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29 May 2013
Fairview Heights Man Pleads Guilty in Heroin Overdose DeathRead the Press Release
The United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today that Joseph L. Robinson pled guilty in U.S. District Court in East St. Louis, IL, on May 29, 2013, to selling the heroin which caused the death of Donnie T. Bauman on December 21, 2010.
U.S. Attorney Wigginton noted, “This successful prosecution is yet another step in our anti-heroin initiative. Our anti-heroin effort is designed to slow down and reverse the epidemic of heroin overdose deaths among young people in the Southern District of Illinois. As I have said to nearly 10,000 students, the penalties for drug dealers who choose to prey on young heroin users are very severe, and rightly so.”
Robinson, 30, of Fairview Heights, IL, will be sentenced in U.S. District Court in East St. Louis, IL on Monday, September 16, 2013 at 8:00 a.m. Robinson has been confined since his arraignment on the federal charge on November 10, 2011. Robinson faces a sentence of not less than 20 years and not more than life imprisonment.
Donnie T. Bauman was 22 years old when he died at his residence in Fairview Heights on December 21, 2010. According to documents filed with the District Court at Robinson’s change of plea hearing, Robinson sold Bauman two “buttons” of heroin (approximately one fifth of a gram) for $20 in cash about seven hours before family members discovered Bauman’s body. Next to Bauman’s body, police found a syringe, which Robinson admitted he had provided to Bauman.
The investigation which resulted in Robinson’s conviction was conducted by the Fairview Heights Police Department, Metropolitan Enforcement Group of Southwestern Illinois (MEGSI) and the Drug Enforcement Administration.
The case is assigned to AUSA Robert L. Garrison for prosecution.
Employee Pleads Guilty to Filing False Tax DocumentsRead the Press Release
Orlando, FL - United States Attorney Robert E. O'Neill announces today that Mary Jean Holzworth (63, Longwood) pleaded guilty to filing false tax documents. Holzworth faces a maximum penalty of three years in federal prison.
According to the plea agreement, while Holzworth worked for Fulfillment Partners, she embezzled $1,629,677. She made several purchases at high-end retail stores and bought high-end assets including a new Cadillac. She also used the embezzled funds to pay for gym memberships. When co-workers began to notice a change in Holzworth's lifestyle, she told them that she had an uncle in Germany who had passed away and left her an inheritance.
During the time Holzworth embezzled from Fulfillment Partners, she prepared and filed her own tax return for 2009 and reported only her W-2 wages and some interest. She did not report any embezzled funds. In an interview with the IRS, Holzworth admitted that she had prepared and signed a 2009 tax return under penalty of perjury. Holzworth admitted that she had filed the Form 1040 for tax year 2009 and knowingly failed to report the additional income from the theft on her tax return.
This case was investigated by Internal Revenue Service Criminal Investigation. It is being prosecuted by Assistant United States Attorney Tanya Davis Wilson.
District Man Sentenced to 17 Years in PrisonRead the Press Release
For Fatal Stabbing in Southeast Washington
-Attack Followed Argument About the Victim’s Dog-WASHINGTON – Ellsworth Colbert, 57, was sentenced today to 17 years in prison on charges stemming from a slaying in Southeast Washington during an argument over the victim’s dog, U.S. Attorney Ronald C. Machen Jr. announced.
Colbert, of Washington, D.C., was found guilty by a jury in January 2013 of manslaughter while armed, assault with a dangerous weapon, and carrying a dangerous weapon. The verdict followed a trial in the Superior Court of the District of Columbia. He was sentenced by the Honorable Herbert B. Dixon, Jr. Upon completion of his prison term, Colbert will be placed on five years of supervised release.
According to the evidence at trial, Colbert and the victim, Robert L. Wright, 37, became embroiled in an argument on the morning of March 4, 2012, in front of Colbert’s house in the 3500 block of Pope Street SE, in the Penn-Branch neighborhood. The trouble began after Mr. Wright and a friend walked their dog on Colbert’s property. Colbert became enraged and brandished a knife and a walking stick.
The altercation moved up the street to the house where the dog was kept, located in the 3600 block of Highwood Drive. During the course of the argument, Colbert lunged at Mr. Wright and cut him in the neck with his knife. Mr. Wright then retrieved a nearby shovel, and the two continued their altercation in the middle of the street. During the course of the fracas, Colbert tackled Mr. Wright to the pavement, causing him to lose possession of the shovel. Colbert then stabbed Mr. Wright in the back, chest and abdomen resulting in his death.
In announcing the sentence, U.S. Attorney Machen commended those who worked on the case for the Metropolitan Police Department (MPD), including detectives, mobile crime technicians, and others. He acknowledged the efforts of those who worked on the case for the U.S. Attorney’s Office, including Paralegal Specialists Fern Rhedrick, San Lane, Phil Aronson, Kwasi Fields and Sharon Newman, Litigation Support Services Specialists Ron Royal and Josh Ellen; Intelligence Analyst Lawrence Grasso, and Victim Advocate Tamara Ince.
Finally, U.S. Attorney Machen commended the work of Assistant U.S. Attorneys Robert J. Feitel and Edward A. O’Connell, who prosecuted the case at trial.
13-188Denver Man Pleads Guilty to Filing False Tax Return as Part of Running Illegal Sports Betting BusinessRead the Press Release
DENVER – Daniel Dinner, age 61, of Denver, Colorado, pled guilty today before U.S. District Court Judge Robert E. Blackburn to one count of filing a false income tax return, the United States Attorney’s Office and IRS Criminal Investigation announced. Dinner, who is free on bond, is scheduled to be sentenced by Judge Blackburn on August 8, 2013.
Dinner was originally charged by Information on April 12, 2013 after waiving his Constitutional right to be charged by Indictment. According to the facts contained in the Information as well as the stipulated facts contained in the plea agreement, from 2005 through 2009, Dinner ran an illegal sports betting business in the Denver metro area and on line for which most of his proceeds were cash. In March 2011, agents executed a search warrant and recovered approximately $1.2 million in cash from the defendant's properties and safe deposit boxes which came from both legitimate and illegitimate sources. Dinner owned two homes with an aggregate assessed value of more than one million dollars.
During 2005 through 2009 Dinner filed tax returns reporting some legitimate income from an agricultural business owned by a family trust but he also made money from his illegal sports betting business which he did not report on his tax returns. He signed and filed tax returns under penalty of perjury with the IRS for each of these years. He reported less income than he actually made.
The total tax loss to the government is $165,193 which Dinner has agreed to pay to the Internal Revenue Service as part of his plea agreement.
“While illegal sports betting is not a legitimate business, the income the defendant received is still taxable,” said U.S. Attorney John Walsh. “In this case the defendant faces criminal consequences for not declaring all of his income to the IRS and for not paying his income tax.”
“This is a reminder that all taxpayers should file complete and accurate tax returns; all income regardless of the source is taxable,” said Steven Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
Dinner faces one count of filing a false income tax return which carries a penalty of not more than 3 years in federal prison and a fine of up to $250,000.
This case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI). The case is being prosecuted by Assistant United States Attorney Suneeta Hazra.
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Counterfeiting Charges Filed on Lakewood ManRead 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 Christopher Kelley, age 30, of Lakewood, Ohio, with one count of passing counterfeit obligations and one count of possessing counterfeit obligations.
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 violations. 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 United States Attorney Margaret A. Sweeney following an investigation by the United States Secret Service and the Ohio Bureau of Criminal Investigation, Ohio Casino Control Commission.
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.
Corina Moldrem Sentenced in U.S. District CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Billings, on May 29, 2013, before U.S. District Judge Sam E. Haddon, CORINA MOLDREM, a 26-year-old resident of Billings, was sentenced to a term of:
Prison: 92 months
Special Assessment: $100
Supervised Release: 5 years
MOLDREM was sentenced in connection with her guilty plea to conspiracy to possess and distribute methamphetamine.
In an Offer of Proof filed by Assistant U.S. Attorney Jessica T. Fehr, the government stated it would have proved at trial the following:
Beginning in late 2009, a drug distribution group out of Las Vegas, Nevada, were distributing methamphetamine in Billings and the surrounding area. The F.B.I. Big Sky Safe Streets Task Force (BSSSTF) began an investigation and arranged for the purchase of methamphetamine from Jose Aguilar, Jr. and Anjel Aguilar. The BSSSTF learned that the Aguilar brothers were utilizing a distribution network in Billings to distribute Flores' methamphetamine. Two of the distributors for the group were Jeri Milheim and Corina MOLDREM.
The investigation by law enforcement uncovered that MOLDREM, along with others, not only distributed methamphetamine for the organization, but participated in the transportation, unpacking and repackaging of half pound to pound quantities of methamphetamine.
As part of the investigation, a probation search was conducted at MOLDREM's residence on July 16, 2010. The search uncovered 56.0 grams of meth, along with meth pipes, a drug scale, and a loaded .45 caliber handgun.
MOLDREM was interviewed and admitted to distributing methamphetamine personally as well as to assisting others in the transportation, unpacking and repackaging of methamphetamine for distribution in the Billings area.
MOLDREM admitted that she participated in a conspiracy that possessed and distributed over 500 grams of methamphetamine from the Summer of 2009, and continuing thereafter until in or about the late Summer of 2010.
Jose Aguilar, Anjel Aguilar, and Milheim pled guilty to federal charges and have been sentenced.
Because there is no parole in the federal system, the "truth in sentencing" guidelines mandate that MOLDREM will likely serve all of the time imposed by the court. In the federal system, MOLDREM does have the opportunity to earn a sentence reduction for "good behavior." However, this reduction will not exceed 15% of the overall sentence.
The investigation was conducted by the Billings Big Sky Safe Streets Task Force.
Convicted Felon Exiled to 8 Years in Prison for Possessing A GunRead the Press Release
Baltimore, Maryland - U.S. District Judge Richard D. Bennett sentenced Corey Jones, age 38, of Baltimore, Maryland, today to eight years in prison followed by five years of supervised release for being a felon in possession of a gun. Judge Bennett enhanced Jones’ sentence upon finding that that Jones had attempted to obstruct justice when he absconded while on pretrial home detention with electronic monitoring.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Steven L. Gerido of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Baltimore City State’s Attorney Gregg L. Bernstein; and Baltimore Police Commissioner Anthony W. Batts.
According to court documents and statement made a today’s sentencing hearing, On July 4, 2010, Baltimore police conduct a traffic stop of a vehicle after observing a broken and cracked side mirror. The vehicle had three occupants: the defendant in the front passenger seat, the defendant's brother, who was driving, and the defendant's wife in the rear passenger seat.
After officers approached the car, they saw Jones’ wife in the back passenger seat attempting to remove a knife from her waistband. An officer reached through the window and took the knife from her, and then ordered her out of the vehicle. Instead of complying, she reached for her purse and the officer then opened the door and removed her from the vehicle. Once she and the purse were on the sidewalk, the officer saw the butt of a handgun protruding from her purse. The gun was later identified as a loaded .32 caliber handgun.
Officers then removed Jones and his brother from the vehicle. As he was being arrested Jones told officers that the gun was his and that he had put it in his wife’s purse. Officers took all three of the car's occupants to the station and obtained voluntary, post-Miranda, taped statements from each of them. Jones again stated that the gun was his, and that he placed it in his wife’s purse without her knowledge before they got in the car.
United States Attorney Rod J. Rosenstein commended the ATF, Baltimore Police Department and Baltimore City State’s Attorney's Office for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Justin S. Herring and Paul E. Budlow, who prosecuted the case.
Civil Rights Laws Protect Servicemembers from Employment Violations and Financial FraudRead the Press Release
TULSA, Okla. — Active duty and reserve military servicemembers honorably protect our nation. Congress has recognized these sacrifices and has enacted laws to protect the civil rights of servicemembers and veterans. The Department of Justice, in partnerships with other federal agencies, offers programs that protect servicemembers which include: Uniform Services Employment and Reemployment Rights Act of 1994 (USERRA) and the Servicemembers Civil Relief Act (SCRA).
United States Attorney for the Northern District of Oklahoma Danny C. Williams Sr. said, “The U.S. Attorney’s Office will protect the rights of our servicemembers, and hold those accountable who discriminate and violate the rights of those who serve our nation.”
The Uniform Services Employment and Reemployment Rights Act of 1994 protects service members’ and veterans’ civilian employment rights and prohibits discrimination in hiring, promotion, retention, reemployment, and other employment benefits on the basis of a person’s prior service, current obligations, or intent to join a uniformed service. The civil rights law also requires employers to reemploy a servicemember from military service in a position he/or she would have attained had they not been called away for military service.
The Servicemembers Civil Relief Act provides financial security and protection to active duty servicemembers in areas of: rental agreements, security deposits, prepaid rent, evictions, installment contracts, credit card and mortgage interest rates, foreclosure, civil judicial proceedings, automobile leases, life insurance, health insurance and income tax payments. The law is designed to ease financial burdens on service members and their families during times of military service.
Servicemembers and veterans who believe they may have been a victim of employment discrimination or financial fraud based on their military service may report these violations to the Department of Justice. More information can be found at www.justice.gov. Please visit www.servicemembers.gov to learn about how the Department of Justice is protecting the rights of servicemembers.
Citizen of Turkey Sentenced to 62 Months in Federal Prison for Role in Atm "skimming" SchemeRead the Press Release
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced that AHMET CILEK, 43, a citizen of Turkey last residing in Levittown, N.Y., was sentenced today by United States District Judge Janet Bond Arterton in New Haven to 62 months of imprisonment for his participation in an ATM skimming scheme across southern New England.
According to court documents and statements made in court, between February 2011 and July 2011, CILEK, Mehmet Aydin, Gabriella Graham and others conspired to install “skimming” devices on automated teller machines (“ATMs”) at 11 banks and one credit union in Connecticut, Massachusetts and Rhode Island. The devices were able to capture the information encoded on the magnetic strips of bank cards used by ATM customers. The co-conspirators also placed devices on the ATMs that contained hidden pinhole cameras, which recorded the personal identification numbers that bank customers keyed into the ATMs to gain access to their accounts. The co-conspirators used the stolen information captured by the skimming devices and pinhole cameras to create counterfeit bank cards that allowed them to withdraw funds from the customers’ accounts.
Approximately 500 bank accounts were victimized and financial institutions have suffered losses of approximately $336,057.64 as a result of this scheme. As part of his sentence, CILEK was ordered to make full restitution, jointly and severally with his co-defendants.
CILEK has been detained since his arrest in Darien on June 20, 2011. On April 9, 2012, he pleaded guilty to one count of conspiracy to commit bank fraud and one count of aggravated identity theft.
Aydin and Graham also pleaded guilty and have been sentenced to 59 months and 45 months of imprisonment, respectively.
This investigation was conducted by the Connecticut Financial Crimes Task Force, which includes members of the United States Secret Service, United States Postal Inspection Service, United States Department of State, Bureau of Diplomatic Security, Internal Revenue Service – Criminal Investigation, Connecticut State Police, and the Greenwich, Hartford, Stamford, Shelton and Stratford Police Departments. Acting U.S. Attorney Daly specifically recognized the efforts of the Greenwich Police Department, Darien Police Department, U.S. Citizenship and Immigration Service’s Office of Fraud Detection and National Security, and U.S. Secret Service in Boston and Providence for their assistance in the investigation and prosecution of this matter.
This case was prosecuted by Assistant U.S. Attorney Douglas P. Morabito.
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(203) 821-3722 [email protected]Charlotte Man Is Sentenced to Six Months in Prison for Making Threats Against the President on TwitterRead the Press Release
CHARLOTTE, N.C. – Donte Jamar Sims, 22, of Charlotte, was sentenced today to serve six months in prison and one year of supervised release for threatening the life of the President of the United States, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney Tompkins is joined in making today’s announcement by Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division, and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department.
According to filed court documents and today’s sentencing hearing, in September 2012 a criminal indictment charged Sims with one count of knowingly and willfully making a threat to take the life of and to inflict bodily harm upon Barack H. Obama, President of the United States, specifically by making threats to assassinate President Obama in statements Sims posted on his Twitter account, @DestroyLeague_D. Sims pleaded guilty to the charge in October 2012.
Court records show that Sims was aware that President Obama would be in Charlotte during the week of September 3, 2012, in connection with the Democratic National Convention. Media outlets had also reported that the President would be making several public appearances in Charlotte during that time period, including making public speeches at the Time Warner Arena or the Bank of America Stadium.
On September 4, 2012, the U.S. Secret Service located the following statements on Twitter made using the Twitter user name “@DestroyLeague_D.”:
a) 09/03/12 @ 0606 hours: “Well Ima Assassinate president Obama this evening !... Gotta get this monkey off my chest while he’s in town -_-“ (https://twitter.com/DestroyLeague_D/status/242609574576803841)
b) 09/03/12 @ 0608 hours: “Ima hit president Obama with that Lee Harvey Oswald swag”
c) 09/03/12 @ 0612 hours: “The Secret Service is gonna be defenseless once I aim the Assault Rifle at Barack’s Forehead … F* the #DNC !”
d) 09/03/12 @ 0619 hours: “he wont even make it to the coliseum”
e) 09/03/12 @ 0620 hours: “*Plotting president Obama’s Murder”
The personal photograph on the profile associated with @DestroyLeague_D published on the Twitter website was that of Sims.
On September 5, 2012, agents with the U.S. Secret Service conducted an interview of Sims at his Charlotte residence. Court records indicate Sims acknowledged that he used Twitter and that his account was named @DestroyLeague_D. Sims also acknowledged using his Twitter account @DestroyLeague_D to publish the Tweets threatening the President, and also stated that he published the statements because he hated President Obama.
In handing down Sims’ sentence, Chief U.S. District Judge Robert J. Conrad, Jr. noted the seriousness of the offense and the need for the sentence to promote a respect for the law.
The defendant was ordered to self-report to the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.
The investigation was led by the U.S. Secret Service with the assistance of CMPD. The prosecution for the government was handled by Assistant U.S. Attorney Robert Gleason of the U.S. Attorney’s Office in Charlotte.
Charleroi Man Charged with Failing to Register as A Sex OffenderRead the Press Release
PITTSBURGH, Pa. - A resident of Charleroi, Pa., has been indicted by a federal grand jury in Pittsburgh for failing to register as a convicted sex offender, United States Attorney David J. Hickton announced today.
The one-count indictment, returned on May 23, and unsealed yesterday, named Kerry McFeely, age 53, as the sole defendant.
According to the indictment, McFeely was required to register under the Sex Offender Registration and Notification Act after having been convicted in 1993 in Vermont Superior Court, Chitteden Criminal Division of the felony sex offense of Sexual Assault of Minor Under the Age of 16. The indictment states that from around April of 2011 through May 23, 2013, McFeely traveled in interstate commerce and knowingly failed to register and update a registration, as required by the Sex Offender Registration and Notification Act.
The law provides for a maximum total sentence of up to 10 years in prison, a fine of up to $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Amy L. Johnston is prosecuting this case on behalf of the United States.
The United States Marshals Service conducted the investigation leading to the indictment in this case.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Centralia Man Sentenced on Drug ChargeRead the Press Release
The United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today that Jason T. Bayles, 34, of Centralia, IL, was sentenced in United States District Court in East St. Louis on Tuesday, May 28, 2013 to 100 months in federal prison for “Possession of Pseudoephedrine for the Manufacture of Methamphetamine.” Bayles pled guilty to that charge on January 24, 2013.
At his change of plea hearing in January, Bayles admitted purchasing hundreds of pseudoephedrine tablets in both Marion and Clinton Counties between 2009 and 2011, knowing that these tablets would be used to manufacture methamphetamine.
The investigation which resulted in Bayles’ conviction and sentence was conducted by the Marion County Sheriff’s Office, and the Drug Enforcement Administration.
The case was prosecuted by Assistant United States Attorney Robert L. Garrison.
Cedar Rapids Man Sentenced for Posting False Information About A Consumer Product on the InternetRead the Press Release
A man who posted a false statement on Facebook claiming a consumer product was contaminated was sentenced today to five years in federal prison.
Luke A. Truesdell, age 40, from Cedar Rapids, Iowa, received the prison term after a February 8, 2013 guilty plea to one count of communicating false information that a consumer product had been tainted and one count of making a false statement to the United States Food and Drug Administration (FDA).
In a plea agreement, Truesdell admitted that, on January 26, 2012, shortly after he was fired from his job in Linn County, Iowa, he called the FDA and made a false statement. Truesdell told the FDA he was a Hepatitis B carrier and then falsely claimed he had bled into batches of an FDA regulated consumer product manufactured by his former employer. Truesdell also admitted that, on January 27, 2012, he posted similar, false information on the Facebook page of one of his former employer’s customers.
Truesdell was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Truesdell was sentenced to five years’ imprisonment and ordered to make $17,721 in restitution his former employer. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system. In announcing the sentence, Judge Reade said, “we all know when you put something on the internet, you are posting it to the world.” Judge Reade added that this type of criminal activity “can result in consumer fear and panic.”
“This case demonstrates the blatant misuse of social media to intentionally cause financial harm to business entities manufacturing FDA regulated products,” said Special Agent in Charge Patrick J. Holland of FDA’s Office of Criminal Investigations, Kansas City Field Office. “The FDA will continue to aggressively pursue perpetrators of such acts, and ensure that they are punished to the full extent of the law.”
Truesdell is being held in the United States Marshal’s custody until he can be transported to a federal prison. The case was prosecuted by Assistant United States Attorney Peter Deegan and was investigated by the United States Food and Drug Administration Office of Criminal Investigations.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 12-CR-8 LRR.
California Man sentenced to 48 month in prison for roll in drug conspiracyRead the Press Release
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that a California resident was sentenced in Anchorage to federal prison for drug conspiracy.
Charles M. Ferris, 61, of Sacramento, California, was sentenced yesterday by U.S. District Court Judge Timothy M. Burgess to 48 months prison for his role in a drug trafficking conspiracy.
According to Assistant U.S. Attorney Jack S. Schmidt, who prosecuted the case, the charges arose from a joint investigation including the Drug Enforcement Administration, Port of Seattle Police Department and the Juneau Police Department-Drug Metro Unit, which were investigating the importation of oxycodone into Juneau, Alaska. In July 2010, Ferris and others conspired to import oxycodone from Sacramento, California, to Juneau, Alaska. On July 4, 2010, Ferris sent a drug courier carrying over 500 80mg oxycodone pills to Juneau on a commercial airline.Prior to imposing sentence, Judge Burgess emphasized the seriousness of the offense and the need to deter the defendant and others as reasons for imposing the 48 month prison sentence.
Ms. Loeffler commended the Drug Enforcement Administration, Port of Seattle Police Department and the Juneau Police Department - Drug Metro Unit for the investigation leading to the successful prosecution of Ferris.Buffalo Man Sentenced on Drug Conspiracy ChargeRead the Press Release
BUFFALO, N.Y. – U.S. Attorney William J. Hochul, Jr. announced today that John A. Cruz, 26, of Buffalo, N.Y., who was convicted of conspiracy to possess with intent to distribute heroin, was sentenced by U.S. District Judge William M. Skretny to 58 months in prison.
Assistant U.S. Attorney Mary Catherine Baumgarten, who handled the case, stated that between December 2009 and August 17, 2010, Cruz sold quantities of heroin to other members of a drug conspiracy that was the subject of an ongoing criminal investigation. At the time of his arrest, the defendant was awaiting sentencing on other federal drug distribution charges.
Williams was arrested along with 22 others in August of 2010 for narcotics trafficking. To date 16 defendants have been convicted.
The sentencing is the result of an investigation by the Drug Enforcement Administration, under the direction of Special Agent in Charge Brian R. Crowell, New York Field Division, the Federal Bureau of Investigation, under the direction of Acting Special Agent in Charge Richard M. Frankel, Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge James C. Spero, The Niagara County Drug Enforcement Task Force, under the direction of Sheriff James Votour, and the Niagara Frontier Transit Authority Police, under the direction of Chief George Gast.Buffalo Man Pleads Guilty to Child PornographyRead the Press Release
BUFFALO, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that John Luchetti, 27, of Buffalo, N.Y., pleaded guilty before U.S. Judge Richard J. Arcara to a charge of receipt of child pornography. The charge carries a maximum penalty of 20 years in prison, a fine of $250,000, or both.
Assistant U.S. Attorney Maura K. O'Donnell, who is handling the case, stated that the defendant received and distributed images and videos of child pornography through an Internet file sharing program. Luchetti possessed over 600 images of child pornography on his laptop computer, which included images of prepubescent minors and acts of violence.
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.
The plea is the result of an investigation by Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge James C. Spero.
Sentencing is scheduled for September 6, 2013 at 1:00 p.m. before Judge Arcara.Bank Teller Pleads Guilty to Embezzling Money from BankRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 64-year-old woman from the southeastern Minnesota community of Wykoff pleaded guilty to embezzling approximately $35,520 from the Security State Bank where she was employed as the head teller. Cheryl Lynn Holzer pleaded guilty to one count of bank embezzlement. Holzer, who was charged on May 3, 2013, entered her plea before United States District Court Judge David S. Doty.
In her plea agreement, Holzer admitted that between December 2010 and February 2012, she took bundles of cash from the bank’s vault for her personal use, primarily to pay her mortgage and other bills. She worked at the bank, located in Wykoff.
For her crime, Holzer faces a potential maximum penalty of 30 years in prison. Judge Doty will determine her sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Thomas Calhoun-Lopez.Alton Man Pleads Guilty to Firearm OffenseRead the Press Release
On May 28, 2013, Jared R. Henry, a thirty-four year old Alton, Illinois, man pled guilty in federal district court, in East St. Louis, to unlawful possession of a firearm by a previously convicted felon, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. Henry is scheduled for sentencing on September 13, 2013, at which time he faces a maximum potential sentence of 10 years’ in prison and a fine of up to $250,000, not more than 3 years’ of supervised release after his prison term, and a mandatory special assessment of $100. Henry also agreed to forfeiture of the firearms.
Court proceedings revealed that on October 18, 2012, police officers went to a residence in Alton, IL, after receiving an anonymous tip about drug activity at the home. Officers were aware of an active warrant for Henry’s arrest before arriving on the premises. Officers knocked several minutes upon arrival and were allowed to enter the home by a resident answering the door. Once inside, an officer immediately observed Henry lying in bed in a bedroom in direct view of the front door. He was presented with the warrant, arrested and removed from the household. Officers were given written consent to search the premises by the resident answering the door. Five different firearms were recovered during the search.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Alton Police Department, and is assigned to Assistant United States Attorney Daniel T. Kapsak for prosecution.
Alabama Resident Pleads Guilty in Stolen Identity Refund Fraud SchemeRead the Press Release
Today, Bridgette Rivers, a resident of Montgomery, Ala., pleaded guilty to her involvement in a conspiracy to use stolen identities to file fraudulent tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to the court documents, Rivers provided identity information to her co-conspirators, Barbara Murry, Veronica Temple and Yolanda Moses. Those co-conspirators used these stolen identities and others to file false tax returns that fraudulently requested tax refunds from the IRS. Rivers also recruited another individual to provide her bank account information to the conspiracy. The fraudulently obtained tax refunds went into that individual’s bank account and the individual would then withdraw the money to give to Rivers.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Michael Boteler and Jason Poole of the Justice Department’s Tax Division are prosecuting the case, with the assistance from the U.S. Attorney’s Office for the Middle District of Alabama and, in particular, Assistant U.S. Attorney Todd Brown.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
30 Charged in Federal Drug IndictmentsRead the Press Release
RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York, announces that two indictments unsealed today in United States District Court charge eighteen (18) persons with being members of two drug trafficking conspiracies operating in Utica, New York. The Indictments allege that the groups trafficked cocaine and cocaine base (crack).1 The defendants were charged with conspiring to distribute these drugs from the summer of 2011 through June 26, 2012. The following defendants were arrested or sought today :
US v. SEAN HAGANS, et al. 5:13-CR-137
Sean Hagans, a/k/a “Pretty,” 42, of Utica, NY, Timothy Rider, 46, of Utica, NY, Alexis Tarris, 26, Frankfort, NY, Scott Fyfe, 41, Utica, NY, and
Michael Lynch, 39, of Utica, NY.US v. REID SOOK, et al. 5:13-CR-187
Reid Sook, a/k/a “Country,” 38, of Utica, NY, Arthur Charles Robinson, 24, of Utica, NY, John Robinson, a/k/a “Pooh Bear,” 38, of Utica, NY, Cecil Jeffrey Palmer, a/k/a “Cry Baby,” 42, of Utica, NY, Alexis Tarris, 26, Frankfort, NY, Scott Fyfe, 41, Utica, NY, Brandon Winn, 20, of Niagara Falls, NY, Dennis Amsdill, 29, of Lewiston, NY, Kimberly Springer, 31, of Utica, NY, Raymond Schloop, 41, of Utica, NY, Jim Caruso, 46, of Utica, NY, Michael Rossi, a/k/a “Ross,” 50, of Utica, NY,_________________________
1The allegations contained in the Indictments are mere accusations; and the defendants are presumed innocent unless and until proven guilty in a court of law.
28 May 2013
Wichita Falls, Texas, Man Charged in Federal Complaint with Making Threats to Blow up Federal CourthousesRead the Press Release
DALLAS — Christopher Stephens, 34, appeared in federal court today in Wichita Falls, Texas, before U.S. Magistrate Judge Robert K. Roach, on a criminal complaint related to several threats he allegedly made to blow up federal buildings in the Dallas-Fort Worth metroplex, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. Stephens, who resided at the North Texas State Hospital (NTSH) in Wichita Falls, was ordered detained, pending a probable cause and detention hearing that will be set at a later date and held before U.S. Magistrate Judge David L. Horan in federal court in Dallas.
According to the affidavit filed with the complaint, the Wichita Falls Police Department’s (WFPD) communications center received telephone calls, one on March 5, 2013, and one the following day, from a caller who identified himself as “Gerald Adams.” In those calls, the caller threatened to blow up the U.S. Courthouse in Dallas. During the second phone call, the communications operator asked the caller if he was located at the NTSH, and the caller said that he was.
Law enforcement contacted an individual with a similar name who resided at the NTSH; however, it was determined that this individual was not the one who made the telephonic bomb threats. This individual stated that he believed the caller was another resident of NTSH, Christopher Stephens. He explained that Stephens became fascinated with his ex-wife, who had visited on several occasions, and that Stephens had alluded to making contact with her upon his release. The individual believed that Stephens used his name to sabotage his release date.
On March 7, 2013, the WFPD’s communication center received a third bomb threat. During that call, Stephens advised that a bomb had been planted at the U.S. Courthouse in Fort Worth. The operator kept Stephens on the line long enough for WFPD officers to go to NTSH and observe Stephens on the phone speaking with the WFPD. Stephens didn’t deny making the bomb threat.
NTSH provided the officers with letters from Stephens. One letter was addressed to a WFPD officer and one was addressed to the FBI. Both letters provided a detailed description of how Stephens would blow up a federal courthouse, what materials he would use to make the bomb and how it would detonate. Stephens also wrote racial comments in the letter and included Nazi SS symbols.
On March 25, 2013, the FBI Dallas Field Division received a letter, via the U.S. Postal Service, signed by Stephens. That letter read, “I will blow up the Federal Courthouse in Fort Worth, Texas.” On April 3, 2013, the WFPD received a mailed bomb threat from Stephens that mirrored the one sent earlier to the FBI, with the exception that the letter depicted three Nazi Swastikas and the words “White Power.”
A federal complaint is a written statement of the essential facts of the offense charged, and must be made under oath before a magistrate judge. A defendant is entitled to the presumption of innocence until proven guilty. The U.S. Attorney’s office has 30 days to present the matter to a grand jury for indictment. Stephens is charged with one count of using to the mail to willfully make a threat to unlawfully damage or destroy a federal courthouse by means of an explosive. That offense as charged carries a maximum statutory penalty 10 years in federal prison and a $250,000 fine, per count.
The matter is being investigated by the FBI and the WFPD. Assistant U.S. Attorney Kate Pfeifle and Deputy Criminal Chief Assistant U.S. Attorney Gary Tromblay are prosecuting.
Washington, Pa., Man Sentenced to 12 Years in Prison for Coercion and Enticement of A Minor and Possession of Child PornographyRead the Press Release
PITTSBURGH, Pa. – A Washington, Pa., man was sentenced today to 12 years in prison for coercing and enticing a minor and possessing child pornography, U.S. Attorney for the Western District of Pennsylvania David J. Hickton, and Special Agent in Charge John Kelleghan of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Philadelphia, announced today.
Jeffrey W. Herschell, 54, pleaded guilty in January before U.S. District Judge David Cercone. According to a statement of facts entered into the record by the government and agreed to by the defendant, Herschell sent money to the Philippines in February 2010 for a live, online sex show that included a 12-year-old minor female engaging in sexual activity. Herschell also admitted to possessing child pornography videos at his Pennsylvania residence.
This case was investigated by ICE-HSI Pittsburgh and the ICE-HSI Attache’s Office in the Philippines with significant assistance from the National Bureau of Investigation (Philippines) and the Philippine National Police. This case was prosecuted by Assistant U.S. Attorney Jessica Lieber Smolar of the Western District of Pennsylvania and Trial Attorney Bonnie L. Kane of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).
This case was brought as part of Project Safe Childhood, a nationwide launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who sexually exploit children, and to rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Walkersville Man Pleads Guilty in $9.2 Million Investment SchemeRead the Press Release
Caused Approximately $4 Million in Losses to InvestorsBaltimore, Maryland - Larry Michael Parrish, a/k/a Michael Parrish, age 49, of Walkersville, Maryland pleaded guilty today to wire fraud arising from an investment scheme.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.
According to his plea agreement, Parrish operated IV Capital, Ltd., which from November 2005 to October 2009, he described to potential investors as an investment and trading company. Parrish made a number of false representations to encourage potential investors to make investments with IV Capital. For example, Parrish falsely represented that IV Capital: traded stocks, bonds, currencies precious metals and other instruments on international exchanges; had $20 million or more under management; employed a number of other traders and staff, when in fact, the company had no employees aside from Parrish; and had established a minimum gross profit margin each month of 5%, which would be equally divided between the company and its individual investors.
Parrish also falsely represented that: he and several partners had invested substantial funds of their own with the company; that all invested funds would be deposited in an escrow account and used solely to secure a line of credit from a financial institution, which would provide the actual working capital for IV Capital’s trading activities; and that IV Capital’s management of its accounts would be evaluated by top licensed professional third parties. In fact, Parrish had no partners and had not invested any of his own funds with IV Capital. The investors’ funds were directed to an offshore bank where they were not kept in an escrow account, but were instead used to generate funds for risky and highly unsuccessful trading activity, to make the “profit” payments of roughly 2.5% monthly back to the investors, and to supply funds for the personal use of Parrish and his family.
Out of the approximately $9.2 million in investor funds that were placed with Parrish and IV Capital between February 2006 and October 2009, Parrish allocated approximately $2.938 million to trading activity conducted by himself and another individual, almost all of which was lost in making risky and unsuccessful investments in options and futures contracts. Another $5.2 million was used to make “profit” payments to IV Capital investors, and almost all of the remainder was used by Parrish for personal expenses, including purchases of clothing, furniture, electronics and other items, paying bills for rent, food and utilities, as well as paying for entertainment and vacation expenses, including a golf outing for himself and a number of friends in May 2008, and the purchase of a 2009 Harley Davidson FXDF motorcycle in September 2008.
Parrish faces a maximum sentence of 20 years in prison for wire fraud. U.S. District Judge J. Frederick Motz scheduled sentencing for November 15, 2013, at 10:00 a.m.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
United States Attorney Rod J. Rosenstein thanked the FBI for its work in the investigation and praised Assistant U.S. Attorney Jefferson M. Gray and Harry M. Gruber, who are prosecuting the case. The United States Securities & Exchange Commission (SEC) also conducted an investigation of Parrish, and obtained a default judgment against him in a civil action filed in federal court in Denver, Colorado in September 2012.
Wal-Mart Pleads Guilty to Federal Environmental Crimes, Admits Civil Violations and Will Pay More Than $81 MillionRead the Press Release
Wal-Mart Stores Inc. pleaded guilty today in cases filed by federal prosecutors in Los Angeles and San Francisco to six counts of violating the Clean Water Act by illegally handling and disposing of hazardous materials at its retail stores across the United States. The Bentonville, Ark.-based company also pleaded guilty today in Kansas City, Mo., to violating the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) by failing to properly handle pesticides that had been returned by customers at its stores across the country.
As a result of the three criminal cases brought by the Justice Department, as well as a related civil case filed by the U.S. Environmental Protection Agency (EPA), Wal-Mart will pay approximately $81.6 million for its unlawful conduct. Coupled with previous actions brought by the states of California and Missouri for the same conduct, Wal-Mart will pay a combined total of more than $110 million to resolve cases alleging violations of federal and state environmental laws.
According to documents filed in U.S. District Court in San Francisco, from a date unknown until January 2006, Wal-Mart did not have a program in place and failed to train its employees on proper hazardous waste management and disposal practices at the store level. As a result, hazardous wastes were either discarded improperly at the store level – including being put into municipal trash bins or, if a liquid, poured into the local sewer system – or they were improperly transported without proper safety documentation to one of six product return centers located throughout the United States.
“By improperly handling hazardous waste, pesticides and other materials in violation of federal laws, Wal-Mart put the public and the environment at risk and gained an unfair economic advantage over other companies,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Today, Wal-Mart acknowledged responsibility for violations of federal laws and will pay significant fines and penalties, which will, in part, fund important environmental projects in the communities impacted by the violations and help prevent future harm to the environment.”
“Federal laws that address the proper handling, storage and disposal of hazardous wastes exist to safeguard our environment and protect the public from harm,” said André Birotte Jr., the U.S. Attorney for the Central District of California. “Retailers like Wal-Mart that generate hazardous waste have a duty to legally and safely dispose of that hazardous waste, and dumping it down the sink was neither legal nor safe. The case against Wal-Mart is designed to ensure compliance with our nation’s environmental laws now and in the future.”
“As one of the largest retailers in the United States, Wal-Mart is responsible not only for the stock on its shelves, but also for the significant amount of hazardous materials that result from damaged products returned by customers,” said Melinda Haag, U.S. Attorney for the Northern District of California. “The crimes in these cases stem from Wal-Mart's failure to comply with the regulations designed to ensure the proper handling, storage, and disposal of those hazardous materials and waste. With its guilty plea today, Wal-Mart is in a position to be an industry leader by ensuring that not only Wal-Mart, but all retail stores properly handle their waste.”
“This tough financial penalty holds Wal-Mart accountable for its reckless and illegal business practices that threatened both the public and the environment,” said Tammy Dickinson, U.S. Attorney for the Western District of Missouri. “Truckloads of hazardous products, including more than 2 million pounds of pesticides, were improperly handled under Wal-Mart’s contract. Today’s criminal fine should send a message to companies of all sizes that they will be held accountable to follow federal environmental laws. Additionally, Wal-Mart’s community service payment will fund important environmental projects in Missouri to help prevent such abuses in the future.”
“The FBI holds all companies, regardless of size, to the same standards,” said FBI Special Agent in Charge David J. Johnson of the San Francisco Field Office. “We will continue to work closely with our law enforcement partners to ensure there is a level playing field for all businesses and that everyone follows the rules.”
“Today Wal-Mart is taking responsibility for violating laws that protect people from hazardous wastes and chemicals,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Walmart is committing to safe handling of hazardous wastes at all of its facilities nationwide, and action that will benefit communities across the country.”
Wal-Mart owns more than 4,000 stores nationwide that sell thousands of products which are flammable, corrosive, reactive, toxic or otherwise hazardous under federal law. The products that contain hazardous materials include pesticides, solvents, detergents, paints, aerosols and cleaners. Once discarded, these products are considered hazardous waste under federal law.
Wal-Mart pleaded guilty this morning in San Francisco to six misdemeanor counts of negligently violating the Clean Water Act. The six criminal charges were filed by the U.S. Attorney’s Office in Los Angeles and San Francisco (each office filed three charges), and the two cases were consolidated in the Northern District of California, where the guilty pleas were formally entered before U.S. Magistrate Judge Joseph C. Spero. As part of a plea agreement filed in California, Wal-Mart was sentenced to pay a $40 million criminal fine and an additional $20 million that will fund various community service projects, including opening a $6 million Retail Compliance Assistance Center that will help retail stores across the nation learn how to properly handle hazardous waste.
In the third criminal case resolved today, Wal-Mart pleaded guilty in the Western District of Missouri to violating FIFRA. According to a plea agreement filed in Kansas City, beginning in 2006, Wal-Mart began sending certain damaged household products, including regulated solid and liquid pesticides, from its six return centers to Greenleaf LLC, a recycling facility located in Neosho, Mo., where the products were processed for reuse and resale. Because Wal-Mart employees failed to provide adequate oversight of the pesticides sent to Greenleaf, regulated pesticides were mixed together and offered for sale to customers without the required registration, ingredients, or use information, which constitutes a violation of FIFRA. Between July 2006 and February 2008, Wal-Mart trucked more than 2 million pounds of regulated pesticides and additional household products from its various return centers to Greenleaf. In November 2008, Greenleaf was also convicted of a FIFRA violation and paid a criminal penalty of $200,000 in 2009.
Pursuant to the plea agreement filed in Missouri and accepted today by U.S. District Judge John T. Maughmer, Wal-Mart agreed to pay a criminal fine of $11 million and to pay another $3 million to the Missouri Department of Natural Resources, which will go to that agency’s Hazardous Waste Program and will be used to fund further inspections and education on pesticide regulations for regulators, the regulated community and the public. In addition, Wal-Mart has already spent more than $3.4 million to properly remove and dispose of all hazardous material from Greenleaf’s facility.
In conjunction with today’s guilty pleas in the three criminal cases, Wal-Mart has agreed to pay a $7.628 million civil penalty that will resolve civil violations of FIFRA and Resource Conservation and Recovery Act (RCRA). In addition to the civil penalties, Wal-Mart is required to implement a comprehensive, nationwide environmental compliance agreement to manage hazardous waste generated at its stores. The agreement includes requirements to ensure adequate environmental personnel and training at all levels of the company, proper identification and management of hazardous wastes, and the development and implementation of Environmental Management Systems at its stores and return centers. Compliance with this agreement is a condition of probation imposed in the criminal cases.
The criminal cases announced today are a result of investigations conducted by the FBI and the EPA, which received substantial assistance from the California Department of Substance and Toxics Control, and the Missouri Department of Natural Resources.
In Missouri, the case was prosecuted by Deputy U.S. Attorney Gene Porter and ENRD Senior Trial Attorney Jennifer Whitfield of the Environmental Crimes Section of the Environment and Natural Resources Division. In California, the cases were prosecuted in Los Angeles by Assistant U.S. Attorney Joseph O. Johns and in San Francisco by Assistant U.S. Attorney Stacey Geis.
Utica Area Man Sentenced in Fraud and Money Laundering CaseRead the Press Release
United States Attorney Richard S. Hartunian announced today that a Utica man has been sentenced for his role in an insurance fraud scheme and money laundering charge.
On May 28, 2013, JOSEPH DEMME, age 67, Whitesboro, NY, was sentenced by United States District Court Judge Norman A. Mordue in Syracuse. DEMME was sentenced to 15 months imprisonment and ordered to pay restitution in an amount exceeding $1.4 million. DEMME will also serve three years of supervision following his release from incarceration.
DEMME pled guilty on May 29, 2012 to conspiracy to commit mail fraud and money laundering. DEMME admitted that in or about 2005 he agreed to assist other conspirators in an insurance fraud scheme. The scheme involved a staged motor vehicle accident on Harbor Lock Road in Utica on March 20, 2006. On that date, Joseph Dellerba and Cynthia Morgan claimed to have been injured while passengers in a Ford van which was struck by a Ryder truck driven by Michael Matrulli. In fact, the collision was staged, and Dellerba and Morgan were not passengers at the time of the impact. Dellerba and Morgan claimed to have been injured as a result of the accident and submitted false insurance claims, including claims for personal injuries, no fault benefits and disability benefits. Dellerba and Morgan sought medical treatment for non-existent injuries or injuries that they claimed were the result of the collision.
The money laundering conviction stems from an October 10, 2007 incident where DEMME applied for and obtained a $25,000 loan from Rome Savings Bank in New Hartford, New York. The proceeds of the loan were derived from unlawful activity, in that in support of this loan application, DEMME submitted to the bank a false U.S. Individual Income Tax Return form 1040 for the year 2006, which overstated his income and had not been filed with the Internal Revenue Service.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation Division and the New York State Insurance Frauds Bureau. The case was prosecuted by Assistant United States Attorney Edward R. Broton.
US Attorney's Office Welcomes 19 Law Clerks in Buffalo and Rochester for the SummerRead the Press Release
BUFFALO, N.Y.-- U.S. Attorney William J. Hochul, Jr. announced today that 19 law clerks from 10 different law schools have joined the Buffalo and Rochester Offices of the United States Attorney's Office for the summer.
The law clerks will assist the U.S. Attorney and Assistant U.S. Attorneys with legal research, writing projects and court appearances. They will also assist with all aspects of investigating cases and preparing cases for trial. They will also learn more about the criminal justice system and our law enforcement partners by attending presentations at the Federal Bureau of Investigation, the Rainbow Bridge, the Attica Correctional Facility, and through a weekly speaker series presented by our Office.
"I look forward with great anticipation to welcoming these law clerks to our Office," said U.S. Attorney Hochul. "The on-the-job training they will receive will be invaluable as they pursue their legal careers, and they will observe first hand some of the top lawyers in our area. Our Office and the community gains because the students will work with our prosecutors, conduct research into legal issues, and provide valuable assistance to our staff. This is a win-win situation for all."
The following law clerks have been assigned to the Buffalo Office of the USAO:
Catherine Mendola, Boston College (Lead Law Clerk)
Paige Bouley, University at Buffalo
Sydney Brunecz, Case Western
James Campisi, Roger Williams
Anthony Faraco, Jr., University at Buffalo
Kristen Flick, University at Buffalo
Katherine Jost, University at Buffalo
Aaron Rubin, University at Buffalo
Robert Ruh, Syracuse
Ryan Sugg, Northwestern
Samih Tayeh, University at Buffalo
Violanti, George Washington
Alex Wilshaw, University at Buffalo
Lian Yeh, University at Buffalo
Alyssa Zongrone, University at BuffaloThe following law clerks have been assigned to the Rochester Office of the USAO:
Jacob Ark, University at Buffalo
Kelly Geary, Vermont
Elizabeth Oklevitch, Regent University
Joseph Plukas, Western New England UniversityThe law clerks begin their service on May 28, 2013.
Tyler County Woman Sentenced for Theft of over $1 MillionRead the Press Release
Department of Justice
Office of Public AffairsBEAUMONT, Texas – A 60-year-old Spurger, Texas, woman has been sentenced to federal prison for federal violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Sammy Gail Page pleaded guilty on Jan. 4, 2013 to interstate transportation of money taken by fraud and was sentenced to 57 months in federal prison today by U.S. District Judge Marcia Crone. Page was also ordered to pay restitution in the amount of $1,207,440 to UBS financial Services.
According to information presented in court, from 2005 to March 2011, Page, an investment advisor at the Beaumont office of UBS, made unauthorized withdrawals from five different client accounts on over 60 different occasions totaling $1,207,440.00. Page was employed by UBS since 1987 and had wide discretion in the withdrawal and transfer of funds. Page arranged the withdrawals by authorizing the issuance of wire transfers, generally payable to American Express, where she maintained a credit card account. The investigation revealed that Page used the client funds to pay her own personal expenses, such as credit card balances. Page was indicted by a federal grand jury on Oct. 17, 2012.
Page was ordered to report to the U.S. Marshals Service on July 12, 2013 to be transported to the Bureau of Prisons.
This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Robert L. RawlsTwo Perry County Women Charged with Methamphetamine ConspiracyRead the Press Release
Two Perry County, Illinois, residents were indicted by a federal grand jury on May 21, 2013, and charged with conspiracy to manufacture methamphetamine, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
On May 24, 2013, Pattsy P. Pelate, 26, Willisville, and Julie A. Keller, a/k/a “Julie Smith,” “Julie Keller-Smith,” 34, Cutler, were arraigned in United States District Court in Benton on their indictment. The indictment alleges that the offense occurred between 2010 and November 2012, in Jackson and Randolph Counties. Pelate and Keller are currently being held without bond pending a May 28, 2013, detention hearing.
An indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge until proved guilty beyond a reasonable doubt to the satisfaction of a jury.
If convicted, Pelate and Keller face up to 20 years’ imprisonment, 3 years’ supervised release, and a $1,000,000 fine.
The ongoing investigation is being conducted by the Jackson County Sheriff’s Office, Randolph County Sheriff’s Office, Perry County Sheriff’s Office, and Murphysboro Police Department.
The case is being prosecuted by Assistant United States Attorney Amanda A. Robertson.
Two Fairbanks Residents indicted for wire fraud, theft from the City of Tanana, a local government receiving Federal FundsRead the Press Release
Anchorage, Alaska -U.S. Attorney Karen L. Loeffler announced today that two Fairbanks residents were charged with nine counts of wire fraud and three counts of theft from a local government receiving federal funds. The offenses charged occurred from December, 2009, through November, 2012.
The two defendants named in this indictment are Alfred R. “Bear” Ketzler, Jr. 57, and Alfred McQuestion Fabian, 62. The indictment charges that Ketzler was employed by the City of Tanana as the City Manager and was responsible for managing the City’s property, including federal excess and surplus property the City obtained from the federal government. In this position, Ketzler was responsible to allocate surplus federal property to the City of Tanana where needed. Fabian was employed by the City of Tanana as an expeditor who was responsible for storing and transporting the City’s property, including that received from the federal government.
The indictment alleges a scheme between Ketzler and Fabian whereby Ketzler would acquire surplus federal property that was stored at several different locations without notifying the Mayor of Tanana or the City Council for the City of Tanana of the federal excess and surplus property obtained on behalf of the City of Tanana. It is further alleged, that as part of the scheme, Ketzler, who conducted the majority of the business for the City of Tanana from his residence and his office in Fairbanks, did not provide adequate paperwork to the Mayor of Tanana or the City Council for the City of Tanana regarding federal excess and surplus property he obtained on behalf of the City of Tanana. It is alleged that Fabian, for his part, would transport federal excess and surplus property obtained on behalf of the City of Tanana to storage locations in and around Fairbanks, Alaska, including his own residence.According to the indictment, after acquiring the surplus property, Ketzler, in coordination with Fabian, would sell the City of Tanana’s federal excess property to individuals and businesses in Alaska for personal gain. As charged in the indictment, the property illegally sold by Ketzler and Fabian included heavy equipment such as trucks, fork lifts, bull dozers, and other industrial equipment. The indictment alleges that in most instances, Ketzler had the purchasers write their checks to Ketzler personally. Upon receiving the checks, Ketzler would then deposit the checks into his personal bank accounts.
The indictment also alleges that part of the scheme involved Ketzler lying to other possible purchasers of surplus federal property. As alleged in the indictment, Ketzler lied and misrepresented information to purchasers of the federal excess property. For example, Ketzler told purchasers that the property belonged to the City of Tanana and that he was selling the property on behalf of the City of Tanana.
The indictment alleges that Ketzler would deposit the proceeds from the sale of the City of Tanana’s property into one of his personal bank accounts, and would then write a check to Fabian or transferred money into one of Fabian’s personal bank accounts.
It was also a part of the scheme, as listed in the indictment, that Fabian converted some of the City of Tanana’s federal excess property for his own personal use and that both he and Ketzler sold the City of Tanana’s federal excess property through third-parties.
As a result of the scheme, it is alleged that Ketzler and Fabian received at least approximately $122,100 in illegally obtained payments for the sales of the City of Tanana’s property and $3,650 in property converted to their personal use, for property which had an acquisition value to the United States of approximately $984,390.
The maximum penalty for wire fraud is 30 years imprisonment with a $250,000 fine. The maximum penalty for theft from a local government receiving federal funds is 10 years imprisonment with a $250,000 fine. An arraignment date has not been set.
The investigation has identified numerous sales of federal surplus property by Alfred Ketzler and Alfred Fabian. Some of these sales are believed to have been authorized by the City of Tanana and some of these sales are alleged to have occurred without proper authority. The FBI and Office of Inspector General believe that the sellers represented these sales as legitimate and they do not intend to seize the sold property and they do not consider the buyers to be suspects. The FBI and Office of Inspector General would like to speak to anyone who purchased equipment from Ketzler or Fabian to assist the City of Tanana and the Office of Inspector General in identifying all the sales that have occurred. Please call the FBI at (907) 452-3250 or (907) 276-4441 and ask to speak to Special Agent Sutherland if you have information about a sale or purchase of this federal surplus property.
An indictment is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt
Ms. Loeffler commends the Federal Bureau of Investigation and the Office of Inspector General, for the investigation of this case.Shalimar Man Charged with Child Exploitation CrimesRead the Press Release
PENSACOLA, FLORIDA – Joshua Douglas Taylor, 23, of Shalimar, Florida, appeared in federal court today to face charges associated with his receipt and possession of child pornography. Taylor has been charged by a federal grand jury in a three-count indictment with receipt, transportation, and possession of child pornography between October 2011 and February 2012. If convicted, he faces a mandatory minimum sentence of five years, up to a possible maximum sentence of twenty years, in prison. His case is set for trial on July 8, 2013, before Chief U.S. District Judge M. Casey Rodgers.
The indictment results from an investigation by the North Florida Internet Crimes Against Children Task Force with participating agents from the Federal Bureau of Investigation, the Walton County Sheriff’s Department, Immigration and Customs Enforcement’s Homeland Security Investigations and the Okaloosa County Sheriff’s Department. The case will be prosecuted by Assistant U.S. Attorney J. Ryan Love.
This prosecution is being brought as part of the Project Safe Childhood, a nationwide initiative launched by the Department of Justice in May 2006 to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims.
An indictment is merely an allegation by a grand jury that a defendant has committed a violation of federal criminal law and is not evidence of guilt. All defendants are presumed innocent and entitled to a fair trial, during which it will be the government's burden to prove guilt beyond a reasonable doubt in a court of law.Rapid City Man Charged with Illegal Reentry After DeportationRead the Press Release
United States Attorney Brendan V. Johnson announced that a Rapid City, South Dakota man was indicted by a federal grand jury for illegally reentering the United States after having been previously deported.
Armando Romero-Ramirez, 29, was indicted on May 23, 2013 for Illegal Reentry After Deportation. He appeared before U.S. Magistrate Judge Veronica L. Duffy on May 23, 2013 and pled not guilty to the indictment.
The maximum penalty upon conviction is 2 years’ imprisonment and/or a $250,000 fine. The charge is merely an accusation and Romero-Ramirez is presumed innocent until and unless proven guilty.
The investigation is being conducted by the U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI). Assistant U.S. Attorney Eric Kelderman is prosecuting the case.
Romero-Ramirez was remanded to the custody of the U.S. Marshal. A trial date has not been set.
Randolph County Woman Charged with Methamphetamine ConspiracyRead the Press Release
A Randolph County, Illinois, woman was indicted by a federal grand jury on May 21, 2013, for two methamphetamine-related offenses, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
On May 24, 2013, Rachael S. Holt, 39, Sparta, was arraigned in United States District Court in Benton on a two-count indictment charging conspiracy to manufacture methamphetamine and possession of pseudoephedrine knowing that it would be used to manufacture methamphetamine. The indictment alleges that the offenses occurred between 2009 and March 2013, in Jackson, Randolph, and St. Clair Counties. Holt is currently being held without bond pending a May 28, 2013, detention hearing.
An indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge until proved guilty beyond a reasonable doubt to the satisfaction of a jury.
If convicted, Holt faces up to 20 years’ imprisonment, 3 years’ supervised release, and a $1,000,000 fine.
The ongoing investigation is being conducted by the Jackson County Sheriff’s Office, Randolph County Sheriff’s Office, Murphysboro Police Department, and Sparta Police Department.
The case is being prosecuted by Assistant United States Attorney Amanda A. Robertson.
Quincy Man Sentenced as Career Offender on Cocaine ChargesRead the Press Release
TALLAHASSEE, FLORIDA – Teriel Young, 32, of Quincy, Florida, wassentenced to serve 188 months in federal prison today on multiple charges of distributing cocaine and crack cocaine. Young was also sentenced to six years of supervised release and $400 of special monetary assessments.
Young received an enhanced sentence because of his prior convictions for crimes of violence and drug trafficking. His prior convictions include sale of cocaine in 2002 and 2004, resisting an officer with violence in 2004, trafficking cocaine in 2007, and fleeing and eluding at high speed in 2008. He served two sentences in the Florida Department of Corrections, 18 months between 2004 and 2006 and 48 months between 2007 and 2011.
Young was released from state prison in September 2011. In November of the same year, he was arrested in Gadsden County, Florida, with 34.7 grams of powder cocaine. Young attempted to flee from law enforcement, but was subdued by a police dog.
Young bonded out on state charges on December 6, 2011. Shortly thereafter, on February 17, 2012, he sold a small amount of drugs to a confidential informant in Gadsden County.
Young then relocated to Tallahassee. Between May and August 2012, he made three additional sales to different confidential informants, totaling 11 grams of powder cocaine and 17.6 grams of crack cocaine. On August 30, 2012, deputies served a search warrant at Young’s Tallahassee apartment. They recovered $1,360 in cash, 15.5 grams of powder cocaine, 2.2 grams of crack cocaine, drug records, and drug paraphernalia. Young was found hiding behind the headboard of a bed.
U.S. Attorney Marsh praised the joint efforts of Drug Enforcement Administration, the Leon County Sheriff’s Office, and the Tallahassee Police Department. “A small number of repeat offenders make up a great deal of law enforcement’s caseload, to the great detriment of the communities they live in. With this sentence, at least one of those repeat offenders will be taken off our streets for a good long time.”
Assistant U.S. Attorney Michael T. Simpson prosecuted this case.Porcupine Man Pleads Not Guilty to StealingRead the Press Release
United States Attorney Brendan V. Johnson announced that a Porcupine, South Dakota man has been indicted by a federal grand jury for allegedly stealing over $1,000 from the Pine Ridge Pizza Hut between November 1 and 30, 2011.
David Gay, age 25, was indicted by a federal grand jury on January 24, 2012 for Larceny. Gay appeared before U.S. Magistrate Judge Veronica L. Duffy on May 14, 2013 and pled not guilty to the indictment.
The maximum penalty upon conviction is 5 years of imprisonment and a $250,000 fine. The charge is merely an accusation and Gay is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Bureau of Indian Affairs, Office of Justice Services, and the Oglala Sioux Tribe Department of Public Safety.
Gay was released on bond pending trial. A trial date has been set for July 27, 2013.
Pittsburgh Man Sentenced to Probation and Restitution for Stealing BenefitsRead the Press Release
PITTSBURGH, Pa. - A Pittsburgh man has been sentenced in federal court to three years probation, restitution of $27,926 and 50 hours of community service and a $100 special assessment on his conviction of theft of government property, United States Attorney David J. Hickton announced today.
United States District Judge Nora Barry Fischer imposed the sentence on Douglas Ward, Jr., 37.
According to information presented to the court, Douglas Ward, Jr., converted to his own use over $27,926 in Supplemental Security Income Benefits from December 2006 through July 2010.
Assistant United States Attorney Robert S. Cessar prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Social Security Administration, Office of Inspector General, Special Agent Kenneth Grubb, for the investigation leading to the successful prosecution of Ward.
Pennsylvania Man Sentenced to 12 Years in Prison for<br /> Coercing and Enticing a Minor to Perform in an Online Sex ShowRead the Press Release
A Pennsylvania man was sentenced today to serve 12 years in prison for coercing and enticing a minor and possessing child pornography, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Western District of Pennsylvania David J. Hickton; and Special Agent in Charge John Kelleghan of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Philadelphia.
Jeffrey W. Herschell, 54, of Washington, Pa., was sentenced by U.S. District Judge David Stewart Cercone in the Western District of Pennsylvania. According to a statement of facts entered into the record by the government and agreed to by the defendant, Herschell sent money to the Philippines in February 2010 for a live, online sex show that included a 12-year-old minor female engaging in sexual activity. Herschell also admitted to possessing child pornography videos at his Pennsylvania residence.
This case was prosecuted by Assistant U.S. Attorney Jessica Lieber Smolar of the Western District of Pennsylvania and Trial Attorney Bonnie L. Kane of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). This case was investigated by ICE-HSI Pittsburgh and the ICE-HSI Attache’s Office in the Philippines with significant assistance from the National Bureau of Investigation (Philippines) and the Philippine National Police.
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 U.S. Attorneys’ Offices and 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.
Ottawa Woman Sentenced to 18 Years in Fatal Prescription Drug CaseRead the Press Release
KANSAS CITY, KAN. – A woman from Ottawa, Kan., has been sentenced to 18 years in federal prison for her role in a drug trafficking ring tied to the death of a man who died from taking a mixture of prescription drugs, U.S. Attorney Barry Grissom said today.
Tamara Ledom, 37, Ottawa, Kan., pleaded guilty to one count of conspiracy to possess with intent to distribute oxycodone, hydrocodone, methadone, morphine and methamphetamine resulting in the death of a user.
In her plea, she admitted that from Nov. 1, 2007 through Feb. 28, 2012, she was a member of a drug trafficking ring headed by co-defendant Connie Edwards that distributed prescription drugs and other controlled substances in Franklin County, Kan.
On May 10, 2009, a victim who bought drugs from the Edwards' organization, was found unconscious in the living room of his mother's home. He was taken to a hospital and pronounced dead. An autopsy revealed that he died from taking a toxic combination of methadone, hydrocodone and carisoprodol.
Investigators learned that the afternoon before the victim died he purchased hydrocodone, methadone and carisprodal from Ledom and Edwards at Edwards’ residence in Ottawa. Ledom had crushed prescription pills into a powder which was sold to Powell as methamphetamine. Later that evening, the victim purchased prescription pills. Then he injected the substance he believed was methamphetamine – and took the pills – creating a toxic combination that caused his death.
Investigators also documented other incidents in which Ledom sold controlled substances.
Co-defendants include: Connie Edwards, who was sentenced to 300 months
Brittany Edwards, 20, Ottawa, Kan., who is set for sentencing June 3.
Shirley Price, 45, Ottawa, Kan., who is set for sentencing June 10.
Dustin Price, 24, Ottawa, Kan., who is set for sentencing June 10.
Joel Keith Price, 55, Ottawa, Kan., who is set for sentencing June 10.
Morgan Price, 22, Ottawa, Kan., who was sentenced to 5 years probation with 6 months in the halfway house.
Brandi Bivens, 31, Ottawa, Kan., who is set for sentencing Aug. 19.
Angela Mitchell, 36, Ottawa, Kan., who is set for sentencing July 8.
Florence Edwards, 39, Ottawa, Kan., who was sentenced to 12 months probation.Grissom commended the Franklin County Drug Task Force, the Ottawa Police Department, the Franklin County Sheriff’s Office, the Internal Revenue Service, the Kansas Bureau of Investigation and Assistant U.S. Attorney Sheri McCracken for their work on the case.
Orange County Man Who Ran Investment Fraud Scheme That Cost Victims $3 Million Sentenced to over Eight Years in Federal PrisonRead the Press Release
SANTA ANA, California – A retired colonel in the California Army National Guard who admitted running an investment scheme that caused two dozen victims to suffer a losses of nearly $3 million was sentenced today to 97 months in federal prison.
Timothy Melvin Murphy, 70, of Orange, was sentenced this afternoon by United States District Judge David O. Carter. In addition to the prison term, Judge Carter ordered Murphy to pay full restitution – $2,953,758 – to his fraud victims.
In April 2012, Murphy pleaded guilty to one count of mail fraud, admitting that he executed a scheme through his business, the Orange-based Capital Investors Inc., by offering fraudulent investment opportunities that typically yielded annual returns of 12 percent and, in some cases, came with “guaranteed” rates of return. Murphy falsely told most of the investors that their money would be invested in truck-leasing companies based in Gulfport, Mississippi. As part of the scheme, Murphy created false account statements to mislead his clients into thinking that their money was properly invested and was generating the promised income. The false documentation included bogus account statements that appeared to be issued by “The Sterling Trust Company,” a third-party financial services firm.
Instead of using the victims’ money to make investments, Murphy used the funds to make Ponzi payments to earlier investors and to pay for a variety of personal expenses, including refurbishing and maintaining classic automobiles, making payments on home loans and buying a members at a weight loss clinic.
While in the California Army National Guard, Murphy served as the commanding officer of the Joint Forces Training Base in Los Alamitos.
The case against Murphy was investigated by the Federal Bureau of Investigation.
Release No. 13-073
One of the World’s Largest Digital Currency Companies and Seven of Its Principals and Employees Charged in Manhattan Federal Court with Running Alleged $6 Billion Money Laundering SchemeRead the Press Release
Mythili Raman, Acting Assistant Attorney General for the Criminal Division of the U.S. Department of Justice; Preet Bharara, U.S. Attorney for the Southern District of New York; Steven G. Hughes, Special Agent-in-Charge of the New York Office of the U.S. Secret Service; Richard Weber, Chief of the Internal Revenue Service, Criminal Investigation (IRS-CI); and James T. Hayes Jr., Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), announced today the unsealing of an indictment charging Liberty Reserve, a company that operated one of the world’s most widely used digital currency services, and seven of its principals and employees with money laundering and operating an unlicensed money transmitting business. Liberty Reserve is alleged to have had more than one million users worldwide, including more than 200,000 users in the U.S., who conducted approximately 55 million transactions – virtually all of which were illegal – and laundered more than $6 billion in suspected proceeds of crimes including credit card fraud, identity theft, investment fraud, computer hacking, child pornography and narcotics trafficking.
Five defendants were arrested on May 24, 2013, including Arthur Budovsky, the principal founder of Liberty Reserve, who was arrested in Spain; Vladmir Kats, the co-founder of Liberty Reserve, who was arrested in Brooklyn, New York; Azzeddine El Amine, a manager of Liberty Reserve’s financial accounts, who was arrested in Spain; and Mark Marmilev and Maxim Chukharev, who helped design and maintain Liberty Reserve’s technological infrastructure, who were arrested in Brooklyn and Costa Rica, respectively. Two other defendants, Ahmed Yassine Abdelghani (Yassine) and Allan Esteban Hidalgo Jimenez (Hidalgo), are at large in Costa Rica.
In addition to the criminal charges brought in the indictment, five domain names were seized, namely, the domain name of Liberty Reserve and the domain names of four exchanger websites that were controlled by one or more of the defendants; 45 bank accounts were restrained or seized; and a civil action was filed against 35 exchanger websites seeking the forfeiture of the exchangers’ domain names because the websites were used to facilitate the Liberty Reserve money laundering conspiracy and constitute property involved in money laundering. The four exchangers whose domain names were seized, as well as the 35 exchangers whose domain names are the subjects of the civil forfeiture action, were all exchangers that transacted business with Liberty Reserve and were listed on Liberty Reserve’s website as “pre-approved exchangers.” The investigation and takedown involved law enforcement action in 17 countries, including Costa Rica, the Netherlands, Spain, Morocco, Sweden, Switzerland, Cyprus, Australia, China, Norway, Latvia, Luxembourg, the United Kingdom, Russia, Canada and the U.S.
In a coordinated action, the U.S. Department of the Treasury and its Financial Crimes Enforcement Network today announced that Liberty Reserve has been named as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act. This action includes a notice to the Federal Register proposing to prohibit covered U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for foreign banks that are being used to process transactions involving Liberty Reserve.
Acting Assistant Attorney General Raman said: “As charged, Liberty Reserve operated, on an enormous scale, a digital currency system designed to provide cyber and other criminals with a way to launder their profits without leaving a trace. The company’s very purpose was to launder its users’ criminal proceeds through the U.S. and global financial system. By indicting Liberty Reserve and its principals, restraining over $25 million in criminal proceeds, forfeiting domain names, and seizing servers in countries around the globe, our message is clear: money launderers can run, but they can’t hide from the U.S. justice system. Combating the threat of global illicit finance requires using every tool we have at our disposal, and today we demonstrate our resolve to ensure that criminals who exploit the U.S. and global financial system will be held to account.”
U.S. Attorney Bharara said: “ As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes – the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers, and traffickers. The global enforcement action we announce today is an important step towards reining in the ‘Wild West’ of illicit Internet banking. As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.”
Secret Service Special Agent-in-Charge Hughes said: “These arrests are an example of the Secret Service’s commitment to investigate and apprehend criminals engaged in the misuse of virtual currencies to conduct global monetary fraud. Cyber criminals should be reminded today that they are unable to hide behind the anonymity of the Internet to avoid regulated financial systems. We are grateful to our many law enforcement partners throughout the world for assistance in this investigation, especially in Costa Rica, Spain and the Netherlands.”
IRS-CI Chief Weber said: “We are now entering the cyber age of money laundering. Technology advancements over the past several years have dramatically increased opportunities for criminals to move, conceal and enjoy their ill-gotten gains. Liberty Reserve and its principals have been charged with operating a sophisticated and complex system for structuring financial transactions which catered to those engaged in such criminal activity. What they did not anticipate was our robust partnerships with domestic and foreign law enforcement that allowed us collectively to follow the cyber money trail in the United States and around the world.”
ICE HSI Special Agent-in-Charge Hayes said: “The actions of the U.S. Secret Service, IRS, and HSI in dismantling the Liberty Reserve operation are critical because transnational criminal organizations can succeed only so long as they can funnel their illicit proceeds freely and without detection. HSI is proud of its partnership through the Global Illicit Financial Team and will continue to aggressively target financial institutions that deliberately enable businesses and individuals to evade global financial systems in furtherance of criminal schemes.”
According to the allegations in the indictment, the civil forfeiture complaint, and other documents filed in federal court:
Background
Liberty Reserve was incorporated in Costa Rica in 2006 and operated the digital currency commonly referred to as “LR.” While the company billed itself as the Internet’s “largest payment processor and money transfer system,” serving “millions” of people around the world, including the U.S., at no time did the company register with the U.S. Department of the Treasury as a money transmitting business, as required by law.
Budovsky, the principal founder of Liberty Reserve, directed and supervised its operations, finances, and corporate strategy. Kats, a co-founder, helped operate the company until 2009. The day-to-day operations of Liberty Reserve were managed, at different times, by Hidalgo and Yassine. El Amine managed various financial accounts controlled by Liberty Reserve, while Marmilev and Chukharev were primarily responsible for designing and maintaining the company’s technological infrastructure.
Overview of Liberty Reserve’s Money Laundering Operation
The defendants created, structured and operated Liberty Reserve as a criminal bank-payment processor designed to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. It emerged as one of the principal money transfer agents used by cyber criminals around the world to distribute, store, and launder the proceeds of their illegal activity. The company grew into a financial hub of the cybercrime world, facilitating a broad range of online criminal activity, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography and narcotics trafficking. Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cyber criminals around the world to conduct anonymous and untraceable financial transactions.
The defendants also protected the criminal infrastructure of Liberty Reserve by, among other things, lying to anti-money laundering authorities in Costa Rica and pretending to shut down Liberty Reserve after learning the company was being investigated by U.S. law enforcement. They then continued operating the business through a set of shell companies, and moved tens of millions of dollars through shell company accounts maintained in Cyprus, Russia, China, Hong Kong, Morocco, Spain, Australia and elsewhere.
The Criminal Design of Liberty Reserve
In order to use LR currency, a user first had to open an account through the Liberty Reserve website and provide basic identifying information. Unlike traditional banks or legitimate online processors, Liberty Reserve did not require users to validate their identities. Users routinely established accounts under false names, including such blatantly criminal names as “Russia Hackers” and “Hacker Account.” As part of the investigation, a law enforcement agent opened and executed transactions through an undercover account at Liberty Reserve in the name of “Joe Bogus” and the address “123 Fake Main Street” in “Completely Made Up City, New York.”
Once an account was established, the user could conduct transactions with other Liberty Reserve users. In these transactions, the user could receive transfers of LR from other users’ accounts, and transfer LR from his or her own account to other users, including any “merchants” that accepted LR as payment. Liberty Reserve charged a one-percent fee up to a maximum of $2.99, every time a user transferred LR to another user through the Liberty Reserve system. For an additional “privacy fee” of 75 cents per transaction, a user could hide his or her own Liberty Reserve account number when transferring funds, effectively making the transfer completely untraceable, even within Liberty Reserve’s already opaque system.
To add an additional layer of anonymity, Liberty Reserve did not permit users to fund their accounts by transferring money to the company directly through a credit card transfer or other means. Users also could not withdraw funds from their accounts directly. Instead, Liberty Reserve users were required to make any deposits or withdrawals through the use of third-party “exchangers,” which enabled the company to avoid collecting any information about its users through banking transactions or other activity that would leave a centralized financial paper trail. Budovsky, Kats and El Amine owned and operated certain Liberty Reserve exchanger services.
The Liberty Reserve website recommended a number of “pre-approved” exchangers, which tended to be unlicensed money transmitting businesses operating in countries without significant governmental money laundering oversight or regulation, such as in Malaysia, Russia, Nigeria, and Vietnam. The exchangers charged transaction fees for their services that were much higher than the fees charged by mainstream banks or payment processors for comparable money transfers.
The Criminal Use of Liberty Reserve
To further enable the use of Liberty Reserve for criminal activity, its website offered a “shopping cart interface” that “merchant” websites could use to accept LR currency as a form of payment. The “merchants” who accepted LR currency were overwhelmingly criminal in nature. They included traffickers of stolen credit card data and personal identity information, peddlers of various types of online Ponzi and get-rich-quick schemes, computer hackers for hire, unregulated gambling enterprises, and underground drug-dealing websites.
In addition to being used to process payments for illegal goods and services online, Liberty Reserve was also used by cyber criminals to launder criminal proceeds and transfer funds among criminal associates. For example, Liberty Reserve was used by credit-card theft and computer-hacking rings operating in countries around the world, including Vietnam, Nigeria, Hong Kong, China, and the U.S., to distribute proceeds of these conspiracies among the members involved.
The defendants were well aware that Liberty Reserve functioned as an unlawful money-laundering enterprise. In an online chat between Kats and Yassine that was captured by law enforcement, Kats explicitly described Liberty Reserve’s activities as “illegal” and noted that “everyone in USA” such as “DOJ” knows “LR is [a] money laundering operation that hackers use.”
* * *
Liberty Reserve, Budovsky, 39, a citizen of Costa Rica who resides in the Netherlands, Kats, 41, of Brooklyn, New YorkYassine, 42, of Costa RicaHidalgo, 28, of Costa Rica,El Amine, 46, of Costa Rica,Marmilev, 33, of Brooklyn, New York, and Chukharev, 27, of Costa Rica,are each charged with one count of conspiracy to commit money laundering, which carries a maximum term of 20 years in prison, one count of conspiracy to operate an unlicensed money transmitting business, which carries a maximum term of five years in prison, and operation of an unlicensed money transmitting business, which carries a maximum term of five years in prison. The terms of incarceration apply to the individual defendants.
This case was investigated by the Secret Service, the IRS-CI and ICE HSI, which worked together in this case as part of the Global Illicit Financial Team. The Secret Service’s New York Electronic Crimes Task Force assisted with the investigation, as well as the Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation, and the Swiss Federal Prosecutor’s Office. The Shadowserver Foundation acted as the hosting provider for the domain names that were seized pursuant to the Court-authorized seizure warrants. The Department of Justice’s Office of International Affairs and Computer Crime and Intellectual Property Section also provided support.
This case is being prosecuted jointly with the Department of Justice’s Asset Forfeiture and Money Laundering Section, which is overseen by Acting Assistant Attorney General Mythili Raman; and the U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds Unit and Asset Forfeiture Unit.
If you believe you were a victim of a crime and were defrauded of funds through the use of Liberty Reserve, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact (888) 238-0696 or (212) 637-1583.
The charges contained in the indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
Oklahoma City Doctor Pleads Guilty to Defrauding MedicaidRead the Press Release
Oklahoma City, Oklahoma – AMAR NATH BHANDRY, M.D., 53, of Oklahoma City, has pled guilty to committing health care fraud, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.
According to the superseding information, Dr. Bhandry submitted claims to Medicaid claiming reimbursement for services that he had not actually provided. Specifically, he filed claims for comprehensive psychiatric examinations between 45-50 minutes in duration when he visited with patients for only 10-20 minutes. Dr. Bhandry pled guilty earlier today to the superseding information.
At sentencing, Dr. Bhandry faces up to 10 years in prison and $250,000 fine. Sentencing will take place in approximately ninety days.
These charges are the result of an investigation conducted by the Federal Bureau of Investigation and the Drug Enforcement Administration. The case was prosecuted by Assistant U.S. Attorneys Randal A. Sengel and David P. Petermann.
Reference is made to court filings for further information.
Ohio Man Who Sold Firearms to A Convicted Felon Pleads Guilty to Federal ChargesRead the Press Release
HUNTINGTON, W.Va. – An Ohio man who illegally sold several firearms to a convicted felon in 2012 pleaded guilty on May 28 in Huntington to federal charges, announced U.S. Attorney Booth Goodwin. Jeffrey Allen Jones, 50, of Chesapeake, Ohio, pleaded guilty to knowingly selling firearms to a convicted felon. On March 15, 2012, a police informant contacted Jones by telephone and arranged to purchase a .22 caliber pistol. Afterward, Jones met the informant at a predetermined location in Huntington and sold the pistol in exchange for $150. Jones knew that prior to conducting the firearm transaction, the informant had been convicted of a felony and was not permitted to possess a firearm. During the firearm transaction, Jones told the police informant to wipe the firearm down and if anything happened he would report the gun stolen.
Jones also sold an additional five firearms to the same police informant. All of the firearm transactions were monitored and recorded by police.
Jones faces up to 10 years in prison and a $250,000 fine when he is sentenced on August 26, 2013 by Chief United States District Judge Robert C. Chambers.
The investigation was conducted by the Huntington Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Assistant United States Attorney Gregory McVey is in charge of the prosecution.
This case is being brought as part of Project Safe Neighborhoods. Project Safe Neighborhoods is a nationwide commitment to reduce gun crime in the United States by networking existing local programs targeting gun crime.
Ohio Man Sentenced to Prison for Internet Extortion Scheme Targeting PittRead the Press Release
PITTSBURGH, Pa. - A resident of Loveland, Ohio, has been sentenced in federal court to one year plus one day imprisonment followed by two years supervised release on his conviction of conspiracy to commit internet extortion, United States Attorney David J. Hickton announced today.
United States District Judge Joy Flowers Conti imposed the sentence on Alexander Waterland, 25.
According to information presented to the court, on April 25, 2012, Waterland downloaded a large amount of data from the University of Pittsburgh server, which was located in the Western District of Pennsylvania. Waterland downloaded this data, which included identifying information of students and faculty, at the suggestion of Brett Hudson, who was his co-worker in Ohio, who sent him the weblink where the information could be downloaded from. The purpose of this download was to include it in an Internet threat that they would send to the University of Pittsburgh.
On or about April 26, 2012, using a YouTube account they had created in the name of AnonOperative13, the conspirators in Ohio created and posted a video onto YouTube claiming to be members of the hacking group Anonymous, which a loosely connected international network of computer hackers that have increasingly become associated with international hacktivism, usually with the goal of promoting Internet freedom and freedom of speech. The video claimed that the University's servers containing confidential student and instructor information had been compromised, that the University's Hydrogen server had been compromised with 200 gigabytes of data stolen, and that unless the University of Pittsburgh altered their webpage domain to include an apology from the Chancellor of the University, such confidential information would be released. This video threat was received by the University of Pittsburgh staff in the Western District of Pennsylvania.
On or about April 26, 2012, an email was sent by the conspirators in Ohio from an email account they had created at [email protected], to the email address at the University of Pittsburgh at [email protected] which contained the weblink to AnonOperative13's YouTube extortionate threat.
On or about April 27, 2012, Brett Hudson set up a Twitter account in the name of AnonOperative13, which was associated with the [email protected] email account and the AnonOperative13 YouTube account.
On or about April 28, 2012, Brett Hudson, from Ohio, posted a weblink to the April 26, 2012 YouTube video threat against the University of Pittsburgh by AnonOperative13 onto the Twitter account of AnonOperative13. This tweet was received by the administration of the University of Pittsburgh.On or about May 2, 2012, the conspirators in Ohio posted a comment to the YouTube video of April 26, 2012, which was still up on YouTube. The comment, which was posted in response to numerous other comments posted by other viewers of YouTube who had seen the threat video against the University of Pittsburgh, stated "we are NOT going to release this information unless Pitt admins don't follow our very simple request! We are giving Pitt until Monday, May 6, 2012 and should remain posted for no less than 15 days. To help determine if this threat is real or not, we have posted very little and near useless information, but should prove our point!! We also would like to mention that we have no ties with the current bomb threats as we do not condone violence or harm to any person. This would directly violate our rules of engagement. Enjoy the information and Pitt can stop the release of information; however, the morning of Monday." The bomb threats referenced by Hudson and Waterland in the posting were a series of high profile bomb threats which were sent over the internet to the University of Pittsburgh administrators from March 30 until April 21, 2012. Similar to Hudson and Waterland's internet demands of the administration of the University of Pittsburgh beginning five days later, the perpetrator of the bomb threats also extorted the administration of the University of Pittsburgh. As proof of their seriousness, the conspirators posted personal data they purported to have stolen from the University of Pittsburgh servers.
On May 6, the purported deadline, Hudson texted Waterland stating "Dude scan Pitt.edu we need something to post," indicating the need to download more data from the University of Pittsburgh server in order to make good on their threat.
On or about May 14, 2012, the conspirators in Ohio sent an email to both [email protected] and [email protected], received on servers in the Western District of Pennsylvania from their email account at [email protected], which was entitled "proof of recent breech." The email stated "do what's best, time is of the essence, so you have seven days to have the public apology to the students released...otherwise user names and passwords are next! We are anonymous! We are legion! We are your brothers and sisters! We are the students and faculty of Pitt! We are your worst nightmare! The internet is here! You will now Expect us!" Again, the email included attachments which purported to be personal information stolen from the University of Pittsburgh's computer servers in order to prove their credibility.
Assistant United States Attorney James T. Kitchen prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Federal Bureau of Investigation (FBI) for the investigation leading to the successful prosecution of Waterland.
Nanuet Man Pleads Guilty in White Plains Federal Court to Threatening to Kill Federal and State OfficialsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that LAWRENCE MULQUEEN pled guilty to an Indictment charging him with making threats against federal officials in messages that he posted on the online social networking site “Facebook.” MULQUEEN threatened to kill members of the U.S. Congress, state and local elected officials, and others. He was charged in February 2013 and pled guilty today before U.S. District Judge Kenneth M. Karas.
U.S. Attorney Preet Bharara said: “As we have stated time and time again, social media, and the internet generally, are powerful tools for communication, but the fact that you face a screen and not a person does not give Lawrence Mulqueen, or anyone else, a license to make threats and incite others to commit acts of violence. The fact that a threat is made remotely does not mean that the chance of prosecution is remote. With his plea today, Mulqueen has learned that.”
According to the Complaint, Indictment, and statements made at today’s guilty plea proceeding in White Plains federal court:
In February 2013, MULQUEEN posted numerous messages on his Facebook page in which he threatened to kill members of the U.S. Congress, state and local elected officials, and others. For example, on February 20, 2013 he posted a message stating that he “[could] not wait to start killing” multiple U.S. Senators and members of the U.S. House of Representatives, as well as a Governor and Mayor. MULQUEEN instructed people commenting on his posts to secure a “high powered rifle,” and recommended a particular Italian-manufactured shotgun as “very light and . . . semi-automatic, [with] no need to pump or reload.” He added that readers should “[u]se blades when you can to conserve bullets.” In other posts, MULQUEEN commanded readers to seek out and kill Latinos and at least one political activist.
MULQUEEN, 50, of Nanuet, NY, pled guilty to one count of threatening federal officials and one count of transmitting threatening communications. He faces a sentence of up to 15 years in prison and a fine of up to $500,000 and will be sentenced by Judge Karas on October 16, 2013. Separate state charges against MULQUEEN for criminal possession of a weapon remain pending in Rockland County Court.
Mr. Bharara praised the work of the Federal Bureau of Investigation, the United States Secret Service, and the Clarkstown Police Department in this investigation.
The case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Ilan Graff is in charge of the prosecution.
Nacogdoches Couple Sentenced for Federal Tax ViolationsRead the Press Release
Department of Justice
Office of Public AffairsLUFKIN, Texas - A Nacogdoches, Texas couple has been sentenced for federal tax violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Reggie Cotton, 53, and Deborah Cotton, 57, pleaded guilty on Nov. 7, 2013 to failing to file tax returns for the calendar year 2004 and were both sentenced to five months in federal prison today by U.S. District Judge Ron Clark. Their prison sentences will be followed by five months of home detention and restitution of $75,320 to the Internal Revenue Service.
According to information presented in court, the Cottons were involved in running and operating D&R Services, a janitorial cleaning service. The Cottons had received gross income for 2004 totaling $207,857 for D&R Services which they failed to file a federal income tax return for. The Cottons knew they were required to file an income tax return because they had filed an income tax return for a separate janitorial company they had been involved with in the past.
Reggie Cotton was ordered to report to the U.S. Marshals Service in July 2013 to begin serving his sentence. Deborah Cotton was ordered to report in January 2014.
This case was investigated by the IRS and prosecuted by Assistant U.S. Attorney Robert L. Rawls.Montana Man Sentenced for Felon in Possession of A FirearmRead the Press Release
United States Attorney Brendan V. Johnson announced that a Missoula, Montana man convicted of Felon in Possession of a Firearm was sentenced on May 17, 2013 by Chief Judge Jeffrey L. Viken, U.S. District Court.
Steven Shane McCann, age 30, was sentenced to 51 months’ imprisonment, 3 years' supervised release, and a $100 special assessment to the Federal Crime Victims Fund.
On May 17, 2012, McCann, a previously convicted felon, was found in possession of a firearm when his vehicle was stopped by law enforcement in Pennington County in South Dakota. McCann pled guilty to the charge on February 14, 2013.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the South Dakota Highway Patrol, and the South Dakota Division of Criminal Investigation. Special Assistant U.S. Attorney Laura A. Shattuck prosecuted the case.
McCann remained in the custody of the U.S. Marshal.
McKees Rocks Woman Sentenced to 30 Months in Prison for Dealing Prescription DrugsRead the Press Release
PITTSBURGH, Pa. - A McKees Rocks woman was sentenced to imprisonment today on a charge of violating the federal narcotics laws, United States Attorney David J. Hickton announced today.
United States District Judge David S. Cercone sentenced Carol Combs, 55, to 30 months imprisonment, to be followed by a three-year term of supervised release, on her conviction for conspiracy to distribute oxycodone.
In connection with the guilty plea, the court was advised that Combs conspired to distribute oxycodone and oxymorphone between Aug. 24, 2010 and Jan. 20, 2012. Combs purchased oxycodone tablets from runners who filled fraudulent prescriptions, and she also obtained oxycodone prescriptions from Dr. Oliver Herndon, who was sentenced last year to 135 months imprisonment for violating the federal narcotics laws.
In imposing sentence, Judge Cercone stated, "Prescription drugs are ruining more lives than crack cocaine today."
Assistant United States Attorney Stephen R. Kaufman prosecuted this case on behalf of the government.
The Drug Enforcement Administration conducted the investigation that led to the prosecution of Combs.
Maplewood Felon Sentenced for Possessing .32-caliber RevolverRead the Press Release
MINNEAPOLIS—Earlier today in federal court in St. Paul, a 35-year-old felon from Maplewood was sentenced for possessing a loaded .32-caliber revolver. United States District Court Judge Donovan W. Frank sentenced Derek Lee Preston to 180 months imprisonment on one count of being a felon in possession of a firearm. Preston was indicted on April 12, 2011, and pleaded guilty on February 4, 2013.
In his plea agreement, Preston admitted that on January 25, 2011, he possessed the weapon while a passenger in a vehicle that was stopped by Minneapolis Police. Officers found the weapon inside the jacket Preston was wearing when Preston was searched in connection with the traffic stop. In addition, officers found recovered 7.5 grams of marijuana and nearly four grams of crack cocaine.
Because he is a felon, Preston is prohibited under federal law from possessing firearms or ammunition at any time. Preston’s prior Hennepin County convictions include unlawful possession of a pistol (1997), attempted first-degree aggravated robbery (1997), fifth-degree controlled substance crimes (1999 and 2009), a second-degree controlled substance crime (2001), terroristic threats (2005), violation of a no-contact order (2009), attempted violation of a no-contact order (2009), and domestic assault (2010).
This case was the result of an investigation by the Minneapolis Police Department, and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”). It was prosecuted by Assistant U.S. Attorneys Surya Saxena and Andrew Dunne.
The case was charged federally through Project Exile Minneapolis. That law enforcement initiative was launched on July 22, 2010, as part of a city-wide effort to reduce gun violence. Through Project Exile, the Minneapolis Police Department and the ATF work together to apprehend serial criminals for violations of gun laws. Then, the Hennepin County Attorney’s Office teams up with the U.S. Attorney’s Office to determine where those offenders will most effectively be prosecuted – state or federal court. Those determinations are based on the offenders’ criminal histories and current charges, among other factors. To date, the U.S. Attorney’s Office has brought charges against two dozen serious habitual criminals through Project Exile Minneapolis.Manhattan U.S. Attorney Announces Guilty Plea of Jeremy Hammond for Hacking into the Stratfor WebsiteRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that JEREMY HAMMOND, a/k/a “Anarchaos,” pled guilty in Manhattan federal court to conspiracy to engage in computer hacking for his role in the December 2011 hack of Strategic Forecasting, Inc. (“Stratfor”), a global intelligence firm in Austin, Texas, that affected approximately 860,000 victims, including employees and subscribers. During his guilty plea, HAMMOND also admitted his involvement in multiple additional hacks, including computer intrusions into the Federal Bureau of Investigation’s Virtual Academy, the Arizona Department of Public Safety, the Boston Police Patrolmen’s Association, and the Jefferson County, Alabama Sheriff’s Office. HAMMOND pled guilty today before Chief U.S. District Judge Loretta A. Preska.
Manhattan U.S. Attorney Preet Bharara stated: “While he billed himself as fighting for an anarchist cause, in reality, Jeremy Hammond caused personal and financial chaos for individuals whose identities and money he took and for companies whose businesses he decided he didn’t like. He was nothing more than a repeat offender cybercriminal who thought that because of his computer savvy he was above the law that binds and protects all of us – the same law that assured his rights in a court of law and allowed him to decide whether to admit his guilt or assert his innocence. Computer hacking is a very serious crime that violates the privacy and economic security of its victims and disrupts legitimate commerce. We will continue to make the prosecution and punishment of cybercriminals like Jeremy Hammond a top priority.”
According to the Complaint, the Superseding Indictment, the Superseding Information, and statements made in other public filings and in court:
In December 2011, HAMMOND and other members of “AntiSec” – an off-shoot of “Anonymous,” a loose confederation of computer hackers and others – hacked into computer systems used by Strategic Forecasting, Inc. (“Stratfor”), a global intelligence firm in Austin, Texas. HAMMOND and his co-conspirators stole confidential information from those computer systems, including Stratfor employees’ emails as well as account information for approximately 860,000 Stratfor subscribers or clients. HAMMOND and his co-conspirators also stole credit card information for approximately 60,000 credit card users and used some of the stolen data to make more than $700,000 in unauthorized charges. HAMMOND and his co-conspirators also publicly disclosed some of the confidential information they had stolen.
In addition, at his guilty plea today, HAMMOND admitted his involvement in multiple additional hacks, including: the June 2011 hack of computer systems used by the Federal Bureau of Investigation’s Virtual Academy; the June 2011 hack of computer systems used by the Arizona Department of Public Safety, a state law enforcement agency in Arizona; the July 2011 hack of computer systems owned by Brooks-Jeffrey Marketing, Inc., a company based in Mountain Home, Arkansas, and various law enforcement-related websites; the August 2011 hack of computer systems used by Special Forces Gear, a company based in California; the August 2011 hack of computer systems used by Vanguard Defense Industries, a company based in Texas; the October 2011 hack of computer systems used by the Jefferson County, Alabama Sheriff’s Office; the October 2011 hack of computer systems used by the Boston Police Patrolmen’s Association; and the February 2012 hack of computer systems used by the Combined Systems, Inc., a company based in Pennsylvania.
HAMMOND, 28, of Chicago, Illinois, pled guilty to one count of conspiracy to engage in computer hacking and faces a maximum of 10 years in prison. He has also agreed to pay up to $2.5 million in restitution. He will be sentenced by Judge Preska on September 6, 2013 at 10 a.m.
Charges against four other hackers who were originally charged with HAMMOND, RYAN ACKROYD, JAKE DAVIS, DARREN MARTYN, and DONNCHA O’CEARRBHAIL – all of whom identified themselves as members of Anonymous or its offshoots, including “Internet Feds,” “LulzSec,” and “AntiSec” – remain pending. The charges are merely accusations, and the defendants are presumed innocent unless and until proven guilty. ACKROYD and DAVIS were convicted for cybercrimes by a British court in May 2013 and are serving their sentences there.
The Office’s Complex Frauds Unit is handling the case.
U.S. v. Jeremy Hammond S2 Information
Manhattan U.S. Attorney Announces Extradition of Former President of Guatemala, Alfonso Portillo, on Money Laundering ChargeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Michele M. Leonhart, Administrator of the Drug Enforcement Administration, and Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), today announced the extradition of ALFONSO PORTILLO, the former President of Guatemala, who is charged with conspiring to launder millions of dollars he embezzled from the Government of Guatemala through bank accounts located in the United States. Portillo arrived in the Southern District of New York last Friday and will be presented today before U.S. District Judge Robert P. Patterson.
United States Attorney Preet Bharara said: “After three years of fighting his extradition, Alfonso Portillo has finally arrived in the United States to answer for his alleged misappropriation of millions of dollars intended for the benefit of the people of Guatemala and which he laundered through United States banks. Our ability to hold him to account for his alleged criminality and corruption is the result of the unrelenting commitment and dedication of our prosecutors and our law enforcement partners in both the United States and Guatemala.”
DEA Administrator Michele M. Leonhart said: “Former President Portillo has been extradited to the United States for violations of money laundering. In his role as President, Mr. Portillo used our banking system to launder illegal proceeds, which is a violation of law that DEA will always aggressively investigate. Thanks to the work of many in law enforcement and DEA’s strong and cooperative relationships with the Guatemalan government, Mr. Portillo will now face justice in a U.S. courtroom.”
IRS-CI Special Agent-in-Charge Toni Weirauch said: “IRS-Criminal Investigation is dedicated to working with our law enforcement partners and sharing our financial investigative expertise to combat and disrupt criminal organizations and individuals that commit crimes against our society and the world economy, including international money laundering. To that end, we are a proud participant in the DEA’s New York Organized Crime Drug Enforcement Strike Force. These money laundering allegations are truly international in nature, as the American financial system was misused and harmed in the concealment of money embezzled from the government of Guatemala and ultimately, its people.”
According to the Indictment previously unsealed in Manhattan federal court:
PORTILLO served as the President of Guatemala from January 14, 2000, to January 14, 2004. In that capacity, he embezzled tens of millions of dollars in public funds, a substantial portion of which he laundered through American and European bank accounts.
PORTILLO misappropriated public money in at least three different ways:
First, in 2000 and 2002, PORTILLO embezzled approximately $2.5 million dollars provided by the Government of Taiwan's Embassy in Guatemala. In 2000, the Taiwanese Embassy issued three checks totaling $1.5 million, drawn upon a New York bank account created for the purpose of funding a Guatemalan program designed to purchase books for school libraries, Bibliotecas Para La Paz ("Libraries for Peace"). PORTILLO endorsed these checks and caused them to be deposited in a bank account in Miami, Florida. None of the money from the Government of Taiwan was applied towards the Libraries for Peace program; almost $1 million of the donation was ultimately diverted, through a series of transactions and transfers intended to conceal the source and origin of the funds, to bank accounts in the name of PORTILLO's former wife and daughter at Banco Bilbao Vizcaya Argentaria ("BBVA") in Paris, France. The money transferred into the BBVA Accounts was further laundered through financial institutions in Luxembourg and Switzerland, among other places.
Second, in 2001, PORTILLO embezzled approximately 30 million Quetzales (equivalent at that time to approximately $3.9 million) from the Guatemalan Ministry of Defense. PORTILLO arranged for this money to be delivered to one of Guatemala's national banks, Credito Hipocaterio Nacional ("CHN"), to which PORTILLO had previously appointed a co-conspirator ("CC-1") as the bank’s president. With the assistance of CC-1, PORTILLO directed the disbursement of the military funds to, among other things, finance a private land deal, disguise a loan to an associate, and issue checks to a company controlled by another co-conspirator. That co-conspirator then transferred a portion of that money to the BBVA accounts controlled by PORTILLO's former wife and daughter through a Miami bank account.
Finally, from approximately 2000 through 2003, PORTILLO misappropriated funds from the publicly financed reserves of CHN. PORTILLO and his co-conspirators created overdrafts in CHN accounts belonging to companies established by CC-1 and other co-conspirators. Through the use of these overdrafts, PORTILLO and his co-conspirators withdrew and transferred money from CHN accounts in excess of the accounts' otherwise existing balances. PORTILLO used these overdraft withdrawals and transfers to purchase, among other things, various personal items –- including expensive watches and cars –- for himself and his associates. On other occasions, PORTILLO and his co-conspirators used the overdrafts on CHN accounts to transfer and launder funds into business and personal accounts, maintained in the United States and elsewhere, belonging to co-conspirators. Relying on the CHN overdrafts, PORTILLO also transferred money to help prop up two failing banks that were principally owned by a close associate and political supporter of PORTILLO's, Banco Promotor and Banco Metropolitano.
If convicted of the money laundering conspiracy count with which he is charged, PORTILLO, 61, faces a maximum term of 20 years in prison and a maximum fine of the greater of $500,000, or twice the value of the monetary instruments or funds involved in the money laundering transactions.
Mr. Bharara 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, IRS-CI, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Secret Service and the U.S. Marshals Service – the Department of State, and the U.S. Department of Justice's Office of International Affairs for their work in this investigation. Mr. Bharara also recognized and thanked the United Nations Commission Against Impunity in Guatemala ("CICIG"), the Guatemalan Special Prosecutor's Office for the CICIG, and the Ministerio Público in Guatemala for their assistance in this investigation.
This prosecution is being handled by the Office's Terrorism and International Narcotics Unit. Assistant United States Attorneys Rachel Kovner and Adam Fee are in charge of the prosecution.
The charge contained in the Indictment is merely an accusation and the defendant is presumed innocent unless and until proven guilty.
U.S. v. Alfonso Portillo Indictment
Manhattan U.S. Attorney Announces Charges Against Liberty Reserve, One of World’s Largest Digital Currency Companies, and Seven of Its Principals and Employees for Allegedly Running A $6 Billion Money Laundering SchemeRead the Press Release
Investigation and Takedown Believed to Be the Largest International Money Laundering Prosecution in History, Involving Law Enforcement Actions in 17 Countries
Preet Bharara, the United States Attorney for the Southern District of New York, Mythili Raman, the Acting Assistant Attorney General for the Criminal Division of the U.S. Department of Justice (“DOJ”), Steven G. Hughes, the Special Agent-in-Charge of the New York Office of the U.S. Secret Service, Richard Weber, the Chief of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and James T. Hayes, Jr., the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s (“ICE”) Homeland Security Investigations (“HSI”), announced today the unsealing of an indictment charging LIBERTY RESERVE, a company that operated one of the world’s most widely used digital currency services, and seven of its principals and employees with money laundering and operating an unlicensed money transmitting business. LIBERTY RESERVE is alleged to have had more than one million users worldwide, including more than 200,000 users in the U.S, who conducted approximately 55 million transactions – virtually all of which were illegal – and laundered more than $6 billion in suspected proceeds of crimes including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking.
Five defendants were arrested on May 24, 2013, including ARTHUR BUDOVSKY, the principal founder of LIBERTY RESERVE, who was arrested in Spain; VLADIMIR KATS, the co-founder of LIBERTY RESERVE, who was arrested in Brooklyn, New York; AZZEDDINE EL AMINE, a manager of LIBERTY RESERVE’s financial accounts, who was arrested in Spain; and MARK MARMILEV and MAXIM CHUKHAREV, who helped design and maintain LIBERTY RESERVE’s technological infrastructure, who were arrested in Brooklyn, New York, and Costa Rica, respectively. Two other defendants, AHMED YASSINE ABDELGHANI (“YASSINE”) and ALLAN ESTEBAN HIDALGO JIMENEZ (“HIDALGO”), are at large in Costa Rica.
In addition to the criminal charges brought in the Indictment, five domain names were seized, namely, the domain name of LIBERTY RESERVE and the domain names of four exchanger websites that were controlled by one or more of the defendants; 45 bank accounts were restrained or seized; and a civil action was filed against 35 exchanger websites (see attached list) seeking the forfeiture of the exchangers’ domain names because the websites were used to facilitate the LIBERTY RESERVE money laundering conspiracy and constitute property involved in money laundering. The four exchangers whose domain names were seized, as well as the 35 exchangers whose domain names are the subjects of the civil forfeiture action, were all exchangers that transacted business with LIBERTY RESERVE and were listed on LIBERTY RESERVE’s website as “pre-approved exchangers.” The investigation and takedown involved law enforcement action in 17 countries, including Costa Rica, the Netherlands, Spain, Morocco, Sweden, Switzerland, Cyprus, Australia, China, Norway, Latvia, Luxembourg, the United Kingdom, Russia, Canada, and the U.S.
In a coordinated action, the U.S. Department of the Treasury and its Financial Crimes Enforcement Network today announced that LIBERTY RESERVE has been named as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act. This action includes a notice to the Federal Register proposing to prohibit covered U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for foreign banks that are being used to process transactions involving LIBERTY RESERVE.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes – the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers, and traffickers. The global enforcement action we announce today is an important step towards reining in the ‘Wild West’ of illicit Internet banking. As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.”
Acting Assistant Attorney General Mythili Raman said: “As charged, Liberty Reserve operated, on an enormous scale, a digital currency system designed to provide cyber and other criminals with a way to launder their profits without leaving a trace. The company’s very purpose was to launder its users’ criminal proceeds through the U.S. and global financial system. By indicting Liberty Reserve and its principals, restraining over $25 million in criminal proceeds, forfeiting domain names, and seizing servers in countries around the globe, our message is clear: money launderers can run, but they can’t hide from the U.S. justice system. Combating the threat of global illicit finance requires using every tool we have at our disposal, and today we demonstrate our resolve to ensure that criminals who exploit the U.S. and global financial system will be held to account.”
Secret Service Special Agent-in-Charge Steven G. Hughes said: “These arrests are an example of the Secret Service’s commitment to investigate and apprehend criminals engaged in the misuse of virtual currencies to conduct global monetary fraud. Cyber criminals should be reminded today that they are unable to hide behind the anonymity of the Internet to avoid regulated financial systems. We are grateful to our many law enforcement partners throughout the world for assistance in this investigation, especially in Costa Rica, Spain and the Netherlands.”
IRS-CI Chief Richard Weber said: “We are now entering the cyber age of money laundering. Technology advancements over the past several years have dramatically increased opportunities for criminals to move, conceal and enjoy their ill-gotten gains. Liberty Reserve and its principals have been charged with operating a sophisticated and complex system for structuring financial transactions which catered to those engaged in such criminal activity. What they did not anticipate was our robust partnerships with domestic and foreign law enforcement that allowed us collectively to follow the cyber money trail in the United States and around the world.”
ICE HSI Special Agent-in-Charge James T. Hayes, Jr. said: “The actions of the U.S. Secret Service, IRS, and HSI in dismantling the Liberty Reserve operation are critical because transnational criminal organizations can succeed only so long as they can funnel their illicit proceeds freely and without detection. HSI is proud of its partnership through the Global Illicit Financial Team and will continue to aggressively target financial institutions that deliberately enable businesses and individuals to evade global financial systems in furtherance of criminal schemes.”
According to the allegations in the Indictment, the Civil Forfeiture Complaint, and other documents filed in Manhattan federal court:
Background
LIBERTY RESERVE was incorporated in Costa Rica in 2006 and operated the digital currency commonly referred to as “LR.” While the company billed itself as the Internet’s “largest payment processor and money transfer system,” serving “millions” of people around the world, including the U.S., at no time did the company register with the U.S. Department of the Treasury as a money transmitting business, as required by law.
BUDOVSKY, the principal founder of LIBERTY RESERVE, directed and supervised its operations, finances, and corporate strategy. KATS, a co-founder, helped operate the company until 2009. The day-to-day operations of LIBERTY RESERVE were managed, at different times, by HIDALGO and YASSINE. EL AMINE managed various financial accounts controlled by LIBERTY RESERVE, while MARMILEV and CHUKHAREV were primarily responsible for designing and maintaining the company’s technological infrastructure.
Overview of Liberty Reserve’s Money Laundering Operation
The defendants created, structured, and operated LIBERTY RESERVE as a criminal bank-payment processor designed to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. It emerged as one of the principal money transfer agents used by cyber criminals around the world to distribute, store, and launder the proceeds of their illegal activity. The company grew into a financial hub of the cybercrime world, facilitating a broad range of online criminal activity, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking. LIBERTY RESERVE was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cyber criminals around the world to conduct anonymous and untraceable financial transactions.
The defendants also protected the criminal infrastructure of LIBERTY RESERVE by, among other things, lying to anti-money laundering authorities in Costa Rica and pretending to shut down LIBERTY RESERVE after learning the company was being investigated by U.S. law enforcement. They then continued operating the business through a set of shell companies, and moved tens of millions of dollars through shell company accounts maintained in Cyprus, Russia, China, Hong Kong, Morocco, Spain, Australia, and elsewhere.
The Criminal Design of Liberty Reserve
In order to use LR currency, a user first had to open an account through the LIBERTY RESERVE website and provide basic identifying information. Unlike traditional banks or legitimate online processors, LIBERTY RESERVE did not require users to validate their identities. Users routinely established accounts under false names, including such blatantly criminal names as “Russia Hackers” and “Hacker Account.” As part of the investigation, a law enforcement agent opened and executed transactions through an undercover account at LIBERTY RESERVE in the name of “Joe Bogus” and the address “123 Fake Main Street” in “Completely Made Up City, New York.”
Once an account was established, the user could conduct transactions with other LIBERTY RESERVE users. In these transactions, the user could receive transfers of LR from other users’ accounts, and transfer LR from his or her own account to other users, including any “merchants” that accepted LR as payment. LIBERTY RESERVE charged a one-percent fee up to a maximum of $2.99, every time a user transferred LR to another user through the LIBERTY RESERVE system. For an additional “privacy fee” of 75 cents per transaction, a user could hide his or her own LIBERTY RESERVE account number when transferring funds, effectively making the transfer completely untraceable, even within LIBERTY RESERVE’s already opaque system.
To add an additional layer of anonymity, LIBERTY RESERVE did not permit users to fund their accounts by transferring money to the company directly through a credit card transfer or other means. Users also could not withdraw funds from their accounts directly. Instead, LIBERTY RESERVE users were required to make any deposits or withdrawals through the use of third-party “exchangers,” which enabled the company to avoid collecting any information about its users through banking transactions or other activity that would leave a centralized financial paper trail. BUDOVSKY, KATS, and EL AMINE owned and operated certain LIBERTY RESERVE exchanger services.
The LIBERTY RESERVE website recommended a number of “pre-approved” exchangers, which tended to be unlicensed money transmitting businesses operating in countries without significant governmental money laundering oversight or regulation, such as in Malaysia, Russia, Nigeria, and Vietnam. The exchangers charged transaction fees for their services that were much higher than the fees charged by mainstream banks or payment processors for comparable money transfers.
The Criminal Use of Liberty Reserve
To further enable the use of LIBERTY RESERVE for criminal activity, its website offered a “shopping cart interface” that “merchant” websites could use to accept LR currency as a form of payment. The “merchants” who accepted LR currency were overwhelmingly criminal in nature. They included traffickers of stolen credit card data and personal identity information, peddlers of various types of online Ponzi and get-rich-quick schemes, computer hackers for hire, unregulated gambling enterprises, and underground drug-dealing websites.
In addition to being used to process payments for illegal goods and services online, LIBERTY RESERVE was also used by cyber criminals to launder criminal proceeds and transfer funds among criminal associates. For example, LIBERTY RESERVE was used by credit-card theft and computer-hacking rings operating in countries around the world, including Vietnam, Nigeria, Hong Kong, China, and the U.S., to distribute proceeds of these conspiracies among the members involved.
The defendants were well aware that LIBERTY RESERVE functioned as an unlawful money-laundering enterprise. In an online chat between KATS and YASSINE that was captured by law enforcement, KATS explicitly described LIBERTY RESERVE’s activities as “illegal” and noted that “everyone in USA” such as “DOJ” knows “LR is [a] money laundering operation that hackers use.”
LIBERTY RESERVE, BUDOVSKY, 39, a citizen of Costa Rica who resides in the Netherlands, KATS, 41, of Brooklyn, New York, YASSINE, 42, of Costa Rica, HIDALGO, 28, of Costa Rica, EL AMINE, 46, of Costa Rica, MARMILEV, 33, of Brooklyn, New York, and CHUKHAREV, 27, of Costa Rica, are each charged with one count of conspiracy to commit money laundering, which carries a maximum term of 20 years in prison, one count of conspiracy to operate an unlicensed money transmitting business, which carries a maximum term of five years in prison, and operation of an unlicensed money transmitting business, which carries a maximum term of five years in prison. The terms of incarceration apply to the individual defendants.
Mr. Bharara praised the outstanding investigative work of the Secret Service, the IRS-CI, and ICE HSI, which worked together in this case as part of the Global Illicit Financial Team. He also thanked the Secret Service’s New York Electronic Crimes Task Force for their extraordinary assistance with the investigation. Additionally, Mr. Bharara specially thanked all the international law enforcement agencies that assisted this investigation, in particular, the Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation, and the Swiss Federal Prosecutor’s Office. Mr. Bharara also thanked the Shadowserver Foundation for acting as the hosting provider for the domain names that were seized pursuant to the Court-authorized seizure warrants.
This case is being prosecuted jointly with the Department of Justice’s Asset Forfeiture and Money Laundering Section (“AFMLS”), which is overseen by Acting Assistant Attorney General Mythili Raman. Mr. Bharara thanked AFMLS for its partnership and also thanked the Department of Justice’s Office of International Affairs and Computer Crime and Intellectual Property Section for their support.
If you believe you were a victim of a crime and were defrauded of funds through the use of Liberty Reserve, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact (888) 238-0696 or (212) 637-1583.
The prosecution of this case is being handled by the Office’s Complex Frauds Unit and Asset Forfeiture Unit.
The charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
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U.S. v. Liberty Reserve, et al. Indictment - Redacted
U.S. v. Liberty Reserve, et al. Redacted AUSA Appln
U.S. v. Liberty Reserve, et al. Redacted Domain SW
U.S. v. Liberty Reserve, et al. Redacted Injunction Order