdict, Roy faces a sentence of ten years to life in prison on Count One of the Indictment, attempted online enticement of a minor, and a sentence of up to thirty years in prison on Count Two of the Indictment, traveling with the intent to engage in illicit sexual conduct. Roy also faces a fine of up to $250,000, not less than five years and up to a life term of supervised release, and a $100 special assessment on both counts. Sentencing is set for November 20, 2013 at 10 a.m.
In announcing the verdict, Pamela C. Marsh, United States Attorney for the Northern District of Florida, credited the success of this prosecution to the joint efforts of the agencies participating in the North Florida Internet Crimes Against Children Task Force Program, particularly U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Marshals Service, Bay County Sheriff’s Office, and the Gainesville Police Department. Ms. Marsh said, “The safety and well-being of our children is a top priority for the Department of Justice. Our office will continue to aggressively prosecute these cases to protect the community and children, who are our most innocent victims. Great praise is deserved by all of our law enforcement partners who contributed to the success of this investigation.”
This case was brought as part of Project Safe Childhood, a nationwide initiative launched by the Department of Justice in May 2006 to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was prosecuted by Assistant United States Attorney Kathryn Risinger.
Kyle Man Indicted for Assaulting an OfficerRead the Press Release
United States Attorney Brendan V. Johnson announced that a Kyle, South Dakota, man was indicted by a federal grand jury for assaulting an Oglala Sioux Tribe police officer.
Red Owl was remanded to the custody of the U.S. Marshals Service. A trial date has not been set.
Richard Red Owl, age 46, was indicted on July 23, 2013, for Assaulting a Federal Officer. He appeared before U.S. Magistrate Judge Veronica L. Duffy on August 12, 2013, and pled not guilty to the indictment. Red Owl allegedly swung a tree branch at the officer, and then threw a knife at him.
The maximum penalty upon conviction is 20 years’ imprisonment and/or a $250,000 fine. The charge is merely an accusation and Red Owl is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Bureau of Indian Affairs Office of Justice Services and the Oglala Sioux Tribe Department of Public Safety. Assistant U.S. Attorney Eric Kelderman is prosecuting the case.Justice Department Resolves Lawsuit Alleging Discrimination on Basis of Race and National Origin in MinneapolisRead the Press Release
The Justice Department today announced a settlement of its lawsuit alleging that Highland Management Group Inc., Edina Park Apartments LLC, and Amy Koch violated the Fair Housing Act (FHA) by discriminating against Somali prospective renters at Edina Park Apartments in Edina, Minn. a suburb of Minneapolis. After filing the complaint earlier today, the department submitted the settlement to U.S. District Court Judge Susan R. Nelson, in the form of a proposed consent decree.
The case originated based on evidence generated by the department’s Fair Housing Testing Program, in which individuals pose as prospective renters to gather information about possible discriminatory practices. The testing uncovered evidence that Amy Koch, who was the then property manager at Edina Park Apartments, showed white testers apartments when they walked in while she told Somali testers they had to make an appointment to see an apartment the next day. She also failed to tell Somali testers about certain apartments becoming available that she mentioned to white testers. Amy Koch was an employee of Highland Management Group, Inc.
“Treating people differently because of their race or national origin when they are looking for a place to live is a fundamental affront to American values,” said Acting Assistant Attorney General Jocelyn Samuels. “This settlement demonstrates that the Civil Rights Division Housing Testing Program is an important tool in combating discrimination.”
Under the settlement, Highland Management Group Inc. and Edina Park Apartments must pay $30,000 to the government as a civil penalty. The settlement also requires Highland Management Group, Inc. and Edina Park Apartments to maintain a nondiscrimination policy, provide employees with training on the requirements of the Fair Housing Act and provide periodic reports to the government.
U.S. Attorney B. Todd Jones said, “Everyone has the right to expect equal treatment under the law when searching for housing. The U.S. Department of Justice and the U.S. Attorney’s Office will work tirelessly to ensure that all people are treated fairly when attempting to secure housing for themselves and their families. It is what the good citizens of Minnesota expect and deserve.”
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Individuals who believe that they may have been victims of housing discrimination should call the Housing Discrimination Tip Line (1-800-896-7743) or email the Justice Department at [email protected]. Such persons may also contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at http://www.usdoj.gov/crt.
Justice Department Reaches Settlement with Homeowners Association and Property Management Company inFair Housing Lawsuit Involving Occupancy LimitsRead the Press Release
The Justice Department announced today that the Townhomes of Kings Lake HOA Inc. (HOA) and Vanguard Management Group Inc. have agreed to pay $150,000 to settle a lawsuit alleging violations of the Fair Housing Act (FHA). The lawsuit alleged that the HOA adopted and both defendants enforced occupancy limits that discriminated against families with children at the Townhomes of Kings Lake, a 249-townhome community in Gibsonton, Fla.
Under the proposed consent decree, which must still be approved by the U.S. District Court for the Middle District of Florida, the defendants will pay $45,000 to the family that initiated the original complaint filed with the U.S. Department of Housing and Urban Development (HUD), $85,000 into a victim fund to compensate other aggrieved families, and $20,000 to the United States as a civil penalty. In addition, the proposed consent decree prohibits the defendants from discriminating in the future against families with children and requires the defendants to receive training on the requirements of the FHA. In January 2013, while the lawsuit was pending, the HOA modified its occupancy limits to permit four occupants in 2-bedroom townhomes, six occupants in 3-bedroom townhomes, and eight occupants in 4-bedroom townhomes.
“The Fair Housing Act ensures that families with children are not denied their housing rights based on discriminatory occupancy policies,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to vigorously enforce fair housing laws that protect the rights of families with children.”
The lawsuit, filed in October 2012, arose from a complaint filed with HUD by a family with six children that was living at the Townhomes of Kings Lake. After the family moved into their 4-bedroom townhome, the defendants indicated there was a problem with the number of people living in the home and threatened to evict the family. The family eventually moved out of the Kings Lake community. After HUD investigated the complaint, it issued a charge of discrimination and referred the matter to the Justice Department. The lawsuit alleged that the defendants violated the family’s rights, that the restrictive occupancy policies discriminated against other families with children, and that the defendants engaged in a pattern or practice of discrimination or denied rights protected by the FHA to a group of persons.
“Twenty-plus years of HUD guidance and cases have put housing providers on notice that occupancy standards which unfairly limit or exclude families with children violate the Fair Housing Act,” said Bryan Greene, HUD’s Acting Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Department of Justice are committed to making sure that all people have equal access to the housing for which they financially qualify.”
Individuals who believe they or other individuals they know were victims of housing discrimination as a result of the former occupancy policies at the Townhomes of Kings Lake should contact the Housing and Civil Enforcement Section of the Civil Rights Division at 1-800-896-7743, mailbox number 9994, or by sending an email to [email protected] .
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.
Justice Department Files Antitrust Lawsuit Challenging Proposed Merger Between US Airways and American AirlinesRead the Press Release
The Department of Justice, six state attorneys general and the District of Columbia filed a civil antitrust lawsuit today challenging the proposed $11 billion merger between US Airways Group Inc. and American Airlines’ parent corporation, AMR Corp. The department said that the merger, which would result in the creation of the world’s largest airline, would substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service.
The Department of Justice’s Antitrust Division, along with the attorneys general, filed a lawsuit in the U.S. District Court for the District of Columbia, which seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate. The participating attorneys general are: Texas, where American Airlines is headquartered; Arizona, where US Airways is headquartered; Florida; the District of Columbia; Pennsylvania; Tennessee; and Virginia.
“Airline travel is vital to millions of American consumers who fly regularly for either business or pleasure,” said Attorney General Eric Holder. “By challenging this merger, the Department of Justice is saying that the American people deserve better. This transaction would result in consumers paying the price – in higher airfares, higher fees and fewer choices. Today’s action proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace.”
Last year, business and leisure airline travelers spent more than $70 billion on airfare for travel throughout the United States. In recent years, major airlines have, in tandem, raised fares, imposed new and higher fees and reduced service, the department said.“The department sued to block this merger because it would eliminate competition between US Airways and American and put consumers at risk of higher prices and reduced service,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “If this merger goes forward, even a small increase in the price of airline tickets, checked bags or flight change fees would result in hundreds of millions of dollars of harm to American consumers. Both airlines have stated they can succeed on a standalone basis and consumers deserve the benefit of that continuing competitive dynamic.”
American and US Airways compete directly on more than a thousand routes where one or both offer connecting service, representing tens of billions of dollars in annual revenues. They engage in head-to-head competition with nonstop service on routes worth about $2 billion in annual route-wide revenues. Eliminating this head-to-head competition would give the merged airline the incentive and ability to raise airfares, the department said in its complaint.
According to the department’s complaint, the vast majority of domestic airline routes are already highly concentrated. The merger would create the largest airline in the world and result in four airlines controlling more than 80 percent of the United States commercial air travel market.
The merger would also entrench the merged airline as the dominant carrier at Washington Reagan National Airport, with control of 69 percent of the take-off and landing slots. The merged airline would have a monopoly on 63 percent of the nonstop routes served out of Reagan National airport. As a result, Washington, D.C., area passengers would likely see higher prices and fewer choices if the merger is allowed, the department said in its complaint. Blocking the merger will preserve current competition and service, including flights that US Airways currently offers from Washington’s Reagan National Airport.
The complaint also describes how, in recent years, the major airlines have succeeded in raising prices, imposing new fees and reducing service. The complaint quotes several public statements by senior US Airways executives directly attributing this trend to a reduction in the number of competitors in the U.S. market:· President Scott Kirby said, “Three successful fare increases – [we are] able to pass along to customers because of consolidation.”
· At an industry conference in 2012, Kirby said, “Consolidation has also…allowed the industry to do things like ancillary revenues…. That is a structural permanent change to the industry and one that’s impossible to overstate the benefit from it.”
· As US Airways CEO Parker stated in February 2013, combining US Airways and American would be “ the last major piece needed to fully rationalize the industry.”
· A US Airways document said that capacity reductions have “enabled” fare increases.
“The merger of these two important competitors will just make things worse –exacerbating current airline industry trends toward reduced service, increasing fares and increasing passenger fees,” added Baer.
As the complaint describes, absent the merger, US Airways and American will continue to provide important competitive constraints on each other and on other airlines. Today, US Airways competes vigorously for price-conscious travelers by offering discounts of up to 40 percent for connecting flights on other airlines’ nonstop routes under its Advantage Fares program. The other legacy airlines – American, Delta and United – routinely match the nonstop fares where they offer connecting service in order to avoid inciting costly fare wars. The Advantage Fares strategy has been successful for US Airways because its network is different from the networks of the larger carriers. If the proposed merger is completed, the combined airline’s network will look more like the existing American, Delta and United networks, and as a result, the Advantage Fares program will likely be eliminated, resulting in higher prices and less services for consumers. An internal analysis at American in October 2012, concluded, “The [Advantage Fares] program would have to be eliminated in a merger with American, as American’s large, nonstop markets would now be susceptible to reactionary pricing from Delta and United.” And, another American executive said that same month, “The industry will force alignment to a single approach–one that aligns with the large legacy carriers as it is revenue maximizing.” By ending the Advantage Fares program, the merger would eliminate lower fares for millions of consumers, the department said.
The complaint also alleges that the merger is likely to result in higher ancillary fees, such as fees charged for checked bags and flight changes. In recent years, the airlines have introduced fees for those services, which were previously included in the price of a ticket. These fees have become huge profit centers for the airlines. In 2012, domestic airlines generated more than $6 billion in fees from checked bags and flight changes alone. The legacy carriers often match each other when one introduces or increases a fee, and if others do not match the initiating carrier tends to withdraw the change. By reducing the number of airlines, the merger will likely make it easier for the remaining carriers to coordinate fee increases, resulting in higher fees for consumers.
The department also said that the merger will make coordination easier among the legacy carriers. Although low-cost carriers such as Southwest and JetBlue offer consumers many benefits, they fly to fewer locations and are unlikely to be able to constrain the coordinated behavior among those carriers.
American Airlines is currently operating in bankruptcy. Absent the merger, American is likely to exit bankruptcy as a vigorous competitor, with strong incentives to grow to better compete with Delta and United, the department said. American recently made the largest aircraft order in industry history, and its post-bankruptcy standalone plan called for increasing both the number of flights and the number of destinations served by those flights at each of its hubs.
The department’s complaint describes US Airways executives’ fear of American’s standalone growth plan as “industry destabilizing.” The complaint states that US Airways worries that American’s growth plan would cause “others” to react “with their own enhanced growth plans…,” and that the resulting effect would increase competitive pressures throughout the industry. The department said the merger will allow US Airways’ management to abandon these aggressive growth plans and continue the industry’s current trend toward higher prices and less service.
The department’s complaint states that executives of both airlines have repeatedly said that they do not need the merger to succeed. The complaint states that US Airways’ CEO observed in December 2011, that “A[merican] is not going away, they will be stronger post-bankruptcy because they will have less debt and reduced labor costs.” US Airways’ executive vice president wrote in July 2012, that, “There is NO question about AMR’s ability to survive on a standalone basis.” And, as recently as January 2013, American’s management presented plans that would increase the destinations it serves in the United States and the frequency of its flights, and would position American to compete independently as a profitable airline with aggressive plans for growth.
AMR is a Delaware corporation with its principal place of business in Fort Worth, Texas. AMR is the parent company of American Airlines. Last year American flew more than 80 million passengers to more than 250 destinations worldwide and took in more than $24 billion in revenue. In November 2011, American filed for bankruptcy reorganization.
US Airways is a Delaware corporation with its principal place of business in Tempe, Ariz. Last year US Airways flew more than 50 million passengers to more than 200 destinations worldwide and took in more than $13 billion in revenue.Related Materials:
Remarks as Prepared for Delivery by Assistant Attorney General Bill Baer at the Conference Call Regarding the Justice Department?s Lawsuit Challenging Us Airways? Proposed Merger with American Airlines
Health Care Clinic Owners Plead Guilty in Miami<br /> for Roles in $8 Million Health Care Fraud SchemeRead the Press Release
Two health care clinic owners pleaded guilty today in connection with an $8 million health care fraud scheme involving the now-defunct home health care company Flores Home Health Care Inc.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent in Charge Michael B. Steinbach of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the Miami office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations made the announcement.
Miguel Jimenez, 43, and Marina Sanchez Pajon, 29, of Miami, pleaded guilty before U.S. District Judge Ursula Ungaro in the Southern District of Florida, each to one count of conspiracy to commit health care fraud. At sentencing, scheduled for Oct. 30, 2013, Jimenez and Pajon each face a maximum penalty of 10 years in prison.
Jimenez and Pajon, who are married, were owners and operators of Flores Home Health, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.
According to court documents, Jimenez and Pajon operated Flores Home Health for the purpose of billing Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided. Jimenez’s primary role at Flores Home Health involved controlling the company and running and overseeing the schemes conducted through Flores Home Health. Both Jimenez and Pajon were responsible for negotiating and paying kickbacks and bribes, interacting with patient recruiters, and coordinating and overseeing the submission of fraudulent claims submitted to the Medicare program.
Jimenez, Pajon and their co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Flores Home Health for home health and therapy services that were medically unnecessary and/or not provided. They also paid kickbacks and bribes to co-conspirators in doctors’ offices and clinics in exchange for home health and therapy prescriptions, medical certifications, and other documentation. Jimenez, Pajon, and their co-conspirators used the prescriptions, medical certifications, and other documentation to fraudulently bill Medicare for home health care services that Jimenez and Pajon knew were in violation of federal criminal laws.
From approximately October 2009 through approximately June 2012, Flores Home Health was paid approximately $8 million by Medicare for fraudulent claims for home health services that were not medically necessary and/or not provided.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case was prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Health Care Clinic Owners Plead Guilty in Miami for Roles in $8 Million Health Care Fraud SchemeRead the Press Release
Two health care clinic owners pleaded guilty today in connection with an $8 million health care fraud scheme involving the now-defunct home health care company Flores Home Health Care Inc.
U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; Special Agent in Charge Michael B. Steinbach of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the Miami office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations made the announcement.
Miguel Jimenez, 43, and Marina Sanchez Pajon, 29, of Miami, pleaded guilty before U.S. District Judge Ursula Ungaro in the Southern District of Florida, each to one count of conspiracy to commit health care fraud. At sentencing, scheduled for Oct. 30, 2013, Jimenez and Pajon each face a maximum penalty of 10 years in prison.
Jimenez and Pajon, who are married, were owners and operators of Flores Home Health, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.
According to court documents, Jimenez and Pajon operated Flores Home Health for the purpose of billing Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided. Jimenez’s primary role at Flores Home Health involved controlling the company and running and overseeing the schemes conducted through Flores Home Health. Both Jimenez and Pajon were responsible for negotiating and paying kickbacks and bribes, interacting with patient recruiters, and coordinating and overseeing the submission of fraudulent claims submitted to the Medicare program.
Jimenez, Pajon and their co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Flores Home Health for home health and therapy services that were medically unnecessary and/or not provided. They also paid kickbacks and bribes to co-conspirators in doctors’ offices and clinics in exchange for home health and therapy prescriptions, medical certifications, and other documentation. Jimenez, Pajon, and their co-conspirators used the prescriptions, medical certifications, and other documentation to fraudulently bill Medicare for home health care services that Jimenez and Pajon knew were in violation of federal criminal laws.
From approximately October 2009 through approximately June 2012, Flores Home Health was paid approximately $8 million by Medicare for fraudulent claims for home health services that were not medically necessary and/or not provided.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case was prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Health Care Business Owner Sentenced to Four Years in Prison, Pays A Million Dollar Civil Settlement, and Agrees to 20-year Exclusion from Medicare and Medicaid in Connection with Illegal Kickback SchemeRead the Press Release
Babubhai Rathod is the Ninth Person Convicted of Felony Charges in a Joint Federal-State Investigation Resulting from a Whistleblower Lawsuit
GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick Miles announced today that Babubhai Rathod, age 44, of Okemos, Michigan, was sentenced to four years in prison and two years of supervised release for his lead role in a conspiracy to pay illegal kickbacks to health care practitioners and others to induce the referral of patients to medical clinics, physical therapy clinics, and a home health care agency. U.S. District Judge Janet T. Neff also ordered Rathod to pay $950,000 in restitution, $900,000 of which Rathod paid prior to sentencing under the terms of a related $1,000,000 civil False Claims Act settlement. As part of that civil settlement, Rathod also agreed to a 20-year exclusion from federal health care programs, including Medicare and Medicaid. In sentencing Mr. Rathod, Judge Neff described the kickback charges as “very, very serious” and having “consequences to . . . very important government programs in which millions of Americans participate.”
Rathod’s conviction and the related civil settlement arose from a superseding indictment and civil complaint which alleged that between at least January 2007 and January 2012, Rathod directed a scheme to pay physicians, mid-level practitioners, and others for referring patients to medical clinics (Lakeshore Spine & Pain, P.C., based in Ludington, MI), physical therapy clinics (U.S. Rehab Services, P.C., among others, based in Mt. Pleasant, MI), and a home health care agency (Lakeshore Home Health Care, Inc., based in Lansing, MI). The illegal payments were made in cash and checks disguised as bonuses, mileage reimbursements, and payments under sham contracts for medical director and consulting services that were never performed. During the sentencing hearing, Judge Neff specifically noted that the physicians who received such kickbacks stole from government programs that provide “crucial medical services.” Judge Neff further emphasized, with respect to such medical professionals, that “[a] thief is a thief.”
The superseding indictment and civil complaint also alleged that between at least January 2007 and January 2012, Rathod directed a scheme where Lakeshore Spine & Pain, P.C. routinely submitted claims for medical services in order to fraudulently obtain higher insurance reimbursements than those to which the company was entitled, a practice known as upcoding. Notably, Rathod was able to own and operate this network of affiliated health care companies, and direct these kickback and upcoding schemes, despite the fact that in 2003, Rathod pleaded one of his physical therapy companies guilty to a felony charge of falsifying medical records and subsequently lost his physical therapy license as the result of an assault conviction involving a patient.
Rathod’s sentencing follows the felony convictions of five other persons who paid or received illegal kickbacks in exchange for referring patients to Rathod’s health care companies for physical therapy, electrodiagnostic testing, and home health care services. Judge Neff imposed the following sentences for those individuals:
- Lino S. Dial, Jr., D.O. (Physician, Edmore, MI). Dial was sentenced to four months’ imprisonment and $70,000 in restitution. Dial has also been excluded from federal health care programs for five years.
- Clinton J. Cornell, P.A. (Physician Assistant, Mt. Pleasant, MI). Cornell was sentenced to fourteen months’ imprisonment and $38,430 in restitution. Cornell is also subject to a minimum five-year exclusion from federal health care programs.
- John E. Roberts, P.A. (Physician Assistant, Mt. Pleasant, MI). Roberts was sentenced to four months’ imprisonment and $70,000 in restitution. Roberts has also been excluded from federal health care programs for five years.
- Natalie J. Schutte, P.A. (Physician Assistant, Edmore, MI). Schutte was sentenced to two years’ probation and $120,000 in restitution. Schutte has also been excluded from federal health care programs for five years.
- Raju G. Nakum (Practice Administrator, Mt. Pleasant, MI). Nakum was sentenced to three months’ imprisonment and $345,000 in restitution. Nakum is also subject to a minimum five-year exclusion from federal health care programs.
Two other individuals employed by Lakeshore Spine & Pain, P.C. were convicted of felony health care fraud for their roles in the illegal upcoding scheme. Judge Neff imposed the following sentences for those individuals:
- Rajesh Makwana (Practice Administrator, Ludington, MI). Makwana was sentenced to twelve months and one day imprisonment and $71,000 in restitution. Makwana is also subject to a minimum five-year exclusion from federal health care programs.
- Sandeepkumar Patel (Biller, Ludington, MI). Patel was sentenced to two years’ probation. Patel has been excluded from federal health care programs for five years and will be deported from the United States.
In addition to these individuals and Rathod, a ninth individual, Kevin Witt, D.O., of Jackson, Michigan was charged and convicted by the Michigan Attorney General’s Office on a related state felony charge for accepting kickback payments from Rathod. Witt has been excluded from federal health care programs for five years.
This case resulted from a civil lawsuit filed by a whistleblower who worked in one of Rathod’s offices. The lawsuit, known as a qui tam action, was filed under the False Claims Act and Michigan Medicaid False Claims Act, which allow private whistleblowers to bring lawsuits on behalf of the United States and the State of Michigan and receive a share of any recoveries. In this case, the United States and State of Michigan intervened in the whistleblower’s lawsuit, recovered $1,140,000 to date, and are pursuing additional claims against over a dozen other physicians and mid-level practitioners. The whistleblower has received $240,100 of these settlement proceeds, as well as additional amounts for attorney’s fees and costs.
“Whistleblowers play a key role in protecting federal health care programs from fraud and abuse, including kickback schemes that are often difficult to detect and result in the referral of unnecessary and upcoded services,” said U.S. Attorney Miles. “Paying kickbacks for patient referrals distorts the motives of health care professionals. The U.S. Attorney’s Office will continue to aggressively investigate and prosecute such kickback schemes and seek all available civil and criminal remedies including treble civil damages, monetary penalties, and felony prosecutions.”
“It is essential to maintain integrity in our healthcare system. Patients deserve to know that when a doctor refers them for additional treatment, the decision to do so is based upon quality health advice—not what is best for the doctor’s bottom line,” said Attorney General Bill Schuette. “Kickbacks with the Medicaid program do not just hurt patients, they affect the taxpayers whose hard-earned dollars subsidize healthcare for those in need.”
FBI Special Agent in Charge Robert D. Foley, III stated, “Those who provide health care must be held to the highest standards of ethics and integrity. The FBI remains committed to pursuing and prosecuting such criminals who abuse the system by receiving illegal kickbacks.”
“Paying kickbacks for the referral of Medicare or Medicaid patients is a serious crime,” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. “Kickbacks inappropriately influence health care practitioners’ medical decision making process, lead to overutilization and/or upcoding of services, and further increase program costs. The OIG will continue to aggressively pursue all available remedies whether criminal, civil or administrative to ensure the integrity of the Medicare and Medicaid programs and protect vital taxpayer dollars.”
These convictions and settlements were the result of a coordinated effort by the U.S. Attorney’s Office for the Western District of Michigan, the Michigan Attorney General’s Office, the Federal Bureau of Investigation, the U.S. Department of Health and Human Services, Office of Inspector General, and Blue Cross Blue Shield of Michigan.
END
Head of Charter School Pleads Guilty to FraudRead the Press Release
PHILADELPHIA - Masai Skief, 32, of Philadelphia, Pennsylvania, pleaded guilty today to an information charging him with two counts of wire fraud, arising from the abuse of his leadership positions at a Philadelphia charter school, announced United States Attorney Zane David Memeger. Skief was the chief executive officer of Harambee Institute of Science and Technology Charter School (“Harambee Charter School”) and the president and chief administrative officer of a related non-profit organization, Harambee Institute, Inc. (“Harambee Institute”).
Harambee Charter School, a non-profit corporation, was established to educate children from kindergarten to eighth grade, and it promoted itself as Pennsylvania’s first African-centered charter school. Harambee Institute was a separate non-profit corporation that had been established to provide students with educational services and vocational training. Harambee Institute owned the school building that was used by Harambee Charter School and collected rent from the school. For its students, Harambee Charter School created a scholarship fund intended to benefit those who intended to attend a “historically black institution of higher education in the United States.”
During a guilty plea hearing before the Honorable Paul S. Diamond, Skief admitted that he engaged in a scheme to improperly obtain the funds of both the scholarship fund and Harambee Institute. First, Skief improperly withdrew $9,000 from the scholarship fund in order to purchase a house for himself in Philadelphia. Then, through his control of the bank accounts of Harambee Institute, Skief converted for his own personal use approximately $79,000 from Harambee Institute. He did this primarily through a series of improper cash withdrawals from the bank accounts of Harambee Institute.
Skief also made substantial efforts to conceal his illegal activities, both during and after the fraud. In particular, he attempted to disguise a significant portion of his improper cash withdrawals from the accounts of Harambee Institute as labor costs for Harambee Institute, when there were no such labor costs associated with the improper withdrawals. Skief directed an accountant to create IRS forms to reflect this false information. Skief also directed others to lie for him to federal agents and to a federal grand jury about the use of the funds that the defendant had unlawfully converted.
A sentencing hearing is scheduled for November 14, 2013. Skief faces a maximum possible sentence of 40 years in prison and an expected advisory sentencing guideline range of at least 21 to 27 months imprisonment, plus full restitution to the scholarship fund and to the Harambee Institute.
“Masai Skief stole scholarship money, mortgaging children’s futures to help buy himself a house,” said FBI Special Agent-in-Charge Edward Hanko. “His further theft from the education non-profit taught Philadelphia’s kids a harsh lesson about unmitigated greed.”
“Today’s action shows that Mr. Skief not only abused his position of trust for personal gain, but did so at the expense of students. That is unacceptable,” said Special Agent-in-Charge Steven Anderson, of the U.S. Department of Education Office of Inspector General Mid-Atlantic Office. “OIG will continue to aggressively pursue those who misappropriate education funds for their own purposes. America’s students and taxpayers deserve nothing less.”
The case was investigated by the Federal Bureau of Investigation and the United States Department of Education Office of Inspector General. It is being prosecuted by First Assistant United States Attorney Louis D. Lappen and Assistant United States Attorney Joseph J. Khan.
Click here to view the indictment
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Grand Island Man Sentenced for Structuring Bank Transactions to Evade Reporting RequirementsRead the Press Release
United States Attorney Deborah R. Gilg announced that Senior United States District Court Judge Richard G. Kopf sentenced Randy Evans, age 60 of Grand Island, Nebraska, to 5 years of probation, a $50,000.00 fine, and ordered the forfeiture of $32,702.85. In addition, Evans must pay a $100 special assessment.
Randy L. Evans is the owner of RCE Investments, Inc., doing business as Randy Auto Sales, located in Grand Island, Nebraska. Between January 4, 2010 and February 28, 2012, Randy Evans deposited and directed currency deposits in a bank account of Randy’s Auto Sales at Five Points Bank, a financial institution as defined by federal law. Evans was aware of the financial institution’s legal obligation to report currency transactions in excess of $10,000. During the period set forth in the Indictment, Evans intentionally structured, and caused to be structured, currency deposits with Five Points Bank in amounts under $10,000, in order to evade the reporting requirements of federal law. During the period in question, Evans structured, and caused to be structured, currency transactions totaling between $1,000,000 and $2,030,322.22, including $32,702.85 seized by the United States from a bank account controlled by Evans at Five Points Bank during this investigation.
“The use of cash is legal, however, structuring cash transactions to evade federal reporting requirements is illegal,” said Sybil Smith, Special Agent in Charge of IRS Criminal Investigation. “Individuals who engage in this type of activity run the risk of a possible prison sentence, a monetary forfeiture and/or fine.”
This case was investigated by IRS Criminal Investigations.Georgetown Home Builder Convicted of Bank Fraud, Embezzlement, Aggravated Identity Theft and False Loan ApplicationRead the Press Release
LEXINGTON, KY - A home builder from Georgetown, KY., was convicted by a federal jury of fraudulently obtaining more than a million dollars in loans from a Frankfort bank.
The jury convicted 59 year-old Lee C. Tevis of one count of bank fraud, three counts of false loan application, three counts of aiding and abetting bank embezzlement and three counts of aggravated identity theft. Tevis was acquitted on a conspiracy count. The jury rendered the verdict Monday evening, after more than 15 hours of deliberation, following five days of trial.
Evidence at trial proved that, starting in 2006, Tevis began construction on a house and fraudulently obtained loans from American Founders Bank (AFB), by setting up bogus corporations in the names of other people to bypass loan limits.
The evidence furthered revealed that Tevis used some of the loan money, which the bank intended to be used to fund a home in Frankfort, to pay off his personal loans and debt on other construction projects.
According to trial testimony, when Tevis reached loan limits established by the Bank, he set up a bogus corporation in the name of his company’s foreman, an illegal alien, in order to obtain more loans. After fraudulently qualifying for the loans, Tevis used the social security number of the foreman’s five year-old son to pass the bank’s credit check.
Tevis fraudulently received $1.4 million in loans from the bank, according to the evidence at trial. The Bank eventually foreclosed on the home that Tevis received the loans for and suffered a significant financial loss in the process.
Jim Tate, the AFB president who approved the loans for Tevis, previously pleaded guilty to bank fraud and will be sentenced on September 10.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, Federal Bureau of Investigation, and John E. Lucas, Special Agent in Charge, Federal Deposit Insurance Corporation, Office of Inspector General jointly announced the conviction.
The investigation was conducted by the FBI and the FDIC-OIG. Assistant U.S. Attorneys Andrew Sparks and Jim Arehart represent the U.S. Attorney’s Office in this case.
Tevis will appear for sentencing on December 3. He faces a maximum of 30 years in prison. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal statutes before imposing a sentence.
Four Men Indicted on Federal Charges in $158 Million Consumer and Mortgage Fraud ConspiracyRead the Press Release
Another Defendant Pleaded Guilty Today; Two Others Previously Pleaded Guilty And Are Awaiting Sentencing
CHARLOTTE, N.C. – The former senior vice president of a manufactured housing retailer, two of his former sales managers and a former loan officer associated with the retailer have been indicted on federal charges involving a $158 million consumer and mortgage fraud conspiracy, announced the U.S. Attorney’s Office for the Western District of North Carolina.
The superseding criminal indictment filed on August 6, 2013, stems from an ongoing investigation into allegations that the defendants were involved in a consumer and mortgage fraud conspiracy that defrauded North Carolina buyers of manufactured and modular housing and originated $158 million in fraudulent federally-secured loans for their purchase. Another defendant pleaded guilty today in connection with the scheme and two others have already pleaded guilty to related charges and awaiting sentencing.
U.S. Attorney Tompkins is joined in making today’s announcement by Lester Fernandez, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the Department of Housing and Urban Development (HUD-OIG); Karen Citizen-Wilcox, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the U.S. Department of Agriculture (USDA-OIG); Keith Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS); and North Carolina Attorney General Roy Cooper who oversees the North Carolina State Bureau of Investigation (NC SBI).
The superseding indictment charges Dennis Wayne Parris, 55, of Pinehurst, N.C., Fabian Sparrow, 35, of Burlington, N.C., Andrew B. McKeown, 38, of Asheboro, N.C., and Isaac “Ike” A. Vinson, IV, 46, of Pawleys Island, S.C., with one count of conspiracy to make false statements to the U.S. Departments of Housing and Urban Development (HUD) and Agriculture (USDA) and one count of wire fraud conspiracy. Parris, Sparrow and Vinson are also charged with one count of aiding and abetting the destruction of documents with intent to impede a federal investigation.
According to allegations contained in the superseding indictment, from in or about April 2005 to October 2010, Parris, Sparrow, and McKeown were employed by Phoenix Housing Group (“PHG”), a manufactured and modular housing retailer headquartered in Greensboro, N.C. with sales offices throughout North and South Carolina. Parris was Senior Vice President at PHG. Sparrow and McKeown worked as sales managers at PHG’s sales centers doing business as “Southern Showcase Housing” in Burlington and Asheboro, respectively. A fourth former PHG employee also involved in the scheme, Roger Dean Bailey, Jr., 40, of Hickory, was the sales manager of PHG’s sales center in Granite Falls, N.C., doing business as “Homes America.”
The superseding indictment alleges that Parris, Sparrow, McKeown and Bailey executed a mortgage fraud scheme to sell PHG manufactured and modular homes to consumers in North and South Carolina. Parris, Sparrow, McKeown, Bailey, and other PHG officers allegedly created a culture at PHG wherein employees were compelled to generate as many sales as possible regardless of whether their customers could afford the homes they were sold. Furthermore, the indictment alleges that, even after the HUD investigation into Bailey and Homes America became known, Parris, Sparrow and McKeown continued the scheme at other PHG locations.
According to the indictment, the co-conspirators were able to secure financing on those loans with the assistance of three loan officers of W.R. Starkey Mortgage (“WRSM”), a mortgage loan originator with corporate offices in North and South Carolina, among other states. WRSM was approved to originate loans insured by the Federal Housing Administration (“FHA”) or guaranteed by USDA. Vinson was a WRSM branch manager and loan officer in Myrtle Beach, S.C. Marina McCuen, 49, of Asheville, N.C. was a loan officer for WRSM’s Asheville office. Vinson originated loans for PHG customers in Burlington and supervised McCuen, who originated loans for PHG customers in Granite Falls, N.C. Joseph Klakulak, 37, of Charlotte, was a loan officer for WRSM’s Charlotte office. The indictment alleges that the three loan officers conspired with PHG’s management to fraudulently obtain federally-secured mortgages for PHG customers’ purchase of home/land deals.
In all, Parris, Sparrow, McKeown, Bailey and their conspirators sold over 1,100 homes to North Carolina consumers from PHG stores in Burlington, Asheboro, Granite Falls, and elsewhere, financed with more than $158 million in government-insured loans. The fraudulent loans resulted in hundreds of mortgage insurance claims totaling more than $24 million and net losses to the United States presently exceeding $16 million. According charging documents in Klakulak’s case, he originated over 400 of these loans, totaling more than $60 million, causing net losses to the federal government in excess of $3 million.
The superseding indictment further charges that, beginning in September 2008, Parris, Vinson, Sparrow, McCuen and Bailey obstructed HUD’s investigation into PHG’s and WRSM’s fraudulent activities at PHG’s Granite Falls sales office by destroying and attempting to destroy documents and asking witnesses to lie to investigators.
Today, Klakulak pleaded guilty before U.S. Magistrate Judge David S. Keesler to one count of conspiracy to defraud the United States and to make false statements to HUD and USDA. He was released on bond pending sentencing, which has not been set yet. At sentencing, Klakulak faces a maximum of five years in prison and a $250,000 fine.
Bailey pleaded guilty in October 2011 to conspiracy to commit wire fraud and to make false statements to HUD, making false statements to HUD, and wire fraud. McCuen pleaded guilty in June 2012 to one count of conspiracy to make false statements to HUD and USDA in connection with this scheme. Both McCuen and Bailey have been released on bond and await sentencing.
Also today, Vinson had his initial appearance on the superseding indictment before Judge Keesler. Vinson was released on bond. His co-defendants, Parris and McKeown, have been ordered to appear on a summons and will be arraigned on the charges on September 3, 2013. An arrest warrant has been issued for Sparrow, who is currently believed to be a fugitive. A photo of Sparrow is attached.
If convicted on all offenses, Parris, Sparrow, and Vinson face a maximum of 55 years in prison and a $1.5 million fine. McKeown faces a maximum of 35 years in prison and a $1.25 million fine if convicted on counts one and two of the indictment.
The charges contained in the indictment are allegations. They defendants are presumed innocent unless and until they are proven guilty beyond a reasonable doubt in a court of law.
In January 2011, PHG ceased business operations as part of a settlement with the Consumer Protection Division of the North Carolina Attorney General’s office. This settlement stemmed from a state civil action filed in November 2009, claiming Bailey, then the owner of K and B Home Builders in Hickory, N.C., along with other employees and/or managers of PHG and WRSM, as well as other businesses and individuals, were involved in deceptive consumer practices.
The prosecution for the case is being handled by Assistant United States Attorney Michael Savage and Benjamin Bain-Creed of the U.S. Attorney’s Office in Charlotte. The investigation is being handled HUD-OIG, USDA-OIG, USPS-OIG, and state investigators with NC SBI, the Office of Commissioner of Banks and the Consumer Protection Division of the N.C. Department of Justice.
Former Watertown Police Officer Convicted of Passing False Prescriptions Using Another’s IdentityRead the Press Release
BOSTON - A Framingham man pleaded guilty today in federal court in connection to crimes committed while in his official capacity as a Watertown police officer.
Joseph Deignan, 58, was convicted of unlawful possession of a controlled substance by fraud and fraud in connection with identification documents.
At today’s plea hearing, the prosecutor stated that Deignan, a former Watertown Police Officer who retired in February 2012, used the identity of another person to obtain oxycodone and other controlled substances by forging prescriptions in the other person’s name. Deignan stole the driver’s license of the person in 2010 while he was working as the traffic supervisor for the Watertown Police Department. From 2010 through December 2013, using various doctors’ information, Deignan forged over 100 prescriptions for controlled substances and used the stolen identity to fill the scripts.
The maximum sentence under the identity theft count is 15 years in prison, followed by three years of supervised release and a $250,000 fine. Judge Douglas P. Woodlock set sentencing for November 15.
United States Attorney Carmen M. Ortiz and John Arvanitis, Special Agent in Charge of the Drug Enforcement Administration’s New England Field Division made the announcement today. The DEA was provided assistance from the Marlborough Police Department. The Watertown Police Department has been cooperative during the investigation. The case is being prosecuted by Assistant U.S. Attorney Eugenia Carris of Ortiz’s Public Corruption Unit.Former Wastewater Manager in Hays Charged with Violating Clean Water ActRead the Press Release
WICHITA, KAN. – A former manager of wastewater facilities for the city of Hays, Kan., has been charged with violating the Clean Water Act, U.S. Attorney Barry Grissom said today.
Charles L. Blair, 57, Hays, Kan., is charged with four counts of making false statements about nitrogen levels in the effluent for the City of Hays. In three counts, Blair is alleged to have made false statements in Discharge Monitoring Reports. The reports significantly understated the amount of ammonia nitrogen in the city’s effluent. In another count, Blair is alleged to have falsely stated to agents of the Environmental Protection Agency that he had provided accurate reports to EPA. The crimes are alleged to have occurred in February, March and July 2012 in Hays, Kan.
The Clean Water Act regulates the discharge of pollutants from point sources to waters of the United States. More information on the law is available at: http://www2.epa.gov/laws-regulations/summary-clean-water-act
If convicted, Blair faces a maximum penalty of two years in federal prison and a fine up to $10,000 on each of the first three counts and a maximum penalty of five years and a fine up to $250,000 on the fourth count.
The Environmental Protection Agency investigated. Assistant U.S. Attorney Matt Treaster is prosecuting.
OTHER INDICTMENTS
Antoine Otano, 23, Wichita, Kan., is charged with one count of possession with intent to distribute cocaine, and one count of unlawful possession of a firearm in furtherance of drug trafficking. The crimes are alleged to have occurred May 25, 2009, in Sedgwick County, Kan.If convicted, he faces a penalty of not less than five years and not more than 40 years and a fine up to $2 million on the cocaine charge, and a penalty of not less than five years – consecutive to the sentence on the other count – and a fine up to $250,000 on the firearm charge.
The Wichita Police Department and the Drug Enforcement Administration investigated. Special Assistant U.S. Attorney Michelle Jacobs is prosecuting.
Eleazar Marquez-Bencomo, 52, Garden City, Kan., is charged with one count of possession with intent to distribute cocaine and two counts of unlawful possession of a firearm in furtherance of a drug trafficking. The crimes are alleged to have occurred Aug. 1, 2013, in Finney County, Kan.
If convicted, he faces a penalty of not less than five years and not more than 40 years and a fine up to $2 million on the cocaine charge, and a penalty of not less than five years – consecutive to the sentence on the other count – and a fine up to $250,000 on each firearm count. The Finney County Sheriff’s Department, the Garden City Police Department and the Drug Enforcement Administration investigated. Special Assistant U.S. Attorney Michelle Jacobs is prosecuting.
Amos Becknell, 33, Wichita, Kan., is charged in a superseding indictment with one count of possession with intent to distribute cocaine, one count of unlawful possession of a firearm in furtherance of drug trafficking and three counts of unlawful possession of a firearm after a felony conviction. The crimes are alleged to have occurred April 1, 2011, in Sedgwick County, Kan.
If convicted, he faces a maximum penalty of 20 years and a fine up to $1 million on the cocaine count, a penalty of not less than five years, consecutive to the sentence on the cocaine count, and a fine up to $250,000 on the charge of possessing a firearm in furtherance of drug trafficking, and a maximum penalty of 10 years and a fine up to $250,000 on each of the charges on unlawful possession of a firearm after a felony conviction. The Wichita Police Department investigated. Special Assistant U.S. Attorney Michelle Jacobs is prosecuting.
Troy D. Benton, 43, Liebenthal, Kan., is charged with one count of possession with intent to distribute methamphetamine and one count of unlawful possession of a firearm after a felony conviction. The crimes are alleged to have occurred July 4, 2013, in Ellis County, Kan.
If convicted, he faces a penalty of not less than five years and not more than 40 years and a fine up to $2 million on the drug charge and a maximum penalty of 10 years and a fine up to $250,000 on the firearm charge. The Ellis County Sheriff’s Office investigated. Assistant U.S. Attorney Matt Treaster is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Former Owner of Liquor Store Pleads Guilty to Tax Crime and Selling Cutting Agents to Local Drug DealersRead the Press Release
Southfield, Mich., resident Bashar Saroki pleaded guilty to filing a false tax return and selling drug paraphernalia, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents, Saroki controlled and operated Golden Star Party Store, a liquor store that was located in Detroit. From 2007 through 2011, Saroki sold more than $1 million worth of a variety of cutting agents to local narcotics dealers out of Golden Star Party Store and from his residence. The cutting agents were substances used by narcotics dealers to dilute the potency and increase the quantity of the narcotics sold to customers. Despite the significant proceeds from the sale of cutting agents, Saroki reported very little income on his false tax return for 2009.
Saroki faces a maximum sentence of three years in prison, one year of supervised release and a $250,000 fine on each count. U.S. District Judge Robert H. Cleland set sentencing for Dec. 17, 2013.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of special agents of IRS-Criminal Investigation, who investigated this case, and Tax Division Trial Attorneys Kenneth C. Vert and Yael T. Epstein, who prosecuted the case.
Former Loan Officer Pleads Guilty to Stealing $400,000 from Victims in Investment Fraud SchemeRead the Press Release
LAS VEGAS, Nev. – A former loan officer from Henderson, Nev., who convinced over 30 victims to give him money for a high yield investment scheme involving the foreign currency exchange market, has pleaded guilty to federal fraud and money laundering charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Kamalu Gonzales, 47, pleaded guilty on Monday, Aug. 12, 2013, before U.S. District Judge Gloria M. Navarro to two counts of mail fraud, six counts of wire fraud, and two counts of money laundering. Gonzales is scheduled to be sentenced on Nov. 14, 2013, and faces up to 30 years in prison and a $1 million fine on each of the fraud charges and up to 10 years in prison and a $250,000 fine on each of the money laundering charges.
According to the court records, from approximately 2007 to 2008, Gonzales told individuals that he was a successful investor and trader in the foreign currency exchange market. Gonzales recruited individuals to invest with him in the market, telling them that they could earn high rates of return on their investments in a short period of time. Some of the victims wired money to Gonzales, and others borrowed money from their retirement fund, line of credit, or refinanced their houses in order to invest with him.
During 2007, Gonzales worked as a loan officer for Meridias Capital in Henderson, Nev. Gonzales helped persons refinance their homes, and placed false information in the loan applications so the individuals could obtain refinancing and cash to which they would not have otherwise been entitled. Gonzales convinced these individuals to give him some of the cash they received from refinancing for his investment fraud scheme. None of the victims agreed to pay Gonzales any commissions or fees, or agreed that he could use their investments for personal or business expenses or to pay other investors.
In order to continue the scheme and to keep victims from discovering the crime, Gonzales lied to the victims repeatedly and told them their investments were doing well. As a result of the lies, some victims gave Gonzales more money to invest. Gonzales also made payments to some of the victims using monies he received from other victims.
Gonzales received approximately $1 million total from over 30 victims in 2007 and 2008. Gonzales did not invest the victims’ funds as promised and diverted approximately $410,000 for his own personal purposes.
Gonzales is free on a personal recognizance bond pending sentencing.
The case was investigated by the FBI and is being prosecuted by Assistant U.S. Attorneys Kathryn C. Newman and Kimberly M. Frayn.
Today's announcement is part of efforts underway by President Obama's Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys' offices and state and local partners, it's the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Former Corporate Controller for Collin Street Bakery (CSB) Is Arrested and Detained on Mail Fraud ChargeRead the Press Release
Defendant Allegedly Embezzled More Than $16 Million from CSB
DALLAS — Sandy Jenkins, 64, of Corsicana, Texas, was arrested by special agents of the FBI yesterday afternoon on a federal criminal complaint charging mail fraud. Jenkins appeared before a magistrate judge this afternoon where he waived preliminary and detention hearings and was remanded into custody pending the outcome of his case. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
According to the affidavit filed with the complaint, as well as the government’s motion for detention, Jenkins was the corporate controller for the Collin Street Baker (“CSB”) in Corsicana, Texas, from February 1998 through June 21, 2013. On June 21, 2013, Jenkins was terminated after CSB discovered the alleged fraud. In particular, Jenkins caused CSB checks to be written to his personal creditors and then manipulated CSB’s computerized accounting system to show that the checks had been voided. In order to keep CSB’s books in balance and further disguise his fraudulent activity, Jenkins created checks in CSB’s accounting system purporting to go to an approved vendor in the same amounts as the checks to his personal creditors. The checks to Jenkins’s personal creditors were used to bankroll a lavish lifestyle that included a house in Santa Fe, New Mexico, 43 luxury automobiles, frequent travel on private planes and a watch and jewelry collection worth approximately $3 million. The government’s investigation shows that Jenkins caused 888 fraudulent checks to be sent to his personal creditors, resulting in approximately $16.65 million in losses to the bakery.
A complaint is a written statement of the essential facts of the offenses charged and must be made under oath before a magistrate judge. A defendant is entitled to the presumption of innocence until proven guilty. The government has 30 days to present the matter to a grand jury for indictment. The maximum statutory penalty for the offense of mail fraud is 20 years in federal prison and a $250,000 fine, per count. In addition, restitution could be ordered.
The investigation is being conducted by the FBI. Assistant U.S. Attorney J. Nicholas Bunch is in charge of the prosecution and Assistant U.S. Attorney Melissa Childs is handling the forfeiture.
Former CFO of Communications and Power Co. Facing Fraud and Tax ChargesRead the Press Release
ERIE, Pa. - A resident of Erie, Pennsylvania, has been indicted by a federal grand jury in Erie on charges of mail fraud and tax evasion, United States Attorney David J. Hickton announced today.
The two-count indictment named Brian M. Quimby, 46, as the sole defendant.
According to the indictment presented to the court, while Quimby was employed as CFO of Thayer Power and Communications, he defrauded Key Bank. In addition, Quimby failed to file his income tax return for calendar year 2007.
The law provides for a maximum total sentence of 35 years in prison, a fine of $1,250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Christian A. Trabold is prosecuting this case on behalf of the government.
The Internal Revenue Service, Criminal Investigation, and the Federal Bureau of Investigation conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former CEO of Miami Lakes Tax Preparation Business Charged in Structuring SchemeRead the Press Release
Wifredo A Ferrer, United States Attorney for the Southern District of Florida, and Michael J. De Palma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announce that defendant Carlos Rodriguez, 40, of Miami Lakes, was charged in a 19 count indictment with structuring financial transactions with the intent to evade currency reporting requirements, in violation of Title 31, United States Code, Sections 5324(a)(3) and 5324(d)(2). The indictment also seeks the forfeiture of $558,516.80, the amount of currency involved in the structuring violations, pursuant to Title 31, United States Code, 5317(c)(1). Defendant Rodriguez had his initial appearance today before U.S. Magistrate Judge John O’Sullivan.
According to the indictment, financial institutions are required to report cash transactions in amounts over $10,000.00 to the IRS. The indictment alleges that between January 4, 2012 and March 22, 2012, Rodriguez intentionally cashed fifty-six checks from his business account in amounts just under $10,000.00 at a financial institution in order to evade the cash reporting requirements. As further alleged in the indictment, the total amount of money involved in the structuring violations was $558,516.80. If convicted, the defendant faces up to 10 years in prison for each count.
According to statements made in court, Rodriguez was Chief Executive Officer of Rodri Rodri & Associates, Inc., a tax preparation business, during the time of the alleged structuring violations and currently is the Chief Financial Officer of Ayudame Financial Services, Inc.
Mr. Ferrer commended the investigative efforts of IRS-CI. This case is being prosecuted by Assistant U.S. Attorney Elijah A. Levitt.
An indictment is only an accusation and the defendant is presumed innocent until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Federal Grand Jury Criminal Indictments AnnouncedRead the Press Release
TULSA, Okla. — The results of the August 2013 Federal Grand Jury were announced today by Danny C. Williams Sr., United States Attorney for the Northern District of Oklahoma.
The following named individuals have been charged with a federal crime or crimes by the return of an indictment by the Grand Jury. The return of an indictment is a method of informing the defendant of alleged violations which must be proven in a court of law beyond a reasonable doubt to overcome the defendant’s presumption of innocence.Tyrone Taray Shaw. Felon in Possession of Firearm and Ammunition. Shaw, 29, of Tulsa, is accused of possessing a Romarm AK-47 assault rifle and ammunition after six prior felony convictions which included possession of marijuana and escape from confinement. If convicted, the maximum sentence of imprisonment would be 10 years and a fine of $250,000, along with the forfeiture of the Romarm AK-47 assault rifle and ammunition. The Bureau of Alcohol, Tobacco, Firearms and Explosives is the lead agency.
Andres Gonzalez. Possession with Intent to Distribute Methamphetamine and Possession of a Firearm in Drug Trafficking Crime. Gonzalez, 26, of Tulsa, is accused of possession with intent to distribute 50 or more grams of methamphetamine and possession of a firearm furtherance of a drug trafficking crime. If convicted, the minimum mandatory sentence of imprisonment would be five years and the maximum imprisonment is 40 years, and a fine of $4,000,000. Gonzalez shall forfeit about $1,800, one caliber pistol and ammunition. The Federal Bureau of Investigation is the lead agency.
Matthew Scott Storey. Possession with Intent to Distribute Methamphetamine. Storey, 29, of Tulsa, is accused of possession and intent to distribute 500 grams or more of methamphetamine. If convicted, the minimum imprisonment would be 10 years for possession and the maximum imprisonment is 20 years for intent to distribute. The Federal Bureau of Investigation is the lead agency.
Jesus Uzziel Rodriguez, Vincente Chipres Valencia and Francisco Reyes-Sanchez. Drug Conspiracy and Possession with Intent to Distribute Methamphetamine. Rodriguez, 30, of Hayward, California, Valencia, 33, of East Palo Alto, California and Reyes-Sanchez, 34, of Mounds, Oklahoma are accused of possessing and conspiring to distribute 500 grams and more of methamphetamine. If convicted, the minimum mandatory imprisonment is 10 years with a maximum life imprisonment, and a $10,000 fine. The lead agencies for this case are the Oklahoma Bureau of Narcotics and Dangerous Drugs Control and Tulsa Police Department, Special Investigative Division.
Luis Alberto Vale and Alejandro Alspuro-Bernal. Drug Conspiracy and Possession with Intent to Distribute Heroin. Vale, 23, and Alspuro-Bernal, 31, both of Tulsa, are accused of conspiring and possessing with the intent to distribute 100 grams or more of heroin between May and July 2013. If convicted, the minimum mandatory imprisonment would be five years and the maximum imprisonment is 40 years, up to $5,000,000 fine, and a forfeiture of approximately $11,000. The U.S. Immigration and Customs Enforcement, Homeland Security Investigations is the lead agency.
Edin Ayala-Lopez. Alien in the United States After Deportation. Ayala-Lopez, 26, was arrested in Tulsa County and charged with having returned to the United States unlawfully after being deported in June 2008 near New Orleans, Louisiana. If convicted, Ayala-Lopez would face a maximum 20 years imprisonment and/or fine up to $250,000. The U.S. Immigration and Customs Enforcement is the lead agency of this case.
Marino Lopez-Miranda. Alien in the United States After Deportation. Lopez-Miranda, 53, was arrested in Tulsa County and charged with having returned to the United States unlawfully after being deported near Del Rio, Texas in September 2008. If convicted, Lopez-Miranda would face a maximum 20 years imprisonment and/or fine up to $250,000. The U.S. Immigration and Customs Enforcement is the lead agency of this case.El Departamento de Justicia Realiza Acuerdo Conciliatorio con la Asociación de Propietarios de Vivienda y Compañía de Administración de Propiedades en una Demanda de Vivienda Justa Asociada A Límites de Ocup...Read the Press Release
Washington– El Departamento de Justicia anunció hoy que Townhomes of Kings Lake HOA Inc. (Asociación de Propietarios de Vivienda) y Vanguard Management Group, Inc. han aceptado pagar 150,000 dólares en resolución de una demanda que alegando violaciones de la Ley de Vivienda Justa [Fair Housing Act (FHA)]. La demanda alegaba que la HOA adoptó y ambos demandados hicieron valer límites de ocupación que discriminaron contra familias con niños en Townhomes of Kings Lake, una comunidad de 248 viviendas en Gibsonton, Fla.
Bajo el decreto por consentimiento propuesto, el que aún debe ser aprobado por el Tribunal Federal de Distrito para el Distrito Medio de Florida, los demandados pagarán 45,000 dólares a la familia que inició la queja original entablada con el Departamento de Vivienda y Desarrollo Urbano de EE.UU. [U.S. Department of Housing and Urban Development (HUD)], 85,000 dólares a un fondo para víctimas para indemnizar a otras familias discriminadas, y 20,000 dólares a los Estados Unidos como multa civil. Además, el decreto por consentimiento propuesto prohíbe a los demandados discriminar en el futuro contra familias con niños y exige que los demandados reciban capacitación sobre los requisitos de la FHA. En enero de 2013, mientras la demanda se encontraba pendiente, la HOA modificó sus límites de ocupación de modo a permitir 4 ocupantes en las viviendas de 2 dormitorios, seis ocupantes en las viviendas de 3 dormitorios y ocho ocupantes en las viviendas de 4 dormitorios.
"La Ley de Vivienda Justa asegura que no se les niegue a familias con niños sus derechos de vivienda mediante políticas de ocupación discriminatorias", señaló Jocelyn Samuels, Secretaria de Justicia Auxiliar Interina de la División de Derechos Civiles. "El Departamento de Justicia seguirá haciendo valer enérgicamente las leyes de vivienda justa que protegen los derechos de familias con niños ".
La demanda, entablada en octubre del 2012, surgió de una queja presentada a HUD por una familia con seis niños que vivía en Townhomes of Kings Lake. Después de que la familia se mudó a su vivienda de 4 dormitorios, los demandados indicaron que había un problema con el número de personas que vivían en el hogar y amenazaron con desalojar a la familiar. Finalmente, la familia se mudó de la comunidad Kings Lake. Después de que HUD investigó la queja, la agencia emitió un cargo de discriminación y remitió la cuestión al Departamento de Justicia. La demanda alegó que los demandados violaron los derechos de la familia, y que las políticas de ocupación restrictivas discriminaron a otras familias con niños, y que los demandados exhibieron un patrón o práctica de discriminación o se les negaron derechos protegidos por la FHA a un grupo de personas.
"Más de veinte años de orientación de HUD y casos han servido de aviso a los proveedores de vivienda de que las normas de ocupación que limiten injustamente o excluyan a familias con niños violan la Ley de Vivienda Justa", señaló Bryan Greene, Secretario Auxiliar Interino de Vivienda Justa e Igualdad de Oportunidades de HUD. "HUD y el Departamento de Justicia se comprometen a asegurar que todas las personas tengan acceso igualitario a la vivienda para la que califiquen financieramente".
Las personas que crean que ellas mismas u otras personas que conocen fueron víctimas de discriminación en la vivienda como resultado de las antiguas políticas de ocupación de Townhomes of Kings Lake deben comunicarse con la Sección de Vivienda y Cumplimiento de Ley Civil de la División de Derechos Civiles al 1-800-896-7743, oprima el 2 para continuar en español y seleccione el buzón número 7, o enviar un mensaje de correo electrónico a [email protected].
La Ley de Vivienda Justa federal prohíbe discriminación en vivienda por razón de raza, color, religión, sexo, estado familiar, origen nacional y discapacidad. El hacer valer las leyes de vivienda de justa es una prioridad de la División de Derechos Civiles. Para obtener más información sobre la División de Derechos Civiles y las leyes que hace valer, visite www.justice.gov/crt.
East Bay Trio Charged in Identity Theft SchemeRead the Press Release
OAKLAND – East Bay residents Sean Lucas Cowgill, Juanco Tango Andres, and Guadalupe Nieves, Jr., made their initial appearance on August 9, 2013, in federal court on charges of wire fraud and aggravated identity theft, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation Special Agent in Charge José M. Martinez.
According to the indictment, unsealed on August 9, 2013, from about May 27, 2011 to February 24, 2012, Sean Lucas Cowgill allegedly carried out a scheme to obtain money by filing false tax returns claiming refund payments. In order to carry out the scheme, Cowgill created an identification form (“ID-Doc”) which included questions requiring personal information, such as name, income, birthday, Social Security number, number of dependents, expenses, and type of work.
Cowgill trained and used recruiters to convince people to complete the ID-Doc form in order to determine if they were eligible for a stimulus program sponsored by President Obama. Cowgill used the completed ID-Doc forms to prepare and electronically file false federal individual income tax returns, claiming fraudulent tax credits and refunds. Cowgill directed the refunds to be paid in a manner that enabled him to exercise control over the refunds. Cowgill paid recruiters $50 to $100 for each completed ID-Doc form that resulted in a tax refund.
According to the indictment, from about September 17, 2011 to about February 24, 2012, Cowgill taught Juanco Tango Andres and Guadalupe Nieves, Jr. to use information from ID-Doc forms to prepare false federal income tax returns claiming tax credits and refunds. Andres and Nieves allegedly followed Cowgill’s scheme, training and using recruiters to convince people to complete the ID-Doc form. Andres and Nieves paid Cowgill a $50 “franchise fee” for each tax refund.
All three defendants were indicted on July 23, 2013. Cowgill was charged with 13 counts of wire fraud and three counts of aggravated identity theft. Andres was charged with 10 counts of wire fraud and eight counts of aggravated identity theft. Nieves was charged with 10 counts of wire fraud and one count of aggravated identity theft.
The maximum statutory penalty for each count of wire fraud, in violation of Title 18, U.S.C § 1343, is 20 years in prison and a fine of $250,000. The maximum penalty for aggravated identity theft, in violation of Title 18, U.S.C § 1028A, is two years in prison, consecutive to the underlying felony and a fine of $250,000.
Thomas Moore is the Assistant U.S. Attorney who is prosecuting this case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
(Cowgill indictment )
Detroit Man Used Counterfeit Credit Cards to Buy Retail Store Gift CardsRead the Press Release
PITTSBURGH, Pa. - A Detroit man pleaded guilty in federal court to conspiracy to access device fraud, United States Attorney David J. Hickton announced today.
Jamon Paul Judson, 32, of Detroit, Mich., pleaded guilty to one count before Senior United States District Judge Donetta W. Ambrose.
In connection with the guilty plea, the court was advised that Judson along with other defendants, left Michigan in early 2009 to use counterfeited, re-encoded credit cards to make purchases of retail store gift cards at numerous Giant Eagle stores in Ohio and Pennsylvania in 2009. The group was apprehended in Cranberry Township in August 2009, and found in possession of counterfeited credit cards and a device used to make counterfeit cards, as well. Losses total near $120,000.
Judge Ambrose scheduled sentencing for Dec, 4, 2013, at 11 a.m. The law provides for a total sentence of five years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.
Pending sentencing, the defendant was released on bond conditions.
Assistant United States Attorney Gregory C. Melucci is prosecuting this case on behalf of the government.
The Western Pennsylvania Financial Crimes Task Force (WPFCTF) conducted the investigation that led to the Indictment in this case. The WPFCTF was established in February 1995 as a collaborative, multi-agency effort to effectively combat financial crimes, including identity fraud, in Western Pennsylvania. Partners in this effort are the United States Attorney's Office for the Western District of Pennsylvania, the United States Secret Service, the United States Postal Inspection Service, the Department of Homeland Security, the Allegheny County District Attorney's Office, the Allegheny County Police Department, the City of Pittsburgh Bureau of Police and the Pennsylvania State Police.
Correctional Officer Pleads Guilty to A Racketeering ConspiracyRead the Press Release
Smuggled Drugs and Other Contraband for BGF Gang Members in Baltimore Correctional Facilities
Baltimore, Maryland - Jennifer Owens, a/k/a O and J.O., age 31, of Randallstown, Maryland pleaded guilty today to a racketeering conspiracy for smuggling drugs and other contraband for Tavon White and other member of the Black Guerilla Family (BGF) gang inside several correctional facilities.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Secretary Gary D. Maynard of the Maryland Department of Public Safety and Correctional Services; Baltimore Police Commissioner Anthony W. Batts; and Baltimore City State’s Attorney Gregg L. Bernstein.According to court documents, BGF has been the dominant gang at the Baltimore City Detention Center (BCDC), and in several connected facilities, including the Baltimore Central Booking Intake Center, the Women’s Detention Center, which houses many men, and in the Jail Industries Building.
Jennifer Owens worked as a correctional officer (CO) at BCDC from 2007 to 2013. Owens admitted that she entered into a personal and sexual relationship with BGF gang leader Tavon White while he was an inmate at BCDC and has two children by White. According to her plea agreement, Owens frequently smuggled Percocet pills and Suboxone strips into BCDC on behalf of White and others. From 2010 to 2011, Owens smuggled marijuana and tobacco into the prison two to four times per week, but after that she concentrated on pills and strips. Outside the prison, Owens frequently obtained contraband from other co-defendants and was paid either by transfers of funds onto Green Dot cards or by cash from these co-defendants. Owens also moved contraband internally within BCDC for others. Owens was aware that other co-defendants and many other correctional officers also smuggled contraband.
Owens faces a maximum sentence of 20 years in prison for the racketeering conspiracy. U.S. District Judge Ellen L. Hollander scheduled sentencing for January 24, 2014.
The case arose from the efforts of the Maryland Prison Task Force, a group of local, state and federal law enforcement agencies and prosecutors that met regularly for more than two years and generated recommendations to reform prison procedures. The investigation is continuing.
U.S. Attorney Rosenstein recognized the efforts of the other members of the Maryland Prison Task Force, including: Colonel Marcus L. Brown, Superintendent of the Maryland State Police; Chief Mark A. Magaw of the Prince George’s County Police Department; United States Marshal Johnny Hughes; Special Agent in Charge Karl C. Colder of the Drug Enforcement Administration - Washington Field Division; Tom Carr, Director of the Washington-Baltimore High Intensity Drug Trafficking Area; and Dave Engel, Executive Director of the Maryland Coordination and Analysis Center.
United States Attorney Rod J. Rosenstein praised the FBI, Maryland Department of Public Safety and Correctional Services, Baltimore Police Department, and Maryland Prison Task Force, for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Robert R. Harding and Ayn B. Ducao, who are prosecuting this Organized Crime Drug Enforcement Task Force case.Chief Executive Officer Sentenced to 30 Months in Securities Fraud SchemeRead the Press Release
BOSTON - The chief executive of Vida Life International Ltd., a public company that traded on the over-the-counter securities market, was sentenced yesterday to 30 months in federal prison for conspiracy to commit securities fraud, wire fraud and mail fraud.
John C. Jordan, 62, of Cameron Park, Calif., was sentenced by United States District Court Judge Nathaniel M. Gorton after being convicted in May by a jury. Jordan was also ordered to pay a fine and to forfeit his illegal earnings.
Jordan was sentenced for his role in a scheme to pay secret kickbacks to an investment fund representative who had agreed to steer the investment fund to buy stock in Vida Life. The kickbacks were concealed through the use of a sham consulting agreement and other fraudulent documents. Jordan did not know that the purported investment fund representative was actually an undercover agent with the Federal Bureau of Investigation.
The conviction and sentence followed a year-long investigation focusing on preventing fraud in the micro-cap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies a share. Fraud in the microcap markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse. This is, in part, because accurate information about microcap stocks may be difficult for the average investor to find, since many microcap companies do not file financial reports with the Securities Exchange Commission.
Two additional defendants who were charged as part of the undercover operation were sentenced last month. Steven Berman, 50, of Ohio, the former chief executive Officer of China Wi-Max Communications, Inc., and Richard Kranitz, 69, a Wisconsin securities attorney who served as an adviser and a member of the board of directors of China Wi-Max, were each sentenced to 18 months in federal prison after pleading guilty to conspiracy to commit securities fraud.
Two other defendants are scheduled to be sentenced over the next several weeks. Karen Person, 62, of Las Vegas, Chief Executive Officer of the Small Business Company, Inc., is scheduled to be sentenced on August 16. Person also pleaded guilty to conspiracy to commit securities fraud. James Prange, 62, of Greenbush, Wis., a self-described financing consultant to small and emerging companies, who, like Jordan, was convicted after trial on multiple counts of conspiracy to commit securities fraud and wire fraud, is scheduled to be sentenced on September 25, 2013.
The Securities and Exchange Commission, which conducted a parallel civil investigation alongside the FBI undercover operation, cooperated with criminal authorities in bringing these, and charges against 10 other defendants who participated in the kickback scheme. Six of the defendants have already pled guilty to charges arising out of their involvement in the scheme.U.S. Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division made the announcement today. The case was prosecuted by Assistant U.S. Attorneys Sarah E. Walters, Stephen E. Frank, and Vassili Thomadakis of Ortiz’s Economic Crimes Unit.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Canyon County Man Sentenced for Federal Firearms ViolationsRead the Press Release
BOISE – Kyle Alan Batt, 28, of Caldwell, Idaho, was sentenced in federal court today to 180 months in prison for unlawful possession of a firearm and one count of possession of a firearm with an obliterated serial number, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Edward J. Lodge ordered Batt to serve three years of supervised release after his prison term, and also ordered Batt to forfeit the firearm and pay restitution for the injuries he caused to two Canyon County Sheriff deputies. Batt pleaded guilty to the charges on May 31, 2013.
According to information presented in court, Batt shot two Canyon County Sheriff’s deputies on October 24, 2012. Deputies found Batt hiding with a gun that morning, shortly after the deputies were shot. When he was discovered, Batt shot himself in the head. He was initially charged by complaint and taken into federal custody in November 2012. A federal grand jury returned an indictment on December 11, 2012.
According to the plea agreement, Batt admitted that on October 23, 2012, he knowingly possessed a Beretta .40 semiautomatic pistol with an obliterated serial number. At the time Batt possessed the pistol he had previously been convicted, on May 14, 2004, in Boise County, Idaho, of possession of a controlled substance, a felony crime punishable by a term of imprisonment exceeding one year and is therefore prohibited from possessing firearms.
“Mr. Batt’s criminal history prohibited him from possessing any kind of firearm,” said Olson. “This defendant’s disregard for the law enforcement officers’ lives were aggravating factors that warranted the serious federal prison term he imposed in this case. I commend the cooperation among the various law enforcement agencies and the partnership of the Canyon County Prosecuting Attorney’s Office in this case to ensure that appropriate charges recognizing the seriousness of the conduct were pursued in each jurisdiction.”
The case was investigated by the Nampa Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Batt was prosecuted by the Special Assistant U.S. Attorney hired by the Treasure Valley Partnership and the State of Idaho to address gang crimes. The Treasure Valley Partnership is comprised of a group of elected officials in southwest Idaho dedicated to regional coordination, cooperation, and collaboration on creating coherent regional growth. For more information, visit treasurevalleypartners.org.
California Man and Woman Charged with Discharge of A Pollutant from A Point SourceRead the Press Release
United States Attorney Brendan V. Johnson announced that two Hacienda Heights, California, residents have been indicted by a federal grand jury.
Sean Clark, age 47, and Devorah Lopez, age 50, d/b/a Glencoe CampResort II, were indicted by a federal grand jury on July 17, 2013, for Discharge of a Pollutant from a Point Source into a Water of the United States. The Indictment alleges that in both 2011 and 2012 the defendants discharged fill material into Bear Butte Creek. They appeared before U.S. Magistrate Veronica L. Duffy on August 12, 2013, and pled not guilty to the Indictment.
The maximum penalty upon conviction is 3 years of imprisonment, not less than $5,000 nor more than $50,000 fine per day of violation, or both; 1 year of supervised release, an additional year of supervised release upon revocation; and a mandatory $100 each special assessment to the Federal Crime Victims Fund. Restitution may also be ordered. The charge is merely an accusation, and Clark and Lopez are presumed innocent until and unless proven guilty.
The investigation is being conducted by the U.S. Environmental Protection Agency and Assistant U.S. Attorney Meghan N. Dilges is prosecuting the case.
Clark and Lopez were released on bond pending trial which has been set for October 15, 2013.Boise Man Sentenced for Producing and Distributing Child PornographyRead the Press Release
Advertised 3-Year-Old Child for Prostitution on Craigslist
BOISE – U.S. Attorney Wendy J. Olson announced that Jason Lloyd Schaber, 40, of Boise, Idaho, was sentenced today in United States District Court to 30 years in prison on count one and 10 years on count two, to run concurrently, followed by lifetime supervised release. Schaber pleaded guilty in May 2013 to sexual exploitation of children by producing and distributing child pornography between 2010 and 2012. U.S. District Judge Edward J. Lodge also ordered Schaber to forfeit the personal property used in the offenses.
According to the plea agreement, the investigation of Schaber's activities began in April 2012 after Boise police were contacted by a person who saw a Craigslist advertisement offering a young child for sex. Investigators worked with Craigslist and Google and traced the ad back to Schaber in mid-May, according to reports. Boise police investigators obtained a warrant to search Schaber's home, which they executed on May 31, 2012. Schaber has been in custody since his arrest.
The plea agreement states that Schaber produced 26 sexually explicit images and videos of female minor(s) who were less than six years of age, and distributed child pornography that he had produced himself, or that he had obtained from the Internet, via email to at least 16 other individuals. The images and videos depicted actual and simulated intercourse, oral sex and the lascivious exhibition of the genitals and pubic area of the minors, according to the plea agreement.
“Mr. Schaber well deserves the lengthy sentence the Court imposed,” said Olson. “His horrific conduct victimized an innocent child. This office, along with its federal and state law enforcement and prosecuting partners, will continue to act cooperatively and aggressively to bring child sexual predators to justice. I applaud the quick and efficient work of the ICAC investigators in this case. We hope for the ongoing recovery of the victims in this case.”
Members of the Idaho Internet Crimes Against Children Task Force investigated the case, including investigators from the Boise Police Department, the Ada County Sheriff's Department, and the Federal Bureau of Investigation, with technical assistance provided by the U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the High Technology Investigative Unit at the U.S. Department of Justice, Child Exploitation and Obscenity Section in Washington, D.C., with cooperation from the Ada County Prosecuting Attorney's Office.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, visit www.usdoj.gov/psc. For more information about internet safety education, visit www.usdoj.gov/psc and click on the tab “resources.” For more information about registered sex offenders in Idaho, visit www.isp.idaho.gov/sor_id.
Baraga Man Sentenced in KBIC Beating and Hannahville Sexual AssaultRead the Press Release
MARQUETTE, MICHIGAN – Joel Thomas Smith, 24, of Baraga, Michigan, was sentenced to 71 months in federal prison for assault resulting in serious bodily injury and sexual abuse of a minor, U.S. Attorney Patrick A. Miles, Jr. announced today. In addition to the prison term, U.S. District Judge R. Allan Edgar ordered Smith to serve eight years of supervised release following his release from prison, and to pay a $200 special assessment. Smith, who was on federal supervised release from a 2009 conviction for assault with a dangerous weapon, was sentenced to an additional18 months in federal prison for the violation of his supervised release.
On May 13, 2013, Smith pleaded guilty to a federal indictment charging him with assault resulting in serious bodily injury and a felony information charging him with sexual abuse of a minor. The assault charge arose from an incident at a residence in Baraga, Michigan, on the Keweenaw Bay Indian Community reservation on February 11, 2013. During this incident, Smith assaulted his live-together girlfriend, fracturing one of her ribs. The sexual assault charge stemmed from an incident in summer 2007 at a residence located on the Hannahville Indian Community reservation. During this incident, Smith, who was 19 at the time, engaged in sexual intercourse with a 13 year-old girl. This incident first came to light in May 2011, when the victim first disclosed what had happened to her.
The Keweenaw Bay Indian Community Tribal Police, the Hannahville Indian Community Tribal Police and the FBI investigated the cases. Assistant U.S. Attorney Paul D. Lochner prosecuted the cases.
END
Appeals Court Affirms Life Sentence for Drug Conspiracy LeaderRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that the Third Circuit Court of Appeals today affirmed the sentence of life imprisonment imposed by Senior U.S. District Court Judge Edwin M. Kosik on Charles Sechler for his participation in an eight-year drug trafficking conspiracy that was responsible for distributing large amounts of methamphetamine and marijuana in Northeastern and Central Pennsylvania between 1995 and 2003.
According to United States Attorney Peter J. Smith, Sechler, age 44, who resided in the Montoursville area during the time of the conspiracy, was convicted by a jury after a six-day trial in July 2007. The jury returned guilty verdicts on all eleven drug-related charges against Sechler and his co-defendant Steven Fausnaught. Fausnaught was sentenced to 24 years in prison and his sentence was previously affirmed on appeal.
Sechler was indicted by a federal grand jury on August 12, 2003, as a result of an investigation by the Federal Bureau of Investigation, the Pennsylvania State Police, Bloomsburg Police, the Columbia County Drug Task Force, and the Pennsylvania Attorney General’s Office.
After his conviction in the case, Sechler was released on bail and fled to Canada, was subsequently apprehended by Canadian authorities in cooperation with the U.S. Marshals Service, then fought extradition by claiming he was a “political prisoner.” He was returned to the United States and sentenced on July 14, 2011.
In upholding the life sentence, the Third Circuit Court noted that Sechler was responsible for distributing at least 15 kilograms of methamphetamine and more than 100 kilograms of marijuana, possessed firearms in connection with the conspiracy, and was an organizer and leader of the multi-year drug trafficking operation. The Court rejected Sechler’s argument that the sentence of life imprisonment violated the Eighth Amendment’s prohibition against cruel and unusual punishments, reasoning that the district court’s sentence was not “grossly disproportionate when balanced against the gravity of his offenses.”
Assistant United States Attorney Francis P. Sempa prosecuted the case and handled the appeal for the government.
Alien Trafficker Gets Enhanced Sentence for Sexual AssaultRead the Press Release
LAREDO, Texas – Juan Zavala Gutierrez, 22, a resident of Mexico, has been sentenced to five years in federal prison for transporting undocumented aliens for private financial gain, United States Attorney Kenneth Magidson announced today. Gutierrez pleaded guilty June 10, 2013.
In April 2013, Gutierrez, himself an illegal alien, guided a group of 11 illegal aliens from Mexico, crossing through the Rio Grande River into the United States. All the illegal aliens hid in the brush and Gutierrez sexually assaulted them. He ordered the aliens to undress and forced himself on the females, taking advantage of their vulnerability. Gutierrez was admittedly intoxicated and under the influence of drugs.
Today, U.S. District Judge Marina Garcia Marmolejo handed Gutierrez a sentence of 60 months in federal prison. In handing down the sentence, the court noted that alien smugglers cannot prey on and violate the transported women. Judge Marmolejo, in exercising an upward departure from the U.S. Sentencing guidelines, enhanced the defendant’s punishment to reflect his crude actions.
The case was investigated by the United States Border Patrol and Homeland Service Investigations and prosecuted by Assistant U.S. Attorney Sanjeev Bhasker.
12 August 2013
West Hollywood Doctor Pleads Guilty to Distributing Painkillers After Being Ordered to Stop Writing Prescriptions by DEARead the Press Release
LOS ANGELES – A West Hollywood doctor pleaded guilty this afternoon to a federal drug trafficking charge for writing hundreds of prescriptions for various controlled substances after a federal order revoked his authority to prescribe drugs.
James William Eisenberg, 72, who resides in the Venice district of Los Angeles, pleaded guilty to one count distribution of hydrocodone, a drug best known by the brand names Vicodin and Norco.
Eisenberg wrote the prescriptions while he worked out of several medical offices in West Hollywood, including a Santa Monica Boulevard storefront he called Pacific Support Services. Eisenberg also issued “medical marijuana” recommendations from these West Hollywood locations. He has been prohibited from issuing such recommendations and from practicing medicine at medical marijuana clinics as a condition of his release on bail.
In order to legally prescribe controlled substances such as hydrocodone, physicians must be registered with the United States Attorney General and have a valid DEA registration number. On December 14, 2011, a DEA administrative judge determined that Eisenberg acted as a “drug dealer” and suspended his registration number. The DEA issued an order permanently revoking Eisenberg’s registration on July 24, 2012.
The orders issued by the administrative judge were based on findings that Eisenberg, who at the time was working out of a “medical marijuana” club in Arizona, “lacked a legitimate medical purpose and acted outside of the usual course of professional practice” when he wrote prescriptions for oxycodone (the generic form of a drug often best known as the brand-name OxyContin) and Xanax in exchange for $150 cash payments. The DEA judge also found that Eisenberg wrote “medical marijuana” recommendations to undercover officers posing as patients, and that Eisenberg prescribed OxyContin to one of the undercover agents “before [Eisenberg] had even performed a physical examination.”
DEA investigators later learned that Eisenberg continued to prescribe controlled substances, including hydrocodone, in violation of the DEA’s orders. A review of a California Department of Justice database that can be used to track prescriptions showed that, following the suspension of Eisenberg’s registration number, patients filled more than 1,700 of his prescriptions for controlled substances, including more than 1,200 prescriptions for hydrocodone. As charged in the indictment, Eisenberg wrote one of those prescriptions on December 27, 2011, less than two weeks after his registration number was suspended.
DEA investigators executed a federal search warrant on one of Eisenberg’s West Hollywood offices on February 19, 2013. The affidavit in support of the search warrant outlines evidence, including surveillance and undercover operations, that Eisenberg continued to write prescriptions for controlled substances in violation of the DEA’s revocation order. The evidence included an operation in which an undercover agent, posing as a patient, obtained a prescription from Eisenberg for hydrocodone and alprazolam (the generic form of a drug best known as Xanax).
As a result of today’s guilty plea, Eisenberg faces a statutory maximum sentence of 10 years in federal prison when he is sentenced by United States District Judge Michael W. Fitzgerald on December 9, 2013.
The investigation into Eisenberg was conducted by the Drug Enforcement Administration.
Release No. 13-104
U.s. Attorney Announces Charges Against Indianapolis Man for Threatening Federal JudgeRead the Press Release
INDIANAPOLIS – Joseph H. Hogsett, the United States Attorney, announced today that federal charges have been filed against Delenore Lowell McTarsney, age 53, of Speedway. According to a criminal complaint unsealed this afternoon, McTarsney is alleged to threatened the life of a federal judge and other local officials in a series of comments posted online.
“We in the law enforcement community are committed to doing all within our power to ensure the safety of all those who work in or around our criminal justice system,” Hogsett said. “Due to the very real threat posed by violence and terrorism, the U.S. Attorney’s Office takes seriously all threats – whether they are made online or offline.”
The criminal complaint alleges that in June 2012, McTarsney began posting hundreds of comments in response to a YouTube video submitted by a local attorney. These comments were generally concerned with the defendant’s belief that he was the victim of a conspiracy that involved the local attorney as well as a number of other individuals associated with the Indianapolis legal community, including a current federal bankruptcy judge.
These comments were allegedly posted throughout 2012, and continued into early 2013. In January 2013, a number of these comments allegedly began referencing specific acts of violence that the defendant stated he would undertake against those he believed had conspired against him. These threats included descriptions of violent acts against the local attorney, as well as the federal judge, whose home address was included in these online threats.
The defendant’s alleged actions were investigated by agents with the Federal Bureau of Investigation, as well as representatives of the U.S. Marshals service. On August 10, 2013, the defendant was arrested at his home and charged with making online threats.
According to Assistant U.S. Attorneys Sharon M. Jackson, who is prosecuting the case for the government, McTarsney faces up to five years in prison if he is convicted, as well as fines and federally-supervised release at the end of his prison term.
A criminal complaint is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
U.S. Attorney's Office Indicts Burke Co. Drug and Alcohol Treatment Center, Its Owner and Two Employees on False Claims Act Conspiracy and Bribery ChargesRead the Press Release
U.S. Probation Office Contracted the Facility to Conduct Drug Testing and Counseling Services to Federal Probationers and Parolees
ASHEVILLE, N.C. – A Burke County drug and alcohol treatment center, its owner and two of its employees have been indicted on False Claims Act conspiracy and bribery charges announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The six-count indictment was returned by a federal grand jury sitting in Asheville on August 6, 2013.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Gregory A. Forest, Chief of the United States Probation Office for the Western District of North Carolina join U.S. Attorney Tompkins in making today’s announcement.
Charged in the federal criminal indictment are Clean on Green, PLLC (“Clean on Green”), based out of Morganton and Lenoir, N.C.; Lewis R. Dorman, III, 62, of Morganton and owner of Clean on Green; Levi J. Michaels, 41, also of Morganton; and Lerry Ratley, 60, of Rock Hill, S.C. All defendants are charged with one count of conspiracy to violate the False Claims Act. Dorman and Ratley are charged with one count of bribery of a public official and Michaels with four such counts. Dorman and Clean on Green also face one count of making false, fictitious or fraudulent claims.
According to the indictment, Clean on Green was a facility providing alcohol and drug treatment services in Morganton. Dorman was the owner and operator of Clean on Green, and in that capacity Dorman signed contracts with the U.S. Probation Office for the Western District of North Carolina to provide counseling services and to administer the collection and processing of urinalysis samples of individuals on federal pretrial release, supervised release, parole, or probation. According to the indictment, Michaels was employed by Clean on Green, and was responsible for managing the office, scheduling appointments, processing persons for substance abuse assessments, administering and monitoring urinalysis screening for persons on federal probation and scheduling individual drug and alcohol abuse counseling sessions. Also according to the indictment, Ratley worked at Clean on Green and his primary duty was to conduct group counseling sessions.
The indictment alleges that under its contract with the U.S. Probation Office, Clean on Green was required to collect and test urine samples from probationers or parolees for the presence of controlled substances and to provide the results to the U.S. Probation Office. The U.S. Probation office relied upon these results to inform the U.S. District Court or the Parole Commission as to whether a probationer or parolee was using controlled substances, which would be a violation of the conditions of release or parole. According to the indictment, the contract between Clean on Green and the U.S. Probation Office specified a urine collection protocol to ensure that the test results were accurate and reliable.
The indictment alleges that between 2010 and 2012, Dorman and Michaels did not follow the specific protocol for the urinalysis collection and instead allowed individuals to fraudulently submit substitute urine samples to avoid the detection of a controlled substance. According to the indictment, on multiple occasions Michaels accepted $40 to $50 as cash payments in exchange for allowing individuals under federal supervision to bypass proper urine collection protocols. On at least occasion, according to the indictment, Dorman also accepted a cash payment.
According to the indictment, Clean on Green also had a contract with U.S. Probation to provide individual and group counseling sessions to persons under federal supervision. The procedure required that such persons sign in and out of the counseling sessions and a Clean on Green employee was responsible for verifying the accuracy of the attendance records. From 2010 and continuing until around July of 2012, according to the indictment, Doman and Ratley repeatedly allowed individuals supervised by U.S. Probation to claim attendance at counseling sessions when they did not attend the required sessions. The indictment alleges that, on several occasions, Ratley accepted cash payments from federally supervised persons for allowing them to skip the required counseling sessions. The indictment alleges that on one such occasion, a supervised individual scheduled to attend a three-hour group counseling session only stayed at the facility approximately three minutes and, in return, paid Ratley $40 in cash to falsify the sign in/out forms. The indictment alleges that Dorman submitted these false forms to the U.S. Probation Office along with Clean on Green invoices for those services provided.
U.S. Attorney Tompkins stated, “The defendants’ brazen conduct and utter disregard of the trust bestowed upon them compromised the integrity of the legal system. This kind of conduct cannot be allowed to go on unchecked.”
“These individuals allowed countless criminals to cheat the judicial system in order to line their own pockets. Now they will be held accountable for taking money from those offenders unwilling to follow the conditions of their release,” said John A. Strong, Special Agent in Charge, FBI Charlotte.
“The U.S. Probation Office would like to thank U.S. Attorney Tompkins, the U.S. Attorney’s Office and the FBI for their quick action in this case. The fraud associated in this case had the potential to impact public safety and the safety of U.S. Probation Officers in the Western District of North Carolina. This serves and an outstanding example of federal agencies working together to protect the public and their interests,” said Chief U.S. Probation officer Gregory A. Forest.
The False Claims conspiracy charge carries a maximum of 10 years in prison and a $250,000 fine. The false, fictitious or fraudulent claims charge carries a maximum of five years in prison and a $250,000 fine, and each bribery of public official charge carries a maximum of 15 years in prison and a $250,000 fine.
Dorman and Michaels were arrested on Friday, August 9, 2013, and have been released on bond. Ratley was arrested earlier today. His initial appearance will be scheduled by the Court.
The charges contained in the indictment are allegations. They defendants are presumed innocent unless and until they proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the FBI in cooperation with the U.S. Probation Office. The prosecution is handled by Assistant U.S. Attorney Richard Lee Edwards of the U.S. Attorney’s Office in Asheville.
U.S. Attorney General Announces "Smart on Crime" InitiativesRead the Press Release
Memphis, TN – U.S. Attorney General Eric H. Holder, Jr. today introduced a new initiative designed to reform the criminal justice system for the 21st century, announced U.S. Attorney Edward L. Stanton III.
# # # #
“By targeting the most serious offenses, prosecuting the most dangerous criminals, directing assistance to crime ‘hot spots,’ and pursuing new ways to promote public safety, deterrence, efficiency, and fairness – we can become both smarter and tougher on crime,” said Attorney General Holder in remarks to the American Bar Association’s Annual Convention in San Francisco.
“Attorney General Holder’s ‘Smart on Crime’ initiative provides a measured approach to modernizing the criminal justice system and offers a sensible alternative to the one-size-fits-all policy proven to be flawed and ineffective,” said U.S. Attorney Stanton. “The U.S. Attorney’s Office, court personnel, and our law enforcement partners in the Western District of Tennessee have already been working to implement many of the principles outlined in the initiative, such as launching re-entry and drug courts and using diversion as a resource when warranted for non-violent offenders. This bold approach will allow federal prosecutors to not only be more efficient and effective at deterring crime and reducing recidivism, but also more consistent with our nation’s commitment to treating all Americans as equal under the law.”
“Smart on Crime” is a series of directives to U.S. Attorney Offices across the nation designed to redirect efforts and assets toward more measured, individualized examinations of both the crime and the criminal. The five guiding principles of “Smart on Crime” are: I. PRIORITIZE PROSECUTIONS TO FOCUS ON THE MOST SERIOUS CASES.
Given scarce resources, federal law enforcement efforts should focus on the most serious cases that implicate clear, substantial federal interests. Currently, the Department’s priorities are: 1. Protecting Americans from national security threats
2. Protecting Americans from violent crime
3. Protecting Americans from financial fraud
4. Protecting the most vulnerable members of society
Based on these federal priorities, the Attorney General is, for the first time, requiring the development of district-specific guidelines for determining when federal prosecutions should be brought. This necessarily will mean focusing resources on fewer but the most significant cases, as opposed to fixating on the sheer volume of cases.
II. REFORM SENTENCING TO ELIMINATE UNFAIR DISPARITIES AND REDUCE OVERBURDENED PRISONS.
Prisons are over-capacity, and the rising cost of maintaining them imposes a heavy burden on taxpayers and communities. At the state level, costs for running corrections facilities have roughly tripled in the last three decades, making it the second-fastest rising expense after Medicaid. At the federal level, the Bureau of Prisons comprises one-third of the Justice Department’s budget.
This requires a top-to-bottom look at our system of incarceration. For many non-violent, low-level offenses, prison may not be the most sensible method of punishment. But even for those defendants who do require incarceration, it is important to ensure a sentence length commensurate with the crime committed. Our policies must also seek to eliminate unfair sentencing disparities.
III. PURSUE ALTERNATIVES TO INCARCERATION FOR LOW-LEVEL, NON-VIOLENT CRIMES.
Incarceration is not the answer in every criminal case. Across the nation, no fewer than 17 states have shifted resources away from prison construction in favor of treatment and supervision as a better means of reducing recidivism.
Federal law enforcement should encourage this approach. In appropriate instances involving non-violent offenses, prosecutors ought to consider alternatives to incarceration, such as drug courts, specialty courts, or other diversion programs. Accordingly, the Department will issue a “best practices” memorandum to U.S. Attorney Offices encouraging more widespread adoption of these diversion policies when appropriate.
IV. IMPROVE REENTRY TO CURB REPEAT OFFENSES AND RE-VICTIMIZATION.
After prison, recidivism rates are high. A reduction in the recidivism rate of even one or two percentage points could create long-lasting benefits for formerly incarcerated individuals and their communities.
To lead these efforts on a local level, the U.S. Attorney in the Western District of Tennessee will designate a prevention and reentry coordinator to focus on prevention and reentry efforts. As part of this enhanced commitment, Assistant U.S. Attorneys will be newly encouraged to devote time to reentry issues in addition to casework.
V. ‘SURGE’ RESOURCES TO VIOLENCE PREVENTION AND PROTECTING MOST VULNERABLE POPULATIONS.
Even as crime levels have fallen, many of our communities in the Western District of Tennessee still suffer from alarming rates of homicides, shootings and aggravated assaults. Confronting this problem and its root causes with a holistic approach remains a priority for the Department of Justice. By exploring cost-effective reforms to our prison system, it will allow law enforcement to redirect scarce federal resources towards the priority of violence prevention.
Under a new memorandum issued by the Deputy Attorney General, U.S. Attorneys will update anti-violence strategies that are specific to their district. With multiple federal, state, and local agencies involved in the fight against violent crime, strong relationships and robust information sharing are critical to achieve common goals and to avoid the unnecessary duplication of competing resources and efforts.Two More Romanian Nationals Plead Guilty to Immigration FraudRead the Press Release
BOISE – Victor Raul Fenesan, 31, and Claudia Luminita Beian, 33, both of Boise, Idaho, pleaded guilty today in United States District Court to federal immigration fraud charges based on their fraudulent marriages to United States citizens, U.S. Attorney Wendy J. Olson announced. The Romanian nationals were charged in two separate federal indictments. Fenesan pleaded guilty to one count of obtaining a United States Visa by fraud; Beian pleaded guilty to Unlawful Procurement of Citizenship.
According to plea agreements filed in the cases, Fenesan and Beian each admitted that, in 2004, they both married U.S. citizens for the sole purpose of obtaining immigration benefits. Neither Fenesan nor Beian resided with their spouses as husband and wife, but rather continued to reside with each other. In April 2005, United States Citizenship and Immigration Services (USCIS) granted both Fenesan and Beian lawful permanent resident Visas, which they would not have received had they disclosed the fraudulent nature of their marriages. In February 2010, Beian obtained naturalization as a United States citizen as a result of her fraudulent marriage. As part of her plea agreement, Beian stipulated to an order revoking her citizenship. Fenesan did not attempt to obtain U.S. citizenship.
The defendants each face up to ten years in prison, a maximum fine of $250,000, and up to three years of supervised release, in addition to administrative removal proceedings.
Fenesan and Beian are scheduled to be sentenced on October 21, 2013, before U.S. District Judge Edward J. Lodge at the federal courthouse in Boise.
The cases were investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).