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Monday 29 April 2013
Coast Guard Petty Officer Headed to Prison for Stealing More Than $600,000 in Government PropertyRead the Press Release
HOUSTON – Brandon Lee Scott, U.S. Coast Guard Petty Officer Second Class, of Dickinson, has been ordered to federal prison for using a government-issued credit card to purchase items for his own benefit, United States Attorney Kenneth Magidson announced today. He pleaded guilty Monday, Feb. 11, 2013.
Today, Vanessa D. Gilmore, who accepted the guilty plea, handed Scott a 37-month sentence to be followed by a term of three years of supervised release. He was further ordered to pay $617,441.64 in restitution. In handing down the sentence, Judge Gilmore noted that Scott had abused a position of trust and imposed a sentence at the maximum sentencing guideline range.
At the hearing in support of his guilty plea, Scott, 29, acknowledged the United States could prove he utilized a government issued credit card to buy nearly $3000 worth of electronics for his personal benefit. On June 30, 2011, Scott admitted he used a J.P. Morgan Chase purchase card to buy a 55-inch Samsung High Definition television set and two 10-inch Android WiFi g tablets having a total value of $2,659.97.
Previously released on bond, Scott was permitted to remain on bond and to voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.The charge against Scott resulting in the plea and sentence was the result of an investigation conducted by the U.S. Coast Guard Investigative Service and the Department of Homeland Security-Office of Inspector General. Assistant United States Attorney Daniel C. Rodriguez is prosecuting the case.
Charleston Pill Dealer Pleads Guilty to Federal Oxycodone Distribution ChargeRead the Press Release
Police seize hundreds of prescription painkillers, more than $35,000 and firearms during search of defendant’s home
CHARLESTON, W.Va. – A Charleston pill dealer faces up to 20 years in prison after pleading guilty today in federal court to distribution of oxycodone, announced U.S. Attorney Booth Goodwin. On October 3, 2012, law enforcement officers with the Kanawha County Sheriff’s Department executed a search warrant at the Charleston residence belonging to Eric Simmons, 27. During the search of Simmons’ residence, police seized approximately $35,410 in cash, two rifles, two handguns and 872 30-milligram oxycodone pills.
Simmons had previously sold 10 30-milligram oxycodone pills to a confidential informant working with the Kanawha County Sheriff’s Department in exchange for $300. The illegal pill transaction occurred at the parking lot of the Ivy Motel located on MacCorkle Avenue in Charleston.
Simmons regularly sold prescription painkillers in and around Charleston for $30 to $35 per pill. The cash seized from the defendant’s residence was proceeds collected from illegal prescription pill transactions.
Simmons is scheduled to be sentenced on August 5, 2013 by United States District Judge Thomas E. Johnston.
The Kanawha County Sheriff’s Department conducted the investigation. Assistant United States Attorney John Frail is in charge of the prosecution.
This case is being prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs. The U.S. Attorney’s Office, joined by various federal, state and local law enforcement agencies, remain committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets and curtailing the spread of opiate painkillers in communities across the Southern District.
Central Coast Man Pleads Guilty in Fraud Scheme That Bilked In-Laws, In-Laws’ Friend, and Banks Out of Nearly $50 MillionRead the Press Release
SANTA ANA, California – A Central Coast man pleaded guilty this afternoon in a wide-ranging fraud scheme that caused more than $47 million in losses to several victims, including his in-laws, who were long-established and well-respected farmers in San Luis Obispo County.
John Mark Moore, 51, of Nipomo, pleaded guilty today to federal charges relating to his fraud scheme, which continued for well over a decade until he came clean to his family in the fall of 2011 and then to federal authorities last year.
Appearing before United States District Judge David O. Carter, Moore pleaded guilty to four federal offenses: two counts of making false statements to Farm Credit West (FCW), a production credit association in Templeton, California; one count of mail fraud; and one count of wire fraud.
Over the course of 11 years, Moore misappropriated approximately $24 million from his in-laws, plus another $23 million from five banks and another individual who was a friend and business associate of his in-laws.
According to court documents, Moore took unauthorized disbursements from the bank accounts and lines of credit belonging to his father-in-law and mother-in-law. Once he had control of the funds derived from his in-law’s accounts, Moore used the money to support businesses that he and his father controlled. Over the course of approximately 11 years, Moore diverted approximately $13.8 million from his in-law’s
business and personal accounts at FCW and transferred the money to his father’s company, Moore Agricultural Products (which after March 2004 was owned by his mother) or to companies Moore himself owned, such as American Microtech, LLC.In another scheme, Moore also stole money from his in-laws by fraudulently increasing their personal and business lines of credit at FCW, and then fully drawing down on these lines of credit without having the ability to repay these loans. Moore improperly increased these lines of credit by repeatedly forging his in-law’s signatures on several loan applications that allowed him to increase their personal and business lines of credit at FCW in one case from $1 million to $6.5 million and, in another case, from $1 million to $4 million. Accordingly, Moore fraudulently borrowed $10.5 million against his in-law’s business and personal lines of credit from 2000 through 2011, and he fully defaulted on these obligations.
In another scheme, Moore fraudulently obtained funds by increasing his lines of credits he obtained in the name of himself, his wife, his companies, and his mother through various means, including forging his wife’ signature, submitting false personal financial statements, and pledging phony collateral to secure the loans. As a result of this fraudulent borrowing, the victim lending institutions – including FCW, Heritage Oaks Bank, Union Bank, Rabobank and Happy State Bank in Dumas, Texas – sustained aggregate losses of approximately $11.4 million.
In the fourth scheme in this case, Moore bilked a friend and business associate of his in-laws beginning in 2002 when Moore entered into a series of ranching and farming ventures with the victim. As part of Moore’s scheme to defraud his in-laws’ friend, who is identified in court documents as GLM, Moore entered into a bogus contract in which he agreed to undertake various agricultural ventures and share the proceeds of these ventures with GLM in exchange for GLM providing the start-up capital. However, Moore had no intention of starting agricultural ventures, and instead he used GLM’s money for other purposes. As a result of Moore’s defendant’s fraudulent scheme, GLM lost more than $12 million, which was never repaid.
The false statement charges each carry a statutory maximum penalty of 30 years in federal prison, and the fraud charges each carry a potential penalty of 20 years in prison. Therefore, as a result of his guilty pleas today, Moore faces a potential sentence of 100 years in federal prison. The actual sentence will be determined by Judge Carter when he sentences Moore on July 29.
Moore self-reported his illegal conduct to federal authorities over the course of 2012. Based on the information he provided and a subsequent investigation, the case against Moore is the product of work completed by special agents with the Federal Bureau of Investigation.
Release No. 13-059
Buffalo Man Indicted on Conspiracy and Aggravated Identity Theft ChargesRead the Press Release
BUFFALO, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that a federal grand jury in Buffalo has returned a 66-count indictment charging Clifton Jackson, 44, of Buffalo, N.Y., with conspiracy to unlawfully use Social Security numbers, conspiracy and the filing of false tax returns in 2011, and aggravated identity theft. The charges carry a maximum penalty of 10 years in prison, a fine of $250,000 or both.
Assistant U.S. Attorney Trini E. Ross, who is handling the case, stated that according to the indictment, the defendant devised a scheme to defraud individuals and the United States Government by obtaining and using the names and social security numbers issued to several individuals. Jackson then used that information to file fraudulent tax returns for the tax year 2011with the IRS.
The defendant will be arraigned on the charges on May 1, 2013, at 11:00 a.m. before U.S. Magistrate Judge H. Kenneth Schroeder, Jr.
The indictment is the culmination of an investigation on the part of Special Agents of the Internal Revenue Service - Criminal Investigation Division, under the direction of Special Agent- in-Charge Toni M. Weirauch, and the United States Postal Inspection Service under the direction of Kevin Niland, Inspector in Charge, Boston Division.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.Bryan Chiropractic Clinic Owner Convicted of $3 Million Automobile Insurance FraudRead the Press Release
HOUSTON – The owner of a now defunct chiropractic clinic in Bryan has pleaded guilty to engaging in a conspiracy to defraud various automobile insurance companies of more than $3 million, United States Attorney Kenneth Magidson announced today.
Marion Young, 42, co-owner of Private Chiropractic Care, admitted he participated in a two-year conspiracy to defraud numerous auto insurance companies by recruiting alleged auto accident victims to be represented by a Bryan area law firm. He further admitted he operated Private Chiropractic Care clinic as a front to allow fraudulent chiropractic bills to be created for treatments which were never performed and then used as support for fraudulent settlement demand letters sent to auto insurance companies. During the course of the conspiracy, Young received checks and cash from the firm totaling approximately $112,000.
Once represented by the firm, clients were sent to Private Chiropractic to be evaluated by chiropractor and co-defendant Chase Lindsey, 34. Lindsey pleaded guilty earlier this year, admitting he entered into an agreement with the office manager of that same law firm. Lindsey agreed to provide medical evaluations of, and recommend treatment for, those patients in exchange for $2,000 in cash per month, which totaled approximately $58,000 during the course of the conspiracy. Lindsey routinely prescribed medically unnecessary treatment which was provided, if at all, by unlicensed, untrained and unqualified individuals and never supervised the treatments allegedly administered by these unqualified individuals. Lindsey always prescribed the same six treatments but the patients usually received only two - ice/heat packs and electric stimulation. Lindsey prescribed the treatments be done 3-4 times per week for 5-6 weeks, but the patients usually went once a week for 3-4 weeks.
Young knew the patients were not receiving most of the treatments prescribed and that they were not going for treatments on many of the days reflected on the Private Chiropractic Care bills. Young knew the false Private Chiropractic Care billing was prepared at the law firm and that the fraudulent bills were used as support for settlement demand letters sent to auto insurance companies. The fraudulent demand letters caused the insurance companies to issue settlement checks, which were spilt between Young and others.
Young also participated in the scheme to defraud the insurance companies as an accident client of the law firm. Three separate checks, totaling nearly $5000, were sent and made payable to Young and the law firm to settle an accident claim which was based on fraudulent chiropractic bills produced at the firm. Young never received the treatments reflected on the bills sent to the insurance companies.
The scheme to defraud the automobile insurance companies resulted in the submission of more than $3 million in false billing claims. The insurance companies paid at least $1.2 million in false claims during 2007-2009.
U.S. District Judge Kenneth Hoyt, who accepted the guilty plea, has set sentencing for Sept. 16, 2013, at which time Young faces up to 20 years in prison and a possible $250,000 fine. As part of his plea agreement, Young also agreed to forfeit the $112,000 he received and to pay restitution of $1.2 million to the insurance companies victimized by the scheme. Young was allowed to remain free on bond pending his sentencing.
Three remaining defendants charged in relation to this case are scheduled for trial on Sept. 24, 2013. They are presumed innocent unless convicted through due process of law.
The criminal charges are the result of a joint investigation by agents of the FBI and the National Insurance Crime Bureau. Assistant United States Attorney Al Balboni is prosecuting the case.
Blackfoot Man Sentenced for Involuntary ManslaughterRead the Press Release
POCATELLO – Kendall Perry, 22, of Blackfoot, Idaho, was sentenced today in United States District Court to 30 months in prison for involuntary manslaughter, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill also ordered Perry to serve three years of supervised release and do 200 hours of community service. Perry, an enrolled member of the Shoshone-Bannock Tribes, was indicted by a federal grand jury on October 23, 2012, on one count of involuntary manslaughter. He pleaded guilty to the charge on January 28, 2013.
According to the indictment, on June 30, 2012, Perry, who was intoxicated, was operating a 1999 GMC Yukon with gross negligence, causing a roll-over accident near the intersection of Philbin and Sheepskin Road that resulted in the death of Cullen Fightsover, a passenger in the vehicle. An accident reconstructionist said the vehicle was traveling at 74 mph in a 50 mph zone. Perry ran a stop sign, went through the intersection and then lost control and rolled into a field, ejecting the three occupants from the vehicle. Fightsover was life-flighted, but was pronounced dead at the hospital. Perry admitted drinking hard liquor and beer and admitted smoking marijuana in the hours before the crash. Perry admitted he was “buzzed” from the alcohol he had consumed.
The victim’s family members spoke at sentencing and expressed forgiveness towards Perry. Judge Winmill stated to those present in the courtroom that he considered those statements in imposing sentence.
The case was investigated by the Fort Hall Police Department, the Federal Bureau of Investigation, and the Idaho State Police.
Au Optronics Corporation Executive Sentenced for Role in <br /> LCD Price-Fixing ConspiracyRead the Press Release
An executive of AU Optronics Corp., a Taiwan-based liquid crystal display (LCD) producer, was sentenced today in U.S. District Court in San Francisco for his participation in a worldwide thin-film transistor-liquid crystal display (TFT-LCD) price-fixing conspiracy. Shiu Lung Leung, AU Optronics Corp.’s former senior manager in its Desktop Display Business Group, was sentenced to serve 24 months in prison and to pay a $50,000 criminal fine, the Department of Justice announced.
AU Optronics Corp., based in Hsinchu, Taiwan, and its American subsidiary, AU Optronics Corp. America, headquartered in Milpitas, Calif., were found guilty in March 2012, for their participation in the price-fixing conspiracy, following an eight-week trial. Former AU Optronics Corp. president Hsuan Bin Chen and former AU Optronics Corp. executive vice president Hui Hsiung were also found guilty at that time. A mistrial was declared against Leung after that trial. Today’s sentencing took place before Judge Susan Illston and follows a three-week retrial that started in November 2012 and resulted in Leung’s conviction.
“These international price-fixers caused consumers to pay inflated prices for their computer monitors, notebook computers and televisions,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division. “Prison sentences for culpable executives, combined with substantial fines against corporate wrongdoers, are the most effective deterrents for protecting consumers from this kind of illegal cartel behavior.”
The indictment charged that AU Optronics Corp. participated in the worldwide price-fixing conspiracy from Sept. 14, 2001, to Dec. 1, 2006, and that its subsidiary joined the conspiracy as early as spring 2003. The indictment further charged that Leung participated in that conspiracy from May 15, 2002 to Dec. 1, 2006. LCD panels affected by the conspiracy were a major component in flat-panel computer monitors, notebook computers, and flat-screen televisions sold in the United States. The conspirators fixed the prices of LCD panels during monthly meetings with their competitors, which were secretly held in hotel conference rooms, karaoke bars and tea rooms around Taiwan.Eight companies have been convicted of charges arising out of the department’s ongoing investigation and have been sentenced to pay criminal fines totaling $1.39 billion. All together, 22 executives have been charged. Including today’s sentence, 13 executives have been convicted and have been sentenced to serve prison terms ranging from six to 36 months.
Today’s charges are the result of a joint investigation by the Department of Justice Antitrust Division’s San Francisco office and the FBI in San Francisco. Anyone with information concerning illegal conduct in the LCD industry is urged to call the Antitrust Division’s San Francisco office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.html
Attorney General Holder Names U.s. Attorney Hartunian to Advisory CommitteeRead the Press Release
Albany, New York – United States Attorney General Eric Holder today announced the appointment of Northern District of New York United States Attorney Richard S. Hartunian to serve a two-year term on the Attorney General's Advisory Committee (AGAC). Hartunian was one of six U.S. Attorneys appointed to the AGAC, comprised of the U.S. Attorneys selected from 16 of the 93 federal judicial districts in the United States, plus the U.S. Attorney for the District of Columbia and representatives of the three litigating divisions led by U.S. Attorneys – criminal, civil, and appellate.
United States Attorney Hartunian said, “I am honored to have been appointed by Attorney General Holder to serve on his Advisory Committee, and look forward to working with him and the U.S. Attorneys representing other districts to protect, promote, and enhance the fair administration of justice across our nation.”
Hartunian has served as the United States Attorney for the Northern District of New York since the beginning of 2010. He had been an Assistant United States Attorney since 1997, serving as the Northern District’s Narcotics Chief and Organized Crime Drug Task Force Coordinator from 2006 until he became U.S. Attorney. He is a 1983 graduate of Georgetown University and 1986 graduate of Albany Law School of Union University. Prior to joining the U.S. Attorney’s Office, Hartunian served as an Assistant District Attorney for the Office of District Attorney in Albany County and worked in private practice.
The Attorney General’s Advisory Committee was established in 1973; it is responsible for considering and making recommendations to the Attorney General regarding establishing and modifying the policies and procedures of the U.S. Department of Justice, cooperating with State Attorneys General and other state and local officials, promoting greater consistency in the application of legal standards, and formulating programs to improve the quality of justice at all levels throughout the United States.
The Attorney General’s press release announcing the appointment of U.S. Attorney Hartunian and five other U.S. Attorneys is attached.
Attorney General Holder Appoints U.S. Attorney Sharpe to Advisory CommitteeRead the Press Release
WASHINGTON – Attorney General Eric Holder today announced the appointment of Ronald W.
Sharpe, United States Attorney for the District of the Virgin Islands, along with five others, to serve
two-year terms on the Attorney General’s Advisory Committee (AGAC). The other five U.S. Attorneys
are: David Barlow, District of Utah; Richard S. Hartunian, Northern District of New York; Barbara L.
McQuade, Eastern District of Michigan; Wendy J. Olson, District of Idaho; and Anne Tompkins, Western
District of North Carolina.“It’s a pleasure to welcome the newest members of the Attorney General’s Advisory Committee,
a group of U.S. Attorneys with whom I regularly consult on some of the most critical law enforcement and
public safety issues facing our country,” said Attorney General Holder. “I’m grateful for their service and
leadership on the AGAC. I applaud the excellent work that each of them is leading in their home districts.
And I look forward to working closely with them as we work together to confront the present challenges
and seize new opportunities to protect and ensure justice for the American people.”The AGAC, chaired by U.S. Attorney for the Eastern District of New York Loretta E. Lynch, was
created in 1973. The committee, which reports to the Attorney General through the Deputy Attorney
General, represents the voice of the U.S. Attorneys and provides advice and counsel to the Attorney
General on policy, management and operational issues impacting the Offices of the U.S. Attorneys. U.S.
Attorney Sharpe serves as a member of the AGAC’s Border and Immigration Law Enforcement
Subcommittee, LECC/Victim/Community Issues Subcommittee, and Environmental Issues Working
Group.“I am honored that Attorney General Holder has asked me to serve on this important committee,”
U.S. Attorney Sharpe said. “I look forward to working with my colleagues on the AGAC to help shape law
enforcement policy at the national level.”Sharpe was presidentially appointed U.S. Attorney for the District of the Virgin Islands on July 7,
2011, having served as Interim U.S. Attorney from September 2009 until his confirmation. He also
served as the First Assistant U.S. Attorney for the District of the Virgin Islands from 2008 to 2009. Prior to joining the U.S. Attorney’s Office in the Virgin Islands, Sharpe served as an Assistant U.S. Attorney in
the District of Columbia from 1995 to 2008, and as an associate at Jones Day from 1991 to 1995.The full AGAC membership is listed below:
Loretta E. Lynch, United States Attorney, Eastern District of New York, Chair
Sally Quillian Yates, United States Attorney, Northern District of Georgia, Vice Chair
David Barlow, United States Attorney, District of Utah
Laura E. Duffy, United States Attorney, Southern District of California
Richard S. Hartunian, United States Attorney, Northern District of New York
Timothy J. Heaphy, United States Attorney, Western District of Virginia
Brendan V. Johnson, United States Attorney, District of South Dakota
Pamela Cothran Marsh, United States Attorney, Northern District of Florida
Barbara L. McQuade, United States Attorney, Eastern District of Michigan
Wendy J. Olson, United States Attorney, District of Idaho
Carmen Milagros Ortiz, United States Attorney, District of Massachusetts
Robert L. Pitman, United States Attorney, Western District of Texas
James L. Santelle, United States Attorney, Eastern District of Wisconsin
Ronald W. Sharpe, United States Attorney, District of the Virgin Islands
Carter M. Stewart, United States Attorney, Southern District of Ohio
Anne Tompkins, United States Attorney, Western District of North Carolina
Ronald C. Machen, United States Attorney, District of Columbia, ex officio
Daniel Bella, Criminal Chief, Northern District of Indiana, ex officio
Suzanne Bauknight, Civil Chief, Eastern District of Tennessee, ex officio
Robert Zauzmer, Appellate Chief, Eastern District of Pennsylvania, ex officioAttorney General Holder Appoints Six New U.S. Attorneys to Advisory CommitteeRead the Press Release
Attorney General Eric Holder today announced the appointment of six new U.S. Attorneys to serve two-year terms on the Attorney General’s Advisory Committee (AGAC): David Barlow, District of Utah; Richard S. Hartunian, Northern District of New York; Barbara L. McQuade, Eastern District of Michigan; Wendy J. Olson, District of Idaho; Ronald W. Sharpe, District of the Virgin Islands; and Anne Tompkins, Western District of North Carolina.
“It’s a pleasure to welcome the newest members of the Attorney General’s Advisory Committee, a group of U.S. Attorneys with whom I regularly consult on some of the most critical law enforcement and public safety issues facing our country,” said Attorney General Holder. “I’m grateful for their service and leadership on the AGAC. I applaud the excellent work that each of them is leading in their home districts. And I look forward to working closely with them as we work together to confront the present challenges and seize new opportunities to protect and ensure justice for the American people.”
The Attorney General also thanked the U.S. Attorneys who have completed their two-year terms and are rotating off the committee: Paul J. Fishman, District of New Jersey; Benjamin B. Wagner, District of Eastern California; Steven M. Dettelbach, Northern District of Ohio; John F. Walsh, District of Colorado; and Stephanie A. Finley, Western District of Louisiana.
The AGAC, chaired by U.S. Attorney for the Eastern District of New York Loretta E. Lynch, was created in 1973. The committee, which reports to the Attorney General through the Deputy Attorney General, represents the voice of the U.S. Attorneys and provides advice and counsel to the Attorney General on policy, management and operational issues impacting the Offices of the U.S. Attorneys.
A brief bio on each appointee is below:
David Barlow was presidentially appointed U.S. Attorney for the District of Utah on Oct. 15, 2011. He previously served as the General Counsel and Chief Counsel for Judiciary for Senator Michael S. Lee in 2011. From 2000 to 2010, Mr. Barlow worked at Sidley Austin LLP; first as an associate from 2000 to 2006, and then as a Partner from 2006 to 2010. Prior to this, Mr. Barlow was an Associate at Locke Lord Bissell & Liddell LLP from 1998 to 2000. Barlow serves as chair of the AGAC’s Local Government Coordination Working Group, and as a member of the Border and Immigration Law Enforcement Subcommittee, Native American Issues Subcommittee and White Collar/Fraud Subcommittee.
Richard Hartunian was presidentially appointed U.S. Attorney for the Northern District of New York on Feb. 19, 2010. Prior to his appointment, he served as an Assistant U.S. Attorney for the Northern District of New York (1997-2010). From 1990 to 1997, Hartunian worked both as an Assistant District Attorney for the Office of the District Attorney in Albany County, New York, and as a partner at Hartunian and Clark. Prior to that, he was an associate attorney at Devine, Piedmont and Rutnik. Hartunian serves as vice chair of the AGAC’s the Border and Immigration Law Enforcement Subcommittee, and as a member of the Native American Issues Subcommittee, Environmental Issues Working Group and Health Care Fraud Working Group.Barbara McQuade was presidentially appointed U.S. Attorney for the Eastern District of Michigan on Jan. 4, 2010. She previously served as an Assistant U.S. Attorney for the Eastern District of Michigan from 1998 to 2010, becoming Deputy Chief of the National Security Unit in 2005. Previously McQuade was an associate attorney at Butzel Long P.C., from 1993 to 1998. She began her legal career as a law clerk for the Honorable Bernard A. Friedman of the U.S. District Court for the Eastern District of Michigan from 1991 to 1993. McQuade serves as Vice Chair of the AGAC’s Terrorism/National Security Subcommittee, and as a member of the Border and Immigration Law Enforcement Subcommittee, Civil Rights Subcommittee, Local Government Coordination Working Group, and Medical Marijuana Working Group.
Wendy Olson was presidentially appointed U.S. Attorney for the District of Idaho on June 25, 2010. Prior to her appointment she served as an Assistant U.S. Attorney for the District of Idaho from 1997-2010, including as Senior Litigation Counsel (2006-2010). Olson worked for the Criminal Section of the Civil Rights Division of the Department of Justice, where she was a trial attorney from 1992 until 1996, and Deputy Director of Operations and Assistant to the Director on the National Church Arson Task Force from 1996 until 1997. Olson was also an Adjunct Professor of Legal Writing at the George Washington University School of Law from 1994 until 1997. Olson serves as a member of the AGAC’s Border and Immigration Law Enforcement Subcommittee, Civil Rights Subcommittee, Native American Issues Subcommittee, and Local Government Coordination Working Group.
Ronald Sharpe was presidentially appointed U.S. Attorney for the District of the Virgin Islands on July 7, 2011. He was the court appointed U.S. Attorney from July 2011. From 2008 to 2009, he served as the First Assistant U.S. Attorney for the District of the Virgin Islands, and as an Assistant U.S. Attorney in the U.S. Attorney’s Office for the District of Columbia from 1995 to 2008. Prior to this, Sharpe was an associate at Jones, Day, Reavis & Pogue, from 1991 to 1995. Sharpe serves as a member of the AGAC’s Border and Immigration Law Enforcement Subcommittee, LECC/Victim/Community Issues Subcommittee and Environmental Issues Working Group.
Anne Tompkins was presidentially appointed U.S. Attorney for the Western District of North Carolina on Apr. 26, 2010. Prior to her appointment Tompkins was a partner at Alston & Bird, LLP, from 2005 to 2010. From 2000 to 2005, she was an Assistant U.S. Attorney for the Western District of North Carolina, serving as deputy criminal chief from 2002 to 2004 and on detail in the Regime Crimes Liason Office in Baghdad, Iraq, from 2004 to 2005. Tompkins serves as Vice Chair of the AGAC’s Civil Rights Subcommittee, and as a member of the Native American Issues Subcommittee, Office Management and Budget Subcommittee, White Collar/Fraud Subcommittee and Health Care Fraud Working Group.
The full AGAC membership is listed below:
Loretta E. Lynch, U.S Attorney, Eastern District of New York, Chair
Sally Quillian Yates, U.S Attorney, Northern District of Georgia, Vice Chair
David Barlow, U.S. Attorney, District of Utah
Laura E. Duffy, U.S. Attorney, Southern District of California
Richard S. Hartunian, U.S. Attorney, Northern District of New York
Timothy J. Heaphy, U.S. Attorney, Western District of Virginia
Brendan V. Johnson, U.S. Attorney, District of South Dakota
Pamela Cothran Marsh, U.S. Attorney, Northern District of Florida
Barbara L. McQuade, U.S. Attorney, Eastern District of Michigan
Wendy J. Olson, U.S. Attorney, District of Idaho
Carmen Milagros Ortiz, U.S. Attorney, District of Massachusetts
Robert L. Pitman, U.S. Attorney, Western District of Texas
James L. Santelle, U.S. Attorney, Eastern District of Wisconsin
Ronald W. Sharpe, U.S. Attorney, District of the Virgin Islands
Carter M. Stewart, U.S. Attorney, Southern District of Ohio
Anne Tompkins, U.S. Attorney, Western District of North Carolina
Ronald C. Machen, U.S. Attorney, District of Columbia, ex officio
Daniel Bella, Criminal Chief, Northern District of Indiana, ex officio
Suzanne Bauknight, Civil Chief, Eastern District of Tennessee, ex officio
Robert Zauzmer, Appellate Chief, Eastern District of Pennsylvania, ex officioArmenian National Pleads Guilty in $1.5 Million Health Care Fraud and Money Laundering SchemeRead the Press Release
BRUNSWICK, GA: AVETIK MOSKOVIAN, 46, an Armenian National, plead guilty Tuesday before Chief United States District Court Judge Lisa Godbey Wood to his role in a conspiracy launder approximately $1.5 million in funds defrauded from Medicare through a phony medical business in Brunswick, Georgia.MOSKOVIAN, who resided in Los Angeles until the time of his arrest and was here in the United States on a permanent residence card from Armenia, pleaded guilty to Money Laundering Conspiracy in violation of Title 18, United State Code, Section 1956(h), before Chief United States District Court Judge Lisa Godbey Wood.
According to the evidence presented at MOSKOVIAN’S guilty plea hearing:From 2007 through 2008, various conspirators defrauded Medicare through a durable medical equipment company in Brunswick, Georgia, known as Brunswick Medical Supply. These conspirators submitted millions of dollars in phony claims for health care services that were never provided. The evidence showed that the conspirators stole the identities for doctors and patients from multiple different states, including Alaska, California, New York, and Ohio, and even submitted claims for people that were deceased at the time that he claimed to have provided them the medical equipment.
Once Medicare paid for these phony claims, MOSKOVIAN and other took numerous steps to launder the stolen money. MOSKOVIAN helped form at least four sham businesses in Los Angeles, opened multiple bank accounts in the names of these businesses, and used these bank accounts to launder the proceeds of the fraud at Brunswick Medical Supply. MOSKOVIAN engaged in multiple financial transactions within these accounts, including wire transfers and counter withdrawals of tens of thousands of dollars in cash, as part of his effort to help hide the money defrauded from Medicare.
MOSKOVIAN now faces a maximum statutory penalty of up to twenty (20) years in prison; a fine up to $500,000; and 5 years of supervised release. His sentencing will be scheduled after the United States Probation Office completes a presentence investigation.
United States Attorney Edward J. Tarver said, “Moskovian and others in this criminal organization thought that they could exploit Medicare to steal from this nation’s taxpayers and then avoid detection through this defendant’s money laundering operations. They were wrong. With this money laundering conviction, this Office and its law enforcement partners have taken another important step towards cleaning up the fraud in our nation’s health care programs.”
Derrick L. Jackson, Special Agent in Charge of the Atlanta Region for the Office of Inspector General of the Department of Health and Human Services, said “Avetik Moskovian engaged in a scheme to defraud Medicare by conducting numerous financial transactions with money that was generated through unlawful activity. The OIG strongly pursues those who abuse government healthcare programs for financial gain.”
Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated: “The FBI remains very committed toward providing the much needed investigative resources in protecting such federally funded programs like Medicare from fraud and abuse. Mr. Moskovian, in diverting those public funds to his personal bank account, denied other individuals the health care that those funds were intended for.”
The prosecution of MOSKOVIAN was part of a multi-jurisdictional investigation involving more than $100 million worth of phony claims submitted to Medicare. More than 35 defendants were charged as part of this investigation in Brunswick, Georgia, New York, Los Angeles, Cleveland and Albuquerque. The investigation in the Southern District of Georgia was the result of a multi-agency team of federal, state and local agents, led by the FBI and HHS-OIG), working together to combat health care fraud.
Assistant United States Attorney Brian T. Rafferty prosecuted the case. For additional information, please contact First Assistant United States Attorney James D. Durham at (912) 201-2547.
Alabama Businessman Sentenced for Fraud, Paying BribesRead the Press Release
NORFOLK, Va. – Huffman Earl Monk, 52, Brookwood, Ala., was sentenced today to 63 months in prison, followed by three years of supervised release, for wire fraud and for paying bribes to a U.S. Coast Guard Transportation Officer. Monk was also ordered to pay a fine of $15,000.00 and $779,549.85 in restitution to the U.S. Treasury.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Otis E. Harris, Jr., Special Agent in Charge, Coast Guard Investigative Service, Chesapeake Region; and Michael P. Dawson, Special Agent in Charge, Department of Homeland Security, Office of Inspector General, Washington Field Office, made the announcement after sentencing by United States District Judge Mark S. Davis.
Monk previously pled guilty to the charges on January 9, 2013. According to court documents, Monk was the owner and operator of 12 freight brokerage companies that were headquartered in a single office in Brookwood, Ala. Many of Monk’s freight brokerage companies contracted with Department of Defense Transportation Command (TransCom) to ship military-related freight. Monk’s co-conspirator was an active duty U.S. Coast Guard (USCG) Petty Officer assigned as a Transportation Administrator at the Surface Forces Logistics Center in Norfolk, Va. It was the co-conspirator’s primary duty was to coordinate the shipping of large freight such as boats, trailers, generators, etc. between USCG bases located throughout the United States. The co-conspirator utilized the TransCom automated system to bid out and then contract the shipments with authorized freight brokerage companies.
In September 2009, Monk traveled to Norfolk to meet with the co-conspirator and told him that in exchange for issuing USCG freight contracts to Monk’s freight companies, Monk would kickback a percentage of the profits to him. The co-conspirator agreed to Monk’s offer and, shortly thereafter, Monk began offering monetary bribes to the co-conspirator by providing him with debit cards linked to several of Monk’s business bank accounts. In order to inflate the profits Monk and the co-conspirator would make from each contract Monk encouraged the co-conspirator to fraudulently manipulate various data entered into the TransCom computer system in order to artificially inflate the price of the shipping contracts the co-conspirator steered to Monk’s companies. Monk and the co-conspirator also engaged in creating false shipping contracts for shipments that did not exist, and thereafter awarding the contract and profits to one or more of Monk’s companies. Since no freight was actually being shipped pursuant to these false contracts, the USCG payments to Monk was all profit, resulting in the co-conspirator also receiving a larger kickback from Monk. Over a two-year period, Monk paid out over $220,000 in bribe payments. The total fraud loss to the United States based on these fraudulent military shipping contracts was over $1 million.
The military has recently implemented a number of internal changes to TransCom’s computer systems to enhance the integrity of the bidding and contracting process used by Department of Defense and Department of Homeland Security Transportation Officers.
This investigation was brought as part of the Hampton Roads Procurement Fraud Initiative, a collaboration of defense investigative agencies, Inspectors General, and law enforcement dedicated to strengthening the integrity of the federal procurement system.This case was investigated by the United States Coast Guard Investigative Service and the Department of Homeland Security, Office of the Inspector General, Washington Field Office, with the cooperation and assistance of the Coast Guard Surface Forces Logistics Center. Assistant United States Attorneys Stephen W. Haynie and V. Kathleen Dougherty are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.20-year Sentence for Owner of Primary Health Care in Chillecothe, Ohio for Conpsiring to Distribute Oxycodone and Money LaunderingRead the Press Release
CONTACT: Fred Alverson
Public Affairs Officer
CINCINNATI – Kevin Huff, 36, of Portsmouth, Ohio was sentenced in U.S. District Court to serve 262 months in prison for his role in conspiring to distribute more than 200,000 dosage units (30mg tablets) of Oxycodone and money laundering. In addition, Huff was ordered to forfeit six properties in Lucasville and Sciotoville, Ohio; three vehicles, three ATV’s, a boat, $20,000 in currency, the contents of two bank accounts totaling approximately $118,875 and his latest income tax return as proceeds of the ill-gotten gains.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Ohio Attorney General Mike DeWine; Kathy A. Enstrom, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation, Cincinnati Field Office (IRS); Kyle W. Parker, Executive Director of the Ohio Board of Pharmacy; and Kimberly C. Anderson, Interim Executive Director, State Medical Board of Ohio announced the sentence handed down by U.S. District Judge Michael R. Barrett.
“Between July 2009 and June 2011 Huff conspired to illegally distribute Oxycodone and concealed the proceeds gained from the clinic he owned by purchasing real property, vehicles, and boats, as well as concealing the proceeds in bank accounts,” U.S. Attorney Stewart said. “I want to commend the investigators in the agencies named above as well as special agents with the Ohio Bureau of Criminal Investigation in Attorney General DeWine’s Office, the Ohio Organized Crime Task Force, the Rt. 23 Pipeline Task Force, Ross County Sheriff George W. Lavender Jr., Ross County Prosecutor Matthew S. Schmidt, and Chillicothe Police Chief Roger Moore for their agencies’ role in the investigation.”
According to court documents, agencies began investigating Primary Health Care clinic owned by Huff early in 2011. Primary Health Care charged each “patient” $200 in cash in return for prescriptions for Oxycodone and other narcotics without the benefit of a legitimate medical examination by a physician. The physician on staff saw approximately 25 patients per day.
"This case should serve as an example of just how serious we are about stopping those who are involved in overprescribing prescription medication," said Attorney General DeWine. "People are regularly overdosing on prescriptions that they should never have access to in the first place, and if we have to put those responsible in prison for decades, that's what we'll do."
Huff received between $5,000 and $8,000 in U.S. currency three times a month for his share of the clinic's proceeds. In 2009, Huff received approximately $245,000 in U.S. currency from the operation of the pain clinic. Huff did not deposit this cash into a bank; instead he kept the currency at several locations including his basement and in the shed behind his mother-in-law's house. Huff used the money to pay day-to-day expenses, purchase assets, and take vacations.
The proceeds generated from the operation of Primary Health Care pain clinic represented the proceeds of illegal narcotics trafficking. Other drugs commonly prescribed also included Hydrocodone and Xanax.
Huff purchased a house in Lucasville, Ohio and concealed the purchase of the house by deeding the house in the name of another individual. Huff used $40,000 in drug proceeds to pay for the house.
Huff pleaded guilty on June 27, 2012 to one count of unlawfully conspiring to distribute oxycodone and one count of money laundering. He was sentenced to 240 months for the conspiracy followed by 22 months for the money laundering.“Kevin Huff not only fueled the prescription drug problem in Southern Ohio, he supported addiction in several parts of the country”, said Acting Special Agent in Charge Kathy A. Enstrom, IRS, Criminal Investigation, Cincinnati Field Office. “IRS Criminal Investigation is committed with taking the profit away from criminal enterprises and putting those individuals in jail.”
Stewart recognized District Criminal Chief Kenneth L. Parker and Special Assistant U.S. Attorney Aaron Haslam from Ohio Attorney General DeWine’s Office, who are representing the United States in this case.
Saturday 27 April 2013
Dutschke Charged in Ricin CaseRead the Press Release
OXFORD, Miss. B Felicia C. Adams, United States Attorney for the Northern District of Mississippi, and Daniel McMullen, Special Agent in Charge of the Federal Bureau of Investigation (FBI) in Mississippi, announce:
James Everett Dutschke, age 41, of Tupelo, Mississippi, has been arrested on a Criminal Complaint charging him with knowingly developing, producing, stockpiling, transferring, acquiring, retaining and possessing a biological agent, toxin and delivery system, for use as a weapon, to wit: ricin, and with attempting, threatening and conspiring to do the same, in violation of Title 18, United States Code, Section 175(a). If convicted on this charge, Dutschke faces maximum possible penalties of life imprisonment, a $250,000 fine and 5 years of supervised release.
Dutschke is expected to appear in the United States District Court in Oxford, Mississippi, on Monday, April 29, 2013, before U. S. Magistrate Judge S. Allan Alexander. The arrest is based on a federal charge. A defendant is presumed innocent until proven guilty in court.
The arrest resulted from a cooperative investigation by the Federal Bureau of Investigation-Mississippi and Memphis Joint Terrorism Task Forces, the United States Secret Service, the U. S. Postal Inspection Service, the U. S. Capitol Police, the United States Attorney’s Office for the Northern District of Mississippi and the Counterterrorism Section of the Justice Department’s National Security Division, assisted by the following state and local agencies: Mississippi National Guard 47th Civil Support, Mississippi Office of Homeland Security, Lee County Sheriff’s Office, Prentiss County Sheriff’s Office, Corinth Police Department, Tupelo Police Department and Booneville Police Department.
The public is reminded to be vigilant in alerting any suspicious letters or activity to the appropriate authorities.
Friday 26 April 2013
Week in Review – South BendRead the Press Release
FOR IMMEDIATE RELEASECONTACT: Mary Hatton
www.usdoj.gov/usao/inn/ CELL: (219) 314-9993
South Bend, Indiana —The United States Attorney’s Office announced the following activity in Federal Court:
PLEAS:
Robert Pulliam, 52, of New Carlisle, Indiana, pled guilty before Magistrate Judge Christopher Nuechterlein to the felony offense of manufacturing marijuana.Magistrate Nuechterlein is recommending that the district court accept the tendered guilty plea.Parties have 10 days in which to object to the magistrate judge’s recommendation. Sentencing has been set for 7/31/13.This charge was filed as a result of an investigation by the Drug Enforcement Administration. This case is being prosecuted by Assistant United States Attorney Frank Schaffer.
Dale Hite, 27, of Plymouth, Indiana, pled guilty before Magistrate Judge Christopher Nuechterlein to the felony offense of conspiracy to manufacture methamphetamine.Magistrate Nuechterlein is recommending that the district court accept the tendered guilty plea.Parties have 10 days in which to object to the magistrate judge’s recommendation. Sentencing has been set for 7/25/13.This charge was filed as a result of an investigation by the Drug Enforcement Administration.This case is being prosecuted by Assistant United States Attorney Frank Schaffer.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
DISPOSITION:
Shawn Lunsford, 35, of Peru, Indiana, was sentenced by District Judge Jon DeGuilio to 63 months imprisonment and 25 years of supervised release after pleading guilty to the felony offense of possession of child pornography. Based on an ongoing investigation, a gents from the FBI Cybercrimes Unit and other affiliated agencies executed a search warrant at Lunsford’s residence in order to search any computers that were found in the home for the presence of child pornography. Lunsford was found to be in possession of approximately 7,073 images, approximately 1000 of which were prepubescent minors. This case resulted from an investigation by members of the Indiana Internet Crimes Against Children Task Force, including the Federal Bureau of Investigation.This case was prosecuted by Assistant United States Attorney John Maciejczyk.
Week in Review – HammondRead the Press Release
FOR IMMEDIATE RELEASECONTACT: Mary Hatton
www.usdoj.gov/usao/inn/ CELL: (219) 314-9993
Hammond, Indiana —The United States Attorney’s Office announced the following activity in Federal Court:
PLEAS:
Jose Gonzalez, 31, of Chicago, Illinois, pled guilty before District Judge Joseph Van Bokkelen to the felony offense of possession with the intent to distribute 500 grams or more of cocaine.Sentencing has been set for 8/7/13.This charge was filed as a result of an investigation by the Drug Enforcement Administration.This case is being prosecuted by Assistant United States Attorney Joshua Kolar.
Johana Velazquez, 29, of Rensselaer, Indiana, pled guilty before District Judge Joseph Van Bokkelen to the felony offense of conspiracy to distribute cocaine.Sentencing has been set for 6/27/13.This charge was filed as a result of an investigation by the Drug Enforcement Administration and the Illinois State Police.This case is being prosecuted by Assistant United States Attorney Joshua Kolar.
Krystal Puntillo-Raggs, 21, Javorious Raggs, 22, and Terrence Benson, 22, of Hammond, Indiana, pled guilty before Senior District Judge Rudy Lozano to the felony offense of passing counterfeit obligations.Sentencing for Raggs and Benson has been set for 7/12/13.Puntillo-Raggs will be sentenced on 8/13/13.These charges were filed as a result of an investigation by the United States Secret Service.This case is being prosecuted by Assistant United States Attorney Randall Stewart.
Darren Williams, 34, of Lafayette, Indiana, pled guilty before District Judge Joseph Van Bokkelen to the felony offense of possession of child pornography.Sentencing has been set for 7/10/13.This case resulted from an investigation by members of the Indiana Internet Crimes Against Children Task Force, including the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Columbus, Indiana Police Department.This case is being prosecuted by Assistant United States Attorney Jill Koster.
Julian Rebeles, 22, of Hammond, Indiana, pled guilty before District Judge Joseph Van Bokkelen to the felony offense of possession of a firearm by a convicted felon.Sentencing has been set for 7/10/13.This charge was filed as a result of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives HIDTA Task Force and the Hammond Police Department.This case is being prosecuted by Assistant United States Attorney David Nozick.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
DISPOSITIONS:
Phillip Ramos, II, 25, of Hammond, Indiana, was sentenced by Chief Judge Philip Simon to 27 months imprisonment and 3 years of supervised release after pleading guilty to the felony offense of possession with the intent to distribute cocaine.According to documents filed by the government, during a traffic stop involving Ramos, Hammond Police found a black duffle bag holding eight plastic bags containing a total of 3600 gross grams of a green leafy substance purported to be marijuana. Additionally the duffle bag contained six ounces of a white rock like substance purported to be cocaine, along with a Volunteer Enterprises and Smith and Wesson revolvers.A Sentry Safe was also located in the trunk of the vehicle that contained 647 gross grams of marijuana, a bag that contained 22.5 gross grams of cocaine and assorted prescription pills. This case was the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Hammond Police Department.This case was prosecuted by Assistant United States Attorney David Nozick.
Nathan Elmore, 22, of Gary, Indiana, was sentenced by Senior District Judge Rudy Lozano to 121 months imprisonment, $21,440.80 in restitution and 3 years of supervised release after pleading guilty to the felony offenses of the robberies of Rally’s, Family Dollar, Church’s Chicken, Kentucky Fried Chicken and Auto Zone in Gary, Indiana; Game Stop and Auto Zone in Hammond, Indiana; and the armed robbery of Tech Credit Union in East Chicago, Indiana.
Seandell Rounds, 21, of Riverdale, Illinois, a co-defendant in the Elmore case, was sentenced by Senior District Judge Rudy Lozano to 57 months imprisonment, $189.00 in restitution and 2 years of supervised release after pleading guilty to the felony offenses of the robberies of Subway in Gary and Auto Zone in Merrillville, Indiana.
These charges were brought as a result of a cooperative law enforcement effort by the Federal Bureau of Investigation, the East Chicago Police Department, the Gary Police Department, the Hammond Police Department and the Merrillville Police Department.
This case was prosecuted by Assistant United States Attorney Dean Lanter.
Warren County, Kentucky, Construction Company Owner Guilty of Income Tax EvasionRead the Press Release
– Concealed $1,045,327 in income from the IRS
– Failed to disclose his ownership in Tri-State Construction and income receivedLOUISVILLE, KY – A Warren County, Kentucky construction company owner pleaded guilty in United States District Court this week to an Indictment charging tax evasion announced David J. Hale, United States Attorney for the Western District of Kentucky.
Darrell Mathis, owner of Tri-State Construction, pleaded guilty before United States Magistrate Judge James Moyer, on April 22, 2013, to five counts of income tax evasion due for the tax years 1999 through 2001 and 2005 through 2009. The returns were filed with the Internal Revenue Service (IRS).
According to the plea agreement, from June 2004 until December 2011, Mathis evaded payment of $177,634 in federal income taxes due for the tax years 1999 through 2001. During this time period, among other things, he falsely submitted an IRS Offer-in-Compromise Form 656 in which he concealed his ownership and control of his personal assets, including vehicles and boats, and his business, Tri-State Construction and the company’s bank accounts. Throughout this period he owned and operated Tri-State construction but concealed his ownership and income from the IRS by placing it in the name of a nominee and directing IRS From W-2's not be filed in his name. For the tax years 2005 through 2008 Mathis received approximately $1,045,327 in income from Tri-State construction that he concealed from the IRS by not reporting the income on his federal income tax returns. The resulting additional tax due and owing for 2005 through 2009, is $383,558. Mathis knowingly signed his 2005 through 2008 federal income tax returns under the penalty of perjury.
The tax evasion counts, Mathis pleaded guilty to, also charged that in December 2007, Mathis purchased a piece of real estate at Cooper Dearing Road for $144,900 in the name of a nominee to conceal the purchase from the IRS. In January 2008, he sold this piece of real estate for $235,000 and purchased property located at 121 Timber Ridge Court, Alvaton, Kentucky, again in the name of a nominee. Further, in 2009 and 2010, Mathis caused the owner of Southside Auto Sales to file liens on his vehicles to conceal his equity in them from the IRS. Lastly, in January 2007, Mathis purchased a Keystone camper, titling the camper in a nominee name to conceal his ownership.
Mathis faces up to twenty-five years in prison and a fine of $500,000. A Sentencing date has not been scheduled.
This case is being prosecuted by Assistant United States Attorney Bryan Calhoun and Joshua Judd and was investigated by the IRS, Division of Criminal Investigation.
Vincent J. Garcia Sentenced to Twenty-Seven Months in Federal Prison for Bank Fraud Conviction - Albuquerque Real Estate Developer Also Ordered to Pay $722,543.76 in RestitutionRead the Press Release
ALBUQUERQUE – Albuquerque real estate developer Vincent J. Garcia, 61, was sentenced this afternoon to 27 months in federal prison followed by five years of supervised release for his bank fraud conviction. Garcia also was ordered to pay $722,543.76 in restitution to the banks that were the victims of his criminal conduct. Garcia is required to surrender himself to a federal correctional institution to be designated by the U.S. Bureau of Prisons within 60 days to begin serving his prison sentence.
Garcia’s sentence was announced by U.S. Attorney Kenneth J. Gonzales, Gabriel L. Grchan, Acting Special Agent in Charge of the Phoenix Field Office of IRS Criminal Investigation, David Anderson, Special Agent in Charge of the Kansas City Region of the Federal Deposit Insurance Corporation (FDIC), Office of Inspector General, and Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI.
Garcia pleaded guilty in Aug. 2011, to Count 3 of a 19-count superseding indictment charging him and co-defendants Derek Barnhill, 48, formerly of Rio Rancho, and David Garcia, 36, of Albuquerque, with bank fraud and money laundering charges in connection with three real estate development projects, including the Anaszai Downtown LLC (Anasazi Building). In entering his plea, Garcia admitted committing bank fraud in the amount of $365,677.00, and acknowledged that the gross loss amount to the victims of his fraudulent activity was $842,237.44.
Garcia admitted executing a plan to obtain funding from the Columbian Bank & Trust Co. (Bank) by having Barnhill submit a bank construction loan drawn-down request containing a material misrepresentation. Garcia then used $360,000.00 in construction loan proceeds to invest in a casino in Washington State. To obtain these funds, Garcia had Barnhill submit a construction loan draw-down request in the amount of $365,677.00 to the Bank on Feb. 12, 2007. The draw-down request falsely stated that the funds were needed for “materials and price lock” for construction services to be provided by a specific company.
Garcia also admitted instructing Barnhill to draw down the construction loan knowing that the funds would not be directly utilized in the construction of the Anasazi Building. In requesting that Barnhill submit the draw-down request, Garcia knew that the request would falsely represent that the money would be used for a direct construction expense.
In his plea agreement, Garcia stated that his company engaged his son, co-defendant David Garcia, to act as the general contractor for the Anasazi Building and the other real estate development projects, and that David Garcia was compensated in the form of labor and materials for construction work on his personal residence. Garcia admitted submitting invoices for work performed on his son’s residence to the Bank and to the First Financial Credit Union and manipulated the invoices to appear to be direct expenses for his real estate development projects. Garcia asserted that David Garcia was not aware that the invoices for work performed and labor provided at his residence were being submitted to the banks as direct project expenses.
In Dec. 2010, Barnhill entered a guilty plea to Count 3, a bank fraud offense, and Count 10, a money laundering offense, of the superseding indictment. In his plea agreement, Barnhill provided a more expansive description of the bank fraud to which Garcia entered his guilty plea. To that end, Barnhill said that, on Feb. 12, 2007, Garcia told Barnhill that he needed $360,000.00 for a “good faith payment” towards the purchase of a casino. Garcia asked Barnhill to use an old bid for sheet rock for the Anasazi Building to get the money. Barnhill altered the sheet rock bid to support a fictitious draw-down request for $365,677.00 and submitted the request based solely on the false invoice to the Bank. After the Bank disbursed the money, Barnhill transferred the funds to an Anasazi account at New Mexico Bank and Trust. The next day, Garcia and Barnhill went to New Mexico Bank and Trust and withdrew $360,000.00 of the proceeds and the money at Compass Bank in an account in the name of Albuquerque Downtown Partners. Thereafter, Garcia flew to Washington State with a Compass Bank check for $360,000.00 to make a payment on the casino. In entering his guilty plea, Barnhill did not implicate David Garcia in the criminal conduct charged in the superseding indictment. The charges against David Garcia subsequently were dismissed.
Barnhill faces up to 20 years of imprisonment, a maximum $1,000,000 fine, and restitution as ordered by the court. He remains on conditions of release pending his sentencing hearing, which has yet to be scheduled.
This case was investigated by IRS Criminal Investigation, the FDIC-OIG and the Albuquerque office of the FBI, and was prosecuted by Assistant U.S. Attorney Jonathon M. Gerson.United States Sues Novartis Pharmaceuticals Corp. for Allegedly Paying Multi-Million Dollar Kickbacks to Doctors in Exchange for Prescribing Its DrugsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Stuart F. Delery, the Acting Assistant Attorney General for the U.S. Department of Justice’s Civil Division, announced today that the United States has filed a civil false claims lawsuit against NOVARTIS PHARMACEUTICALS CORP. (“NOVARTIS”). The Government’s Complaint seeks damages and civil penalties under the False Claims Act and under the common law for paying kickbacks to doctors to induce them to prescribe NOVARTIS pharmaceutical products that were reimbursed by federal health care programs. The lawsuit alleges that the payments violated the Anti-Kickback Statute (“AKS”) and, as a result of Novartis’s unlawful conduct, the Government paid false claims for reimbursement for Novartis pharmaceutical products. The Government intervened in part in an action before Judge Paul G. Gardephe filed by a whistleblower on January 5, 2011, under the qui tam provisions of the False Claims Act. This is the second lawsuit to be filed in the Southern District this month against NOVARTIS alleging illegal kickbacks. The U.S. Attorney’s Office sued NOVARTIS on April 23, 2013 for allegedly paying kickbacks to pharmacies that were disguised as rebates and discounts in exchange for the pharmacies switching patients on CellCept or a generic drug to NOVARTIS’s immunosuppressant drug, Myfortic. That suit is before Judge Colleen McMahon.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Novartis corrupted the prescription drug dispensing process with multi-million dollar ‘incentive programs’ that targeted doctors who, in exchange for illegal kickbacks, steered patients toward its drugs. And for its investment, Novartis reaped dramatically increased profits on these drugs, and Medicare, Medicaid, and other federal healthcare programs were left holding the bag, doling out millions of dollars in kickback-tainted claims. Healthcare fraud imposes tremendous costs and causes great harm to an already burdened healthcare system, and the government will not tolerate it. The widespread kickback fraud alleged in our two lawsuits against Novartis – which only a few years ago settled a False Claims Act case involving violations of the Anti-Kickback Statute based on illegal payments to doctors – makes us question whether Novartis is getting the message.”
Acting Assistant Attorney General Stuart F. Delery said: “Kickback schemes like those alleged in this case not only call into question the integrity of individual medical decisions, they raise the cost of health care for all of us. Patients deserve care based on a doctor’s sound medical judgment, not the doctor’s personal financial interest. The Department of Justice will continue to pursue companies that use improper incentives, like those alleged here, to promote their products.”
The following allegations are based on the Complaint filed today in Manhattan federal court:
NOVARTIS, a pharmaceutical company headquartered in East Hanover, New Jersey, is a subsidiary of NOVARTIS A.G., an international pharmaceutical company headquartered in Basel, Switzerland. From January 2001 through at least November 2011, NOVARTIS systematically violated the AKS, which prohibits the payment of remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally-funded programs. Indeed, NOVARTIS violated its own internal policies concerning speaker programs, which require that the programs have an educational purpose and that slides about the company’s drugs be presented. NOVARTIS violated the AKS by paying doctors to speak about certain drugs, including its hypertension drugs Lotrel and Valturna and its diabetes drug Starlix, at events that were often little or nothing more than social occasions for the doctors. The payments and lavish dinners given to the doctors were, in reality, kickbacks to the speakers and attendees to induce them to write prescriptions for NOVARTIS drugs. In many instances NOVARTIS made payments to doctors for purported speaker programs that either did not occur at all or that had few or no attendees, and thousands of programs were held all over the country at which few or no slides were shown and the doctors who participated spent little or no time discussing the drug at issue.
Many speaker programs were also held in circumstances in which it would have been virtually impossible for any presentation to be made, such as on fishing trips off the Florida coast. No slides were shown on the boat. Other NOVARTIS events were held at Hooters restaurants.
In connection with these programs, NOVARTIS also frequently treated the doctors to expensive dinners that they hosted at high-end restaurants. For example, a July 5 dinner for three, including the speaker, at a Washington, D.C. restaurant cost $2,016, or $672 per person. NOVARTIS also paid a $1,000 honorarium to the speaker for this program. One of the two attendees had attended the same program a short time earlier. At another program held on Valentine’s Day in 2006, NOVARTIS paid $3,127, for a meal for three people at a West Des Moines, Iowa restaurant, or $1,042 per person.
NOVARTIS’s internal analyses show that speaker programs had a high return on investment in terms of the additional prescriptions for its drugs written by the doctors who participated in the programs, both as speakers and attendees, with the highest return arising from payments to doctors as “honoraria” for speaking. In short, doctors increased the number of prescriptions they wrote when they were being paid by Novartis to speak about a drug. As a result, NOVARTIS spent millions on speaker programs yearly. According to NOVARTIS’s data, during the period from January 2002 through November 2011 it spent nearly $65 million and conducted more than 38,000 speaker programs for just three drugs: the hypertension drugs, Lotrel and Valturna, and the diabetes drug, Starlix. In the absence of a legitimate purpose for many of the programs, the payments were nothing more than kickbacks to the doctors that induced them to write prescriptions in violation of the AKS.
NOVARTIS was well aware that its speaker programs created opportunities to provide kickbacks to doctors. In September 2010, NOVARTIS entered into a settlement with the U.S. Department of Justice to settle False Claims Act lawsuits based in part on violations of the AKS due to illegal remuneration paid to doctors through such mechanisms as speaker programs, and signed a Corporate Integrity Agreement (“CIA”) with the U.S. Department of Health and Human Services Office of Inspector General agreeing to implement a rigorous compliance program.
Even after entering into the CIA, NOVARTIS’s compliance program was inadequate to prevent kickbacks from being paid in conjunction with NOVARTIS’s speaker programs. NOVARTIS did not adequately review its speaker program to determine whether the programs were being used for an illegitimate purpose. Furthermore, although many instances of speaker program abuse were reported to NOVARTIS, sanctions were generally mere slaps on the wrist. In some cases, sales representatives who violated NOVARTIS’s own speaker program policies were nevertheless promoted. Even after September 2010, NOVARTIS continued to conduct bogus speaker programs that were simply vehicles for paying kickbacks to doctors in the form of honoraria and expensive meals.
As a consequence of its violations of the AKS, NOVARTIS has caused the submission of numerous false claims for drugs to federal health care programs, including Medicare, Medicaid, TRICARE, and the Department of Veterans Affairs health care program, resulting in millions of dollars in reimbursements. Novartis’s unlawful conduct caused those false claims to be made to and paid by the federal health care programs.
The Complaint seeks treble damages and penalties under the False Claims Act for false claims for reimbursement for Lotrel, Valturna, and Stalix, as well as for other NOVARTIS cardiovascular drugs. In addition, the United States seeks damages under the common law.
Mr. Bharara thanked the Justice Department’s Civil Division and the Department of Health and Human Services, Office of Inspector General for their extraordinary assistance in this case.
The case is being handled by the United States Attorney’s Office’s Civil Frauds Unit. Mr. Bharara established the Civil Frauds Unit in March 2010 to bring renewed focus and additional resources to combating civil fraud.
Assistant U.S. Attorneys Heidi A. Wendel and Mara E. Trager are in charge of the case.
U.S. v. Novartis 2 Complaint
U.S. v. Novartis Relator 2nd Amended Complaint (11civ00071)United States Successful in False Claims Act Cases Against Landlords Charging Housing Choice Voucher Tenants Excess RentsRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Marcia K. Cypen, Executive Director, Legal Services of Greater Miami, Inc. (LSGMI), announced the United States’ successful prosecution of several civil False Claims Act cases brought under the qui tam provisions of the False Claims Act, 31 U.S.C. §3730(b) against landlords participating in the United States Department of Housing and Urban Development’s (HUD) Housing Choice Voucher/Section 8 (HCV) Program who unlawfully received excessive rent subsidies known as Housing Assistance Payments (HAP).
Through Section 8 of the United States Housing Act of 1937, as amended, HUD distributes federal funds to local public housing agencies to assist eligible low income families in obtaining decent, safe, and sanitary housing in the private rental market. To receive federally subsidized rents, landlords participating in the HCV Program contractually agree to comply with HUD requirements, to charge only the rent authorized by the local public housing agency and to not raise rents or change lease terms without the written approval of the local public housing agency.
Two of the False Claims Act cases were originally filed by LSGMI who represented Sabrina R. Newberry and Taronda Wade, two low income tenants participating in the HCV Program administered by the Miami-Dade Public Housing and Community Development, a department of Miami-Dade County previously known as the Miami-Dade Public Housing Agency. The tenants brought the cases on behalf of the United States alleging that their landlords, the defendants, made unlawful false claims for rental subsidies by charging and accepting excessive rents, in violation of HUD rules and contractual requirements. After investigating the cases, the United States intervened in the two suits. The United States filed amended complaints asserting that the landlords violated the False Claims Act by making false statements to the County’s HCV Program and endorsing HAP rent subsidy checks for which the United States suffered damages.
1. United States of America, ex rel Sabrina R . Newberry, Relator, Plaintiffs, v. George David Horton, Defendant, Case No. 1:11-cv-20153-Graham.
According to court documents, during her brief tenancy, Newberry’s landlord, the Rev. Dr. George David Horton, collected $5,377.32 in rent from Ms. Newberry in excess of that specified in the HAP Contract and the rental agreement approved by the County’s HCV Program. A settlement was reached in this matter after the United States filed a Motion for Summary Judgment. There, the landlord who denied wrongdoing, paid to the United States $26,000 of which Ms. Newberry received, pursuant to the provisions of the False Claims Act, a Relator’s share of $5,377.32 and recovery of her legal expenses. During its investigation of the matter, the United States learned that Rev. Dr. Horton had also accepted at least $19,169.00 in excessive rents from another HCV tenant over a long period of time. In settlement of that matter, the landlord agreed to pay to the United States an additional $24,000.00.
2. United States of America, ex. rel. Taronda Wade, Relator, vs. DBS Investments, LLC, and John P. Joseph, 1:11-cv-20155-Cooke.
Court documents provide that Ms. Wade’s landlord, DBS Investments and John P. Joseph, unlawfully charged and accepted $4,398.00 more than Ms. Wade was lawfully required to pay during her tenancy. U.S. District Judge Marcia Cooke granted the United States’ motion for summary judgment in this matter and entered an award against the Defendants and in favor of the United States of $35,194.00, consisting of damages in the amount of $13,194.00 and penalties of $22,000. The Court additionally entered an award of $4,398.00 in damages, $10,470.00 in attorney’s fees and $152.35 in costs to Ms. Wade.
U.S. Attorney Wifredo A. Ferrer stated, “We will not tolerate abuse of federal housing or other programs. Schemes such as the ones uncovered in these cases steal taxpayers’ monies and often prey on those who need our assistance the most. We appreciate the actions of Legal Services of Greater Miami in bringing these cases and applaud whistleblowers for coming forward and exposing these schemes. We are pleased to return these monies to the taxpayers.”
“This is not only a legal victory for low-income tenants but also serves as a deterrent to other landlords who do not comply with federal housing requirements,” said LSGMI Senior Staff Attorney Sean Rowley. Added Mr. Rowley, “This case also illustrates how the novel use of the False Claims Act to challenge illegal conduct by landlords can be a highly effective legal strategy and can serve as precedent for other public housing tenant advocates.”
Mr. Ferrer commended LSGM and Miami-Dade Public Housing and Community Development for their assistance and investigative efforts. These cases were prosecuted by Assistant U.S. Attorney James A. Weinkle.
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.
United States Files Complaint Against Novartis Pharmaceuticals Corp. for Allegedly Paying Kickbacks to Doctors in Exchange for Prescribing Its DrugsRead the Press Release
The Justice Department announced today that the United States has filed a second civil false claims lawsuit against Novartis Pharmaceuticals Corp. involving alleged kickbacks paid by the company to health care providers. The government’s complaint seeks damages and civil penalties under the False Claims Act and under the common law for paying kickbacks to doctors to induce them to prescribe Novartis pharmaceutical products that were reimbursed by federal health care programs. The lawsuit alleges that the payments violated the Anti-Kickback Statute and, as a result of Novartis’s unlawful conduct, the government paid false claims for reimbursement for Novartis pharmaceutical products.
“Kickback schemes like those alleged in this case not only call into question the integrity of individual medical decisions, but they also raise the cost of health care for all of us,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “Patients deserve care based on a doctor’s sound medical judgment, not the doctor’s personal financial interest. The Department of Justice will continue to pursue companies that use improper incentives, like those alleged here, to promote their products.”
“As alleged, Novartis corrupted the prescription drug dispensing process with multi-million dollar ‘incentive programs’ that targeted doctors who, in exchange for illegal kickbacks, steered patients toward its drugs. And for its investment, Novartis reaped dramatically increased profits on these drugs, and Medicare, Medicaid, and other federal healthcare programs were left holding the bag, doling out millions of dollars in kickback-tainted claims,” said U.S. Attorney for the Southern District of New York Preet Bharara. “Healthcare fraud imposes tremendous costs and causes great harm to an already burdened healthcare system, and the government will not tolerate it. The widespread kickback fraud alleged in our two lawsuits against Novartis – which only a few years ago settled a False Claims Act case involving violations of the Anti-Kickback Statute based on illegal payments to doctors – makes us question whether Novartis is getting the message.”
The following allegations are based on the government’s complaint filed in the Southern District of New York:
Novartis, a pharmaceutical company headquartered in East Hanover, N.J., is a subsidiary of Novartis AG, an international pharmaceutical company headquartered in Basel, Switzerland. From January 2001 through at least November 2011, Novartis systematically violated the Anti-Kickback Statute , which prohibits the payment of remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally-funded programs. Indeed, Novartis violated its own internal policies concerning speaker programs, which require that the programs have an educational purpose and that slides about the company’s drugs be presented. Novartis violated the Anti-Kickback Statute by paying doctors to speak about certain drugs, including its hypertension drugs Lotrel and Valturna and its diabetes drug Starlix, at events that were often little or nothing more than social occasions for the doctors. The payments and lavish dinners given to the doctors were, in reality, kickbacks to the speakers and attendees to induce them to write prescriptions for Novartis drugs. In many instances Novartis made payments to doctors for purported speaker programs that either did not occur at all or that had few or no attendees, and thousands of programs were held all over the country at which few or no slides were shown and the doctors who participated spent little or no time discussing the drug at issue.
Many speaker programs were also held in circumstances in which it would have been virtually impossible for any presentation to be made, such as on fishing trips off the Florida coast. Other Novartis events were held at Hooters restaurants.
In connection with these programs, Novartis also frequently treated the doctors to expensive dinners that they hosted at high-end restaurants. For example, a July 5 dinner for three, including the speaker, at a Washington, D.C. restaurant cost $2,016, or $672 per person. Novartis also paid a $1,000 honorarium to the speaker for this program. One of the two attendees had attended the same program a short time earlier. At another program held on Valentine’s Day in 2006, Novartis paid $3,127, for a meal for two at a West Des Moines, Iowa restaurant, or $1,042 per person.
Novartis’s internal analyses show that speaker programs had a high return on investment in terms of the additional prescriptions for its drugs written by the doctors who participated in the programs, both as speakers and attendees, with the highest return arising from payments to doctors as “honoraria” for speaking. In short, doctors increased the number of prescriptions they wrote when they were being paid by Novartis to speak about a drug. As a result, Novartis spent millions on speaker programs yearly. According to Novartis’s data, during the period from January 2002 through November 2011, it spent nearly $65 million and conducted more than 38,000 speaker programs for just three drugs: the hypertension drugs, Lotrel and Valturna, and the diabetes drug, Starlix. In the absence of a legitimate purpose for many of the programs, the payments were nothing more than kickbacks to the doctors that induced them to write prescriptions in violation of the Anti-Kickback Statute .
Novartis was well aware that its speaker programs created opportunities to provide kickbacks to doctors. In September 2010, Novartis entered into a settlement with the U.S. Department of Justice to settle False Claims Act lawsuits based in part on violations of the AKS due to illegal remuneration paid to doctors through such mechanisms as speaker programs, and signed a corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General agreeing to implement a rigorous compliance program.
Even after entering into the corporate integrity agreement, Novartis’s compliance program failed to prevent kickbacks from being paid in conjunction with Novartis’s speaker programs. No individual at the company was tasked with examining its speaker program data to determine whether the programs were used for an illegitimate purpose. Furthermore, although instances of speaker program abuse were reported to Novartis, sanctions were generally mere slaps on the wrist. In some cases, sales representatives who violated Novartis’s own speaker program policies were nevertheless promoted. Even after September 2010, Novartis continued to conduct bogus speaker programs that were simply vehicles for paying kickbacks to doctors in the form of honoraria and expensive meals.
As a consequence of its violations of the Anti-Kickback Statute , Novartis has caused the submission of numerous false claims for drugs to federal health care programs, including Medicare, Medicaid, TRICARE and the Department of Veterans Affairs health care program, resulting in millions of dollars in reimbursements. Novartis’s unlawful conduct caused those false claims to be made to and paid by the federal health care programs.
The complaint seeks treble damages and penalties under the False Claims Act for the false claims for reimbursement for Lotrel, Valturna, and Stalix, as well as for other Novartis cardiovascular drugs. In addition, the United States seeks damages under the common law.
The complaint was filed in a lawsuit brought under the qui tam, or whistleblower, provisions of the False Claims Act by Oswald Bilotta, a former Novartis sales representative. Under the Act’s qui tam provisions, a private citizen, known as a “relator,” can sue on behalf of the United States and share in any recovery. The United States may join the lawsuit, as it has here. The lawsuit is United States ex rel. Bilotta v. Novartis Pharmaceuticals Corporation et al., No. 11-cv-0071 (S.D.N.Y.). The claims in the complaint filed by the government are allegations only, and there has been no determination of liability.
On April 23, 2013, the United States filed a separate complaint in the Southern District of New York against Novartis, alleging that the company gave kickbacks, in the form of rebates and discounts, to pharmacies in exchange for the pharmacies’ agreement to switch transplant patients from competitor drugs to a Novartis product. As here, that complaint seeks treble damages and civil penalties under the False Claims Act and remedies under the common law.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $10.3 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.2 billion.
United States Attorney's Office Supports Drug Enforcement Administration's National Take-Back InitiativeRead the Press Release
United States Attorney Michael J. Moore, Middle District of Georgia, announces the commitment of resources to the Drug Enforcement Administration’s National Take-Back Initiative which will take place on Saturday, April 27, 2013, from 10:00 a.m. to 2:00 p.m. in various locations throughout the district. This is an opportunity for those who have subsequently accumulated unwanted and unused prescription drugs, to safely dispose of them.In the five previous Take-Back events, the Drug Enforcement Administration, along with state, local, and tribal law enforcement partners, have collected more than two million pounds (1,018 tons) of prescription medication from circulation. The National Prescription Take-Back Day aims to provide a safe, convenient and responsible means of disposal, while also educating the public about the potential for abuse of these medications.
“We understand that prescription medicine abuse is a serious issue that is affecting an entire generation,” said U.S. Attorney Michael J. Moore. “We have joined this important effort because we are committed to fighting prescription medicine abuse. As prosecutors of narcotics cases, we understand that the need to endorse this effort is crucial. Cleaning out medicine cabinets and securing medications will reduce the chance of someone abusing prescription medication that is not intended for them, and will protect surplus drugs from theft.
The U.S. Attorney’s Office encourages everyone to take part in the National Prescription Take-Back Initiative on Saturday, April 27, 2013 where the Drug Enforcement Administration, state, local, and community partners will be collecting unwanted medicines. In addition, we urge everyone to report drug dealers and unscrupulous medical personnel who provide prescription medicines to our citizens.
Take-Back events will be held in various locations, including Eatonton, Macon, Forsyth, Leesburg, Athens, Ft. Benning, and Blakely.To join the effort, find a location near you and take the pledge to stop prescription medicines abuse go to: Locate Collection Site Near You
Collection site locations are now available. Check back often; sites are added daily. Please contact the Call Center at 1-800-882-9539 if you require assistance.Tokio Woman Pleads Guilty to Conspiracy to Commit Bank FraudRead the Press Release
FARGO - U.S. Attorney Timothy Q. Purdon announced that on April, 23, 2013, Kelly Touche of Tokio, N.D., pleaded guilty before U.S. District Judge Ralph R. Erickson to a charge of conspiracy to commit bank fraud.
Touche, 39, pleaded guilty to soliciting another person to cash a stolen check when she knew the check had been stolen. The incident occurred in September of 2012 in the Districts of North Dakota and Minnesota.
The charge of conspiracy to commit bank fraud carries a statutory maximum penalty of 30 years' imprisonment.
The case was investigated by the U.S. Postal Inspection Service.
Sentencing for Touche has been scheduled for July 22, 2013, in U.S. District Court in Fargo, N.D., at 11:00 a.m.
Assistant U.S. Attorney Janice M. Morley is prosecuting the case.
Three Charged with Filing Fraudulent Claims for Federal Income Tax RefundsRead the Press Release
CONTACT: Fred Alverson
Public Affairs Officer
DAYTON, OHIO -- A federal grand jury here has indicted Ebony F. Taste, 27, Trotwood, Saleen M. Nolan, 25, Dayton, and Jazmen Yates, 29, Galloway, with one count of conspiracy to file false claims for federal income tax refunds, totaling in excess of $150,000, with the Internal Revenue Service (IRS). In addition, each was charged individually with filing false claims for federal income tax refunds with the IRS; Taste was charged with five counts, Nolan with four counts, and Yates with four counts.
Carter M. Stewart, United States Attorney for the Southern District of Ohio and Kathy A. Enstrom, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation, Cincinnati Field Office and Gavin McClaren, Resident Agent in Charge, U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division, Cleveland, Ohio announced the indictment filed today.
The indictment accuses Taste, Nolan, and Yates with participating in a conspiracy between late 2008 and April 2011. The indictment alleges that Taste, Nolan, and Yates obtained personal identifying information, including names, dates of birth, and Social Security numbers belonging to other individuals. Yates is also accused with recruiting purported taxpayers and directing them to Taste.
Taste and Nolan allegedly prepared and filed false income tax returns in the names of the purported taxpayers. Each of the false income tax returns falsely claimed substantial income tax refunds. It has been alleged that Taste and Nolan instructed the IRS to wire transfer the false income tax refunds to various bank accounts the two defendants controlled. Taste, Nolan, and Yates allegedly kept a portion of the fraudulently obtained income tax refunds for themselves and provided the remainder of the income tax refunds to the purported taxpayers.
"Law abiding citizens expect the government to hold accountable those who use deceit and fraud to line their pockets with money, especially when that money represents stolen federal taxes," said Kathy A. Enstrom, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.An indictment is merely an accusation. All defendants are presumed innocent until and unless proven guilty. Conspiracy to file false claims for federal income tax refunds with the IRS is punishable by up to ten years in prison and a fine of up to $250,000. Filing false claims for federal income tax refunds with the IRS is punishable by up to five years in prison and a fine of up to $250,000.
This case is being prosecuted by Assistant United States Attorney Brent Tabacchi and investigated by special agents of IRS-Criminal Investigation and the Veterans Administration Office of Inspector General.
Theft and Fraud Charges Filed Against Canton Woman Accused of Illegally Getting Social SecurityRead the Press Release
Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, today announced that a grand jury returned a two-count indictment charging Lisa J. Music, 54, of Canton, with one count of theft of government property and one count of Social Security fraud.
The indictment alleges that Music stole and converted to her own use, approximately $37,390 in Social Security payments made to her that she was not entitled to receive.
The indictment further alleges that Music concealed and failed to disclose her marriage to her second husband in order to continue to receive Social Security payments.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The case is being prosecuted by Assistant U.S. Attorney Lauren Bell, following investigation by agents of the Social Security Administration Office of Inspector General.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
Stamford Man Sentenced to Five Years in Federal Prison for Distributing CocaineRead the Press Release
David B. Fein, United States Attorney for the District of Connecticut, today announced that ELLIOT CHIAPPETTA, 61, of Stamford, was sentenced yesterday by United States District Judge Janet C. Hall in New Haven to 60 months of imprisonment, followed by four years of supervised release, for distributing cocaine.
According to court documents and statements made in court, CHIAPPETTA was part of a drug-trafficking ring based in Stamford in 2009 and 2010. The investigation, which included the use of court-authorized wiretaps and physical surveillance, revealed that CHIAPPETTA and his co-conspirators acquired cocaine and sold it in smaller quantities to customers in Fairfield County. In April 2010, CHIAPPETTA traveled with a co-conspirator to southern Florida to obtain a kilogram of cocaine from their source of supply.
On January 28, 2013, CHIAPPETTA pleaded guilty to one count of conspiracy to possess with intent to distribute, and to distribute, 500 grams or more of cocaine.
CHIAPPETTA’s criminal history includes state felony convictions in 1992 for sale of narcotics and possession of narcotics, and a federal conviction in 2004 for conspiring to conduct an illegal gambling business.
This matter is being investigated by the FBI Fairfield County Organized Crime Task Force and the Stamford Police Department. The Task Force is composed of members of the FBI, the Internal Revenue Service – Criminal Investigation, the Stamford Police Department, the Bridgeport Police Department and the Connecticut State Police.
The case is being prosecuted by Assistant United States Attorney Hal Chen.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
[email protected]Springfield Man Arrested for Producing Child PornographyRead the Press Release
ALEXANDRIA, Va. – Andrew Choi, 35, of Springfield, Va., was arrested today on charges of production and possession of child pornography.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Chief of Police Douglas W. Keen of the Manassas City Police Department made the announcement after Choi’s initial appearance before United States Magistrate Judge Theresa C. Buchanan.
According to court documents and court proceedings today, Choi engaged in online video chats with underage boys between May 2012 and January 2013. The underage boys performed sex acts on camera and Choi recorded it using a screen capture program. In addition, hundreds of other images and videos of child pornography were also discovered on Choi’s computers.
Choi is charged with production of child pornography, and faces a mandatory minimum of 15 years and maximum of 30 years in prison, if convicted. He is also charged with possession of child pornography, and faces a maximum of 10 years in prison, if convicted.
Criminal complaints are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
The investigation was conducted by the Manassas City Police Department and the Northern Virginia/DC Internet Crimes against Children Task Force. Special Assistant United States Attorney Alicia J. Yass, a Trial Attorney with the Child Exploitation and Obscenity Section of the Justice Department’s Criminal Division, is prosecuting the case on behalf of the United States.
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.
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.
# # #Seth Patrick Durnam Pleads Guilty in U.S. Federal CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Missoula, on April 25, 2013, before U.S. Magistrate Judge Jeremiah C. Lynch, SETH PATRICK DURNAM, a resident of Bozeman, pled guilty to possession of child pornography. Sentencing has been set for July 25, 2013. He is currently released on special conditions.
In an Offer of Proof filed by Assistant U.S. Attorney Tara J. Elliott, the government stated it would have proved at trial the following:
On November 8, 2010, DURNAM was at a residence in Bozeman for a job interview.
On Saturday, November 13, 2010, the homeowner found a 2GB SD card in his driveway. The homeowner called his father who had visited earlier in the day to inquire if the card was his. His father replied that it was not and suggested that he view the images on the card to identify the owner. He did so and found hundreds of images of child pornography, that he described as "naked, under-age boys." When scrolling through the images, the homeowner found a picture of DURNAM, whom he recognized from the earlier job interview. The homeowner contacted law enforcement and turned over the card.
When interviewed by a detective the next day, DURNAM admitted that he "did like images of younger boys" but claimed it was earlier in his life. When the SD card was examined, approximately 300 sexually explicit images and 5 movies of nude prepubescent and early teen boys were found on the card. The images had been copied to the SD card on April 21, 2010, by means of another device. There were also several pictures of DURNAM on the card.
DURNAM possessed images and movies of children clearly prepubescent and children engaged in sadistic or masochistic abuse or other depictions of violence.
DURNAM faces possible penalties of 10 years in prison, a $250,000 fine and lifetime supervision.
The investigation was conducted by the Gallatin County Sheriff's Office.
San Francisco Man Sentenced to 151 Months for LSD and Ecstasy Trafficking OffensesRead the Press Release
SAN FRANCISCO - Defendant Oshan Cook was sentenced yesterday to 151 months in prison for conspiracy to distribute MDMA (“ecstasy”), possession with the intent to distribute ecstasy, and possession with the intent to distribute LSD, United States Attorney Melinda Haag announced.
On November 1, 2012, a federal jury found that Cook participated in a conspiracy to distribute ecstasy, and that he possessed with the intent to distribute ecstasy and more than 10 grams of LSD. The jury returned guilty verdicts on one count of distribution of more than 10 grams of LSD in violation of Title 21, United States Code, Sections 841(a)(1) and 841(b)(1)(A)(v), and two counts of ecstasy trafficking in violation of Title 21, United States Code, Sections 846, 841(a)(1), and 841(b)(1)(C). The guilty verdicts followed a 4-day jury trial before U.S. District Court Judge Jeffrey S. White.
Evidence at trial showed that Cook, 35, of San Francisco, participated in a conspiracy to distribute 1,383 grams of ecstasy that was delivered to an undercover DEA agent in a buy-bust operation, and that Mr. Cook was arrested on the day of the buy-bust operation, wearing a backpack containing 630 grams of ecstasy and 39.3 grams of liquid LSD.
Cook was charged by a federal grand jury, along with three co-defendants, in a Superseding Indictment on August 26, 2010. He was the last of the 4 defendants to be sentenced in this case. Defendant Yuri Lambert previously pled guilty to an ecstasy trafficking offense, and defendant James Edmonds pled guilty to an LSD trafficking offense. Both Lambert and Edmonds are currently serving 63 month sentences. Defendant Victoria Vanlaanen also pled guilty to an ecstasy trafficking offense, and is currently serving an 18 month sentence.
After the jury returned its verdict on November 1, 2012, Cook was remanded into the custody of the United States Marshals, and he remains in custody to serve his sentence.
The sentence was handed down by U.S. District Court Judge Jeffrey S. White. Judge White also sentenced the defendant to a five year period of supervised release.
Chinhayi Cadet and Pete Axelrod are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Ana Guerra. The prosecution is the result of a 2-year investigation by the Drug Enforcement Administration.
Red Lake Man Indicted for Running Another Vehicle Off the RoadRead the Press Release
MINNEAPOLIS—A federal indictment unsealed yesterday charges a 30-year-old Red Lake man for running a vehicle driven by a woman off the road while on the Red Lake Indian Reservation. The indictment, which was filed on April 22, 2013, charges Tony Lee Lussier with one count of assault with a dangerous weapon. The indictment was unsealed following Lussier’s initial appearance in federal court.
The indictment alleges that on May 12, 2012, Lussier assaulted the woman with intent to do bodily harm, with a motor vehicle. The woman was driving a Pontiac Bonneville, which was allegedly forced off the road by Lussier who was driving a gray van.
If convicted, Lussier faces a potential maximum penalty of ten years in prison. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the Red Lake Tribal Police Department and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Laura M. Provinzino.Because the Red Lake Indian Reservation is a federal-jurisdiction reservation, some of the crimes that occur there are investigated by the FBI in conjunction with the Red Lake Tribal Police Department. Those cases are prosecuted by the U.S. Attorney’s Office.
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.
Press ReleaseRead the Press Release
RICHMOND MAN CONVICTED OF DISCHARGING FIREARM DURING DRUG
TRANSACTION AT SPOTSYLVANIA TOWN CENTER MALLRICHMOND, Va. – Travis Doug Burley, 26, of Richmond, Virginia, was found guilty yesterday of using and possessing a firearm during and in relation to a drug trafficking offense. The jury also unanimously found that the firearm had been discharged during the offense. Following the jury’s verdict, Judge Gibney immediately remanded Burley into the custody of the United States Marshals Service. He faces a 10-year mandatory minimum sentence, and a maximum possible sentence of life imprisonment, when he is sentenced on July 23, 2013.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; and Carl Vasilko, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Washington Field office, made the announcement.
According to evidence at trial, on July 11, 2012, Burley contacted a Spotsylvania-area man, Matthew Johnson, to purchase four ounces of high grade marijuana. Burley, who was previously unknown to Johnson, used a mutual friend named Ronnie Morgan, Jr., to broker the deal. Morgan and Johnson negotiated the transaction through a text message conversation, and eventually agreed to meet that evening in the Spotsylvania Town Center Mall, near the Costco store. When Johnson arrived at the Mall, he parked near a car he saw containing his friend Morgan, the defendant Burley, and a third unidentified man.
Immediately after Johnson parked his car, Burley got into the passenger seat, brandished a handgun and told Johnson, “You know what this is about” and demanded that Johnson give him the drugs. Johnson, who did not know Burley, denied having anything, which prompted Burley to hit Johnson repeatedly with one fist while holding a .40 caliber Smith & Wesson semiautomatic pistol in the other. Johnson grabbed the handgun, which discharged while the men struggled over it. A single bullet injured both Burley in the hand and Johnson in the hand and left calf.
Johnson drove a short distance from the scene and attempted to hide the marijuana, and further lied to investigators during his initial 911 call. However, when later confronted by investigators with various items of evidence, including text messages from his cell phone, he agreed to cooperate. Johnson, who still has pending drug distribution charges in Spotsylvania County, acknowledged his guilt during his testimony, without the benefit of any immunity or plea agreement from local prosecutors.
During the struggle in Johnson’s car, Ronnie Morgan, Jr, stood outside of Johnson’s car looking in. After Burley’s handgun went off during the fight, both Morgan and the third, unidentified man fled the scene prior to police arriving. Morgan, who was a long-time associate of Burley, was subpoenaed to testify before a federal grand jury, during which he lied that he knew who Burley was when shown photographs of his friend. Morgan later pleaded guilty to perjury as a result of those false statements, and is scheduled for sentencing on May 14, 2013, before Judge Gibney. Morgan was not called as a witness during the trial.
The investigation was conducted by the Richmond Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Spotsylvania County Sheriff’s Office. Mr. MacBride and Special Agent Vasilko wish to acknowledge the significant assistance provided by the offices of Spotsylvania County Commonwealth’s Attorney, William F. Neely, and Spotsylvania County Sheriff, Roger L. Harris, during the federal phase of this investigation. Assistant United States Attorney Brian R. Hood prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.
# # #Owner of Buy-A-Home Real Estate Brokerage Sentenced in Manhattan Federal Court to 70 Months in Prison for Participating in Multi-Million Dollar Mortgage Fraud Scheme and Committing PerjuryRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that MITCHELL COHEN, the owner of the now defunct Buy-A-Home real estate brokerage business, was sentenced today in Manhattan federal court to 70 months in prison for participating in a multi-million dollar mortgage fraud scheme and for committing perjury. COHEN was indicted in July 2012 and pled guilty in December 2012 to one count of conspiracy to commit mail, wire and bank fraud and one count of perjury in connection with statements he made in a civil lawsuit filed against him by this Office. COHEN was sentenced today before U.S. District Judge Denise L. Cote.
Mr. Bharara also announced that the Office reached a settlement of its lawsuit against COHEN in which he admitted to conspiring with others to secure federally-insured mortgage loans through fraud. Under that settlement, a $2.7 million judgment will be entered against COHEN, and he will be permanently barred from participating in real estate sales involving federally-insured mortgages and from any advertising, marketing, or solicitation of business involving such sales. The settlement was approved by U.S. District Judge Lorna G. Schofield.
Manhattan U.S. Attorney Preet Bharara stated: “The egregious conduct for which Mitchell Cohen was sentenced today helped contribute to the home mortgage crisis and to FHA’s dire financial straits, and it also caused many home buyers to lose homes they could ill afford in foreclosure proceedings. He will now answer for his crimes with jail time and multi-million dollar criminal and civil penalties. This case is a prime example of how our Office uses every legal tool in our toolbox – both criminal and civil – to punish those who engage in mortgage fraud.”
According to the Indictment and statements made during court proceedings:
COHEN’s Mortgage Fraud Scheme
From 2007 through 2010, the U.S. Department of Housing and Urban Development’s Federal Housing Administration (“HUD-FHA”) provided mortgage insurance to borrowers seeking residential mortgages. Unlike conventional loans, FHA-insured loans required little cash investment from borrowers and were more flexible in income and payment ratio requirements. To qualify for FHA mortgage insurance, a potential borrower had to meet HUD requirements regarding his or her creditworthiness and ability to make mortgage payments. No undisclosed payments could be made or promised in connection with a residential mortgage transaction. At all relevant times, certain private lenders were authorized to make commitments for the provision of FHA mortgage insurance on behalf of HUD. They did so through the execution and ultimate submission to HUD of various mortgage documents, forms, and supporting documentation. Because FHA-backed mortgages were valuable commodities, lenders typically sold them to banks that pooled them and then resold them to institutional investors.
From April 2007 through October 2010, COHEN operated a real estate brokerage business in Queens, New York known, at various times, as Buy-a-Home, LLC and First Home Brokerage, LLC (“Buy-a-Home”). Buy-a-Home employed several sales managers, as well as a number of sales agents who recruited clients to purchase homes who were usually first-time home buyers. COHEN and Buy-a-Home employees facilitated the sales of the homes by preparing documentation to secure FHA-insured loans to fund the borrowers’ purchases.
During that time period, COHEN engaged in a widespread conspiracy to defraud HUD into issuing FHA mortgage insurance and to defraud banks into purchasing the FHA-backed mortgages issued to Buy-a-Home’s clients in order to earn substantial profits. Through entities he controlled, COHEN bought, or promised sellers he would buy, homes at one price, and then he and others at Buy-a-Home recruited unsophisticated buyers of modest means and induced them into purchasing the same homes at inflated prices, which were typically $100,000 higher than the original sale price. To insure that the deals for these properties would go through, COHEN and others schemed to make the Buy-a-Home clients – who did not and could not qualify to receive FHA mortgage insurance – seem more creditworthy. In furtherance of this scheme:
- COHEN directed Buy-a-Home employees to pay off borrowers’ debts, often with cash funneled through bank accounts of borrowers’ relatives, in order to make the borrowers appear more creditworthy and to make it seem that their debts had been paid by an appropriate source;
- COHEN directed Buy-a-Home employees to provide cash to borrowers so that they could obtain certified checks falsely showing that they had sufficient funds to close;
- COHEN directed borrowers’ relatives to sign false gift affidavits to make it seem that the borrowers’ debts had lawfully been paid off, or the borrowers’ funds for closing had been appropriately provided by relatives, when in fact they had unlawfully paid off the debts themselves or through Buy-a-Home; and
- COHEN advised borrowers to make other false statements on loan applications submitted to HUD.
In so doing, COHEN concealed the borrowers’ true financial condition from HUD and the banks that subsequently bought the FHA-backed mortgages, all in an effort to insure that they and Buy-a-Home could profit from the deals. COHEN also made mortgage payments on behalf of certain borrowers to further conceal their financial condition and to prevent banks from enforcing their right to sell loans back to the lenders that first provided the borrowers with mortgages.
Through this scheme, COHEN defrauded HUD into issuing, and banks into purchasing, millions of dollars in fraudulent loans. Furthermore, because the FHA insurance was based on false statements made to HUD, and the borrowers could not really afford their mortgages, many of the homes went into foreclosure proceedings, forcing HUD to pay out $1,574,259.43 million in insurance payments.
COHEN’S Perjury in the Civil Mortgage Fraud Action Against Him
In December 2010, the U.S. Attorney’s Office for the Southern District of New York filed a civil complaint against COHEN, the mortgage lender, and the appraisers who helped him orchestrate the fraud at Buy-a-Home. On December 29, 2010, the District Judge presiding over the civil action entered a preliminary injunction barring COHEN from participating in real estate sales involving HUD-insured mortgages and any advertising, marketing, or solicitation of business involving such mortgages.
Subsequently, in October 2011, the Government moved for a finding of civil contempt against COHEN, alleging that he willfully violated the preliminary injunction by re-establishing Buy-a-Home under a new name – Y-Rent New York, LLC (“Y Rent”) – which was nominally owned by COHEN’s wife and another individual, but was in fact operated by COHEN. In connection with his opposition to the contempt motion, COHEN filed a declaration in November 2011 in which he falsely stated, under penalty of perjury, that he was not involved with Y Rent, did not train Y Rent’s salespeople, did not take certain types of business calls, and did not speak to prospective borrowers. In December 2011, COHEN was held in contempt for having willfully violated the injunction against him in the civil action
In addition to the prison term, Judge Cote sentenced COHEN, 55, of Old Westbury, New York, to three years of supervised release. COHEN was also ordered to forfeit $7,515,966, and to pay $1,574,259.43 in restitution to HUD-FHA. He will surrender on June 28, 2013, at 2:00 p.m. The civil judgment against COHEN consists of $2.2 million in damages and $500,000 in penalties. COHEN’s civil settlement is the fifth and final settlement in the civil action. In four prior settlements entered in 2011 and 2012, the Government recovered $1.55 million in damages and penalties from the lender and the appraisers. The lender, the lender’s principals and key employees, and the appraisers all agreed to be barred from all HUD programs either permanently or for a term of up to 10 years.
Mr. Bharara praised HUD-OIG and FHFA-OIG for their outstanding work in the investigation.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
This matter is being handled by the Office’s Complex Frauds Unit and the Civil Frauds Unit. Assistant U.S. Attorneys Janis Echenberg and Nicole Friedlander are in charge of the criminal case, and Assistant U.S. Attorneys Li Yu and Cristine Phillips are in charge of the civil case.
U.S. v. Mitchell Cohen Consent Order
Operator of Illegal Alien Employment Business in Scranton Sentenced in Federal CourtRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that an operator of an illegal alien employment business in Scranton was sentenced Thursday in federal court before Senior U.S. District Court Judge A. Richard Caputo.
Rama Putra, age 32, residing in Scranton, was sentenced to 12 months’ imprisonment. Putra also faces possible deportation.
According to United States Attorney Peter J. Smith, Putra engaged in a conspiracy to promote and conceal the profits of a temporary employment agency known as “H&Y Staffing, Inc.” operating out of a Scranton address which recruited, employed, and transported an illegal work force. “H&Y Staffing, Inc.” provided dozens of illegal temporary employees to businesses in the Scranton area over a period of several years. Putra, in furtherance of the conspiracy, allegedly provided transportation for the illegal workers, paid the illegal work force in cash on a weekly basis, and cashed checks from local businesses at check cashing services located in Philadelphia as part of the scheme to conceal and promote the underlying criminal activity.
Putra was indicted in October 2012 and pleaded guilty in January 2013 to conspiracy to commit money laundering and the employment and transportation of illegal aliens.
The case was investigated by the U.S. Department of Homeland Security - Immigration and Customs Enforcement and the Pennsylvania State Police.
Prosecution was assigned to Assistant United States Attorney Michelle Olshefski.
Omaha Woman Sentenced to 71 Months in Prison for Distributing MethamphetamineRead the Press Release
United States Attorney Deborah R. Gilg announced that Lori A. Schories of Omaha, Nebraska, was sentenced on April 26, 2013, to 71 months in prison by United States District Judge Richard G. Kopf. Schories had previously pled guilty for her involvement in a conspiracy to distribute methamphetamine, including sales of methamphetamine to a cooperating witness and an undercover officer, in August of 2012. After serving her sentence, Schories will be required to serve a Term of Supervised Release of 4 years.
This case was the result of an investigation by the Sarpy County Sheriff’s Office.
Oklahoma Man Sentenced for Failure to Pay Child SupportRead the Press Release
United States Attorney Brendan V. Johnson announced that a Stang, Oklahoma man charged with Failure to Pay Legal Child Support was sentenced on April 23, 2013 by U.S. District Judge Charles B. Kornmann.
Rodney L. Bolin, age 38, was sentenced to time served, 1 year of unsupervised probation, a $100.00 special assessment to the Federal Crime Victims Fund and child support restitution in the amount of $49,213.50.
On June 5, 2012 Bolin was indicted by a federal grand jury for failing to pay over $42,693.00 in past due child support. Bolin was previously ordered by the Sisseton-Wahpeton Oyate Court, Lake Traverse Indian Reservation to pay $600.00 per month for his minor children, commencing June 1, 2003. He made a payment in March of 2012, but prior to that date, he had not made a child support payment since September of 2009. At the time of indictment, the total arrearage amount was $42,693.48. He pled guilty to the charge on April 23, 2013.
This case was investigated the Department of Health and Human Services, Office of Inspector General. Assistant U.S. Attorney Thomas J. Wright prosecuted the case.
Ocala Career Offender Sentenced to More Than 21 Years in Prison for Firearms CrimesRead the Press Release
Ocala, Florida - Senior U.S. District Judge William Terrell Hodges sentenced Joseph Jerome Smith (32, Ocala) yesterday to 21 years and ten months in federal prison for possessing a firearm as a convicted felon and for possessing a firearm in furtherance of a drug trafficking crime. Smith pleaded guilty on February 14, 2013.
According to court documents, on May 21, 2012, the Marion County Sheriff's Office executed a search warrant at Smith's Ocala residence and found him to be in possession of a distribution amount of cocaine, drug trafficking equipment, and multiple loaded firearms, including two 9 mm pistols. Following this incident, a federal arrest warrant was issued for Smith. On September 18, 2012, a special agent with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and members of the U.S. Marshals Fugitive Task Force arrested Smith as he was seated in a vehicle at an Ocala convenience store parking lot. At the time of his arrest, Smith was in possession of another loaded 9 mm pistol with an obliterated serial number.
Smith has multiple prior felony convictions and was therefore prohibited from possessing a firearm or ammunition under federal law. At his sentencing, Smith was found to be a career offender under the federal sentencing guidelines.
This case was investigated by the ATF, with assistance from the Marion County Sheriff's Office and the U.S. Marshals Service. It was prosecuted by Assistant United States Attorney Andrew C. Searle.
It is another case prosecuted as a part of the Department of Justice's "Project Safe Neighborhoods" program - a nationwide, gun-violence reduction strategy. United States Attorney Robert E. O'Neill, along with Julie Torres, Special Agent in Charge, ATF, is coordinating the Project Safe Neighborhoods effort here in the Middle District of Florida in cooperation with federal, state, and local law enforcement officials.
New York Businessman Pleads Guilty to Tax CrimesRead the Press Release
Antonio Morales, a resident of Brooklyn, N.Y., pleaded guilty today in U.S. District Court in the Eastern District of New York to aiding in the preparation of a false federal tax return, the Justice Department and Internal Revenue Service (IRS) announced.
According to court records and admissions made by the defendant in court today, Morales owned T&R Environment Corp., a construction and sanitation business located in Brooklyn. Morales cashed T&R’s business checks at a check casher and falsely informed his return preparer that T&R was an inactive company. Morales then filed four false corporate income tax returns for tax years 2004 through 2007 that reported no gross receipts for T&R even though T&R generated gross revenue of at least $472,337 during that four year period. Morales admitted that his failure to report T&R’s gross receipts caused a tax loss to the IRS approximating $160,593.
Morales faces a potential maximum sentence of three years in prison and a maximum fine of $250,000. A sentencing date has not been set.
The case was investigated by IRS - Criminal Investigation and is being prosecuted by Trial Attorneys Mark Kotila and Jeffrey Bender of the Justice Department’s Tax Division.
Milton Man Sentenced to 17 Years for Orchestrating Large Ponzi Scheme and Massive Mail FraudRead the Press Release
Boston – On April 25, a Milton man was sentenced to 17 years in federal prison for orchestrating a large Ponzi scheme through his securities company, and for defrauding customers of millions of dollars by selling coins at inflated prices.
On October 2, 2012, Arnett L. Waters, 63, pleaded guilty to two counts of criminal contempt. On November 29, 2012, he also pleaded guilty to seven counts of securities fraud, six counts of mail fraud, two counts of money laundering, and one count of obstruction of justice. In addition to the prison term, United States District Judge Denise J. Casper sentenced Waters to three years of supervised release, as well as restitution and forfeiture in the amounts of over $9 million.
U.S. Attorney Carmen M. Ortiz said, “The personal nature of this fraud, the effort and calculation necessary to carry it out, and the defendant’s utter disregard for his victims and the law, makes this one of the most serious white collar cases in Massachusetts in recent memory. This crime, while not violent, had a profound and direct impact on the lives of victims who lost life savings, retirement money, funds for college educations, and funds meant for the benefit of the defendant’s own church.”
From 2007 through 2012, Waters obtained roughly $839,000 from various investors by selling units in sham investment partnerships. He spent most of the investors' funds on personal and business expenses. Waters lulled investors into a false sense of security by telling them that their investments had generated substantial profits which would be paid to them in the near future.
In April 2012, Waters was interviewed as part of an examination United States Securities and Exchange Commission of his securities business. During the interview, Waters falsely told examiners that no one had invested in his investment partnerships.
In addition, between 2002 and 2012, Waters defrauded coin customers and obtained millions of dollars by selling coins at inflated prices. Waters convinced customers to buy coins at prices that, on average, represented a 600% mark-up from market value of the coins. Waters also induced coin purchasers to return coins to him, on the false pretense that he would sell those coins on their behalf. Waters convinced one victim, who had paid Waters over $7 million for coins, to further pay him over half a million dollars for fees purportedly related to the sale and storage of the coins. In fact, Waters had already sold most or all of the coins and had used the proceeds for his own personal and business expenses.Waters also engaged in criminal contempt when he maintained a hidden bank account in violation of the asset freeze order in a civil fraud case brought against him by the SEC. From the time the freeze order was entered in May 2012 through mid-July 2012, Waters deposited approximately $172,000 in proceeds from his mail fraud and dissipated approximately $152,000.
U.S. Attorney Ortiz and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The United States Attorney’s Office appreciates the cooperation received from the United States Securities and Exchange Commission. This matter came to the attention of authorities through the Financial Industry Regulatory Authority. The case is being prosecuted by Assistant U.S. Attorney Ryan M. DiSantis of Ortiz’s Economic Crimes Unit. The forfeiture matters are being handled by Assistant U.S. Attorney Veronica M. Lei.
Mansfield Man Indicted for Theft of $1 MillionRead the Press Release
A Mansfield man was indicted on charges that he embezzled more than $1 million from an customer annuity accounts at an insurance company where he worked, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Willard C. Lee, age 51, was indicted on one count each of insurance embezzlement and wire fraud.
Lee was employed by Allstate. The indictment alleges that Lee embezzled approximately $1,056,000 from Allstate customer annuity accounts between July 2007 and December 2011. Lee forged customer signatures on withdrawal requests to Allstate and Lincoln Benefit Life, a company wholly owned by Allstate, which sells annuities, according to the indictment.
Once fraudulent paperwork was submitted, Lee had the proceeds wire-transferred into bank accounts he controlled in Mansfield, according to the indictment.
The case was presented for indictment by Assistant United States Attorney James V. Moroney following an investigation by the Federal Bureau of Investigation;’s Mansfield office, who in turn were following up an investigation by the Investigative Services unit of the Allstate Insurance Company.
If convicted, the defendant’s sentence will be determined by the court after review of
factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s
role in the offense and the characteristics of the violation. In all cases, the sentence will not
exceed the statutory maximum and in most cases it will be less than the maximum.An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a
fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.Manhattan U.S. Attorney Announces Extradition of Alleged International Narcotics Trafficker Charged with Conspiring to Engage in Narco-Terrorism and to Support the FarcRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Brian R. Crowell, Special-Agent-in-Charge of the New York Field Office of the United States Drug Enforcement Administration (“DEA”), today announced that JOSE EVARISTO LINARES CASTILLO was extradited from Colombia on charges that he conspired to import ton-quantities of cocaine into the United States, to provide material support to the Fuerzas Armadas Revolucionarias de Colombia (the “Revolutionary Armed Forces of Colombia,” or “FARC”), and to engage in narco-terrorism. The FARC has been designated by the U.S. Department of State as a Foreign Terrorist Organization. LINARES CASTILLO, a Colombian citizen, has been designated a Consolidated Priority Organization Target (“CPOT”) by the Department of Justice, a designation given to the most significant narcotics traffickers in the world. In February 2013, The U.S. Department of the Treasury designated LINARES CASTILLO as a Specially Designated Narcotics Trafficker. LINARES CASTILLO, who was arrested in May 2012, arrived in the Southern District of New York yesterday. He was presented and arraigned before U.S. District Judge Richard J. Sullivan this morning.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Linares-Castillo was a drug kingpin of the first order who consorted with, and paid-off, known terrorists to ensure the safe passage of narcotics that were destined for the United States. His extradition to the Southern District where he will face American justice is the result of close international law enforcement cooperation and a significant victory in our unrelenting battle against alleged narco-terrorists.”
DEA Special-Agent-in-Charge Brian R. Crowell said: “As alleged, Linares-Castillo ran cocaine laden aircrafts from Colombia, through Venezuela, Honduras, and into Mexico for distribution onto American streets. He also allegedly collaborated with the FARC to secure safe passage of drugs through Colombia and Venezuela. I commend the members of the New York Strike Force, DEA Special Operations Division, DEA Bogota Country Office, the Government of the Republic of Colombia and the US Department of Justice’s Office of International Affairs who succeeded in extraditing one of the most significant drug kingpins in the world responsible for the shipment of thousands of kilos of cocaine into the United States.”
According to the allegations in the Indictment which was previously unsealed in Manhattan federal court:
LINARES CASTILLO led a drug trafficking organization that distributed ton-quantities of cocaine obtained in Colombia. The cocaine was transported through the Apure region of Venezuela, flown to Honduras, and thereafter sent to the U.S. via Mexico. To facilitate the movement of its cocaine into and out of the FARC-controlled Apure region, LINARES CASTILLO’s organization made regular payments to the FARC.
The Indictment charges LINARES CASTILLO, 47, in three counts. Count One charges him with conspiracy to possess and to distribute cocaine on board an aircraft owned by a U.S. citizen or registered in the U.S.; to import cocaine into the United States; and to distribute cocaine knowing and intending that it be imported into the U.S. Count Two charges LINARES CASTILLO with narco-terrorism conspiracy. Count Three charges him with material support conspiracy. Counts One and Two carry a maximum penalty of life in prison; Count Three carries a maximum penalty of 15 years in prison.
Mr. Bharara praised the outstanding investigative work of the DEA’s New York Division and Special Operations Division. He specifically thanked the DEA’s New York Organized Crime Drug Enforcement Strike Force – which is comprised of agents and officers of the DEA, the New York City Police Department, Immigration and Customs Enforcement’s Homeland Security Investigations, the New York State Police, the U. S. Internal Revenue Service Criminal Investigation Division, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Secret Service and the U.S. Marshal Service – as well as the DEA’s Bogota Country Office, the Government of the Republic of Colombia, and the U.S. Department of Justice’s Office of International Affairs for their ongoing assistance.
This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Edward Y. Kim, Michael D. Lockard, and Adam J. Fee are in charge of the prosecution.
The charges contained in the Indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty.
U.S. v. Jose Evaristo Linares Castillo S2 Indictment
Man Claiming to Be Son of the President of the Congo Charged with Defrauding Victims Out of $1.6 MillionRead the Press Release
SAN FRANCISCO - A federal criminal complaint was filed on April 24, 2013 against Blessed Marvelous Herve, of San Francisco, charging him with wire fraud, United States Attorney Melinda Haag announced. Herve told victims that he was son of the President of Congo and needed money to release his riches. He promised repayment plus a bonus of millions.
According to the complaint, Herve, 41, collected $1.6 million from victims through his fraud scheme. In order to lure victims and bolster his credibility, Herve showed various documents, such as a letter written to him from a United States Senator, copies of awards of recognition he received from the City and County of San Francisco, and a certificate of Special Congressional Recognition from a Member of Congress. He also claimed he lived at the Four Seasons hotel in San Francisco.
One of Herve's victims was a real estate agent from whom Herve promised that his father would purchase tens of millions of dollars in real estate. Herve convinced the agent to give him tens of thousands of dollars to pay expense related to the purported father’s real estate tours, such as the rental of bulletproof limousines. In the final years of the scheme, Herve claimed that the U.S. Government seized millions of dollars from him during the course of secret court proceedings. Herve also claimed he was incarcerated as a result of these proceedings. When the victims ran out of money, Herve claimed that he was being deported to Puerto Rico and was not heard from again.
Herve was arrested Wednesday evening in San Francisco and made his initial appearance in federal court in San Francisco yesterday morning. Herve’s next scheduled appearance is at 9:30 a.m. on April 29, 2013, for a detention hearing before Magistrate Judge Nathanael Cousins.
The maximum statutory penalty for wire fraud, in violation of 18 U.S.C. § 1343, is 20 years imprisonment and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Hallie Hoffman is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Elizabeth Garcia. The prosecution is the result of a 3 week investigation by the Federal Bureau of Investigation and the United States Department of Homeland Security.
Please note, an criminal complaint contains only allegations against an individual and, as with all defendants, Herve must be presumed innocent unless and until proven guilty.
(BMH complaint )
Lower Brule Man Pleads Guilty to Assaulting, Resisting and Impeding A Federal OfficerRead the Press Release
United States Attorney Brendan V. Johnson announced that Marty LaRoche, age 20, of Lower Brule, South Dakota appeared before U.S. Magistrate Judge Mark A. Moreno on April 25, 2013 and pled guilty to the Information that charged him with Assaulting, Resisting and Impeding a Federal Officer.
The maximum penalty upon conviction is 1 year of imprisonment, a $100,000 fine, or both; 1 year of supervised release and an additional year of supervised release upon revocation. Restitution and a $25 special assessment may also be ordered.
The charge stems from an incident on February 8, 2013, wherein Marty LaRoche did forcibly assault, resist, oppose, impede, intimidate, and interfere with an officer, constituting simple assault. The officer was employed as a federal law enforcement officer with the Bureau of Indian Affairs, Department of Interior, engaged in the performance of his official duties.
The investigation was conducted by the Bureau of Indian Affairs. Assistant U.S. Attorney Meghan N. Dilges is prosecuting the case.
LaRoche was remanded to the custody of the U.S. Marshal Service pending sentencing which has been set for June 25, 2013.
Long Island Man Pleads Guilty After Multi-state Scam to Steal Victims’ Retirement SavingsRead the Press Release
CENTRAL ISLIP, NY – Smithtown, New York, resident Alexander Swanson, 48, waived indictment and pleaded guilty this morning to felony charges that he engaged in a wire fraud scheme to steal retirement savings from individuals in New York, New Jersey, and elsewhere. Through his investment fraud scheme, the defendant stole approximately $3.1 million from his victims. When sentenced, the defendant faces up to 20 years’ imprisonment on each of the three counts to which he pled guilty. Pursuant to his guilty plea, the defendant must also forfeit the proceeds of his fraud.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George C. Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
According to the criminal charges filed today in the Eastern District of New York, Swanson misrepresented his job, background, and investment experience to his victims, and then provided the victims with false reports touting his investments’ performance. These misrepresentations fraudulently induced the victims to invest with Swanson, who stole and squandered their retirement savings for his own benefit, including gambling his victims’ savings on sporting events.
“Today, Swanson admitted that he constructed a false persona, lying about his job, background, and investment expertise, all for the purpose of bilking unsuspecting individuals out of their hard earned retirement savings. Promising them secure investments, he instead provided fraudulent reports that lured them deeper into his web of lies and deceit. Just as Swanson played fast and loose with the truth, he also played with his victims’ money, gambling much of it away on sporting events. Due to the combined efforts of law enforcement, the real Swanson will now receive the only payout his actions deserve: fraud charges, a guilty plea, and the prospect of a significant jail sentence,” stated United States Attorney Lynch. “I would like to thank our partners at the FBI for their hard work on this important investigation.”
FBI Assistant Director-in-Charge Venizelos stated, “Swanson preyed upon a particularly vulnerable class of victims. Investment fraud always victimizes the trusting investor, but Swanson targeted retirees who parted with portions of their savings. The FBI is determined to protect all investors from unscrupulous schemes.”
The defendant’s guilty plea took place this morning before United States Magistrate Judge Gary Brown, at the federal courthouse in Central Islip. United States District Judge Denis R. Hurley has not yet scheduled the sentencing hearing in this case.
The government’s case is being prosecuted by Assistant United States Attorney Christopher A. Ott.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The Defendant:
ALEXANDER SWANSON
Age: 48
Smithtown, New YorkKentucky Pain Clinic Owners Await Sentencing for Unlawfully Dispensing More Than 50,000 Prescription PillsRead the Press Release
PIKEVILLE, KY - Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Robert L. Corso, Special Agent in Charge, DEA and Jack Conway, Kentucky Attorney General jointly announced today that two eastern Kentucky pain clinic owners will be sentenced in September after admitting in federal court they conspired with doctors to illegally dispense more than 50,000 prescription pills.
Tammy Cantrell, 40, of Oil Springs, KY., and Shelby Lackey, 50, of Williamsport, KY., pleaded guilty Wednesday before U.S. Magistrate Judge Edward B. Atkins to conspiracy to distribute and unlawfully dispense Oxycodone and maintaining a drug involved premise. Both defendants agreed to forfeit a total of approximately $500,000 which represents proceeds from the conspiracy. Judge Atkins remanded Cantrell into custody while Lackey was released on her own recognizance.
The defendants are the first pain clinic owners in the Eastern District of Kentucky (district includes 67 counties) to have federal convictions for operating a pill mill and conspiring to illegally distribute Oxycodone.
According to the plea agreement, the defendants owned and operated Care More Pain Management, LLC located in Paintsville, KY. From 2008 until approximately February 2012, the defendants conspired with two doctors to dispense Oxycodone to eastern Kentuckians without a legitimate medical purpose.
Court records state that the doctors performed little or no physical examination before writing prescriptions that were usually for 90 Percocet 10 mg pills. Patients paid $200 for the initial visit and $185 for subsequent visits; all fees were paid in cash. One of the doctors previously admitted he saw between 40 and 50 patients in one day. In many instances, the doctors wrote prescriptions without seeing patients or signed blank prescriptions for office assistants to complete, according to the plea agreement.
Cantrell and Lackey paid the doctors as much as $8,500 a week. The clinic didn’t accept insurance and doctors made no referrals for physical rehabilitation. Neither Cantrell nor Lackey are medically certified and have no nursing experience.
The investigation started when detectives with the Kentucky Attorney General’s Office received complaints from local law enforcement that Care More was seeing a high volume of patients. Court records state that patient lines at Care More stretched into the parking lot.
One of the doctors, Richard Albert, pleaded guilty in July 2012 to conspiring to distribute and dispense controlled substances without a legitimate medical purpose. He also agreed to forfeit $500,000 which represented his proceeds from the crime. Albert will be sentenced in June. The other doctor, Rano Bofill, was indicted in August of last year for conspiracy to distribute controlled substances and operating a drug involved premise. He previously pleaded not guilty and his trial is in May.
The investigation was conducted by the Kentucky Attorney General’s Office, the DEA and the Paintsville Police Department. Assistant U.S. Attorney Roger West represents the U.S. Attorney’s Office in this case.
Justice Department Returned $1.5 Billion to Victims of Crime since January 2012Read the Press Release
As the United States concludes its recognition of National Crime Victims’ Rights Week, Acting Assistant Attorney General Mythili Raman announced that the Department of Justice’s Asset Forfeiture Program has returned more than $1.5 billion in forfeited assets to more than 400,000 crime victims since January 2012. The funds were distributed through the forfeited assets distribution program managed by the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS).
“Returning forfeited funds to crime victims is an essential ingredient in achieving justice,” said Acting Assistant Attorney General Raman. “Fulfilling this important mission, the department has distributed over $1.5 billion over the past 16 months to victims of fraud and others. I commend the prosecutors in the Criminal Division and U.S. Attorneys’ Offices around the country, as well as the many federal, state and local law enforcement agents, who have worked so hard to reach this milestone.”
AFMLS, in close coordination with the U.S. Attorneys’ offices and federal law enforcement agencies, reviews and rules on petitions for remission submitted by crime victims. During the past decade, AFMLS has partnered with federal regulatory agencies, court-appointed receivers, private claim administrators, and private class action cases to successfully return more than $3 billion in forfeited assets to crime victims.
Noteworthy cases include:
$729 Million to Victims of Adelphia Communications
Adelphia Communications Corporation was the fifth-largest cable television company in the United States before going bankrupt in 2002 as a result of fraud committed by its principal owners, the Rigas family. In April 2005, the U.S. Attorney’s Office for the Southern District of New York entered into settlement agreements with Adelphia and the Rigas family, including forfeitures of cash, stock of Time Warner Cable Inc. (purchaser of Adelphia assets), real estate, and the proceeds from a litigation trust. The total value of the forfeited assets, including accrued interest, was approximately $729 million. AFMLS approved the appointment of a special master to identify and notify victims of the remission, process victim petitions, make decision recommendations, and distribute the forfeited funds. In April 2012, the special master commenced distribution of funds to 8,727 victims.
$65 Million to Victims of Enron Securities Fraud
In June 2012, the Criminal Division released approximately $65 million in forfeited funds to the Securities and Exchange Commission (SEC) for distribution to approximately 128,200 victims of the Enron Corporation securities fraud. The funds were forfeited in several criminal and civil actions handled by the Department of Justice’s Enron Task Force, the Fraud Section of the Criminal Division and AFMLS. In the late 1990s, Enron was the nation’s largest natural gas and electricity marketer. Beginning in 1997, principals of Enron defrauded Enron’s shareholders by using off-balance-sheet transactions with certain Special Purpose Entities (SPE) the principals controlled. As a result of these illegal actions, Enron’s stock price dropped from more than $80 per share to less than $1. Enron eventually filed for bankruptcy in 2001.
$45 Million to Victims of Qwest Communications Fraud
Between April 2012 and April 2013, the Criminal Division distributed approximately $45 million to approximately 112,200 victims of fraud committed by Qwest Communications International Inc. The funds were forfeited to the United States as a result of the 2007 federal conviction of Qwest’s Chief Executive Officer, Joseph P. Nacchio, for securities fraud. Between 1999 and 2002, Nacchio and Qwest issued false and misleading statements to the public about the company’s financial condition in order to meet revenue projections. After the irregularities were discovered, Qwest stock, which had traded as high as $55 per share, plummeted to about $1 per share. The prosecution of Nacchio was handled by the U.S. Attorney’s Office for the District of Colorado.
$20 Million to Victims of Warshak/Berkeley Products Fraud
On June 14, 2012, the Criminal Division released $23 million in forfeited funds to 138,426 victims of a nutritional supplement fraud. Customers who requested a free sample of the Berkeley “sexual enhancement” product were fraudulently billed for additional products they did not order. The prosecution of Berkeley and its principal, Steven Warshak, and related forfeitures were handled by the U.S. Attorney’s Office for the Southern District of Ohio.
$1.3 Million to Victims of ICT Telemarketing Fraud
In December 2012, the Criminal Division distributed approximately $1.3 million to victims of Integrated Check Technologies (ICT), a payment processor. ICT withdrew funds from victims’ bank accounts without their authorization in furtherance of a telemarketing fraud scheme. Approximately $2.9 million was civilly forfeited by the U.S. Attorney’s Office for the Western District of New York. The Criminal Division approved more than 3,600 petitions with verified losses of $1.3 million. Because the amount recovered through forfeiture exceeded the victims’ total losses, each victim received a 100 percent reimbursement.
$2.4 Million to Victims of “UniDyn” Securities Fraud
In February 2013, the Criminal Division distributed $2.4 million to victims of a “pump and dump” securities fraud orchestrated by Randy Jenkins and Ira Gentry. Jenkins and Gentry secretly acquired millions of shares of UniDyn on the Over the Counter market and posted messages online falsely touting the company’s earning potential. After having fraudulently “pumped” the value of UniDyn stock, Jenkins and Gentry proceeded to “dump” their holdings on unsuspecting buyers. Jenkins and Gentry were convicted of multiple counts of securities fraud, wire fraud, and money laundering, and one count of tax evasion. In related civil actions, the United States Attorney’s Office for the District of Arizona obtained forfeitures of cash and real and personal property valued at approximately $3.35 million. About 660 persons submitted petitions for remission, of which 466 were approved by AFMLS, with confirmed losses of $5.8 million.
Additional information about the Justice Department’s asset forfeiture recovery efforts can be found at www.justice.gov/criminal/afmls.
International Competition Network AdvancesConvergence Through Initiatives onEnforcement Cooperation and Investigative ProcessRead the Press Release
T he International Competition Network (ICN) advanced convergence through important initiatives on international enforcement cooperation and investigative processes in competition cases, the Department of Justice announced today. The ICN adopted new work product on economic analysis in merger review, legal theories in exclusive dealing investigations, international cooperation and information sharing in cartel enforcement, and the benefits of competition.
The 12th annual ICN conference, hosted by Poland’s Office of Competition and Consumer Protection (OCCP), was held on April 24-26, 2013, in Warsaw, Poland. More than 500 delegates participated, representing more than 80 antitrust agencies from around the world, including competition experts from international organizations and the legal, business, consumer and academic communities. Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division and Federal Trade Commission (FTC) Chairwoman Edith Ramirez led the U.S. delegation. The conference showcased the achievements of ICN working groups on cartels, competition advocacy, competition agency effectiveness, mergers and unilateral conduct.
“One of the defining characteristics of the ICN is the deep engagement of its members on critical antitrust issues, including mergers, anti-cartel enforcement, unilateral conduct and competition advocacy,” said Assistant Attorney General Baer. “The discussions and work product emerging from this meeting strengthen the ties between U.S. enforcers and our counterparts around the globe and enhance effective antitrust enforcement for the benefit of all consumers.”
Bronislaw Komorowski, the President of Poland, provided opening remarks at the conference. John Fingleton, former Chief Executive of the UK Office of Fair Trading and former ICN Steering Group Chair, moderated a panel on competition and its relevance to global economic policy discussion among representatives from the World Trade Organization, World Bank and International Chamber of Commerce. Joaquin Almunia, European Commission Vice President and Commissioner for Competition, also addressed the conference. Eduardo P é rez Motta, ICN Steering Group Chair and President of the Mexican Federal Competition Commission, spoke about his initiatives to support ICN member competition advocacy and enhance cooperation with international organizations .
Assistant Attorney General Baer moderated a panel of antitrust officials on international enforcement cooperation to discuss the strengths and limitations of current cooperation frameworks. The panel also discussed future ICN work that could best help antitrust agencies address the challenges of engaging effectively in international enforcement cooperation. Over the past year, the ICN partnered with the Organization for Economic Cooperation and Development (OECD)’s Competition Committee on a comprehensive study of the state of international enforcement cooperation. Lynda K. Marshall, Assistant Chief of the Department of Justice’s Antitrust Division’s Foreign Commerce Section, led a discussion on future work on international cooperation in cartel enforcement.
The Polish OCCP led a special project devoted to the interaction between competition agencies and courts, culminating in a session led by OCCP President Malgorzata Krasnodebska-Tomkiel. FTC Chairwoman Ramirez addressed the vital role of economic evidence in competition cases and offered guidance for how to effectively present this evidence to generalist courts. She also highlighted the various tools available to competition agencies to encourage courts to recognize competition law principles.
“This 12th annual ICN conference demonstrated how competition agencies from around the world can come together both to advance convergence toward best practices in antitrust enforcement and to strengthen the voice of competition policy as our governments confront common economic challenges,” said Chairwoman Ramirez.
The conference also highlighted the work of the Cartel Working Group, co-chaired by the Department of Justice, the Japan Fair Trade Commission and Germany’s Bundeskartellamt. The working group brings together antitrust enforcers to address the challenges of anti-cartel enforcement, through the examination of important policy issues and the exchange of effective investigative techniques. The group presented a new chapter on international cooperation and information sharing for its Anti-Cartel Enforcement Manual, a reference tool for antitrust agencies on effective investigative techniques.
The Agency Effectiveness Working Group, co-chaired by the FTC, the Mexican Federal Competition Commission and the Norwegian Competition Authority, examines the institutions and procedures that support the enforcement missions of competition agencies. Randolph W. Tritell, Director of the FTC’s Office of International Affairs , led a panel discussion and presentation of the group’s work related to investigative tools and agency transparency practices, part of a project on investigative processes in competition cases. The working group also presented two new chapters on effective knowledge management and human resources management for its competition agency practice manual.
The conference showcased the ICN Curriculum Project, a project led by the FTC to create a “virtual university” of training materials on competition law and practice. FTC Counsel Paul O’Brien presented the Curriculum Project and its new modules on planning and conducting investigations, competition advocacy and challenges for agencies in developing countries.
The Merger Working Group, co-chaired by the European Commission’s Competition Directorate, the Competition Commission of India (CCI) and the Italian Competition Authority aims to promote best practices in the design and operation of merger review regimes. The FTC’s Director of the Bureau of Economics, Howard Shelanski, participated in a panel discussion of the role of economic analysis in merger review. The panel highlighted the group’s new work addressing the role of economic evidence in merger analysis, a comprehensive overview of the qualitative and quantitative analyses available to antitrust agencies for the review of horizontal mergers.
The Unilateral Conduct Working Group, co-chaired by the Swedish Competition Authority, the Turkish Competition Authority, and the UK Office of Fair Trading, promotes convergence and sound enforcement of laws governing conduct by firms with substantial market power. T he working group presented a new workbook chapter on exclusive dealing arrangements as part of a project that is producing a practical guide to the investigation of the various types of unilateral conduct.
The Advocacy Working Group, co-chaired by the French Autorité de la Concurrence, the Portuguese Competition Authority and the Competition Commission of Mauritius, develops practical tools and guidance to improve the effectiveness of ICN members’ competition advocacy. This year, the working group developed draft guidance on procedures and analysis for assessing existing or proposed laws and regulations to determine whether they may have a significant impact on competition. The group also presented its work on practical techniques to help promote a competition culture and strategies for explaining the benefits of competition to other government entities.
The ICN was created in October 2001, when the Department of Justice and the FTC joined antitrust agencies from 13 other jurisdictions to increase understanding of competition policy and promote convergence toward best practices around the world. The ICN now includes 126 member agencies from 111 jurisdictions.
ICN documents are available at www.internationalcompetitionnetwork.org .
Informational: Federal Court ArraignmentsRead the Press Release
The United States Attorney's Office announced that during a federal court session in Great Falls, on April 25, 2013, before U.S. Magistrate Judge Keith Strong, the following individuals were arraigned:
WILLIAM FREDERICK SCHROEDER, a 31-year-old resident of Helena, appeared on charges of coercion and enticement and receipt of child pornography. He is currently detained. If convicted of these charges, SCHROEDER faces possible penalties of a mandatory minimum of 10 years in prison and could be sentenced to life, a $250,000 fine, and lifetime supervision. Special Assistant U.S. Attorney Ole Olson is the prosecutor for the United States. The investigation was conducted by the Helena Police Department.
FELIPE JESUS PARRA-FLORES, a 46-year-old resident of Nampa, Idaho, appeared on charges of receipt of child pornography and possession of child pornography. He is currently released on special conditions. If convicted of these charges, PARRA-FLORES faces possible penalties of a mandatory minimum of 5 years in prison and could be sentenced to 20 years, a $250,000 fine, and lifetime supervision. Assistant U.S. Attorney Cyndee L. Peterson is the prosecutor for the United States. The investigation was conducted by U.S. Department of Homeland Security - Homeland Security Investigations.
The defendants pled not guilty to the charges.
The charge, an indictment, information or complaint, is merely an accusation and all persons named as defendants are presumed innocent until proven guilty. A pre-trial conference and a trial date will be set and the United States will be required to prove the allegations set forth in the indictment beyond a reasonable doubt.
In Recognition of the 13th Annual World Intellectual Property Day Maryland U.S. Attorney’s Office Highlights Recent CasesRead the Press Release
Baltimore, Maryland - The growing role of the internet has dramatically enhanced the opportunities for criminals around the world to sell products that do not belong to them, depriving the legitimate owners of any profit. April 26th is the 13th Annual World Intellectual Property Day, designated to increase public awareness about the role of intellectual property rights in promoting innovation and creativity. Intellectual property theft – whether involving counterfeit medicines, network hardware, pirated content or trade secrets – threatens our nation’s economy, can endanger public health and safety, and can even undermine our national security.
The Maryland U.S. Attorney’s Office works with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and other federal, state and local partners to enforce intellectual property rights. Some of the highlights from the past year involving Maryland cases are:
Trafficking in Counterfeit Goods
In January 2013, Liang Lin, pleaded guilty to trafficking in counterfeit goods. Lin owned and operated two shops on the boardwalk in Ocean City, Maryland, where he sold counterfeit merchandise, including purses, handbags, shirts, jewelry perfume, hats, and shoes that bore trademarks such as Michael Kors, Nike, Monster, Coach, Gucci, Versace, Vera Wang, Louis Vuitton and Channel. Law enforcement made several seizures of counterfeit trademarked merchandise from Lin and his stores. The retail value of the counterfeit trademarked merchandise seized from and sold by Lin is between $200,000 and $400,000. The estimated retail value of the counterfeit merchandise, based on what Lin was selling the infringing counterfeit items for, is $153,585. Lin is scheduled for sentencing on July 10, 2013 at 9:30 a.m.
Jerold Lee Sharoff has been indicted for conspiring to, and trafficking in counterfeit goods, and counterfeit labels. Sharoff operated Beachwear Outlet and Surf Beachwear, both on Atlantic Avenue in Ocean City, where the indictment alleges that he sold counterfeit trademarked merchandise. Sharoff also allegedly stored counterfeit goods at a warehouse located in Ocean City. Further, the indictment alleges that Sharoff and his co-conspirators manufactured counterfeit t-shirts by applying heat transfers bearing counterfeit trademarks to t-shirts using heat presses. Sharoff is scheduled to go to trial on October 21, 2013.
Several other defendants have pleaded guilty to trafficking in trademarked counterfeit goods, such as Nike, Coach, Gucci, Versace, Louis Vuitton, Chanel, Michael Kors, Jimmy Choo, Tory Burch, Juicy, Prada, Christian Dior, Ed Hardy, Burberry, and Dolce & Gabbana, with losses estimated at between $10,000 and $30,000. Keith Jackson pleaded guilty to selling counterfeit purses, handbags and watches. He was arrested three times for selling counterfeit goods before being charged federally. He is scheduled to be sentenced on June 12, 2013 at 1:00 p.m. Co-defendants Philip Swaby and Yoncra Robinson pleaded guilty to operating a store in Baltimore called Fashion Trendz, where they sold counterfeit purses, watches, jewelry, glasses, wallets and scarves. They are scheduled to be sentenced on June 5, 2013 at 3:00 p.m. Tidiane Ba was sentenced to eight months in prison and ordered to pay $1,000 in restitution, and Baba Toure was sentenced to one year probation, after they pleaded guilty to selling counterfeit purses, handbags, shoes, watches, hats and other items by luxury manufacturers at locations around Baltimore, including at the Patapsco Flea Market. They rented storage units to store counterfeit trademarked merchandise received from suppliers in New York. HSI agents seized counterfeit goods from the defendants on several occasions during the course of the investigation. Charges against three co-defendants are pending.
Copyright Infringement
Naveed Sheikh, age 32, of Baltimore, pleaded guilty to conspiring to and infringing copyrights by illegally reproducing and distributing over 1000 copyrighted commercial software programs, with a value of over $4 million. Sheikh created multiple websites through which the infringing software was sold. Sheikh did not report the income from the copyright infringement scheme on his tax returns. As part of his plea agreement, Sheikh will be required to forfeit $4 million. Sentencing is scheduled for May 15, 2013 at 3:00 p.m.
Website Seizures
In 2012, the U.S. Attorney’s Office, working with HSI-led National Intellectual Property Rights Coordination Center (IPR Center) and HSI Baltimore special agents, seized and shut down websites selling counterfeit items.
For example, in October 2012, nearly 700 U.S. based websites selling trademarked counterfeit pharmaceutical drugs were seized and shut down. The drugs being offered for sale on the websites included anti-cancer medications, drugs to treat depression and dementia, drugs to reduce the risk of heart attack and stroke, weight loss and food supplements, and erectile dysfunction pills. Analyses of trademarked counterfeit pharmaceutical drugs purchased from the websites revealed that the drugs were generally shipped from outside the U.S, and were not authentic, nor approved by the Food and Drug Administration for sale in the U.S. The operation, known as Bitter Pill, was part of an international initiative that spanned 100 countries and confiscated over 3 million doses of counterfeit medications worth approximately $10.5 million.
In June 2012, two domain names and three PayPal accounts were seized in connection with a scheme to sell fraudulent store and rewards coupons. The Sderclub.com and its related domain name, ccccpn.com, offered online sales of store and rewards coupons, also known as “rewards checks” from Staples, Inc. Website operators created compromised and fraudulent coupons using coupon codes legitimately issued by Staples for use by Staples Rewards customers. The fraudulent coupons purchased from sderclub.com or ccccpn.com expired within a couple of days in order to be used by the purchaser before the legitimate Staples customer, to whom the coupon was issued, redeemed it. From January 13, 2009 through May 15, 2012, over 102,553 transactions pertaining to the sale of fraudulent store and/or rewards coupons occurred on the three seized PayPal accounts, each of which was created by an individual residing in China.
These cases are part of the efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to http://www.justice.gov/dag/iptaskforce/.
HSI manages the IPR Center in Washington, one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 20 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters. To report IP theft or to learn more about the HSI-led IPR Center, visit www.IPRCenter.gov.
Greendale Business Owner Enters Guilty Plea in Social Security Disability and Tax Fraud ProsecutionRead the Press Release
James L. Santelle, the United States Attorney for the Eastern District of Wisconsin, announced today that Lawrence J. Popp pleaded guilty to two felony offenses in connection with his fraudulent receipt of social security disability benefits and his participation in a welfare benefit plan (under Section 419 of the Internal Revenue Code) with the intention of evading the payment of income taxes. This matter was investigated by agents of the Social Security Administration’s Office of Inspector General (“SSA-OIG”) and the Internal Revenue Service-Criminal Investigation (“IRS-CI”).
In making this announcement, Santelle commented: “The programmatic and fiscal integrity of the Social Security Administration’s programs is compromised significantly—to the detriment of legitimate beneficiaries—when individuals engage in purposeful fraud of this and other types. The knowing misapplication of welfare benefit plans, pursued to evade the payment of income taxes, aggravates the abuse and has a quantifiable impact upon all Americans.” Santelle added: “This prosecution, premised upon a balanced, focused, and highly professional investigation by special agents of the Social Security Administration and the Internal Revenue Service, is illustrative of the kind of effective federal law enforcement work known well in Eastern Wisconsin and throughout the nation.”
“Business owners who misuse welfare benefit plans by running their compensation through layers of complicated trusts and insurance policies will be vigorously investigated by federal law enforcement,” said Kelly R. Jackson, Special Agent in Charge of the IRS Criminal Investigation office in Milwaukee. Agent Jackson added: “We encourage anyone with information about these types of schemes to come forward and speak with federal authorities.”
United States District Judge Rudolph T. Randa, who presided over the plea hearing, has scheduled the sentencing of the defendant for October 29, 2013.
Government Contracting Company and CEO Plead Guilty to Paying Bribes to Former U.S. Postal OfficialRead the Press Release
ALEXANDRIA, Va. – AH Computer Consulting, Inc. (AH, Inc.), an international
information technology consulting firm based in Rockville, Maryland, pleaded guilty today to having paid thousands of dollars in bribes to Gene Quarles, a former official with the United States Postal Service, in exchange for Quarles’ official assistance in obtaining and facilitating government contracts for that company. The company’s CEO-Managing Director, Heba Elaraby, 42, of Gaithersburg, Md., also admitted to having paid bribes and entered into a Deferred Prosecution Agreement with the United States earlier today. The company’s CEO-Technical Director, Adel Elaraby, 45, of Gaithersburg, Md., pleaded guilty to the same offense on April 19, 2013. Quarles previously pled guilty to bribery of a public official on February 14, 2013, and is scheduled for sentencing on May 17, 2013.Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and
Special Agent in Charge Tom Frost of the U.S. Postal Service, Office of Inspector General, made the announcement after the pleas were entered in United States District Court for the Eastern District of Virginia.AH, Inc., Heba Elaraby, and Adel Elaraby were all charged, through a criminal
information, with bribery of a public official. AH, Inc. faces a maximum penalty of a $250,000 fine and 5 years of probation when it is sentenced on July 26, 2013. Adel Elaraby faces a maximum penalty of 15 years’ imprisonment and 3 years of supervised released when he is sentenced on the same date.In a statement of facts filed with their plea agreements, both AH, Inc. and Adel Elaraby admitted that, in April 2010, the Elarabys approached Quarles and offered to pay him bribes in exchange for various impermissible contracting preferences and advantages. Quarles accepted this offer, and from in or about April 2010 through in or about June 2012, AHCC employees paid Quarles numerous cash payments—totaling several thousands of dollars—in exchange for Quarles’ providing advantages to AHCC during the USPS contracting process. For example, Quarles provided AHCC with confidential USPS contracting information, so that AHCC could tailor its bids to what other potential contractors were bidding. In addition, Quarles forwarded various private call-in numbers for conference calls between USPS officials, where official business was discussed, so that AHCC employees could anonymously listen in and get a leg-up on their competition. Quarles also allowed AHCC employees to complete surveys, evaluations, and other review materials in Quarles’ own name so that AHCC could obtain additional government contracts.
This case was investigated by the United States Postal Service, Office of Inspector General. Assistant United States Attorney Chad Golder is prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.