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Wednesday 12 June 2013
Seattle Man Charged in Spokane Ethanol Plant Investment SchemeRead the Press Release
Spokane – Today, Michael C. Ormsby, United States Attorney for the Eastern District of Washington, announced that Robert J. Braun, age 53, originally of Spokane, and now residing in Seattle, appeared for an arraignment in United States District Court in Spokane. Braun is charged in a twenty-seven count indictment with multiple allegations of Wire Fraud and Securities Fraud. If convicted, Braun faces up to twenty years of incarceration and up to $5,000,000 in fines on the most serious charges.
According to the indictment, Braun raised approximately $1.5 million as part of a scheme to defraud more than 50 investors. The indictment alleges that Braun claimed that he was raising funds for an ethanol plant that would be built in Spokane County, and that investors could earn extraordinary returns. The indictment also alleges that Braun used various business names including S & B Energy, LLC, S & B Energy Spokane, LLC, Novahol Spokane, LLC, and Novahol Medical Lake, LLC. The indictment alleges further that Braun used investor funds for various unauthorized personal and living expenses, including mortgage payments for three homes that he owned and purchases at department and clothing stores. Braun also allegedly diverted investor funds towards a women's shoe store that he owned in Spokane. Between 2008 and 2012, Braun is alleged to have lulled investors into a false sense of security by telling them funding for the ethanol plant was imminent.
The investigation was conducted by the Federal Bureau of Investigation, the Washington State Department of Financial Institutions (DFI), and the Internal Revenue Service Criminal Investigation (IRS-CI). The case is being prosecuted by K. Jill Bolton, Assistant U.S. Attorney for the Eastern District of Washington and Special Assistant United States Attorney Robert Kondrat. Mr. Kondrat is an attorney with the Washington State Department of Financial Institutions, specially designated to handle securities fraud cases in federal court.
The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
2:13-CR-00083-RHW
Roswell Man Pleads Guilty to Unlawful Possession of FirearmsRead the Press Release
ALBUQUERQUE – Harley Harkness, 40, of Roswell, N.M., pleaded guilty this afternoon in Las Cruces federal court to being a felon in possession of firearms. Harkness entered his guilty plea without the benefit of a plea agreement.
Harkness was arrested on March 13, 2013, on a criminal complaint charging him with unlawful possession of firearms and possession of a stolen firearm. According to the criminal complaint, Harkness committed these offenses on Jan. 13, 2013. At the time, Harkness was prohibited from possessing firearms or ammunition because he previously had been convicted of the following offenses in the 5th Judicial District Court for the State of New Mexico: residential burglary and tampering with evidence in Oct. 2001 and battery against a household member in Oct. 2003.
Court filings reflect that the federal charges against Harkness arose out of a domestic violence incident on Jan. 13, 2013. On that day, Roswell Police Department officers responded to a domestic violence call from Harkness’s wife who reported that Harkness hit her and pointed a firearm at her. When the officers executed a search warrant at the Harkness residence in Roswell, they found two loaded pistols and ammunition.
During today’s plea hearing, Harkness pled guilty to a felony information charging him with being a felon in possession of a firearm and admitted that he unlawfully possessed two pistols on Jan. 13, 2013, in Chaves County, N.M. At sentencing, which has yet to be scheduled, Harkness faces a maximum penalty of ten years in federal prison. Harkness remains in custody pending his sentencing hearing.
This case was investigated by the Roswell office of the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Roswell Police Department and is being prosecuted by Assistant U.S. Attorney Aaron O. Jordan of the U.S. Attorney’s Las Cruces Branch Office.
Rochester Man Sentenced for Bank FraudRead the Press Release
ROCHESTER, N.Y.-- U.S. Attorney William J. Hochul, Jr. announced today that Nathaniel Pounds, 57, of Rochester, N.Y., who was convicted of bank fraud was sentenced to 51 months in prison and five years of supervised release by U.S. District Judge David G. Larimer.
Assistant U.S. Attorneys Marisa J. Miller and Frank H. Sherman, who handled the case, stated that in September 2012, the defendant was serving a term of supervised release following a 2005 federal conviction for bank fraud. At that time, United States Probation officers discovered stolen and altered checks, forms of identification belonging to others and device making equipment in the defendant's possession. Pounds pleaded guilty to violating his supervised release and to a new bank fraud charge and was sentenced to a combined term of 51 months in prison. The defendant was also ordered to pay restitution in the amount of $16,236.58, in addition to the $114,853.67 in restitution outstanding from the 2005 conviction.
The sentencing is the culmination of an investigation on the part of Special Agents of the United States Postal Inspection Service, Boston Division, under the direction of Inspector in Charge Kevin Nyland; Officers of the United States Probation, under the direction of Chief United States Probation Officer Anthony San Giacomo; and members of the Monroe County Sheriff's Office, under the direction of Sheriff Patrick O'Flynn.Rochester Man Indicted for Making Bomb Threats against KodakRead the Press Release
ROCHESTER, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that a federal grand jury has returned a four count indictment charging Omer Fadhel Saleh Mohammed, 31, of Rochester, N.Y., with making false bomb threats. Each charge carries a maximum penalty of 10 years in prison, a fine of $250,000.00 or both.
Assistant U.S. Attorney Anthony M. Bruce, who is handling the case, stated that according to the indictment, on September 24, 2012, the defendant made three phone calls to 911 and told the operator that his acquaintances were terrorists and were going to blow up the Kodak Corporation. The indictment further alleges that Mohammed made a fourth call on January 24, 2013 claiming that an acquaintance had explosives hidden at a location in Rochester. The 911 calls resulted in emergency responses by the Rochester Police and Fire Departments and by Kodak security personnel, but searches failed to turn up any bombs or evidence that someone had attempted to plant a bomb at any of Kodak’s facilities.
Mohammed was arrested on February 4, 2013, based on a criminal complaint issued by Magistrate Judge Marian W. Payson and is currently in custody. No date has been set for his arraignment.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent unless and until proven guilty.
The indictment is the result of an investigation by the Federal Bureau of Investigation, under the direction of Acting Special Agent in Charge Richard M. Frankel.Redwood City Man Sentenced to More Than Nine Years in Prison for Selling MethamphetamineRead the Press Release
SAN FRANCISCO– Alfredo Contreras was sentenced yesterday to 9 years and 2 months in prison for selling methamphetamine, United States Attorney Melinda Haag announced.
Contreras pleaded guilty on March 26, 2013, to violating Title 21, United States Code, section 841(a)(1). According to the plea agreement, Contreras admitted to selling approximately one ounce of methamphetamine to an undercover San Francisco police officer on November 25, 2012. According to court pleadings filed by the government, Contreras had a long criminal history including prior convictions for crimes involving violence and drug trafficking.
Contreras, age 33, of Redwood City, was indicted by a federal grand jury on January 17, 2013, on a single count of violating 21 U.S.C. §§ 841(a)(1) and (b)(1)(B).
The sentence was handed down by The Honorable Richard Seeborg, U.S. District Court Judge. Judge Seeborg also sentenced the defendant to a four-year period of supervised release. The defendant has been in custody since his arrest on November 25, 2012, and will begin serving the sentence on immediately.
The prosecution is the result of an investigation by the San Francisco Police Department and the Department of Homeland Security, Homeland Security Investigations.
Prison inmate arraigned for charges related to alleged false tax refund claims of over $275,000Read the Press Release
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that an Anchorage man was indicted for one count of conspiracy to defraud the government with respect to tax claims, 12 counts mail fraud, and five counts aggravated identity theft.
John Richard Koesterman, 49, of Anchorage, Alaska, was arraigned on June 11, 2013, in Anchorage after having been indicted by a federal grand jury on April 16, 2013. Koesterman plead not guilty at his arraignment and is currently scheduled for trial beginning August 19, 2013.
According to filings with the court, between July 2009 and May 2011, Koesterman and others conspired to defraud the United States by filing false tax returns in order to obtain fraudulent tax refunds. The conspirators obtained the names and identifying information of people, many of whom were inmates at correctional facilities, without the knowledge of these individuals. Using this information, the conspirators would prepare and file false income tax returns that reported fictitious wage and withholding information. Some of the returns also reported false dependent information. Each fraudulently filed false return claimed that the taxpayer was due a refund of thousands of dollars. The returns were mailed to the IRS from Anchorage, Alaska, and from Denver and Colorado Springs, Colorado. A total of 55 false returns claiming $275,127 in fraudulent refunds were filed. These returns used the identifying information of 28 people.According to the indictment, the false returns used the conspirator’s personal addresses and Treasury checks were mailed to these addresses. In the case of direct deposits, refunds went into accounts held in the name of a conspirator. In order to cash checks, in some instances, conspirators forged Power of Attorney documents. A total of $95,568 was fraudulently obtained from the U.S. Treasury as a result of the scheme.
The identity theft charges of the indictment are the result of Koesterman using, without lawful authority and in relation to mail fraud, the means of identification of three individuals used on false income tax returns.
Koesterman’s indictment contains a forfeiture allegation which stipulates that, upon conviction, Koesterman must forfeit $5,787.75 in currency seized from a bank account and $13,751 seized from a residence.
According to Assistant U.S. Attorney Retta-Rae Randall, if convicted, Koesterman faces up to 20 years in prison and a $250,000 fine. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offense and the prior criminal history of the defendant.
An indictment 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.
The Internal Revenue Service, Criminal Division, led the investigation of this case.
Pittsburgh Man Taken Away to Prison for Bank Fraud and Identity TheftRead the Press Release
PITTSBURGH, Pa. - A resident of Allegheny County has been sentenced in federal court to 12 months and one day incarceration for counts one through nine to run concurrently with count one, plus 5 years supervised release on his conviction of bank fraud and identity theft, United States Attorney David J. Hickton announced today.
United States District Judge Arthur J. Schwab imposed the sentence on Anthony Jose Marchionno, 29.
According to the information presented to the court, Marchionno used several means of stealing identities of others which he then used to pursue schemes to steal from victim's bank accounts, including producing counterfeit checks, impersonating account holders, and producing counterfeit identification documents such as a Pennsylvania photo ID card.
Marchionno agreed to be taken into federal custody immediately to begin serving his sentence.
Assistant United States Attorney Gregory C. Melucci prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended Inspectors from the United States Postal Inspection Service and Allegheny County Police, who as part of the Western Pennsylvania Financial Crimes Task Force (WPFCTF), conducted the investigation that led to the successful prosecution of Anthony Jose Marchionno. The WPFCTF was established as a collaborative, multi-agency effort to effectively combat financial crimes, including identity fraud, in Western Pennsylvania. Partnering 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.
Pike Creek Man Sentenced to 220 Months in Prison for Drug Trafficking and Attempted Murder OffensesRead the Press Release
WILMINGTON, Del. – Charles M. Oberly, III, United States Attorney for the District of Delaware, announced today the sentencing of one man on narcotics trafficking and attempted murder convictions, and the separate conviction of that man’s brother for using Facebook to threaten to kill a government witness during the narcotics trafficking and attempted murder trial.
United States v. William Boney
William Boney, age 39, of Pike Creek, was sentenced to 220 months in prison today for conspiracy to possess with intent to distribute cocaine, in violation of Title 21, United States Code, Sections 841(a)(1) and (b)(1)(A), and 846; attempted murder by retaliating against an informant, in violation of Title 18, United States Code, Section 1513(a)(1)(B); and soliciting another person to retaliate against an informant by committing murder, in violation of Title 18, United States Code, Sections 1513(a)(1)(B) and 373. In January 2013, a federal jury returned guilty verdicts against Boney after a one-week trial.
According to statements made at the sentencing hearing and documents filed in court, Boney was initially arrested on November 7, 2010, for attempting to broker a cocaine deal worth approximately $217,000 at his residence. Boney, however, was released to cooperate with the DEA in ongoing drug investigations. While released, Boney discovered the identity of a confidential informant who assisted the DEA with the investigation of the November 7, 2010 drug deal. Boney then began to plot that informant’s murder.
Unbeknownst to Boney, DEA agents uncovered the plot before Boney could find a “hit man” to kill the confidential informant. DEA agents then had a second confidential informant pose as a would-be “hit man” who was willing to kill the first confidential informant. Boney met with the purported “hit man” three times between May 22, 2011 and July 3, 2011. During these meetings, Boney discussed the details of killing the confidential informant, instructing the “hit man” to kill the informant’s young child if the informant was not present when the “hit man” broke into the informant’s home. Boney proposed to pay the “hit man” by having him also conduct home invasion robberies of those whom Boney believed had large amounts of cash or drugs in their residences. Evidence submitted at trial also showed that Boney was a long-time drug dealer, with two prior convictions for trafficking in marijuana.
United States v. John Boney
John Francis Boney, Jr., age 35, of New Castle, pled guilty on June 4, 2013 to Interstate Transportation of Threats, after using Facebook to threaten to kill a government witness who was scheduled to testify at his brother, William Boney’s, federal narcotics trafficking and attempted murder trial. John Boney faces a maximum sentence of five years in prison, a $250,000 fine, and three years of supervised release. He is scheduled to be sentenced on September 18, 2013 by United States District Judge Sue L. Robinson, who presided over brother William Boney’s trial and sentenced William Boney to 220 months in prison earlier today.
According to statements made and documents filed in court, during a recorded prison phone call made in the weeks before his January 2013 narcotics trafficking and attempted murder trial, William Boney used an intermediary to inform his brother, John Boney, of the identity of a government witness whom William Boney believed would testify as a government witness during the trial.
John Boney attended the January 2013 trial of William Boney, which was held in the federal courthouse, in Wilmington. During the early days of the trial, John Boney learned that the government planned to call the witness identified by William Boney weeks earlier. On January 23, 2013, John Boney used a smartphone to post a message on Facebook threatening to kill the government witness who his brother, William Boney, had identified if that witness took the stand against William Boney.
On the morning of January 24, 2013, the government witness entered the federal building, but told court security officers that he would not report to Judge Sue L. Robinson’s courtroom to testify until he could speak with the federal agents involved in William Boney’s trial. The agents located the government witness on the lower level of the federal courthouse and learned that John Boney had posted a threat to kill the witness on Facebook the previous day.
The agents then responded to the courtroom in which the trial was occurring and removed John Boney from the audience. The agents also took custody of a smartphone that John Boney brought to the courthouse. On that phone, the agents found the Facebook message in which John Boney threatened to kill the government witness if that witness testified for the government. When confronted by the agents, John Boney admitted to posting the message.
Following the court proceedings, United States Attorney Oberly stated: ?The protection of witnesses who walk into federal courtrooms to aid in the pursuit of criminal justice, as well as the families of those witnesses, is of paramount concern, and accordingly should expect to be prosecuted.”
Drug Enforcement Administration Special Agent in Charge David G. Dongilli stated, “The sentence imposed by the court reflects the extreme seriousness of Mr. Boney’s efforts to kill a DEA confidential informant who was going to testify against him. I wish to thank all of the law enforcement agencies and prosecutors that, through their dedication and diligence successfully brought Mr. Boney to trial despite his efforts to subvert justice. DEA will not tolerate threats against witnesses and will continue to work closely with its law enforcement partners and prosecutors to investigate and prosecute individuals and organizations that threaten witnesses and their families.”
These cases were investigated by the Drug Enforcement Administration and were prosecuted by Assistant United States Attorneys Jamie M. McCall, Ilana Eisenstein and Edward J. McAndrew.Pennsylvania Man Charged with Mortgage FraudRead the Press Release
BOSTON – A Woodlyn, Pa., man was charged today with multiple counts of wire fraud in connection with a mortgage fraud scheme in which he recruited a straw buyer to purchase three condominiums in Dorchester, Mass., which ultimately went into foreclosure, causing a loss to the lenders of nearly $900,000.
Simon H. Aouad, 34, of Woodlyn, Pa., was indicted with conspiracy to commit wire fraud and four counts of wire fraud.According to the Indictment, in August 2007, Michael Lee purchased a three-family dwelling at 162 Quincy Street, in Dorchester, for $400,000. He immediately converted the dwelling to three condominiums, which allowed Lee to sell the units individually. At the request of Lee and another individual, Michael Hicks, Aouad recruited a “straw buyer” to purchase all three units for $1.11 million. The straw buyer provided his identifying information to Aouad who forwarded it to Hicks. Hicks used this information, such as his name, address, date of birth and Social Security number, to apply for mortgages for the purchase of the three units at 162 Quincy Street. In the loan applications, Hicks falsely represented the straw buyer’s assets and employment. Aouad also arranged for false income tax returns to be submitted with the fraudulent mortgage applications.
In 2010, Hicks was sentenced to 42 months in prison, followed by three years of supervised release and restitution after pleading guilty to wire fraud and money laundering. In 2011, Lee was sentenced to one year and one day in prison, followed by three years of supervised release and restitution after pleading guilty to wire fraud.
Aouad faces a statutory maximum penalty of 30 years in prison, to be followed by five years of supervised release and a $1 million fine on each count.
United States Attorney Carmen M. Ortiz, Steven Ricciardi, Special Agent in Charge of the U.S. Secret Service, Boston Field Office, and William Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston, made the announcement today. This case is being prosecuted by Assistant U.S. Attorney Sandra S. Bower of Ortiz’s Economic Crimes Unit.
The details contained in the Indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Paintsville Doctor Sentenced to 75 Months for Pill ConspiracyRead the Press Release
LEXINGTON, KY - A former Paintsville, KY., doctor, who previously admitted that he unlawfully dispensed approximately 50,000 prescription pills to individuals in Eastern Kentucky, was sentenced today to 75 months in prison, to be followed by three years supervised release.
U.S. District Judge Amul Thapar sentenced 66-year-old Richard Albert for conspiring to distribute and dispense controlled substances. Albert also agreed to forfeit more $630,000, which represents proceeds from his conspiracy. Albert was also ordered to pay $100,000 in community restitution.
Albert admitted that, from January 2009 until February 2011, he wrote numerous fraudulent prescriptions to individuals without a legitimate medical purpose. He typically wrote prescriptions for 100 (10 milligram) Percocet pills in exchange for $200 cash. Court records indicate that Albert frequently wrote approximately 40 to 50 fraudulent prescriptions in a given day.
According to the plea agreement, Albert wrote prescriptions to people who visited his clinic, his private residence, and a closed chiropractor’s office in Johnson County. During these visits, Albert performed little to no examination before writing the prescriptions. Patients who returned to the clinic after their initial visits received prescriptions without visiting with Albert at all.
In many cases, Albert signed his name to blank prescriptions and had an office assistant fill out the actual prescription. He also back dated information into his medical files to cover up the scheme.
During the course of the conspiracy, Albert worked at Care More Pain Management; and after resigning from Care More, he opened his own pain clinic. Albert was employed by Care More Pain Management owners Tammy Cantrell, of Oil Springs, KY., and Shelby Lackey, of Williamsport, KY. They pleaded guilty in April to conspiracy to distribute and unlawfully dispense Oxycodone and maintaining a drug involved premise.
The investigation started in 2009 when investigators with the Kentucky Attorney General’s Office observed large congregations of people routinely lined up outside Care More’s pain clinic.
Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Jack Conway, Kentucky Attorney General and Robert L. Corso, Special Agent in Charge, DEA, jointly announced the plea.
The investigation was conducted by the DEA, the Kentucky Attorney General’s Office and the Paintsville Police Department. Assistant U.S. Attorney Roger West represented the U.S. Attorney’s Office in this case.
PACT Act Now Fully EnforceableRead the Press Release
BUFFALO, N.Y. - U.S. Attorney William J. Hochul, Jr. and Alcohol, Tobacco, Firearms and Explosives New York Field Division Special Agent in Charge Joseph A. Anarumo announced today that after nearly three years of litigation, the lawsuit seeking to stop the federal law aimed at restricting the internet sales of cigarettes and sales to children has ended with the dismissal of several Native American cigarette retailers’ claims.
In June of 2010, Red Earth, LLC., d/b/a Seneca Smokeshop, and the Seneca Free Trade Association (“SFTA”), which represent over 140 Seneca owned smoke shops, sued the federal government to stop the enforcement of the new federal law, referred to as the PACT Act (Prevent All Cigarette Trafficking), just days before it was to go into effect. In July 2010, U.S. District Judge Richard J. Arcara issued a preliminary injunction preventing the United States from enforcing certain sections of the PACT Act relating to the collection of state taxes on cigarette sales and other state regulations. Judge Arcara upheld other portions of the PACT Act, including a ban on retailers using the United States Postal Service to mail cigarettes.
The Government and plaintiffs both appealed to the Second Circuit Court of Appeals which upheld Judge Arcara’s preliminary injunction and referred the case back to the district court for trial and the district court litigation continued. However, in April of this year, the SFTA discontinued its claims and asked that its lawsuit be dismissed. In addition, on June 7, 2013, Judge Arcara dismissed the remaining Red Earth claims pursuant to an agreement between the U.S. Attorney’s Office and Red Earth. The dismissal also vacated the earlier preliminary injunction which essentially means that the full scope of the PACT Act can now be enforced nationwide by the federal government.
The PACT Act litigation was handled by Assistant U.S. Attorney and Civil Division Chief Mary E. Fleming, Assistant U.S. Attorney Richard D. Kaufman, Special Assistant U.S. Attorneys Jeffrey A. Cohen and Matthew Myerson of the ATF Office of Chief Counsel and the Department of Justice’s Consumer Litigation Attorney Gerald Kell.
"With the end of this litigation, the federal government can now begin to enforce the full breadth and scope of the PACT Act and help insure that our nation’s children are protected from the sales of cigarettes to minors,” said U.S. Attorney Hochul. “The PACT Act will also allow for the proper tax revenues to be collected on the sales of cigarettes by each state, revenues which will be used to finance additional health programs to combat the devastating health effects felt by Americans due to the availability of cheap cigarettes.”
“The PACT Act was passed to combat interstate trafficking in untaxed tobacco which has been found to deprive governments of billions of tax dollars and to fund organized criminal activity,” said Alcohol, Tobacco, Firearms and Explosives Special Agent in Charge Joseph A. Anarumo. “We are pleased that the Government will finally be able to use this important legislative tool.”Owner of Las Americas Latin Market Pleads Guilty to Food Stamp FraudRead the Press Release
Tampa, Florida - United States Attorney Robert E. O'Neill announces that Carlos Chavez (46, Sarasota) pleaded guilty yesterday to theft of government funds in relation to a food stamp fraud scheme perpetrated at his convenience store, Las Americas Latin Market. Chavez faces a maximum penalty of 10 years in federal prison.
According to the plea agreement, Chavez has been the partial owner and operator of “More 4 Less Grocery Store Inc.,” a convenience store located at 560 N. Washington Boulevard in Sarasota. Over the years, this convenience store has done business as “More 4 Less Grocery Store” and, most recently, as “Las Americas Latin Market.”
Since August 2009, Las Americas has participated in the Supplemental Nutrition Assistance Program (“SNAP”), formerly known as the Food Stamp Program. SNAP was established by the United States Government to alleviate hunger and malnutrition among low and middle income families by increasing their food-purchasing power and ability. The U.S. Department of Agriculture is responsible for administering SNAP. Regulations mandate that retail businesses are prohibited from purchasing SNAP benefits in exchange for cash, a practice commonly known as “cash-back.”
Between February 1, 2010, and March 1, 2012, Chavez conducted numerous illegal “cash-back” transactions with SNAP recipients at Las Americas. Chavez collected a substantial fee for providing this cash-back service to SNAP recipients—typically 25% to 50% of the overall SNAP transaction. For example, if a SNAP recipient requested $50 cash back, Chavez would generally charge $100 to the recipient’s EBT card. When the $100 purchase was authorized, he would give the SNAP recipient $50 in cash and, within 48 hours, Las Americas would receive a $100 redemption from the Department of Agriculture. This illegal activity resulted in a loss of $735,886.00 in SNAP benefits to the U.S. Department of Agriculture.
In February 2011, law enforcement officials noticed that there were numerous suspicious SNAP transactions at Las Americas. For instance, Las Americas’ SNAP redemptions far exceeded those of similar convenience stores and even medium-size grocery stores in the immediate area. Also, between February 1, 2010, and March 1, 2012, Las Americas’ SNAP redemptions far exceeded state and national averages by 1,300%. After law enforcement executed a search warrant at Las Americas, SNAP redemptions at the store fell precipitously.
This case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the U.S. Department of Agriculture, the Internal Revenue Service Criminal Investigation, and the Sarasota Police Department. It is being prosecuted by Assistant United States Attorney Simon Gaugush.
North Windham Man Sentenced to 17 Years in Prison for Producing and Distributing Child PornographyRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that HEATH TRAHAN, 39, formerly of North Windham, was sentenced today by United States District Judge Janet Bond Arterton in New Haven to 204 months of imprisonment, followed by 15 years of supervised release, for producing and distributing child pornography.
According to court documents and statements made in court, TRAHAN was arrested on October 14, 2011, after investigators determined that he had emailed images of child pornography to an individual in New Jersey. At the time of his arrest, investigators seized several computers, related components and a mobile phone. Forensic analysis of the seized phone determined that TRAHAN used it to take photographs of two minor children engaging in sexually explicit conduct. Examination of the seized computers also revealed approximately 500 images and 60 videos of child pornography, which had not been produced by TRAHAN.
TRAHAN has been detained since his arrest. On December 20, 2012, he pleaded guilty to one count of production of child pornography and one count of distribution of child pornography.
This matter was investigated by Homeland Security Investigations with the assistance of the Connecticut State Police. The case was prosecuted by Assistant United States Attorneys Neeraj N. Patel and Deborah R. Slater. Assistant United States Attorney Fabiana Pierre-Louis of the District of New Jersey has assisted in the investigation and prosecution of this matter.
This prosecution is part of the U.S. Department of Justice’s Project Safe Childhood Initiative, which is aimed at protecting children from sexual abuse and exploitation. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
To report cases of child exploitation, please visit www.cybertipline.com.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
[email protected]North Dakota Man SentencedRead the Press Release
United States Attorney Brendan V. Johnson announced that a Bismarck, North Dakota man convicted of Conversion of Farm Service Agency Mortgaged Property was sentenced on June 12, 2013 by U.S. District Judge Roberto A. Lange.
Wroper Kosel, age 25, was sentenced to 12 months of probation, a $2,400 fine, and a $100 special assessment to the Federal Crime Victims Fund.
Kosel was indicted by a federal grand jury in November of 2012. The conviction stems from an incident that occurred in March of 2010 where the Defendant sold, without permission or notification to Farm Service Agency, nine head of cattle that were security for loans Kosel had with the Farm Service Agency, a division of the Department of Agriculture.
The investigation was conducted by the Office of Inspector General for the United States Department of Agriculture. The case was prosecuted by Assistant U.S. Attorney Mikal Hanson.
Nevada Man Involved in Multi-Kilogram Cocaine Trafficking Conspiracy Sentenced to 32 Years' ImprisonmentRead the Press Release
RICHMOND, Va. – Torry Von Zenon, 41, of Las Vegas, Nevada, was sentenced today to 384 months’ imprisonment for his role in a drug trafficking conspiracy involving several kilograms of cocaine.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; and Karl C. Colder, Special Agent in Charge for the Drug Enforcement Administration (DEA)’s Washington Division, made the announcement after the sentencing was announced by United States District Judge Henry E. Hudson.
According to evidence presented at trial, Zenon and others conspired together to broker a 100 kilogram cocaine transaction for a potential buyer in Baltimore, Maryland. The participants flew to Richmond, Virginia, and then traveled to Baltimore for a meeting scheduled to take place on January 27, 2012. The conspirators met at an apartment leased by Zenon and counted the approximately $1,499,377.00 in United States currency gathered by the proposed buyers. Soon after the money was counted, three co-defendants (Dion Williams, Torry Zenon, and Vincent Williams) were arrested in possession of the cash, two Royal Sovereign money counters, two handguns, and other items. As a result, the transaction was not consummated. Both Zenon and Vincent Williams were found guilty on January 24, 2013, of conspiracy to distribute five kilograms or more of cocaine following a jury trial.
As part of the same conspiracy, Hiram Alvarez and others coordinated a second drug transaction to take place in March 2012. Documents filed with the Court show that Alvarez contacted co-defendant Topeka Sam in February 2012, and advised that he (Alvarez) had a seller willing to supply approximately 50 kilograms of cocaine. Sam, in turn, located two buyers who were willing to pay $26,000 per kilogram of cocaine. To execute those transactions, Sam and another co-defendant travelled to Richmond, Virginia, on March 7, 2012, to meet with sellers at the Hooter’s Restaurant, located at 7912 West Broad Street, Richmond, Virginia. At Hooter’s, Sam met with three individuals who she believed to be the sellers. Sam and the proposed sellers travelled to a storage facility located at 9001 Brook Road, Glen Allen, Virginia, where she inspected an undercover “trap” vehicle designed to conceal and transport kilogram quantities of cocaine. Sam viewed approximately 50 kilograms of cocaine that were concealed in the vehicle. She agreed to purchase all 50 kilograms of cocaine, with 25 kilograms going to a buyer from Maryland, and another 25 kilograms going to a buyer from New York.
On March 8, 2012, Sam, co-defendant Percy Robinson, and another co-defendant met with the proposed sellers at an address in Randallstown, Maryland. At that location, Robinson negotiated his proposed purchase of 25 kilograms of cocaine and presented approximately $250,000 in United States currency to serve as partial payment for the cocaine purchase. Robinson agreed to meet with the sellers on the following day to present additional money to complete the drug transaction. Robinson left the address and was intercepted by law enforcement during a traffic stop, at which time he was in possession of approximately $255,360.Later on March 8, 2012, Sam and co-defendant Reginald Marshall met with the proposed sellers at the Randallstown, Maryland address to discuss Marshall’s proposed cocaine purchase. Marshall negotiated the transaction and presented approximately $80,000 in United States currency to serve as partial payment for the cocaine. Marshall and Sam left soon thereafter with the understanding that Marshall would gather more funds to complete the purchase. Later that same day, law enforcement officers intercepted Marshall and Sam during a traffic stop, at which time the two were in possession of approximately $89,074.
Finally, on April 24, 2012, Sam and Robinson travelled to Richmond, Virginia to meet with proposed sellers about another drug transaction. During that meeting, Robinson agreed to purchase another 30 kilograms of cocaine. Soon thereafter, both Sam and Robinson were arrested by law enforcement for their alleged role in the drug trafficking conspiracy.
To date, all of the arrested defendants have been convicted and sentenced:
- Hiram Alvarez pleaded guilty and was sentenced to 324 months’ imprisonment on March 24, 2013.
- Dion Levering Williams pleaded guilty and was sentenced to 252 months’ imprisonment on April 19, 2013.
- Vincent A. Williams was convicted at trial and was sentenced to 250 months’ imprisonment on April 26, 2013.
- Topeka Kimberly Sam pleaded guilty and was sentenced to 130 months’ imprisonment on January 11, 2013.
- Percy Robinson pleaded guilty and was sentenced to 130 months’ imprisonment on November 13, 2012.
- Reginald Marshall pleaded guilty and was sentenced to 120 months’ imprisonment on January 25, 2013.
- Susan Smallwood pleaded guilty and was sentenced to 57 months’ imprisonment on November 19, 2012.
The investigation was coordinated by the Drug Enforcement Administration, which received assistance from the Chesterfield County Police Department, Hanover Sheriff’s Office, Richmond Police Department, Virginia State Police, Virginia Commonwealth University Police Department, Baltimore County Police Department, Baltimore City Police Department, Maryland State Police Department, Colton Police Department, Maryland Transportation Authority Police, Maryland Transit Administration Police, Maryland Natural Resources Police, Chino Police Department, Riverside Police Department, San Bernardino City Police Department, Pine Hill Police Department, Portsmouth Sheriff’s Office, and Department of Homeland Security – Homeland Security Investigations. Assistant United States Attorneys Michael Gill, Jamie Mickelson, and Peter Duffey prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.Millette Womack Pleads Guilty to Defrauding Gulf Coast Claims FacilityRead the Press Release
MILLETTE WOMACK, age 38, a resident of New Orleans, Louisiana, pled guilty in federal court today before U.S. District Judge Stanwood R. Duval to conspiracy to commit wire fraud relating to a fraudulent application she made to the Gulf Coast Claims Facility (GCCF) for financial assistance in the aftermath of the Deepwater Horizon oil spill in the Gulf of Mexico, announced U. S. Attorney Dana J. Boente.
According to court documents, the GCCF made disaster assistance money available to individuals and businesses affected by the oil spill resulting from the Deepwater Horizon explosion. The GCCF required individuals to verify loss of income. On October 24, 2010, the GCCF received WOMACK’s online claim form seeking an emergency 6-month payment in the amount of $10,000, wherein WOMACK falsely stated she lost earnings as a result of the Deepwater Horizon oil spill. Documentation in support of WOMACK’s claim included copies of fraudulent earning statements indicating that prior to the oil spill, WOMACK had worked as a line cook at Don’s Seafood Hut Restaurant & Oyster Bar, when, in fact, she was never so employed. As a result of these false representations and documentation contained in the claim, the GCCF paid WOMACK approximately $13,100.00.
WOMACK faces a maximum term of imprisonment of five (5) years, a fine of $250,000.00 and three (3) years of supervised release following any term of imprisonment. Sentencing is set for September 18, 2013.
This case was brought as part of this District’s partnership with the National Center for Disaster Fraud (NCDF), a nationwide initiative to protect available funds and assistance for those victims of both natural and man-made disasters such as hurricanes, floods, tornadoes and the recent Gulf oil spill. If you have knowledge of fraud, waste, abuse, or allegations of mismanagement involving disaster relief operations, you can contact the NCDF by either calling the hotline at (866) 720-5721, faxing (225) 334-4707, emailing at [email protected] or in writing to National Center for Disaster Fraud, Baton Rouge, LA 70821-4909.
The case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant United States Attorney Loan “Mimi” Nguyen.
(Download Factual Basis )
Middlebury Man Sentenced to Federal Prison for Participating in Illegal Campaign Contribution SchemeRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the Federal Bureau of Investigation, announced that DAVID MOFFA, 53, of Middlebury, was sentenced today by United States District Judge Janet Bond Arterton in New Haven to 24 months of imprisonment, followed by one year of supervised release, for participating in a scheme to direct illegal contributions into the campaign of a candidate for the U.S. House of Representatives. MOFFA, who is a former President of the American Federation of State, County and Municipal Employees (AFSCME), was also ordered to pay a $5,000 fine.
According to court documents and statements made in court, in August 2011, the State of Connecticut applied for a court order enjoining Roll Your Own (“RYO”) smoke shops from continuing to operate without complying with state law governing tobacco manufacturers. RYO smoke shops are retail businesses that sell loose smoking tobacco and cigarette-rolling materials and offer customers the option of paying a “rental” fee to insert the loose tobacco and the rolling materials into a RYO machine, which is capable of rapidly rolling large quantities of cigarettes. Customers did not pay a tax on the RYO cigarettes when rolled by the RYO machines, in contrast to cigarettes purchased over-the-counter.
Paul Rogers and George Tirado co-owned Smoke House Tobacco, a RYO smoke shop with two locations in Waterbury. Fearing that the Connecticut General Assembly would enact legislation harmful to RYO smoke shop owners’ business interests during the 2012 legislative session, Rogers, Tirado, MOFFA, Harry Raymond “Ray” Soucy, Benjamin Hogan and others engaged in a scheme to direct conduit contributions into the campaign of Christopher Donovan, a candidate for the U.S. House of Representatives. At the time, Donovan was also the Speaker of the Connecticut House of Representatives. As part of the scheme, the co-conspirators recruited multiple individuals to serve as conduit contributors to the campaign. These individuals permitted checks to be written in their own names to the campaign, and certain conspirators reimbursed them with cash, thereby concealing the fact that RYO smoke shop owners were contributing to the campaign.
The investigation revealed that, on November 2, 2011, MOFFA, Rogers and another RYO smoke shop owner met at Smoke House Tobacco in Waterbury and MOFFA advised the other attendees that Soucy could help the RYO smoke shop owners prevent the enactment of harmful legislation. MOFFA then called Soucy and, shortly thereafter, Soucy arrived at Smoke House Tobacco and joined the meeting. Soucy stated that he was a “friend” of Donovan and could assist in arranging a meeting between RYO smoke shop owners and Donovan.
On November 30, 2011, MOFFA met with Soucy, Rogers and another RYO owner at Smoke House Tobacco. During the meeting, MOFFA discussed with the RYO smoke shop owners that they should make a $5,000 contribution to the Donovan for Congress campaign at a fundraising event to be held on December 8, 2011. MOFFA volunteered to serve as a conduit contributor in order conceal the fact that the RYO smoke shop owners were actually financing the contributions. On that date, MOFFA told the RYO smoke shop owners “You give me the money, I’ll give you a check.”
At a meeting at Smoke House Tobacco on December 8, 2011, Rogers and another RYO smoke shop owner provided MOFFA with $2,500 in U.S. currency. MOFFA then wrote a check for $2,500 in his wife’s name to Donovan for Congress and provided Soucy with his wife’s biographical information so that Soucy could fill in a contribution envelope provided by the campaign. Soucy, Rogers and the other shop owner then went to the fundraising event, where they delivered two $2,500 contributions, including the contribution in MOFFA’s wife’s name to the campaign. Following the event, MOFFA met the group for dinner.
On approximately January 31, 2012, the Donovan for Congress campaign submitted to the Federal Election Commission (“FEC”) a report of the campaign’s receipts and disbursements for the period October 1, 2011 through December 31, 2011. The report falsely reported that it had received a $2,500 contribution from MOFFA’s wife when, in fact, neither MOFFA nor his wife had made a contribution to the campaign.
On June 1, 2012, FBI special agents investigating this matter interviewed MOFFA. During the interview, MOFFA falsely stated that he did not receive any cash in exchange for writing the check to the Donovan for Congress campaign.
On November 2, 2012, MOFFA pleaded guilty to one count of conspiring to make false statements to the FEC and to impede the FEC’s enforcement of federal campaign finance laws.
Soucy, Rogers, Tirado, Hogan, Waterbury business owner Daniel Monteiro and Donovan for Congress campaign manager Joshua Nassi also pleaded guilty to charges related to this scheme and await sentencing. In addition, on May 21, 2013, a jury found Robert Braddock, Jr., the campaign’s finance director, guilty of one count of conspiring to make false statements to the FEC and to impede the function of the FEC, one count of accepting more than $10,000 in federal campaign contributions made by persons in the names of others and one count of causing a false report to be filed with the FEC. He also awaits sentencing.
This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorneys Christopher M. Mattei and Eric J. Glover.
PUBLIC AFFAIRS CONTACT:
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Tom Carson
(203) 821-3722
[email protected]Miami Resident Sentenced for Identity TheftRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael J. DePalma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announced today the sentencing of defendant Josue Faustin, 21, of Miami. United States District Judge William J. Zloch sentenced Faustin to 27 months in prison, to be followed by 3 years of supervised release. In addition, the defendant was ordered to pay restitution in the amount of $43,591.90.
Faustin engaged in a fraud scheme using stolen identities to file fraudulent tax returns. The tax returns falsely claimed refunds and requested that the refunds be direct-deposited into Netspend debit card accounts which Faustin had opened in the names of unwitting identity theft victims. Faustin subsequently went to various ATM machines in Coral Springs, Broward County, and withdrew funds from the Netspend debit card accounts.
According to documents filed with the court, on May 17, 2012, Faustin was observed by a Coral Springs police officer as he went to CVS and 7-11 stores, and bought pre-paid credit cards. After the purchases, Faustin went to ATM machines and withdrew money. After being pulled over for a traffic stop, Faustin was found in possession of bundles of cash totaling $5,881, 3 cell phones, 15 Netspend debit cards loaded with approximately $30,000 from tax refunds, and 4 newly purchased debit cards.
Mr. Ferrer commended the investigative efforts of IRS-CI. The case was prosecuted by Assistant United States Attorney Jennifer Keene.
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.
Maxton Man Sentenced to 480 Months for Drug TraffickingRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announced that in federal court yesterday, Senior United States District Judge James C. Fox sentenced JAMES WILLIAM PAUL SANDERSON, 35, of Maxton, North Carolina, to 480 months imprisonment followed by 5 years supervised release.
On September 20, 2011, SANDERSON pled guilty to the distribution of 50 grams or more of cocaine base (crack) and a quantity of dihydrocodeinone (Percocet) in violation of Title 21, United States Code, Section 841(a)(1).
The evidence presented during SANDERSON’S sentencing hearing revealed that he was a significant trafficker who was responsible for the distribution of multiple kilograms of crack and powder cocaine. The evidence also established that SANDERSON frequently used and possessed firearms during his drug activities.
This case is part of an Organized Crime Drug Enforcement Task Force investigation and was conducted by the Bureau of Alcohol, Tobacco, Firearms, & Explosives, the North Carolina State Bureau of Investigation, and the Robeson County Sheriff’s Office.
Manhattan U.S. Attorney Files and Settles Civil Fraud Lawsuit Against Subcontractor for Violating the Federal Disadvantaged Business Enterprise RegulationsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Barry Kluger, the Inspector General of the Metropolitan Transportation Authority (“MTA”), and Douglas Shoemaker, Regional Special Agent-in-Charge of the U.S. Department of Transportation, Office of the Inspector General (“USDOT-OIG”), announced today that the United States has filed and simultaneously settled a civil fraud lawsuit against a subcontractor, KLEINBERG ELECTRIC INC. (“KLEINBERG”), for engaging in fraudulent conduct designed to take advantage of the Disadvantaged Business Enterprise Program in order to secure a subcontract on a federally-funded project for the design and construction of the Fulton Street Transit Center Dey Street Concourse (the “Dey Street Project”). KLEINBERG caused the prime contractor of the Dey Street Project to falsely represent to the MTA that KLEINBERG paid hundreds of thousands of dollars to a disadvantaged business enterprise (“DBE”) to perform legitimate work on the contract when, in reality, the DBE did not perform a “commercially useful function,” as required by the program’s regulations, and instead received a commission for the fraudulent use of its DBE status. As part of the settlement, KLEINBERG admitted and accepted responsibility for violating the DBE regulations governing the Dey Street Project and agreed to pay $936,000. The settlement was approved yesterday in Manhattan federal court by U.S. District Judge P. Kevin Castel.
Manhattan U.S. Attorney Preet Bharara said: “Kleinberg Electric painted a veneer of legitimacy on a subcontract that did not comply with the Disadvantaged Business Enterprise Program, and in doing so, subverted the aim of helping qualified minority and women-owned businesses succeed. Today’s settlement will help to ensure that all contractors who receive federal funds, whether they are prime contractors or subcontractors, follow the law.”
MTA Inspector General Barry Kluger said: “The civil settlement announced today is the result of the joint efforts of the Office of the United States Attorney, my Office, and the USDOT-OIG to combat construction fraud and protect the integrity of the federal Disadvantaged Business Enterprise Program. Today’s announcement demonstrates our continued commitment to create and maintain a level playing field in which all qualified disadvantaged business enterprises have a fair and equal opportunity to bid for, receive, and participate in MTA projects. I wish to thank the United States Attorney for the Southern District of New York and his staff for their strong and sustained efforts and our continuing partnership.”
USDOT-OIG Regional Special Agent-in-Charge Douglas Shoemaker said: “The Disadvantaged Business Enterprise Program is a business assistance program of the USDOT which helps economically and socially disadvantaged small businesses compete in the marketplace. Disadvantaged Business Enterprise fraud harms the integrity of the program and adversely impacts law-abiding small business contractors trying to compete on a level playing field. Working with our federal, state, and local law enforcement and prosecutorial colleagues, we will vigorously pursue those who violate the law, and expose and shut down fraud schemes that adversely affect public trust and USDOT-assisted transit programs.”
Background on DBEs
In 1980, the USDOT issued regulations in connection with a program to increase the participation of minority and disadvantaged business enterprises in federally-funded public construction contracts. To become certified as a DBE, a company must be owned and controlled by socially and economically disadvantaged individuals; be an independent business whose viability does not depend on its relationship with other firms; employ its own work force and own equipment necessary to perform its work; and be able to meet its financial obligations.
Recipients of USDOT construction grants, such as the MTA, are required to establish a DBE program that sets goals for the percentage of a project’s work that should be awarded to DBEs (“DBE goals”). General contractors on construction projects must make good faith efforts to meet the relevant DBE goals. The MTA has established a DBE program and requires companies that are awarded public works contracts to meet certain DBE goals.
Under the USDOT regulations, general contractors can count funds paid to DBEs toward the attainment of the DBE goals only if the DBEs performed a “commercially useful function.” A DBE subcontractor performs a “commercially useful function” only when it is responsible for the execution of the work of the contract; it actually performs, manages, and supervises the work involved; and it furnishes the supervision, labor, and equipment necessary to perform its work.
A DBE does not perform a “commercially useful function” if “its role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of DBE participation.”
Kleinberg’s Fraud
According to the allegations in the complaint:
The MTA set the DBE participation goal for the Dey Street Project at 10 percent of the project (or approximately $12.7 million). KLEINBERG was hired as a subcontractor for the Dey Street Project by the prime contractor, Slattery Skanska (“Skanska”). KLEINBERG expressly represented to Skanska that it would contract with J&R Rey as a second-tier DBE subcontractor for $600,000 in order to help Skanska reach its DBE goal for the contract. Between September 2005 and April 2007, at least 34 monthly requisitions were submitted to the MTA for the Dey Street Project including certifications of progress towards meeting the contract’s DBE participation goal. Relying on representations from KLEINBERG, Skanska reported to the MTA that J&R Rey was performing legitimate work on the contract. In reality, KLEINBERG never intended for J&R Rey to perform any legitimate tasks on the contract and J&R Rey never in fact performed any work on the contract. Indeed, the President of J&R Rey confirmed to the MTA’s Office of Inspector General that J&R Rey never performed a commercially useful function on the Dey Street Project. Instead, KLEINBERG paid J&R Rey “commissions” for the sole purpose of fraudulently using J&R Rey’s DBE status to earn DBE credit for the prime contractor.
Under the settlement agreement, KLEINBERG admitted, acknowledged, and accepted responsibility for causing false certifications to be submitted to the MTA representing that J&R Rey performed certain work and received certain payments, when in fact, J&R Rey never performed any work and received a commission from KLEINBERG for the fraudulent use of its DBE status. KLEINBERG also agreed to pay the United States $936,000 in damages.
Mr. Bharara praised the work of the MTA Office of Inspector General and the USDOT office of Inspector General for their invaluable work on this case.
The case is being handled by the Office’s Civil Frauds Unit.
Assistant U.S. Attorneys Lara Eshkenazi, Mara Trager, and Ellen London are in charge of the case.
U.S. v. Kleinberg Electric Complaint
U.S. v. Kleinberg Electric Stipulation and Order of DismissalManchester Man Pleads Guilty to Drug and Gun ChargesRead the Press Release
CONCORD, NH – Raymond Negron, 32, of Manchester, pled guilty in United States District Court for the District of New Hampshire to four counts of unlawful distribution of oxycodone and cocaine, one count of unlawful possession with the intent to distribute oxycodone and cocaine, the sale of a firearm to a prohibited person, and possession of a firearm with an obliterated serial number, announced United States Attorney John P. Kacavas.
Beginning in December, 2011, law enforcement began an investigation into Negron’s suspected drug trafficking within the city of Manchester. During the course of the investigation, Negron sold quantities of oxycodone tablets and cocaine. During one of the drug sales, Negron also sold an individual assisting in the investigation a SKS 7.62 caliber rifle that had previously been stolen from a pawn shop in Miami, Florida, knowing the individual had a prior felony conviction.
On March 20, 2012, a search warrant was executed at Negron’s residence. Located in Negron’s residence were additional quantities of oxycodone tablets and cocaine, items used for packaging and distributing narcotics and a “sawed off” Mossberg 20 gauge bolt action shotgun which had an obliterated serial number.
Negron is scheduled to be sentenced on September 16, 2013. He is facing a maximum statutory sentence for each of the drug charges of twenty years, a maximum statutory sentence for the selling of the firearm and possessing an unregistered firearm of ten years and up to five years for possessing a firearm with an obliterated serial number.
The case was investigated by the United States Drug Enforcement Administration’s High Intensity Drug Trafficking Area Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the New Hampshire State Police, and the Manchester, New Hampshire Police Department. The case was prosecuted by Assistant United States Attorney Jennifer Cole Davis.Managing Partner of U.S. Broker-Dealer Charged<br /> in Manhattan Federal Court with Participating in Massive International Bribery SchemeRead the Press Release
A managing partner of a U.S. broker-dealer was arrested today on felony charges arising from a conspiracy to pay bribes to a senior official in Venezuela’s state economic development bank, Banco de Desarrollo Económico y Social de Venezuela (BANDES).
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara for the Southern District of New York, and Assistant Director-in-Charge George Venizelos of the FBI’s New York Office made the announcement.
Ernesto Lujan, 50, among others, allegedly arranged the bribe payments to Maria De Los Angeles Gonzalez De Hernandez at BANDES in exchange for her directing BANDES’s financial trading business to the Broker-Dealer. Lujan was arrested this morning in Wellington, Fla., where he resides, and was presented in federal court in West Palm Beach, Fla.
“The huge bribes Mr. Lujan and others allegedly paid funneled millions to his firm and into his own pockets,” said Acting Assistant Attorney General Raman. “Bribery corrupts markets, and this arrest – just the latest in the Department’s recent series of anti-corruption charges in various districts – is yet another demonstration that, at the end of the day, the real dividends bribe payers reap are criminal charges.”
“From his perch as managing partner Ernesto Lujan allegedly engaged in a bribery scheme designed to drum up foreign trading business for his firm,” said U.S. Attorney Bharara. “Along with his alleged cohorts, three of whom were arrested last month, he pocketed millions from the alleged scheme which was executed through kickbacks to a Venezuelan government official and through money laundering.”“As alleged, Lujan led a conspiracy to bribe a foreign government bank official to steer business to his firm,” said FBI Assistant Director-in-Charge Venizelos. “As previously alleged, much of this trading activity was conducted solely to generate fees for the firm. Lujan personally reaped millions in profits, and used Swiss bank accounts to conceal both the bribes and his own proceeds of the scheme.”
On May 3, 2013, Gonzalez, along with two employees of the Broker-Dealer, Tomas Alberto Clarke Bethancourt and Jose Alejandro Hurtado, were arrested on separate charges relating to this bribery scheme. On May 6, 2013, the government filed a civil forfeiture action in Manhattan federal court seeking the forfeiture of assets held in a number of bank accounts associated with the scheme, including several bank accounts located in Switzerland, and the forfeiture of several properties in the Miami area related to Hurtado that were purchased with his proceeds from the scheme. That same day, the court also issued seizure warrants for multiple bank accounts and a restraining order relating to those Miami properties.
In a separate action, the U.S. Securities and Exchange Commission (SEC) announced civil charges against Lujan.
According to the allegations in the criminal complaint unsealed today, and other documents filed in Manhattan federal court, Lujan, a managing partner of the Broker-Dealer, which was headquartered in New York City, was the branch manager of its Miami offices. In 2008, the Broker-Dealer established a group called the Global Markets Group, which included Lujan, Clarke and Hurtado, and which offered fixed income trading services to institutional clients. One of the Broker-Dealer’s clients was BANDES, which operated under the direction of the Venezuelan Ministry of Finance. The Venezuelan government had a majority ownership interest in BANDES and provided it with substantial funding. Gonzalez, a BANDES official, oversaw the development bank’s overseas trading activity. At her direction, BANDES conducted substantial trading through the Broker-Dealer. Most of the trades executed by the Broker-Dealer on behalf of BANDES involved fixed income investments for which the Broker-Dealer charged the bank a mark-up on purchases and a mark-down on sales.
From December 2008 through October 2010, Lujan, along with Clarke, Hurtado and Gonzalez, allegedly participated in a bribery scheme in which Gonzalez directed trading business she controlled at BANDES to the Broker-Dealer, and in return, agents and employees of the Broker-Dealer, including Lujan, split the revenue the Broker-Dealer generated from this trading business with Gonzalez. During this time period, the Broker-Dealer generated over $60 million in mark-ups and mark-downs from trades with BANDES. Agents and employees of the Broker-Dealer, including Lujan, Clarke and Hurtado, allegedly devised a split with Gonzalez of the commissions paid by BANDES to the Broker-Dealer.
Court records allege that to further conceal the scheme, the kickbacks to Gonzalez were often paid using intermediary corporations and offshore accounts that she held in Switzerland, among other places. For example, at least $9.5 million was transferred from the Broker-Dealer to a Swiss bank account controlled by Clarke, who in turn transferred at least $6.5 million to a Swiss bank account controlled by Lujan. Lujan then allegedly transferred at least $1.5 million of these proceeds to a Swiss bank account controlled by Gonzalez.
Lujan was charged with one count each of conspiracy to violate the Foreign Corrupt Practices Act (FCPA), violation of the FCPA, conspiracy to violate the Travel Act and violation of the Travel Act, which each carry a maximum penalty of five years in prison. He is also charged with conspiracy to commit money laundering and money laundering, which each carry a maximum penalty of 20 years in prison.
This ongoing investigation is being conducted by the FBI, with assistance from the SEC and the Justice Department’s Office of International Affairs. Assistant Chief James Koukios and Trial Attorneys Maria Gonzalez Calvet and Aisling O’Shea of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York’s Securities and Commodities Fraud Task Force are in charge of the prosecution.
Additional information about the Justice Department’s FCPA enforcement efforts can be
found at www.justice.gov/criminal/fraud/fcpa.The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Managing Partner of U.S. Broker-Dealer Charged in Manhattan Federal Court with Participating in Massive International Bribery SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Mythili Raman, the Acting Assistant Attorney General for the Criminal Division of the United States Department of Justice, and George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), today announced the arrest of ERNESTO LUJAN (“LUJAN”), a managing partner of a U.S. broker-dealer (the “Broker-Dealer”), on felony charges arising from a conspiracy to pay bribes to Maria De Los Angeles Gonzalez De Hernandez (“Gonzalez”), a senior official in Venezuela’s state economic development bank, Banco de Desarrollo Económico y Social de Venezuela (“BANDES”). LUJAN, among others, allegedly arranged the bribe payments to Gonzalez in exchange for her directing BANDES’s financial trading business to the Broker-Dealer. LUJAN, 50, was arrested this morning in Wellington, Florida, where he resides and was presented in federal court in West Palm Beach, Florida.
On May 3, 2013, Gonzalez, along with two employees of the Broker-Dealer, Tomas Alberto Clarke Bethancourt (“Clarke”) and Jose Alejandro Hurtado (“Hurtado”) were arrested on separate charges relating to this bribery scheme. On May 6, 2013, the Government filed a civil forfeiture action in Manhattan federal court seeking the forfeiture of assets held in a number of bank accounts associated with the scheme, including several bank accounts located in Switzerland, and the forfeiture of several properties in the Miami, Florida, area related to Hurtado that were purchased with his proceeds from the scheme. That same day, the Court also issued seizure warrants for multiple bank accounts and a restraining order relating to those Miami properties.
Manhattan U.S. Attorney Preet Bharara stated: “From his perch as managing partner Ernesto Lujan allegedly engaged in a bribery scheme designed to drum up foreign trading business for his firm. Along with his alleged cohorts, three of whom were arrested last month, he pocketed millions from the alleged scheme which was executed through kickbacks to a Venezuelan government official and through money laundering.”
Acting Assistant Attorney General Mythili Raman said: “The huge bribes Mr. Lujan and others allegedly paid funneled millions to his firm and into his own pockets. Bribery corrupts markets, and this arrest – just the latest in the Department’s recent series of anti-corruption charges in various districts – is yet another demonstration that, at the end of the day, the real dividends bribe payors reap are criminal charges.”
FBI Assistant Director-in-Charge George Venizelos said: “As alleged, Lujan led a conspiracy to bribe a foreign government bank official to steer business to his firm. As previously alleged, much of this trading activity was conducted solely to generate fees for the firm. Lujan personally reaped millions in profits, and used Swiss bank accounts to conceal both the bribes and his own proceeds of the scheme.”
In a separate action, the U.S. Securities and Exchange Commission (“SEC”) announced civil charges against LUJAN.
According to the allegations in the Criminal Complaint unsealed today, and other documents filed in Manhattan federal court:
Background on the Broker-Dealer and BANDES
LUJAN, a managing partner of the Broker Dealer, which was headquartered in New York City, was the branch manager of its Miami offices. In 2008, the Broker-Dealer established a group called the Global Markets Group, which included LUJAN, Clarke and Hurtado, and which offered fixed income trading services to institutional clients. One of the Broker-Dealer’s clients was BANDES, which operated under the direction of the Venezuelan Ministry of Finance. The Venezuelan government had a majority ownership interest in BANDES and provided it with substantial funding. Gonzalez, a BANDES official, oversaw the development bank’s overseas trading activity. At her direction, BANDES conducted substantial trading through the Broker-Dealer. Most of the trades executed by the Broker-Dealer on behalf of BANDES involved fixed income investments for which the Broker-Dealer charged the bank a mark-up on purchases and a mark-down on sales.
The Bribery Scheme
From December 2008 through October 2010, LUJAN, along with Clarke, Hurtado, and Gonzalez, participated in a bribery scheme in which Gonzalez directed trading business she controlled at BANDES to the Broker-Dealer, and in return, agents and employees of the Broker-Dealer, including LUJAN, split the revenue the Broker-Dealer generated from this trading business with Gonzalez. During this time period, the Broker-Dealer generated over $60 million in mark-ups and mark-downs from trades with BANDES. Agents and employees of the Broker-Dealer, including LUJAN, Clarke and Hurtado, devised a split with Gonzalez of the commissions paid by BANDES to the Broker-Dealer.
To further conceal the scheme, the kickbacks to Gonzalez were often paid using intermediary corporations and offshore accounts that she held in Switzerland, among other places. For example, at least $9.5 million was transferred from the Broker-Dealer to a Swiss bank account controlled by Clarke, who in turn transferred at least $6.5 million to a Swiss bank account controlled by LUJAN. LUJAN then transferred at least $1.5 million of these proceeds to a Swiss bank account controlled by Gonzalez.
A chart containing the charges and maximum penalties LUJAN faces is attached below.
Mr. Bharara praised DOJ’s Criminal Division and the FBI for their work in the investigation. He also thanked the SEC for its assistance in this case and noted that the investigation is continuing.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorneys Harry A. Chernoff and Jason H. Cowley, and Fraud Section Assistant Chief James Koukios and Trial Attorneys Maria Gonzalez Calvet and Aisling O’Shea are in charge of the prosecution. Assistant United States Attorney Carolina Fornos is also responsible for the forfeiture aspects of the case.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
U.S. v. Ernesto Lujan Complaint
Click here to view chart(s)
Local Cook Heads to Prison for Soliciting A Child for SexRead the Press Release
CORPUS CHRISTI, Texas – Corpus Christi resident Daniel Ricardo Barrientos, 30, has been ordered to federal prison following his conviction of soliciting a child for sex through the Internet, United States Attorney Kenneth Magidson announced today. A Corpus Christi federal jury convicted Barrientos on March 7, 2013, after a two-day trial.
Today, Senior U.S. District Judge Hayden Head, who presided over the trial, handed Barrientos a 121-month sentence. At the hearing, Judge Head stated that the sentence imposed was necessary to protect the public. Barrientos will also be required to serve a term of 15 years of supervised release following completion of the prison term, during which time he will be required to comply with numerous conditions that restrict his access to children and the Internet. He must also register as a sex offender.
During his jury trial, the government called several witnesses detailing the offense. The jury learned that Barrientos, a cook at a local chain restaurant, had communicated via email, text and telephone conversations with an undercover officer of the Corpus Christi Police Department’s Internet Crimes Against Children Task Force (CCPD-ICAC). The officer had portrayed herself as a single mother of two daughters ages 12 and 14 who was interested in having her children engage in sexual acts with an adult to which Barrientos responded with his desire to perform various sexual acts with the children.
Barrientos has been in custody since his arrest on Dec. 7, 2012, where he will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
Homeland Security Investigations and CCPD-ICAC conducted the investigation in a joint effort to protect children from child predators.
This case, prosecuted by Assistant United States Attorney Lance Duke, was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."Leader of International, $200 Million Credit Card Fraud Scam Pleads GuiltyRead the Press Release
TRENTON, N.J. – A New York man has admitted his role in leading one of the largest credit card fraud schemes ever charged by the U.S. Department of Justice, U.S. Attorney Paul J. Fishman announced.
Tahir Lodhi, 53, of Hicksville, N.Y., pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with one count of conspiracy to commit bank fraud.
“Today’s admission of guilt by Tahir Lodhi brings to justice a leader of one of the biggest credit card fraud schemes ever charged by the United States,” U.S. Attorney Fishman said. “This type of fraud increases the costs of doing business for every American consumer, every day. Lodhi hurt not only the credit card issuers, but everyone who pays increased interest rates and fees because of the money sucked out of the system by criminals.”
“The criminal enterprise under Mr. Lodhi’s direction took advantage of the system and the good faith of banks and credit lenders they defrauded to the tune of hundreds of millions of dollars,” Aaron T. Ford, FBI Special Agent in Charge, Newark, said. “In doing so, they took advantage of the American public and legitimate users of the banking industry so that they and their families could live a lavish lifestyle. Today’s plea is the result of the hard work of the men and women of the FBI and our partners at the U.S. Secret Service, U.S. Postal Inspectors and the U.S. Social Security Administration, as well as a significant partnership with the private sector. In today’s world, where more and more individuals seek the fast buck by trying to defraud hard-working Americans, the Newark office of the FBI remains committed and focused on combating fraud at all levels of society.”
According to documents filed in this case and statements made in Court:Lodhi directed the activities of a number of other conspirators in fabricating more than 7,000 false identities to obtain tens of thousands of credit cards. They doctored credit reports to pump up the spending and borrowing power associated with the cards. Lodhi and others then borrowed or spent as much as they could, based on the phony credit history, but did not repay the debts, causing more than $200 million in confirmed losses to businesses and financial institutions.
The scheme involved a three-step process in which the defendants would:
· “Make up” a false identity by creating fraudulent identification documents and a fraudulent credit profile with the major credit bureaus.
· “Pump up” the credit of the false identity by providing false information about that identity’s creditworthiness to the credit bureaus. Believing the furnished information to be accurate, the credit bureaus would incorporate this material into the false identity’s credit report, making it appear that the false identity had excellent credit.
· “Run up” large loans using the false identity. The higher the fraudulent credit score, the larger the loans that the defendants could obtain. These loans were never repaid, and Lodhi and his conspirators reaped the profits.The Sham Companies
The enormous size and scope of the criminal fraud enterprise required Lodhi and his conspirators to construct an elaborate network of false identities. Across the country, Lodhi and his conspirators maintained more than 1,800 “drop addresses,” including houses, apartments, and post office boxes, which they used as the mailing addresses of the false identities.
They created dozens of sham companies that did little or no legitimate business, obtained credit card terminals for the companies and then ran up charges on the fraudulent cards. To accept payments in the form of credit cards, a business must establish a merchant account with an entity known as a merchant processor. The merchant processor provides the business with equipment to process credit cards, receives payments from credit card companies for credit cards run at the business, and deposits those payments, minus a fee, into the business’ bank account. When the merchant processors shut down accounts operated by the conspirators for fraud, they would apply for new terminals and create new companies.
The sham companies also served as “furnishers,” providing the credit bureaus with false information about the credit history of numerous false identities of people who purportedly worked at or owned the companies.
Tradelines
Lodhi and his conspirators also used sophisticated methods – including a network of black-market businesses called “tradelines” providers – to commit fraud.
Tradelines come in two varieties: primary tradelines and authorized user tradelines. Primary tradelines are lines of credit in a credit history. If a credit card user has primary tradelines in good standing, it can have a significant impact on the user’s credit score, enabling the user to borrow more from credit card issuers. Lodhi and his conspirators, however, trafficked in fraudulent primary tradelines.
A second kind of tradeline is the “authorized user” tradeline, where a credit card holder adds another, so-called “authorized user,” to a credit card account. This raises the credit score of the authorized user, who inherits some of the primary user’s credit history.
Certain of Lodhi’s conspirators created and sold fake lines of credit for false identities made up by Lodhi and others. These fraudulent primary tradelines were then used to increase the credit limits on fraudulent cards, so that the conspirators could reap even larger profits. Lodhi and other conspirators used the authorized user tradelines to create new identities.
Complicit Businesses
Lodhi and his conspirators also relied upon complicit businesses, including several jewelry stores in the Jersey City, N.J., area, to extract money from the fraudulent cards. The complicit businesses would allow certain conspirators to conduct sham transactions on the phony cards and would then receive the proceeds from the credit card companies and split them with the other conspirators. These complicit businesses maintained multiple credit card merchant processing accounts at the same time. By operating dozens of accounts, these businesses furthered the conspiracy by allowing more fraudulent transactions to be processed before the merchant processors shut down the account. The proceeds from these merchant terminals were deposited into various business checking accounts, and the money was paid out to the owners of the complicit businesses, along with other conspirators.
Lavish SpendingThe conspiracy generated enormous profits for Lodhi and his conspirators – even though they spent millions of dollars sustaining the elaborate network of drop addresses and running credit reports on the thousands of false identities. Records of the New York and New Jersey Departments of Labor reveal that many of Lodhi’s conspirators had no reported legitimate employment in the last five years. Nonetheless, Lodhi and his conspirators used the proceeds of the criminal enterprise to buy luxury automobiles, electronics, spa treatments, expensive clothing and millions of dollars in gold. They also stockpiled large sums of cash. Law enforcement discovered approximately $70,000 in cash in the oven of one of Lodhi’s conspirators.
Lodhi’s conspirators also moved millions of dollars through accounts under their control, and wired millions of dollars overseas. An analysis of 169 bank accounts of the defendants, sham companies, and complicit businesses has identified $60 million dollars in proceeds that flowed through the accounts, much of it withdrawn in cash. The conspirators wired millions of dollars to Pakistan, India, the United Arab Emirates, Canada, Romania, China and Japan. Due to the massive scope of the conspiracy, which involved more than 25,000 fraudulent credit cards, loss calculations are ongoing. Final figures may grow beyond the present confirmed losses of more than $200 million.
The count to which Lodhi pleaded guilty is punishable by a maximum potential penalty of 30 years in prison and a fine of $1 million, or twice the gain or loss caused by the offense. Sentencing is scheduled for Oct. 1, 2013.
The investigation previously resulted in the arrest of 22 defendants and the seizure of more than $4 million in gold from jewelry stores in Jersey City.
U.S. Attorney Fishman praised special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to today’s guilty plea. He also thanked postal inspectors under the direction of Postal Inspector in Charge Marie L. Kelokates, the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola, and the U.S. Social Security Administration for their roles in the investigation.
The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro and Zach Intrater of the Economic Crimes Unit and Barbara Ward of the Asset Forfeiture Unit of the U.S. Attorney’s Office in Newark.
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Defense counsel: Howard Simmons Esq., New York
Lodhi Information
Laredo Resident Get Max in Firearms CaseRead the Press Release
LAREDO, Texas – Elias Fidel Vega Jr., 22, of Laredo, has been sentenced to 10 years in federal prison for multiple firearms convictions, United States Attorney Kenneth Magidson announced today. Vega pleaded guilty Nov. 13, 2012.
Today, U.S. District Judge Diana Saldana handed Vega the statutory maximum sentence of 120 months on each of his three convictions - possession of firearms by a convicted felon, receipt or possession of unregistered firearms and illegal possession of a machine gun. Each sentence will run concurrent to each other for a total of 10 years in federal prison. Following completion of his prison term, Vega will also be required to serve three years of supervised release. Vega was also ordered to pay a $2,500 fine.
On April 14, 2012, the Laredo Police Department (LPD) received a report of a shooting on the 2600 block of Monterrey Ave. Upon arrival, officers learned about a possible drive-by shooting and found Elias F. Vega Sr. with a bullet wound to his back. Officers further noticed the property was equipped with video surveillance cameras and obtained a consent to search and permission to retrieve the recorded video discs. During the search, officers located large amounts of ammunition, an S&W .40 caliber pistol, an AK-47 assault rifle, $18,000 cash and other miscellaneous items.
Video footage showed Vega Jr. arriving at the house agitated and then leaving with a handgun - later determined to be an S&W .40 caliber pistol. Minutes later, footage revealed a confrontation between Vega Jr. and two individuals at the Vega property. The two individuals left the property and fired into a parked vehicle. Vega fired a .223 Bushmaster, as a fully automatic machine gun, as they departed striking Vega Sr. in the process.
LPD detectives interviewed Vega Jr. and others present during the confrontation prior to the shooting. Detectives inquired as to the whereabouts of the Bushmaster machine gun and Vega Jr. took them to the back area of the property and unearthed the Bushmaster from the backyard.
LPD detectives and agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) determined Vega Jr. had been previously convicted in the 49th District Court in Webb County for evading arrest with a motor vehicle in 2010.
Further, LPD detectives and ATF agents did not find any registration records in the National Firearms Registration and Transfer Record to confirm registration of the Bushmaster .223 machine gun to Vega Jr.
ATF inspection and testing of the Bushmaster rifle and various parts revealed it had been altered and converted to fire as a fully automatic machine gun. During testing, the weapon automatically fired five rounds with a single function of the trigger.
The case was investigated by ATF and Laredo Police Department and prosecuted by Assistant U.S. Attorney Raul Guerra.
Justice Department Settles with New Jersey Bus Company <br /> over Unequal Treatment of Passengers with DisabilitiesRead the Press Release
The Justice Department announced today that it has reached a settlement with DeCamp Bus Lines Inc., a New Jersey transportation company, to ensure that bus transportation is provided on equal terms to people with disabilities.
The Civil Rights Division of the U.S. Department of Justice and the U.S. Attorney’s Office for the District of New Jersey determined that DeCamp Bus Lines violated the Americans with Disabilities Act (ADA) by requiring that passengers with disabilities provide 48 hours of advance notice to secure a wheelchair-accessible bus, even though passengers without disabilities did not have to provide any advance notice. The settlement agreement requires DeCamp to comply with all ADA requirements for accessible service, and not exclude persons with disabilities from its transportation services.
As part of compliance with the ADA, DeCamp will stop requiring that passengers with disabilities provide advance notice to secure an accessible bus and to ensure that no passenger with a disability is denied an accessible bus when the passenger does not provide advance notice. DeCamp will also no longer post, distribute or publish any written material that states that a passenger with a disability is required to provide advance notice to secure accessible transportation and train all employees and contractors on the requirements of the ADA.
“Individuals who use wheelchairs should be able to expect the same level of bus service from large operators that is provided to others,” said Eve L. Hill, Senior Counselor to the Assistant Attorney General of the Civil Rights Division. “The department is committed to ensuring that bus companies are complying with this requirement.”
“People with disabilities should not be forced to take needless action simply to use a bus service designed for everyone,” said U.S. Attorney for the District of New Jersey Paul J. Fishman. “With this settlement, the Justice Department ensures individuals riding DeCamp will receive correct information about their access to transportation, and that access will not be denied.”
Title III of the ADA prohibits discrimination against people with disabilities by public accommodations, including motorcoach companies. Since Oct. 29, 2012, the Department of Transportation’s regulations implementing the ADA require that all large, fixed-route motorcoach bus fleets be 100 percent accessible to individuals with disabilities, including individuals who use wheelchairs. Once a fleet is 100 percent accessible, the motorcoach bus company may no longer require advance notice to provide accessible service. The Department of Transportation’s regulations also require that such companies perform regular maintenance checks to ensure that wheelchair lifts work, train their employees on accessibility requirements and file annual accessibility reports with the Federal Motor Carrier Safety Administration of the U.S. Department of Transportation.
The United States was represented by Trial Attorneys David W. Knight and Michael Riess of Civil Rights Division, and Assistant U.S. Attorney Michael Campion of the U.S. Attorney’s Office for the District of New Jersey.
To find out more about the ADA, this settlement, or the obligations of public accommodations, call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov. ADA complaints may be filed by email to [email protected].
Joshua Nettles Sentenced to over 8 Years in Prison for Receiving Images and Movies Depicting the Sexual Exploitation of ChildrenRead the Press Release
JOSHUA NETTLES, age 38, a resident of Covington, Louisiana, was sentenced today by the U.S. District Court Judge Martin L.C. Feldman to 97 months after previously pleading guilty to receiving and possessing images depicting the sexual victimization of children, announced U. S. Attorney Dana J. Boente. Further, after NETTLES is released from prison, he will be subject to 5 years of supervised release and will be required to register as a sex offender.
According to court documents, NETTLES sought out, downloaded, and saved digital images depicting the sexual exploitation of prepubescent minors, including images of victims younger than four years old. A forensic review of NETTLES’ computer revealed that he had downloaded and saved approximately 1409 files and 14 videos depicting the sexual victimization of these children.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”
This case was investigated by special agents from the Federal Bureau of Investigation. The prosecution of this case was handled by Assistant United States Attorney Jordan Ginsberg.
Joplin Woman Indicted for $88,000 Fraud SchemeRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Joplin, Mo., woman was indicted by a federal grand jury today for embezzling more than $88,000 from her employer, Frank Fletcher Ford, in a wire fraud scheme.
Kathryn M. Stayton, 36, of Joplin, was charged with 10 counts of wire fraud in an indictment returned by a federal grand jury in Springfield, Mo.
Today’s indictment alleges that Stayton embezzled $88,000 between September 2009 and September 2011, while employed as a controller and managing the accounting department at Frank Fletcher Ford, part of the Ford Auto Group in Joplin.
As a controller, Stayton had access to the dealership’s blank disbursement check stock and was an approved signor of manual checks. The dealership’s policy requires two signatures on each manual check, regardless of amount. Stayton allegedly wrote 131 checks totaling approximately $46,664 from Fletcher Ford’s bank account to herself or her family members then deposited the checks in her own bank accounts. She attempted to disguise the nature of these transactions by forging the second required authorizing signature on the checks.
In addition, the indictment says, Stayton took cash payments totaling approximately $41,365 that were made to Fletcher Ford. She allegedly attempted to disguise the theft of the cash payments through fraudulent journal entries in Fletcher Ford’s accounting records.
The total amount of loss to Fletcher Ford for both unauthorized check payments and theft of cash was approximately $88,030.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Gary Milligan. It was investigated by the U.S. Secret Service and the Joplin, Mo., Police Department.Johnstown Child Pornography Possessor Gets 4-Year Prison TermRead the Press Release
JOHNSTOWN, Pa. - A resident of Johnstown, Pa., has been sentenced in federal court to 48 months in prison, followed by 20 years supervised release, and was required to register as a convicted sex offender on his conviction of possession of child pornography, United States Attorney David J. Hickton announced today.
United States District Judge Kim R. Gibson imposed the sentence on Austin J. Correll, 32.
According to information presented to the court, on Jan. 24, 2011, Correll knowingly possessed pictures and videos in individual computer graphic files which were produced using minors engaging in sexually explicit conduct. The computer graphic files were shipped or transported in interstate or foreign commerce.
Assistant United States Attorney John J. Valkovci, Jr., prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended Homeland Security Investigations for the investigation leading to the successful prosecution of Correll.
Iowa Woman Charged with Distribution of A Controlled SubstanceRead the Press Release
United States Attorney Brendan V. Johnson announced that a Cushing, Iowa woman has been indicted by a federal grand jury.
Dana Hoover, a/k/a Dana Strawn, age 51, was indicted by a federal grand jury on May 15, 2013 for Distribution of a Controlled Substance. Hoover appeared before U.S. Magistrate Judge Mark A. Moreno on June 11, 2013, and pled not guilty to the Indictment.
The maximum penalty upon conviction is 20 years of imprisonment, a $1,000,000 fine, or both; a mandatory period of at least 3 years up to life on supervised release, an additional 2 years of supervised release upon revocation; and a mandatory $100 special assessment to the Federal Crime Victims Fund. Restitution may also be ordered.
The charge is merely an accusation, and Hoover is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Northern Plains Safe Trails Drug Enforcement Task Force and Assistant U.S. Attorney Kathryn N. Rich is prosecuting the case.
Hoover was remanded to the custody of the U.S. Marshals Service. A trial date has been set for July 30, 2013.
Iowa Company, Employees Indicted for Releasing Contaminated Water into Duenweg SewerRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Des Moines, Iowa, company and two of its employees were indicted by a federal grand jury today for releasing thousands of gallons of gasoline-contaminated water into the city sewer system of Duenweg, Mo.
Seneca Companies, Inc., a petroleum and hazardous materials handling company headquartered in Des Moines, along with company employees Robert Morrison, 31, of Cowgill, Mo., a maintenance technician, and Greg Gill, 50, of Overland Park, Kan., a maintenance technician supervisor, were charged in a two-count indictment returned by a federal grand jury in Springfield.
According to today’s indictment, Seneca agreed to repair a gasoline line at Casey’s General Store, 8084 E., 7th Street, in Duenweg. This gasoline line failure had allowed gasoline to accumulate into a containment sump on Casey’s property. Morrison and Gill were responsible for safely repairing Casey’s gasoline line failure and safely disposing of any hazardous material in conformity with state and federal regulations.
On Dec. 16, 2010 they allegedly pumped gasoline-contaminated water out of Casey=s containment sump and into the sewer system without a permit.
The defendants are charged with one count of violating the Resource Conservation and Recovery Act by unlawfully disposing of a hazardous substance and one count of violating the Clean Water Act by introducing a hazardous substance into a sewer system.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Abram McGull II. It was investigated by the U.S. Environmental Protection Agency – Criminal Investigation Division, the Duenweg, Mo., Fire Department, the Joplin, Mo., Fire Department and the Missouri Department of Natural Resources.Internist Admits Taking Cash Kickbacks for Patient ReferralsRead the Press Release
NEWARK, N.J. – A Somerset County doctor practicing internal medicine at Newark Community Health Center, where she is the clinical director, today admitted receiving cash kickbacks for diagnostic testing referrals of her patients, U.S. Attorney Paul J. Fishman announced.
Padma Siripurapu, 46, of Belle Mead, N.J., pleaded guilty to an information charging her with one count of soliciting and receiving more than $50,000 in illegal cash kickbacks for patient referrals in violation of the federal health care anti-kickback statute.
According to documents filed in this case and statements made in court:
From 2009 through December 2011, Siripurapu agreed with representatives of the diagnostic center Orange Community MRI LLC (Orange MRI) that Orange MRI would pay her a set amount of cash for every MRI, CAT scan, ultrasound, echocardiogram, and DEXA scan she referred. Siripurapu referred patients for more than a thousand of these tests during that time period and was paid a per-test amount for those referrals.
Siripurapu admitted that on Nov. 2, 2011, she received $3,600 in cash from a government informant at her doctor’s office in Newark in exchange for referrals. On Nov. 17, 2011, again at her office in Newark, Siripurapu received another kickback for patient referrals, this time $3,450 in cash.
The anti-kickback charge carries a maximum potential penalty of five years in prison and a maximum $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is scheduled for Oct. 9, 2013.Siripurapu is the twelfth person in the government’s investigation of Orange MRI and its corrupt referring doctors to plead guilty. Nine health care providers to have pleaded guilty to receiving kickbacks have agreed to forfeit $325,300 in illegal kickbacks from Orange MRI. The two other defendants, Ashokkumar Babaria, Orange MRI’s former medical director, and Chirag Patel, Orange MRI’s former executive director, have agreed to forfeit their corrupt gains. Babaria agreed to forfeit his revenues traceable to corrupt referrals, which the government has estimated could reach as much as $2 million. Patel has forfeited $89,180. The remaining defendants charged in the investigation are charged by complaints or indictments at this time.
U.S. Attorney Fishman credited special agents of the U.S. Department of Health and Human Services, Office of the Inspector General, under the direction of Special Agent in Charge Tom O’Donnell, as well as criminal investigators with the U.S. Attorney’s Office’s criminal investigator program, for the investigation leading to today’s guilty plea.
The case is being prosecuted by Assistant U.S. Attorneys Joseph Mack and Scott B.
McBride of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit.13- 242
Defense counsel: Bruce A. Levy Esq. and Lawrence S. Lustberg Esq., Newark
Siripurapu Information
Inmates Sentenced for Assaulting Fellow InmateRead the Press Release
ALEXANDRIA, La. – United States Attorney Stephanie A. Finley announced that A’bleza Skyler Oakie, 24, of Sioux Fall, S.D., and Shannon Fernando Lewis, 27, of Sells, Ariz., were sentenced Monday by U.S. District Judge Dee D. Drell, to five years and six months in prison, respectively, for assaulting a fellow inmate. Oakie was also ordered to serve three years and Lewis one year of supervised release following incarceration.
According to evidence presented at the guilty plea, Oakie and Lewis entered the cell of an inmate on Oct. 28, 2011, while incarcerated at the Federal Penitentiary in Pollock, La. After they left the cell, the inmate was seen staggering out. It was determined that the inmate suffered severe injuries and was sent to various medical centers for treatment. The inmate remains in medical care because of the injuries he sustained.On March 4, 2013, Oakie pleaded guilty to assault and Lewis pleaded guilty to misdemeanor assault. Oakie is currently serving a manslaughter sentence, and Lewis is serving a murder sentence. The prison time for the assault charges will run consecutive to the charges they are now serving, and the supervised release will run concurrent.
The FBI-Alexandria, La., Resident Agency, and the Federal Bureau of Prisons conducted the investigation. Senior Litigation Counsel Joseph G. Jarzabek and Special Assistant U.S. Attorney Robert J. France prosecuted the case.
Husband and Wife Charged with Short Sale FraudRead the Press Release
LAS VEGAS, Nev. – A husband and wife who worked in the real estate profession in southern Nevada, have been charged in U.S. District Court in Las Vegas with conspiracy and fraud for making false statements to Wells Fargo Bank in order to get it to approve a short sale on their home, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Cynthia Hosbrook, 41, currently a licensed real estate agent in Nevada, and Robert Hosbrook, 51, formerly a licensed real estate agent in Nevada, both of Henderson, are charged in a criminal indictment dated June 12, 2013, with one count of conspiracy to commit bank fraud and one count of bank fraud.
According to the indictment, the Hosbrooks allegedly solicited a relative to act as a straw buyer for their residence at 2704 Mallard Landing in Henderson. In a short sale contract dated March 2, 2010, and in other paperwork submitted to Wells Fargo Bank, the Hosbrooks falsely represented that the sale of their home would be an arms length transaction, that it was between two unrelated parties, that no party to the contract was a family member or business associate, that there were no agreements that the seller would remain in the property as a renter, and that the short sale did not constitute straw buying, when they allegedly knew that they were selling the residence to a relative and a straw buyer. The Hosbrooks also allegedly caused the relative/straw buyer to falsely sign a title company form on July 9, 2010, stating that the relative would be residing at the property, which the Hosbrooks knew was a false and fraudulent representation.
Cynthia Hosbrook and Robert Hosbrook have been summoned to appear for an initial hearing and arraignment on June 21, 2013, at 3:00 p.m. before U.S. Magistrate Judge Carl W. Hoffman. If convicted, they face up to 30 years in prison and fines of up to $1 million on each count.
The case is being investigated by the Federal Housing Finance Agency Office of the Inspector General, and is being prosecuted by Assistant U.S. Attorney J. Gregory Damm.
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.Hardin County Man Sentenced for Drug Trafficking ViolationsRead the Press Release
Department of Justice
Office of Public AffairsBEAUMONT, Texas – A39-year-old Silsbee, Texas man has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Eric LaPaul Harper pleaded guilty on Jan. 17, 2013, to conspiracy to possess with intent to distribute methamphetamine and was sentenced to 240 months in federal prison today by U.S. District Judge Marcia Crone.
According to information presented in court, in May 2011, Harper was stopped for a traffic violation in Liberty County, Texas after he was intercepted on a wiretap ordering 6 ounces of methamphetamine. Harper received the methamphetamine in Conroe, Texas and was stopped while returning to Silsbee. A search during the traffic stop revealed 165.8 grams of methamphetamine. Additional surveillance revealed Harper’s involvement in the conspiracy to be much larger as he was recorded ordering and distributing other quantities of methamphetamine on numerous telephone conversations. A federal grand jury returned an indictment on Mar. 7, 2012, charging Harper with federal violations.
This case is the result of an ongoing Organized Crime Drug Enforcement Task Force (OCDETF) joint investigation. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
This case was investigated by the Drug Enforcement Administration and prosecuted by Assistant U.S. Attorney Michelle Englade.
Gregg County Man Sentenced for Possessing Stolen FirearmRead the Press Release
Department of Justice
Office of Public AffairsTYLER, Texas - A 52-year-old Longview, Texas man has been sentenced to federal prison for firearms violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Kym David Pearce pleaded guilty on Feb. 8, 2013 to possession of a stolen firearm and was sentenced to 120 months in federal prison today by U.S. District Judge Michael H. Schneider.
According to information presented in court, on May 20, 2012, a federal warrant was executed for Pearce’s arrest at his residence on Virgie Street in Longview, Texas. As Pearce was being arrested, Gregg County CODE agents observed several firearms in the residence. A search of the residence resulted in the discovery of eight firearms and several rounds of ammunition. Pearce admitted that he knew at least one of the firearms in his residence was stolen. Pearce was indicted by a federal grand jury on Oct. 3, 2012
This case was investigated by the Gregg County Organized Drug Enforcement (CODE) Unit, and the Bureau of Alcohol, Tobacco, Firearms and Explosives and prosecuted by Assistant U.S. Attorney Jim Noble.
This case was prosecuted as part of the Project Safe Neighborhoods Initiative. Project Safe Neighborhoods is aimed at reducing gun and gang violence, deterring illegal possession of guns, ammunition and body armor, and improving the safety of residents in the Eastern District of Texas. Participants in the initiative include community members and organizations as well as federal, state and local law enforcement agencies.Goochland Man Sentenced to More Than 17 Years for Production of Child PornographyRead the Press Release
RICHMOND, Va. – Adam Hobart Stanley, 35, of Manakin-Sabot, Virginia, was sentenced today to 210 months’ imprisonment in U.S. District Court after pleading guilty to one count of production of child pornography. Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement after Stanley was sentenced by United States District Judge John A. Gibney.
Judge Gibney additionally ordered Stanley to pay $205.21 in restitution to the victim. He will also be required to register as a sex offender in any U.S. jurisdiction in which he lives, works, or attends school.
According to court documents, Stanley sexually abused a 12-year-old child whom he babysat during 2012, and used a hidden video camera to produce a child pornography video of that abuse. Additional evidence revealed that Stanley had distributed child pornography videos and images over a peer-to-peer network on the Internet and had also saved hundreds of videos and images of child pornography on various computers and computer media.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case was investigated by the Federal Bureau of Investigation Innocent Images Task Force. Special Assistant United States Attorney Gene Fishel of the Virginia Attorney General’s Office prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.
# # #Ft. Lauderdale Ponzi Schemer Sentenced to 12 Years’ ImprisonmentRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced the sentencing of George Elia, 69, formerly of Fort Lauderdale. United States District Judge Kathleen Williams sentenced Elia to 12 years’ imprisonment, followed by 3 years of supervised release.
According to evidence presented during the trial and sentencing, George Elia, and his conspirator James “Jim” Ellis, 70, also of Fort Lauderdale, operated a Ponzi scheme. Elia guaranteed that investor money was safe, and that he had high rates of returns from his day trading of stock, including Facebook stock. In late 2011, however, payments to investors became irregular, investors filed civil lawsuits against Elia, and in January 2012, Elia sold his home, shipped his belongings to his native Cyprus, and fled. He was arrested returning to Las Vegas with his wife in March 2012.
As a result of his scheme, approximately 50 victims lost approximately $10 million after investing with Elia. Elia used investor money to purchase two Bentleys, a Rolls Royce, approximately $500,000 in jewelry, and Chanel and Hermes jewelry.
On April 30, co-conspirator Ellis was sentenced to 38 months in prison by U.S. District Judge Williams.
Mr. Ferrer commended investigative efforts of the FBI and the cooperation of the Securities and Exchange Commission. This case is being handled by Assistant U.S. Attorneys H. Ron Davidson and Wilfredo Fernandez.
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.
Four E. Idaho Residents Arrested in Connection with Illegal Gun Possession and SalesRead the Press Release
POCATELLO – U.S. Attorney Wendy J. Olson announced the arrest this week of four Eastern Idaho residents on federal firearms violations and methamphetamine distribution charges. Marilee Taylor Love, 44, of Terreton, Rodney Lewis Hall, 54, of Lewisville, Harold Thomas Barker, 58, of Rexburg, and Gary Wallace Hoffman, 50, of Rigby, were indicted by a federal grand jury on May 29, 2013. The defendants are scheduled to be arraigned in United States District Court in Pocatello at 1:00 p.m. MDT, on June 13, before U.S. Magistrate Judge Ronald E. Bush.
Indicted together, Love and Hall are charged with conspiring to distribute and possess with intent to distribute methamphetamine and marijuana between February 2011 and February 2012. The two are also charged with three counts of distributing methamphetamine and unlawful possession of a firearm silencer. Love is additionally charged with two counts of unlawfully selling firearms to a person she knew was prohibited from legally possessing firearms.
Barker is charged with unlawfully possessing a sawed-off shotgun, distributing methamphetamine on two occasions, and four counts of unlawfully selling firearms to a person he knew was prohibited from legally possessing firearms.
Hoffman, convicted of felony possession of methamphetamine in 2004 in Bonneville County, Idaho, is charged with unlawfully possessing three firearms between May and October 2012, and with distributing methamphetamine. Hoffman is prohibited from possessing firearms due to his prior conviction.
If convicted, Love, Hall, Barker, and Hoffman each face up to 20 years in prison, a maximum fine of $1 million, and at least three years of supervised release.
The three cases are being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, with assistance from the Federal Bureau of Investigation, the Idaho State Police, the Madison, Fremont, Jefferson, and Bingham County Sheriff’s Offices, the Rexburg Police Department, Rigby Police Department, Blackfoot Police Department, and the Drug Enforcement Administration.
An indictment is only an allegation of criminal conduct and is not evidence of guilt. A person is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Fort Polk Man Pleads Guilty to Second Degree Murder, Attempted MurderRead the Press Release
LAKE CHARLES, La. – United States Attorney Stephanie A. Finley announced today that Marcus Patterson Carey, 28, of Fort Polk, La., pleaded guilty before U.S. District Judge Patricia Minaldi to second degree murder of one soldier and attempted murder of another soldier at the Fort Polk Military Reservation.
According to evidence presented at the guilty plea, Carey admitted that on June 19, 2010 he killed one victim at Fort Polk by striking the person with a hammer and stabbing the person multiple times. He also admitted to attempting to kill a second person by striking that person with a hammer and stabbing that person multiple times.
Sentencing is scheduled for Sept. 19, 2013. The U.S. Army Criminal Investigation Command and the FBI conducted the investigation. United States Attorney Stephanie A. Finley and Assistant U.S. Attorney Daniel J. McCoy are prosecuting the case.
Fort Dodge Man to Federal Prison for Meth ConspiracyRead the Press Release
A man who conspired to distribute methamphetamine was sentenced June 11, 2013, to 10 years in federal prison.
Troy Fulkerson, 42, from Fort Dodge, Iowa, received the prison term after a January 15, 2013, guilty plea to one count of conspiracy to distribute methamphetamine and one count of possessing with intent to distribute methamphetamine.
At the guilty plea, Fulkerson admitted his involvement in a conspiracy from about 2011 through October 2012 that distributed more than 150 grams of actual (pure) methamphetamine in the Fort Dodge, Iowa, area. Fulkerson also admitted to distributing more than 19 grams of methamphetamine during four separate transactions to individuals cooperating with law enforcement. On October 1, 2012, law enforcement officers executed a search warrant at Fulkerson’s residence, and seized over 30 grams of actual (pure) methamphetamine which Fulkerson admitted he planned to distribute to others. At the time the search warrant was executed, Fulkerson resided within 1000 feet of a protected location, the Holy Rosary School Park in Fort Dodge.
Fulkerson was sentenced in Sioux City by United States District Court Judge Mark W. Bennett. Fulkerson was sentenced to 120 months’ imprisonment. A special assessment of $200 was imposed. He must also serve a ten-year term of supervised release after the prison term. There is no parole in the federal system.
Fulkerson is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated by the Iowa Department of Narcotics Enforcement, Fort Dodge Police Department, Webster County Sheriff’s Office, Clay County Sheriff’s Office, Story County Sheriff’s Office, and the Iowa Division of Criminal Investigation.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 12-3049.
Former Toy Company Owner Sentenced for Failing to Pay over Federal Employment TaxesRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, the former owner of a toy company in Edina was sentenced for failing to pay over federal employment taxes. United States District Court Judge Paul A. Magnuson sentenced Kim Robert Calkins, former co-owner of Princess Soft Toys, Inc., to 12 months and one day in federal prison on one count of failure to pay federal employment taxes. Calkins was charged on September 11, 2012, and pleaded guilty on September 26, 2012.
In his plea agreement, Calkins admitted that from the third quarter of 2008 to the final quarter of 2010, he failed to pay to the Internal Revenue Services (“IRS”) the employment taxes withheld from employees of Princess Soft Toys. Despite receiving regular notices that the employment taxes were still due, Calkins neglected to pay the amount owed. The total tax loss in this case is $852,361.54.
This case was the result of an investigation by the IRS-Criminal Investigation and the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorney Nicole A. Engisch.In a related case, on February 8, 2012, Judge Magnuson sentenced Calkins’ wife and former co-owner of Princess Soft Toys, Sandra Lee Calkins, to 66 months in federal prison for defrauding Central Bank and 42 investors out of approximately $9 million. She was charged on April 29, 2011, and pleaded guilty on May 26, 2011.
In her plea agreement, Calkins admitted that between January of 2008 and March 5 of 2010, she falsified financial statements regarding the company in order to renew a $3.25 million line of credit at Central Bank. She specifically admitted including false information relative to revenue and net assets. As a consequence of the fraud, the credit line was renewed, and she made multiple draws against it, totaling $3,575,000. Central Bank suffered a loss of approximately $1.6 million because of her criminal behavior.
Calkins also admitted that between January of 2008 and 2010, she defrauded individuals into investing or loaning money to Princess Soft Toys through false financial statements or other misrepresentations. The total losses to individual investors exceeded $7 million.
This case was also the result of an investigation by the Federal Bureau of Investigation and the IRS-Criminal Investigation. It was prosecuted by Assistant U.S. Attorney Tim Rank.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.
Former School Committee Member, and Boy Scout Leader, Pleads Guilty to Charges of Child Sexual ExploitationRead the Press Release
BOSTON – A Whitinsville lawyer, who was also a Boy Scout troop leader and part time middle school instructor, was convicted today in U.S. District Court in Worcester of charges that he used the internet to entice minors to engage in unlawful sexual conduct and that he possessed child pornography.
Andrew Jonathan Myers, 34, of Whitinsville, Mass., pleaded guilty before U.S. District Judge Timothy S. Hillman to four counts of using the internet to entice, persuade, or induce a minor to engage in unlawful sexual conduct and of possessing child pornography.
Between July 13, 2012 and July 23, 2012, Myers communicated with a twelve year old Colorado boy, identified as juvenile victim 1 (JV-1), over the internet, first via email, and then via Skype. During the course of the communications with JV-1, Myers told JV-1 that he was attractive, directed JV-1 to websites where child pornography could be found, and offered to “find” JV-1 “a place to sleep” if JV-1 came to Massachusetts. Throughout the communications, Myers repeatedly solicited JV-1 to take off his clothes and masturbate over the Skype video streaming service.
On May 7, 2012, May 9, 2012, and June 28, 2012, Myers sent sexually explicit emails to three minors with whom he was acquainted, identified as JV-2 (age 13), JV-3 (age 11), and JV-4 (age 14), in which Myers proposed to perform oral sex on the minors. Myers had served as a substitute school teacher for JV-2 and JV-3, and had been the Troop leader for JV-4's scout troop.
Finally, the evidence would have proven that a computer and an external hard drive seized from Myers’ residence at the time of his arrest contained in excess of 600 videos depicting child pornography including an electronic video recording of a Skype video chat between Myers and a minor identified as JV-5, a 13-year-old South Carolina resident, in which JV-5 is depicted engaging in sexually explicit conduct.
Sentencing is scheduled for September 9, 2013. Pursuant to a plea agreement with the government, Myers faces a sentence of between 15 to 21 years in prison, followed by 10 years of supervised release.United States Attorney Carmen M. Ortiz; Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; District Attorney Joseph Early of Worcester County; Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police; Chief Walter J. Worhol of the Northbridge Police Department; and Chief Kenny Powell of the Millbury Police Department made the announcement today. This was a joint investigation that was initiated by the Larimer County Sheriff’s Office who discovered Myers’ alleged conduct and provided the information that led to both Myers’ identification and these federal charges. The case is being prosecuted by Assistant U.S. Attorney Mark J. Grady of Ortiz’s Worcester Office.
Former Quincy Man Sentenced to Tax Evasion Schemes and Theft from Federal Housing ProgramRead the Press Release
BOSTON – A former Quincy man, now living in New Hampshire, was sentenced yesterday for carrying out two elaborate tax evasion schemes and theft of federal housing assistance funds.
Raymond C. Stebbins, 70, of Manchester, NH, was sentenced by U.S. District Judge George A. O’Toole, Jr. to three years in prison, to be followed by two years of supervised release and restitution to the Internal Revenue Service and the U.S. Department of Housing & Urban Development. In March 2013, Stebbins pleaded guilty to two counts of conspiracy, five counts of tax evasion, two counts of making false statements and theft of public money.Stebbins was engaged in two ten-year long schemes – first, a false invoice scheme aimed at evading the ascertainment and assessment of income taxes and, second, a Section 8 housing fraud scheme.
In 2000, Christopher McGadden, the General Manager of Xcel Fire Protection, a fire protection indoor sprinkler business, engaged in a false invoice/tax evasion scheme with Stebbins. Stebbins purportedly owned numerous businesses, among them a trucking company, a moving company, a real estate company, and two or more business equipment resale companies. Stebbins prepared and sent bogus invoices in the names of the companies he purportedly owned to Xcel. The invoices falsely reflected that one of the Stebbins’ companies had provided goods or services to Xcel when they had not. Knowing the invoices were bogus, McGadden authorized Xcel to pay the invoices by check. Stebbins then deposited the Xcel checks into various bank accounts he had opened, structuring the withdrawals of funds from those accounts. Thereafter, Stebbins gave McGadden 90 percent of the proceeds of those checks in cash and kept 10 percent for himself. In addition, McGadden caused Xcel’s customers to write checks directly in the name of one of Stebbins’ companies. Stebbins deposited those checks in to his bank account and did the same 90/10 split with McGadden. Neither Stebbins nor McGadden paid the proper income taxes on the $490,000 they took from Xcel checks and certain Xcel customer checks.
In a second conspiracy, starting in December 1999, Stebbins conspired with another individual, identified as FV, to defraud the IRS. Stebbins carried out a nearly identical false invoice tax evasion scheme in which the two men fraudulently diverted more than $3.3 million in funds rightfully belonging to FV’s construction company based in Nashua, NH. This scheme, although larger in scope, worked virtually identically to Stebbins’ scheme with McGadden. Neither Stebbins nor FV paid the proper income taxes on the money they took from FV’s company checks.
For the tax years 2005 through 2009, Stebbins attempted to evade a large part of income tax he owed to the IRS by filing erroneous returns which under-reported his income.
Furthermore, Stebbins made false statements to the U.S. Department of Housing and Urban Development when applying for the Section 8 Housing Assistance Program which provides housing assistance payments to people who need rent subsidy in order to obtain adequate housing.
Beginning in December 1997, Stebbins represented to HUD that he was unable to afford adequate housing. As a result, Stebbins received Section 8 benefits from June 1998 through May 2008. During this time, HUD periodically attempted to establish Stebbins’ continued eligibility for Section 8 benefits, and the level of those benefits, by sending him annual re-certification forms which requested information concerning his household income level and assets. Stebbins filled out the forms with false entries that under-reported his household income and assets. At the time he was receiving Section 8 benefits from HUD, Stebbins was an approved Section 8 housing assistance landlord for two multi-family properties, one in Quincy and another in Nashua, NH. Between January 1, 2002 and May 31, 2008, Stebbins effectively stole money from HUD in the form of Section 8 housing payments that he was not entitled to.
Judge O’Toole ordered Stebbins to report to the U.S. Marshal’s Office in Boston to begin serving his sentence on June 18, 2013.
United States Attorney Carmen M. Ortiz; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Cary Rubenstein, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of the Inspector General, Northeast Regional Office, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Diane Freniere of Ortiz’s Public Corruption and Special Prosecutions Unit.
Former Postmaster Indicted for Stealing Postal FundsRead the Press Release
MINNEAPOLIS—Recently in federal court, the former postmaster of the Marble Post Office in Itasca County was indicted for stealing funds from the office. On June 10, 2013, Jill Marie Rousse, age 39, of Calumet, was charged with one count of misappropriation of postal funds and one count of unlawful issuance of postal money orders.
The indictment alleges that between August 2011 and October 2012, Rousse stole money from the post office by either directly taking cash from the cash drawer or issued money orders in her name. In addition, Rousse falsified reporting documents regarding the sale of money orders and postage in order to conceal her theft.
If convicted, Rousse faces a potential maximum penalty of ten years in prison on the misappropriation count and five years on the unlawful issuance count. Any sentence will be determined by a federal district court judge. This case is the result of an investigation by the United States Postal Service-Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney Lola Velazquez-Aguilu.
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.Former Maverick County Solid Waste Authority General Manager Hector Chavez and Maverick County Contractor Jose Telles Enter Guilty PleasRead the Press Release
Former Maverick County Solid Waste Authority general manager and chief executive officer of the Maverick County landfill Hector Chavez, Jr., faces up to ten years in federal prison, a fine of up to $250,000 and restitution to the County after pleading guilty to theft concerning programs receiving federal funds announced United States Attorney Robert Pitman and FBI Special Agent in Charge Armando Fernandez.
Appearing before U.S. Magistrate Judge Victor Garcia this morning in Del Rio, Chavez admitted that from March 9, 2012, to December 28, 2012, he pocketed over $62,000 in forged Maverick County checks he drafted himself.
Also this morning before Judge Garcia, general contractor Jose Telles, Jr., of Eagle Pass, TX, pleaded guilty to paying a bribe to an agent of an organization receiving federal funds. As a result of his plea, Telles faces up to ten years in federal prison and a fine of up to $250,000. By pleading guilty, Telles admitted that in 2010, he paid a $5,000 bribe to a Maverick County commissioner after being awarded an approximate $30,000 construction contract with Maverick County.
Telles is scheduled to be sentenced on December 9, 2013, before U.S. District Judge Alia Moses in Del Rio; Chavez, September 17, 2013, before U.S. District Judge David A. Ezra in Del Rio.
To date, 12 individuals have pleaded guilty to federal charges and await sentencing in connection with this investigation. This ongoing investigation is being conducted by the Federal Bureau of Investigation and the Texas Department of Public Safety. Individuals who have first-hand information about corruption, fraud, or bribery related to Maverick County are urged to contact the FBI at (210) 225-6741. Assistant United States Attorney Michael Galdo is prosecuting these cases on behalf of the Government.
Former Long Island Bar Owner Sentenced to 60 Years in Prison for Sex Trafficking, Forced Labor and Immigration Crimes on Long IslandRead the Press Release
Earlier today, Antonio Rivera, the former owner of the bars Sonidos de la Frontera in Lake Ronkonkoma and La Hija del Mariachi in Farmingville, New York, was sentenced to 60 years’ imprisonment for his role in a sex trafficking and forced labor ring. Rivera’s co-defendants, John Whaley and Jason Villaman, were sentenced to 25 and 30 years, respectively. The sentences were imposed by United States District Judge Sandra J. Feuerstein at the United States Courthouse in Central Islip, New York. The three defendants were convicted after a four-week trial of multiple offenses including, conspiracy, sex trafficking, forced labor, alien harboring, and alien transportation.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Roy L. Austin, Jr., Deputy Assistant Attorney General, Civil Rights Division; James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York; Edward Webber, Commissioner, Suffolk County Police Department; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Toni Weirauch, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York.
The government’s evidence at trial established that the defendants and others recruited, hired, and harbored in the United States scores of undocumented Latin American immigrants to work as waitresses in Rivera’s bars. The women had come to the United States from Honduras, Guatelmala, Mexico, and El Salvador. Rivera placed ads and flyers seeking waitresses in Spanish language newspapers and at local businesses frequented by Spanish-speaking immigrants. After the women agreed to work as waitresses, Rivera directed them to solicit patrons to buy them alcoholic beverages, which the women were required to consume, and eventually forced them to engage in sexual acts with the patrons in exchange for money, which Rivera kept. Several witnesses testified that Rivera and others used violence, including rapes and beatings, as well as fraud and threats of deportation to compel the victims to continue to work for him and to prevent them from reporting the illegal activity to police.
One victim testified that she was raped by a bar patron inside Sonidos during business hours in full view of patrons and employees. Another victim testified that on one occasion she was transported by Villaman to a local hotel where she was raped while unconscious by a bar patron and awoke to find Villaman watching the assault. A third victim testified that Rivera raped her on multiple occasions and subsequently ordered a security guard to brutally beat her. According to the victim, the security guard drove her to a deserted parking lot after work and, once there, viciously beat her. According to other testimony, Whaley, who assisted Rivera in hiring waitresses, maintaining the bars, and transporting the waitresses to and from the two bars, sexually assaulted one of the victims whom he was supposed to drive home. Testimony also revealed that Villaman acted as a security guard at Sonidos de la Frontera and assisted Rivera in illegal acts against victims, including dumping an unconscious victim on the lawn outside her home after the he and Rivera had assaulted her. Several victims testified that their wages were often taken from them under the guise of being placed into a short-term group savings scheme called the “Society,” but were not returned to them as promised, which forced the victims to remain in Rivera’s employ in hopes of recouping their money.
“The defendants lured vulnerable young women to the United States with the promise of a better life and the ability to earn a living to support their families. Once here, the defendants then turned their American dream into a nightmare, subjecting them to unspeakable physical violence and emotional abuse, as well as threats of deportation, in order to line their own pockets. The lengthy sentences imposed today are fair and just punishment for the intolerable crimes that these defendants committed.” stated United States Attorney Lynch. “We will continue our efforts to ensure that the full protection of the law is provided to all our residents.” Ms. Lynch expressed her grateful appreciation to HSI, Suffolk County Police Department, FBI, and the IRS for their assistance in this case.
“These defendants preyed on some of the most vulnerable members of our society – young, undocumented women and girls seeking a better life – and brutally exploited them in a scheme driven by cruelty and greed,” stated Deputy Assistant Attorney General Austin. “Human trafficking is an affront to freedom and individual rights. The sentences handed down today affirm our commitment as a nation to bringing human traffickers to justice and restoring the rights and dignity of human trafficking victims.”
“The men sentenced today lured innocent women with dreams of good paying jobs that turned into a nightmare of forced prostitution backed by threats and violence. The victims of these heinous crimes have now begun the healing process they so justly deserve,” said HSI Special Agent in Charge Hayes. “HSI agents will continue to work with the Human Trafficking Task Force and other law enforcement agencies to identify victims and to pursue the criminals who prey on them.”
“These victims and other immigrants have the rightful expectation to be protected against those that may take advantage of their vulnerability. These three predators deserve the lengthy sentences they have received for the unforgivable acts they perpetrated against their victims,” said Suffolk County Police Commissioner Webber. “The Suffolk County Police Department will continue to work jointly with federal, state and local law enforcement partners to curb forced labor, violence and sex-trafficking within the county.”
FBI Assistant Director-in-Charge Venizelos stated, “The defendants have received sentences that reflect the gravity and depravity of the crimes they committed. No human being, regardless of immigration status, can be tormented the way the victims of these defendants were without the strongest possible response from our justice system. The horrific physical violence, sexual predation and emotional torment suffered by the victims cannot be undone, but long prison terms for the defendants mean they will not be in any position to inflict such torment again.”
IRS Special Agent-in-Charge Weirauch stated, “IRS-Criminal Investigation is grateful that we were able to support our law enforcement partners in this important investigation and prosecution. The victims in this case endured incredible physical, emotional and financial hardships. We sincerely hope they will be able to heal and move forward.”
The government’s case was prosecuted by Assistant United States Attorneys Demetri M. Jones and Licha Nyiendo, and Senior Litigation Counsel John Cotton Richmond of the Department of Justice, Civil Rights Division, Human Trafficking Prosecution Unit.
The Defendants:
ANTONIO RIVERA
Age: 38
Residence: Patchogue, NYJOHN WHALEY
Age: 33
Residence: Bellport, NYJASON VILLAMAN
Age: 34
Residence: Brentwood, NYFormer Chief Executive of Mortgage Servicing Company <br /> Pleads Guilty to Bank Fraud for Scheme <br /> to Withhold Funds from Wells Fargo BankRead the Press Release
The former president and chief executive officer of U.S. Mortgage, a loan servicing company in Nevada, pleaded guilty today for his role in a scheme to defraud Wells Fargo Bank out of more than $8 million.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada made the announcement after the plea was accepted by U.S. District Judge Andrew P. Gordon.
Earl Gross, 75, of Las Vegas, pleaded guilty to one count of bank fraud. Gross faces a maximum penalty of 30 years in prison when he is sentenced on Sept. 19, 2013. Gross has agreed to forfeit $8,440,439 pursuant to his plea agreement.
According to plea documents, Wells Fargo Bank contracted with U.S. Mortgage to service pools of residential mortgage loans held by investors in mortgage-backed securities. Under the agreement, Gross and U.S. Mortgage were obligated to collect from the borrowers the monthly payments that the borrowers made toward their mortgage obligations and forward these proceeds to Wells Fargo Bank. In the event that a borrower paid off the loan – usually by selling the mortgaged property – U.S. Mortgage was obligated to remit to Wells Fargo Bank the full payoff amount. U.S. Mortgage agreed to provide Wells Fargo Bank with monthly reports, which described the status of the loans, such as the balance, principal and interest, and payment status and received servicing fees for each loan it serviced.
According to the indictment, from 2004 to 2009, Gross and U.S. Mortgage withheld more than $8 million in loan payoffs that were due Wells Fargo Bank by submitting to the bank reports stating that numerous borrowers were continuing to make monthly payments when in fact they had paid off the loans in full. Rather than remit to Wells Fargo Bank the full payoff amount, Mr. Gross and U.S. Mortgage forwarded only what the borrowers’ monthly payment would have been and retained the difference in U.S. Mortgage’s bank account. To deceive Wells Fargo Bank about the status of paid off loans, Mr. Gross and U.S. Mortgage created fake amortization schedules indicating that borrowers who had sold and paid off homes were continuing to make monthly payments. In addition to withholding loan payoff amounts to which he was not entitled, Mr. Gross charged Wells Fargo Bank fees to service mortgage loans that had been paid off.
The case was investigated by the FBI. This case is being prosecuted by Brian R. Young and Charles La Bella of the Criminal Division’s Fraud Section, with assistance from Roberto Iraola of the Office of International Affairs and the United States Attorney’s Office for the District of Nevada.
Today’s guilty plea was a result of efforts 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.
Federal Jury Finds Mound Hedge Fund Manager Guilty of Lying to Investors in Connection with Investment in Petters Co.Read the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, a jury found a hedge fund manager from Mound guilty of fraudulently raising money from individuals and through mutual funds for investment in Petters Company, Inc. (“PCI”). After a four-week trial, the jury convicted James Nathan Fry, age 59, on five counts of securities fraud, four counts of wire fraud, and three counts of making false statements to the United States Securities and Exchange Commission (“SEC”).
According to the evidence presented at trial, Fry raised hundreds of millions of dollars from investors using two hedge funds known as the Arrowhead Funds, which he then provided to PCI in exchange for substantial interest payments. Fry collected more than $30 million in fees from the money he raised from investors and provided to PCI.
Fry formed the Arrowhead Funds in collaboration with Frank Elroy Vennes, Jr. Vennes began raising money to invest with Petters in 1995, only a few years after he was released from federal prison, where he had been serving a sentence for money laundering, firearms, and narcotics charges. Fry used the Arrowhead Funds to solicit money from investors to invest exclusively in financing for PCI. All of the Arrowhead Funds’ transactions with PCI were done through Vennes, and any communication between Fry and Petters or his company had to go through Vennes.
Despite Vennes’s intimate involvement in all of the Arrowhead Funds’ dealings with Petters and PCI, Fry concealed Vennes’s involvement in the PCI transactions because he knew that investors would learn about Vennes’s criminal background and be deterred from investing. Over approximately eight years, Fry obtained hundreds of millions of dollars from investors, which he then provided to PCI, purportedly to finance the purchase of consumer electronics that Petters would later resell at a profit. All of the transactions between Arrowhead and PCI went through Vennes. And, although Vennes was in the middle of every single transaction between Arrowhead and PCI, Fry concealed Vennes’s role and criminal background from investors.
Fry also lied to investors by telling them that the Arrowhead Funds were getting paid directly by the big box retailers, which gave investors the false impression that there were real transactions underlying the PCI investments. In fact, the Arrowhead Funds never received a single payment from a retailer, and all payments on the PCI promissory notes came from PCI, which allowed the Petters Ponzi scheme to expand for years until it finally collapsed.
Finally, Fry lied to investors about significant problems with the PCI investments in 2007 and 2008. Fry told investors that the notes were “90-day notes,” meaning that they were paid off in 90 days. Beginning in the fall of 2007, payments on all the PCI notes held by Arrowhead became substantially later than 90 days, and almost half of the notes were not paid after 180 days and had to be extended to avoid going into default. Fry concealed this information from his investors. The concealment of this information was significant to new investors, who were deciding whether to place money with Arrowhead, and existing investors, who were assessing whether to withdraw from Arrowhead.
Fry also lied to federal authorities after the collapse of the Petters Ponzi scheme. In 2010, Fry gave sworn testimony before the SEC, and during that testimony, he claimed that he was unaware that the Arrowhead Funds were not paid directly from the retailers and that marketing materials containing false information were distributed.
Vennes pleaded guilty to aiding and abetting Fry in connection with these misrepresentations to the Arrowhead Funds’ investors.
For his crimes, Fry faces a potential maximum penalty of 20 years on each count of wire fraud and five years on each count of securities fraud and making false statements. United States District Court Judge Richard H. Kyle will determine Fry’s sentence at a future hearing, yet to be scheduled.
This case was the result of an investigation by the Federal Bureau of Investigation, the Internal Revenue Service–Criminal Investigation, and the U.S. Postal Inspection Service. It was being prosecuted by Assistant U.S. Attorneys Timothy C. Rank, Kimberly A. Svendsen, and Robert M. Lewis.
This law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. It 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, 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.