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24 May 2013
Third-party custodian indicted for perjury and making false statements about criminal historyRead the Press Release
Anchorage, Alaska – Acting U.S. Attorney Kevin Feldis announced today that a resident of Montrose, Colorado, was indicted by a federal grand jury in Anchorage on one count of making false statements to the United States and one count of perjury. Both charges are felonies.
According to the indictment, James Paul Hunt, 61, recently applied to be a third-party custodian for his son, who was charged with distribution of child pornography. Hunt submitted a U.S. Probation/Pretrial Services Application for Third-Party Custody, which he signed under penalty of perjury, to the U.S. Probation/ Pretrial Services Office. The application asked whether Hunt had “Ever been cited, arrested, charged with or convicted of any crime.” It is alleged that in response, Hunt knowingly failed to disclose that in 1987, he was charged and pled guilty to Sexual Assault on a Child (Position of Trust) in Colorado.
The indictment further alleges that at a bail hearing for Hunt’s son on November 26, 2012, an Assistant U.S. Attorney questioned Hunt about whether there were “any other instances” or “police contacts” that Hunt had failed to mention on the application to be a third party custodian. Hunt falsely responded and did not disclose the Sexual Assault charge or his guilty plea.Assistant U.S. Attorney Kimberly Sayers-Fay, who presented the case to the grand jury, advised that each of the felony counts carries a maximum sentence of five years’ imprisonment, a $250,000 fine, one year supervised release and a mandatory special assessment of $100 per count.
Homeland Security Investigations conducted the investigation that led to the indictment in this case.
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.Sixth Former Roxbury Correctional Officer Pleads Guilty,Admits Assault of Inmate and Cover-up ConspiracyRead the Press Release
Jeremy McCusker, a former correctional officer at Roxbury Correctional Institution (RCI) in Hagerstown, Md., yesterday pleaded guilty to assaulting an inmate and conspiring with other officers to cover up that assault. McCusker is the sixth former RCI officer to enter a guilty plea in federal court.
According to court documents filed in connection with his guilty plea, McCusker admitted that, during the midnight shift on March 8-9, 2008, he, Lanny Harris, Philip Mayo and two other RCI officers were involved in an assault of an inmate, identified by the initials K.D. McCusker acknowledged that he and other RCI officers assaulted K.D. in order to punish him for striking an officer during a prior shift.
McCusker also admitted that he and other RCI officers discussed how they would cover up their involvement in the assault of K.D. McCusker admitted that he provided false and misleading information to federal and state authorities in an effort to cover up his involvement in the assault.“Mr. McCusker has admitted that he and other correctional officers assaulted an inmate in order to punish him and that they subsequently conspired to cover up their criminal conduct,” said Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute officers who use their official position to both commit and cover up violations of federal criminal law.”
McCusker faces a statutory maximum penalty of 15 years in prison. Sentencing is set for Aug. 23, 2013, before U.S. District Judge James K. Bredar.
In related cases before Judge Bredar, former RCI Correctional Officers Ryan Lohr, Philip Mayo, Dustin Norris, Walter Steele, and Lanny Harris each has entered a guilty plea. Nine other current or former RCI officers still face federal charges in connection with the alleged assault of K.D.
The investigation by the Frederick Resident Agency of the FBI is ongoing. The case is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Sanjay Patel of the Civil Rights Division of the Department of Justice, with the assistance of Michael Cunningham of the U.S. Attorney’s Office for the District of Maryland.
Six Latin King Gang Members Sentenced for RacketeeringRead the Press Release
FOR IMMEDIATE RELEASECONTACT: Mary Hatton
www.usdoj.gov/usao/inn/ CELL: (219) 314-9993
Hammond, Indiana—The United States Attorney’s Office announced the following activity in Federal Court:
Six members of the Latin Kings street gang were sentenced before Senior District Judge Rudy Lozano in federal court this week for racketeering conspiracy, announced U.S. Attorney David Capp and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.
Oscar Gonzalez, 23, of Hammond, was sentenced to 240 months imprisonment and, if not deported, 5 years of supervised release after pleading guilty on June 26, 2012 to the felony offense of conspiracy to participate in racketeering activity and conspiracy to possess with the intent to distribute and distribute cocaine and marijuana.
Martin Anaya, 42, of Chicago, was sentenced to 360 months in prison and 5 years of supervised release after a jury returned a guilty verdict on Sept. 25, 2012, to racketeering and drug conspiracies.
Jason Ortiz, 29, of Chicago, was sentenced to serve 300 months in prison and 5 years of supervised release after pleading guilty on July 30, 2010, to racketeering conspiracy.During his guilty plea proceeding, Ortiz acknowledged that on Feb. 25, 2007, he, along with four other defendants, rode on a “mission” from Illinois to Griffith, Indiana. While armed with three firearms, they were ordered to ambush rival gang members who were attending a party. Once two Latin Dragon members James Walsh, aka “Jim Boy” and Gonzalo Diaz left the party, the Latin Kings, including Ortiz, rode up in a vehicle and two of Ortiz’s co-defendants got out of the vehicle and shot and killed Walsh and Diaz.
Jermaine Ellis, 23, of Chicago, was sentenced to 205 months imprisonment and years of supervised release after pleading guilty on October 21, 2010 to the felony offense of conspiracy to participate in racketeering activity. Ellis, who became a Latin King member at an early age, admitted that while a juvenile he participated in the shooting deaths of James Walsh and Gonzalo Diaz in Griffith, Indiana.
Antonio Martinez, Jr., 42, of Chicago, a former officer with the Chicago Police Department, was sentenced to 144 months imprisonment and 5 years of supervised release after pleading guilty on December 2, 2011to the felony offense of conspiracy to participate in racketeering activity. According to court records, Martinez and another officer committed armed robberies on behalf of a Latin Kings gang member, at times while in uniform and driving police-issued vehicles. They stole drugs, weapons and cash, and in some instances were given a portion of the funds they stole as payment for committing the armed robberies.
Hiluterio Chavez, 37, of Chicago, was sentenced to 240 months imprisonment and 5 years of supervised release after pleading guilty on January 24, 2012 to the felony offense of conspiracy to participate in racketeering activity. Among other crimes, Chavez participated in a robbery with Martinez and presented himself as a law enforcement officer.
According to the indictments filed in this case, the Latin Kings is a nationwide gang that originated in Chicago and has branched out throughout the United States. The Latin Kings is a well organized street gang that has specific leadership and is composed of regions that include multiple chapters. The Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault and threats against those who violate the rules or pose a threat to the Latin Kings. Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”The indictments charge that the Latin Kings were responsible for more than 20 murders.
Twenty-three Latin Kings members and associates have been indicted in this case.Fourteen have now been sentenced.Of the nine remaining, seven have pled guilty, one case was dismissed and one is a fugitive.
These cases were investigated by Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Drug Enforcement Administration; Federal Bureau of Investigation; the U.S. Immigration and Custom Office of Homeland Security Investigations; the National Gang Targeting, Enforcement & Coordination Center; the National Gang Intelligence Center; the Chicago Police Department; the East Chicago Police Department; the Griffith Police Department; the Hammond Police Department; the Highland Police Department; and the Houston Police Department.The investigation of the Chicago Police Department officers was conducted by Chicago City Public Corruption Task Force, a Chicago Police Department- Internal Affairs and FBI - Chicago law enforcement initiative.This case is being prosecuted by Assistant United States Attorney David J. Nozick, and Joseph A. Cooley, Trial Attorney, United States Department of Justice - Organized Crime and Gang Section.
Sioux Falls Man Pleads Guilty to Wire FraudRead the Press Release
United States Attorney Brendan V. Johnson announced that Terry Stimpert, age 37, of Sioux Falls, South Dakota appeared before U.S. District Judge Karen E. Schreier on May 21, 2013 and pled guilty to an indictment that charged him with wire fraud. The maximum penalty upon conviction is 20 years' imprisonment, and a $250,000 fine.
In 2012, Terry Stimpert devised a scheme to steal money from investment accounts at Equity Trust Company. Posing as an actual account holder, Stimpert provided real account holder names, account numbers, and social security numbers, all of which he obtained during his employment with Equity Trust Company. Stimpert requested that money be wire transferred to an account he established at another financial institution.
The investigation was conducted by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Jeffrey C. Clapper.
A presentence investigation was ordered and a sentencing date was set for August 12, 2013. The defendant was released on bond pending sentencing.
Sioux City Man Guilty of Mail FraudRead the Press Release
United States Attorney Brendan V. Johnson announced that Darin Moran, age 36, of Sioux City, Iowa appeared before U.S. District Judge Karen E. Schreier on May 21, 2013 and pled guilty to Count I of the indictment that charged him with Mail Fraud. The maximum penalty upon conviction is 20 years in prison, a $250,000 fine, or both.
From November 1, 2007 thru October 31, 2010, Moran was a certified repair technician working for Amerikit, an Apple service provider in South Dakota. In that capacity, Moran had particular knowledge and access to the Apple warranty process. This included Apple at times sending new parts that could be used in warranty-covered repairs. Moran utilized three separate methods, all resulting in Moran receiving computers and replacement parts from Apple free of charge. At times, he would make warranty claims on behalf of a personal side business he started, D & M Sales, thereby obtaining free parts that he used in his personal business. At times, he obtained junk parts through internet sources, then submitted fictitious warranty claims for those parts. Finally, at times, Moran submitted warranty claims to Apple for junk parts that he knew were not covered under warranty, such as parts damaged by liquid. He concealed the nature of the damage, and when necessary, replaced serial numbers to submit the parts as warranty-covered damage.
As part of his related scheme, Moran made and caused to be made hundreds of mailings, often via Federal Express. Each of these particular mailings involved parts Moran sent after affixing false serial numbers in an effort to intentionally deceive Apple into determining that they were warranted parts.
The investigation was conducted by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Kevin Koliner.
A presentence investigation was ordered, and a sentencing date was set for August 12, 2013. The defendant was released on bond pending sentencing.
Savannah Doctor Sentenced to 30 Months in Pills for Sex SchemeRead the Press Release
SAVANNAH , GA: WILLIAM ELLIEN, 57, of Savannah, Georgia, was sentenced yesterday in federal court by U.S. District Court Judge William T. Moore, Jr., to 30 months in prison for exchanging prescriptions for highly addictive drugs in exchange for sex. Ellien was also sentenced to serve 3 years of supervised release upon his release from prison and ordered to surrender all of his medical licenses.
According to the evidence presented during the guilty plea and sentencing hearings, from 2009 until 2012, Dr. William Ellien, a once prominent Savannah Psychiatrist and a former Lt. Col. with the United States Army, traded hundreds of prescriptions for oxycontin, hydrocodone, Xanax, and other highly addictive drugs in exchange for sexual acts with multiple women. Some of Ellien’s victims were strip-club dancers, who he befriended and then exchanged prescriptions for sexual favors. The evidence also showed that Ellien met numerous women at hotels, restaurants and other locations to engage in the illicit activity. None of these women were his patients; many were addicts or became addicted as a result of Ellien’s criminal conduct.
United States Attorney Edward Tarver stated, “This defendant completely ignored his oath to ‘do no harm,’ all the while feeding the addiction of others for his own personal gratification. Now, he’ll do no harm serving a stiff prison sentence.”
This case was investigated by the DEA and prosecuted by Assistant United States Attorney E. Greg Gilluly, Jr. For additional information, please contact First Assistant United States Attorney James D. Durham at (912) 201-2547.
Repeat Sex Offender Sentenced to over 22 Years in Federal Prison for Attempting to Coerce A Minor to Have SexRead the Press Release
RENO, Nev. – A man with a prior federal child pornography conviction in California has been sentenced to 22½ years in prison and lifetime supervised release for his guilty plea to soliciting children over the Internet for sex, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Vincent Charles Fasone, 44, of Fernley, Nev., was sentenced on Wed., May 22, 2013, by Senior U.S. District Judge Howard D. McKibben. Fasone pleaded guilty on Jan. 31, 2013, to one count of attempted coercion and enticement of a minor and one count of commission of a felony sex offense by an individual required to register as a sex offender. Under federal law, each count carries a minimum mandatory 10 years in prison, and the repeat sex offender count must be served consecutively.“From about 2007 through 2012, more than 12,000 persons have been convicted in federal courts nationally of an offense related to the sexual exploitation of a minor,” said U.S. Attorney Bogden. “In the District of Nevada during 2012, 60 persons were charged federally with such crimes and 74 new investigations were opened. Almost all of the persons charged were convicted and sentenced to more than five years in prison. We will continue to aggressively pursue these defendants who attempt to exploit our children.”
On Sept. 11, 2012, a detective with the Washoe County Sheriff’s Office, who was working on the Internet Crimes Against Children Task Force, began an undercover investigation on an Internet chat site looking for targets who were seeking to solicit or entice minor children for sex. Fasone, often using the screen name, “Guysmiley,” was observed in various chat rooms. Over the next couple of days, the undercover detective posing as an interested father of a young girl, had multiple online conversations with Fasone, who expressed his desire to have sex with young girls. Arrangements were made to meet Fasone at an apartment complex in Sparks, Nev. on Sept. 20, 2012. Fasone thought he was meeting the father and the father’s seven-year-old daughter and 12-year old female babysitter for sex. Fasone was arrested as he went to the apartment.
Fasone was convicted in 1998 in the Southern District of California of receipt of child pornography and sentenced to four years in prison.
The case was investigated by the Northern Nevada Internet Crimes Against Children Task Force, which includes the FBI, U.S. Immigration and Customs Enforcement HSI, the Nevada Attorney General’s Office, and the Washoe County Sheriff’s Office. The case was prosecuted by Assistant United States Attorney Carla B. Higginbotham.
The case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal
safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project
Safe Childhood, please visit www.usdoj.gov/psc. For more information about internetRadio Equipment Seized from Pirate Radio Station in RoslindaleRead the Press Release
BOSTON – A warrant recently unsealed in U.S. District Court details the seizure of radio transmission equipment of a pirate radio station broadcasting from Roslindale.
The seizure, by federal officials on May 21, 2013, occurred at the station’s last known address on Washington Street in Roslindale. The pirate radio station is alleged to have been using frequency 88.5 MHz without a license from the Federal Communications Commission (FCC). A civil action was brought seeking forfeiture of the equipment because it was allegedly used in violation of federal law.
According to an affidavit filed with the civil complaint, the FCC issued warnings to the residents of 4258 Washington Street, but the radio station continued to broadcast. The forfeiture action was brought after complaints were received from a licensed broadcaster about interference with its radio signal.
The Communications Act of 1934 prohibits the operation of radio broadcasting equipment above certain low-intensity thresholds without a license issued by the FCC. The Act authorizes the seizure and forfeiture of any electronic or radio frequency equipment used to broadcast without an FCC license. The number of available radio frequencies is limited, and unlicensed broadcasting can interfere with the broadcasting of legitimate licensed radio stations, potentially causing chaos in the radio spectrum.
“It is a potential hazard to public safety for pirate radio stations to broadcast illegally and interfere with critical radio communications,” said United States Attorney Carmen M. Ortiz. “The U.S. Attorney’s Office will work in conjunction with the FCC to identify and seize equipment from these pirate broadcasters.”
“The FCC remains committed to shutting down pirate broadcasters whose operations potentially endanger public safety and interfere with the legitimate broadcasts of our licensees.” said Michele Ellison, Chief of the FCC’s Enforcement Bureau. “We will continue to use all available enforcement tools, including equipment seizures, to protect the airwaves and are grateful for the assistance and fine work of the U.S. Attorney’s Office in Boston.”
U.S. Attorney Ortiz and Chief Ellison made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Christine Wichers of Ortiz’s Civil Division.
Preschool Teacher Sentenced to 168 Months for Production of Child PornographyRead the Press Release
ALEXANDRIA, Va. – James Douglas Manring, 54, of Fredericksburg, Virginia, was sentenced today to 168 months in prison, followed by a 3 year term of supervised release, for production of child pornography. Prior to his arrest on Nov. 13, 2012, Manring taught preschool in Bethesda, Maryland.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia and Gary Barksdale, Inspector in Charge of the Washington Division of the United States Postal Inspection Service, made the announcement after United States District Court Judge Claude M. Hilton imposed sentencing.
Manring pleaded guilty to two counts of production of child pornography on Jan. 28, 2013.
According to court documents, Manring filmed himself performing sexual acts on several students who were approximately five years of age while teaching at a preschool in Japan from 1996 to 1999. In 1999, Manring returned to the United States and brought DVDs containing the child pornography he produced with him.Further, between April 2010 and February 2011, Manring also purchased approximately 46 videos for about $2,000. These videos depict the graphic and simulated lascivious exhibition of the genitals and pubic areas of minor boys and were mailed from New York to Manring’s residence in Fredericksburg, Virginia.
This case was investigated by the US Postal Inspection Service, Child Exploitation Investigations’ Washington Division. Special Assistant United States Attorney Alicia J. Yass, a Trial Attorney with the Child Exploitation and Obscenity Section of the Justice Department’s Criminal Division, is prosecuting the case on behalf of the United States.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Pierre Man Charged with Injurious Articles as NonmailableRead the Press Release
United States Attorney Brendan V. Johnson announced that Tom J. Parsons, age 49, appeared before U.S. Magistrate Judge Mark A. Moreno on May 24, 2013, and pled not guilty to an Information that was filed on May 6, 2013, charging him with Injurious Articles as Nonmailable. The maximum penalty upon conviction is 1 year of imprisonment, a $100,000 fine, or both. The charge is merely an accusation, and Parsons is presumed innocent until and unless proven guilty.
The investigation is being conducted by the United States Postal Service, and First Assistant U.S. Attorney Randolph J. Seiler is prosecuting the case. Parsons was released on bond pending trial. A trial date has not yet been set.
Pharmacist and Former Owner of St. George Pharmacy Pleads Guilty to Conspiracy to Commit Health Care FraudRead the Press Release
Tampa, Florida - United States Attorney Robert E. O'Neill announces that Samuel Wahba (45, Palm Harbor) pleaded guilty yesterday to conspiracy to commit health care fraud, lying to a federal agency, making false claims to a federal health care program, and concealing his exclusion from all federal health care programs with the intent to fraudulently seek payment from such programs. Wahba faces a maximum penalty of five years in federal prison for the charge.
According to the plea agreement, on August 10, 2001, Wahba was convicted of one count of violating the Florida Racketeering Influenced and Corrupt Organization Act (RICO), one count of Medicaid Provider Fraud, one count of Grand Theft (Second Degree), and one count of Grand Theft (Third Degree), in the Circuit Court of the Sixth Judicial Circuit. These felony criminal convictions arose out of Wahba’s operation of Clover Pharmacy, located in Palm Harbor.
On July 31, 2002, Wahba received notice that he was excluded for a period of 15 years from participating in any and all other federal health care programs, including Medicare and Medicaid. This exclusion notice also advised Wahba that he could not collect any payments from any federal health care programs during the period of exclusion.
After being excluded from participation in all federal health care programs, Wahba went about devising a scheme to form a new pharmacy. The new pharmacy, called St. George Pharmacy, was secretly owned and controlled by him. Wahba knew that he could only bill Medicaid, Medicare, TRICARE, and other federal health care programs, if his ownership and control of St. George Pharmacy was covert. This aspect of the scheme required Wahba to enlist the assistance of individuals to pretend, at various times, to be the owners and operators of St. George Pharmacy. The main objective in creating the fictional (“nominee”) owners was to enable St. George Pharmacy to bill federal health care programs notwithstanding Wahba’s exclusion from participation in these programs.
During the time frame of the conspiracy, Wahba recruited three individuals to serve as nominee owners of St. George Pharmacy. Wahba paid these nominee owners a one-time fee or compensation.
During the conspiracy, St. George Pharmacy submitted millions of dollars in claims for reimbursement to Medicaid, Medicare, and TRICARE for prescription drug services. In total, St. George Pharmacy fraudulently received $5,281,931.00 in reimbursement payments from federal healthcare programs.
This case was investigated by the Department of Health and Human Services, Office of Inspector General; the Defense Criminal Investigative Service; and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Simon Gaugush.
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Oakland Man Indicted for Stealing and Disposing of Historic Gold Jewelry Box from Oakland MuseumRead the Press Release
OAKLAND, Calif. – Yesterday, a federal grand jury in Oakland indicted Andre Taray Franklin, charging him with Theft of Major Artwork and Unlawful Concealment and Disposition of Stolen Major Artwork, United States Attorney MELINDA HAAG announced.
According to the indictment, Franklin, 45, is alleged to have stolen a jewelry box made of California gold and adorned with richly gold veined quartz made between 1869 and 1878 with a value of at least $100,000 from the Oakland Museum of California, on or about January 7, 2013. In addition, the indictment charges Franklin with unlawfully concealing and disposing of the historic jewelry box between January and February 2013.
An affidavit prepared in connection with a criminal complaint filed in the same matter alleges that the historic jewelry box was stolen from the Oakland Museum of California during a burglary on January 7, 2013. The burglary was captured on a surveillance video which shows that the crime was committed by a lone individual who used an axe to break into the museum and smash display cases to steal the historic jewelry box and other items. The affidavit also explains that Franklin was first identified as a suspect after DNA from an axe cover found on the grounds of the museum following the burglary was compared to a database of DNA profiles, and Franklin was reported as a likely match. At the time of his arrest on March 3, 2013, Franklin was wearing shoes consistent in physical appearance with the museum burglar’s and with soles consistent with footprints found in the burglar’s flight path on the museum grounds. In addition, Franklin’s phone contained a blurry picture of the jewelry box and incriminating text messages. Finally, the jewelry box was recovered from an address in Oakland identified in the incriminating text messages on Franklin’s phone.
Franklin is currently being held in Santa Rita Jail on a parole violation. His initial appearance in federal court will be held before the duty magistrate in Oakland when Franklin’s parole hold is lifted.
The maximum statutory penalty for each count of Theft of Major Artwork and Unlawful Concealment and Disposition of Stolen Major Artwork in violation of 18 U.S.C. §§ 668(b)(1) and (b)(2) is 10 years in prison and a fine of $250,000, plus restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Brian C. Lewis is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Janice Pagsanjan. The prosecution is the result of an investigation by the Oakland Police Department and the Federal Bureau of Investigation.
Please note, an indictment contains only allegations against an individual and, as with all defendants, Mr. Franklin must be presumed innocent unless and until proven guilty.
North Dakota Man Charged with Possession of A Firearm by A Prohibited PersonRead the Press Release
United States Attorney Brendan V. Johnson announced that Virgil Running Bear, Jr., age 40, was indicted by a federal grand jury on May 15, 2013, for Possession of a Firearm by a Prohibited Person. Running Bear appeared before U.S. Magistrate Judge William D. Gerdes on May 23, 2013, and pled not guilty to the Indictment. The maximum penalty upon conviction is 10 years of imprisonment, a $250,000 fine, or both; 3 years of supervised release; an additional 2 years of supervised release upon revocation; and a mandatory $100 special assessment to the Federal Crime Victims Fund. Restitution may also be ordered. The charge is merely an accusation, and Running Bear is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Edmunds County Sheriff’s Office. Assistant U.S. Attorney Kathryn N. Rich is prosecuting the case. Running Bear was remanded to the custody of the U.S. Marshal’s Service. A trial date has not yet been set.
Mexican National Sentenced to 148 Months for Distributing MethRead the Press Release
Seven Co-Defendants Sentenced Earlier in Treasure Valley Drug Conspiracy
BOISE – Nelson Fernando Garcia-Soto, 39, a Mexican national formerly living in Boise, Idaho, was sentenced today to 148 months in prison for possession with intent to distribute 50 grams or more of actual methamphetamine, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill also ordered Garcia-Soto to serve five years of supervised release. He pleaded guilty to the charge on November 13, 2012.
According to the plea agreement, on December 16, 2011, law enforcement officers recovered nine pounds of methamphetamine from a backpack in a vehicle Garcia-Soto was driving. Garcia-Soto subsequently admitted that earlier that evening he had distributed two pounds of methamphetamine to co-defendant Alfredo Dominguez-Villareal.
Seven co-defendants sentenced earlier include Alfredo Dominguez-Villareal, a/k/a Alfredo Vasquez-Dominguez, a Mexican national, to 150 months in prison; Jimenez Valencia a/k/a Jorge Jimenez, a Mexican national, to 57 months; Juan Carlos Arredondo-Sicairos a/k/a Victor Kalil Medina-Feliciano, a Mexican national, to 120 months; Delia Garcia-Pineda, a Mexican national, to 37 months; Tanna Spencer, of Parma, Idaho, to 15 months; Hector Morales, of Delano, California, to six months; and Cynthia Casillas, also of Delano, to three years’ probation.
Two remaining defendants, Alonso Martinez, 26, of Earlimart, California, and Samuel Chavez, 32, of New Meadows, Idaho, are scheduled to be sentenced on June 4 and June 24, respectively.
The case was the result of a joint investigation of the Organized Crime and Drug Enforcement Task Force (OCDETF), led by the Drug Enforcement Administration in conjunction with the Boise Police Department, Nampa Police Department, and the Ada County Sheriff's Office.
The OCDETF program is a federal multi agency, multi-jurisdictional task force that supplies supplemental federal funding to federal and state agencies involved in the identification, investigation, and prosecution of major drug trafficking organizations. Federal task force members include the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration (DEA), the Federal Bureau of Investigation (FBI), Internal Revenue Service-Criminal Investigation, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and U.S. Marshals Service.
Mexican Mafia Member Sentenced for Racketeering Conspiracysan Diego Man Led Extortion & Drug Trafficking EnterpriseRead the Press Release
United States Attorney Laura E. Duffy announced that Mexican Mafia member Salvador Nicola Colabella was sentenced today by United States District Judge Anthony J. Battaglia to serve 262 months in federal prison based on his August 9, 2012 plea to RICO conspiracy charges, in violation of Title 18, United States Code, Section 1962(d). Colabella has been in custody since his arrest on January 25, 2012.
According to court documents, Colabella’s role in the RICO conspiracy related to his participation in the Mexican Mafia, a violent, prison-based gang that controls the criminal conduct of thousands of Hispanic, street-gang members in Southern California. As revealed in his plea, Colabella controlled a significant portion of the criminal activity of Hispanic street-gang members in the San Diego area. Court records noted that while the Mexican Mafia has thousands of associates, membership is rare; in fact, law enforcement estimates that there are only about 150-200 Mexican Mafia members in the United States.
In his guilty plea, Colabella admitted to personally engaging in drug trafficking and extortion, as well as profiting from the criminal activity of those gang members who worked under his command. The extortion payments, or “taxes” in Mexican Mafia parlance, are collected by associates at the behest of members through violence and/or the threat of violence. In exchange for such “taxes,” Mexican Mafia members essentially grant gang members and other associates the right to conduct criminal activity within their respective areas of influence. In fact, Colabella admitted in his plea agreement that he had authority over several Mexican Mafia associates who collected taxes on his behalf. Drug dealers who paid Colabella taxes were responsible for distributing hundreds of pounds of methamphetamine and other drugs worth millions of dollars on the streets of San Diego. In all, Colabella collected tens of thousands of dollars in “taxes,” through the extortion of cash, cars, and other items of value. Colabella admitted in his plea agreement that his associates resorted to violence in the course of extorting others. For example, one of Colabella’s top associates stabbed a drug dealer over a dispute related to the drug dealer’s payment of taxes. According to court records, while Colabella did not directly order the assault, the associate was only able to carry out the stabbing because of the authority granted to him by Colabella.
This case was the result of “Operation Carnalismo,” a long-term investigation conducted by the Violent Crime Task Force - Gang Group (VCTF-GG), a group of federal, state, and local law enforcement agents led by the Federal Bureau of Investigation. In total, Operation Carnalismo resulted in charges against 36 individuals across five indictments. The indictments charged RICO conspiracy, violent crime in aid of racketeering, conspiracy to distribute drugs, and the distribution of drugs.
United States Attorney Duffy praised the work of the VCTF-GG in marshaling the evidence related to Colabella’s activities. Duffy added, “Today’s sentencing marks another significant step toward our office’s effort to combat the dangerous criminal activity of gangs and, in particular, the Mexican Mafia. Gang members should take note: their organized criminal activity will not be tolerated, and we will continue to use the full resources of our office and our law enforcement partners to investigate and prosecute organized gang crime.”
FBI Special Agent in Charge, Daphne Hearn stated, “Today's sentencing should send a message to all gang members that the FBI and our law enforcement partners will aggressively pursue you and hold you accountable for your criminal activities. San Diego is safer today because of the cooperative efforts between the public and law enforcement.”
Chula Vista Police Chief David Bejarano said, “The Chula Vista Police Department appreciates the collective efforts made by our detective and members of the Violent Crimes Task Force to remove this dangerous individual from our community. The success of this investigation underscores the strength and benefits of the partnership that exists among Federal, State and local law enforcement agencies throughout the San Diego region.”
National City Police Chief Manuel Rodriguez stated, “This operation spotlights the collaborative efforts of local, state, and federal agencies to combat violence in our community.”
DEFENDANT Case Number: 12CR0290AJB Salvadore Nicola Colabella SUMMARY OF CHARGES AGAINST COLABELLATitle 18, United States Code, Section 1962(d) – Conspiracy to conduct enterprise affairs through a pattern of racketeering activity
INVESTIGATING AGENCIESFederal Bureau of Investigation
Chula Vista Police Department
San Diego Police Department
National City Police Department
San Diego County Sheriff's Department
San Diego County District Attorney's Office
U.S. Bureau of Prisons
California Department of Corrections and Rehabilitation
San Diego County Probation
Immigration and Customs Enforcement's Homeland Security Investigations
Internal Revenue Service-Criminal InvestigationsPROGRESS OF CASES CHARGED AS PART OF OPERATION CARNALISMO –
CONVICTIONS AND SENTENCES12CR290-AJB
Salvadore Colabella – RICO conspiracy – 262 Months
Jose Luis Mercado – RICO conspiracy - Sentencing June 28, 2013
Robert Mercado – Violent Crime in Aid of Racketeering - 168 Months
Maria De Jesus Claudia Ochoa– RICO conspiracy - Sentencing July 26, 2013
Silvano Hernandez – RICO conspiracy - 210 Months
Jose Briseno-Contreras – RICO conspiracy - 46 Months12CR291-AJB
Ramon Agredano – Conspiracy to distribute methamphetamine - 84 Months
Richard Cornejo – Conspiracy to distribute methamphetamine - 135 Months
David York – Conspiracy to distribute methamphetamine - 120 Months
Guillermo Chaidez – Conspiracy to distribute methamphetamine - 120 Months
David Garcia – Conspiracy to distribute methamphetamine - 120 Months
Adrian Dominguez – Conspiracy to distribute methamphetamine - 108 Months
Charles Smith – Conspiracy to distribute methamphetamine - 120 Months
Anna Sheneman – Conspiracy to distribute methamphetamine - 93 Months
Esteban Rodriguez – Conspiracy to distribute methamphetamine - 60 Months12CR292-AJB
Juan Guerrero – Conspiracy to distribute methamphetamine - 135 Months
Jorge Moreno – Conspiracy to distribute methamphetamine - Sentencing June 28, 2013
Edward Moreno – Conspiracy to distribute methamphetamine - 120 Months
Allen Mundell – Conspiracy to distribute methamphetamine - 120 Months
Brett Youkel – Conspiracy to distribute methamphetamine - 120 Months
Lacy McElroy – Conspiracy to distribute methamphetamine - 100 Months12CR293-AJB
Alfredo Bazurto – Conspiracy to distribute methamphetamine - Sentencing June 7, 2012
Charles Monroe – Conspiracy to distribute methamphetamine - 120 Months
Jose Pedro Covarrubias – Conspiracy to distribute methamphetamine - 120 Months
George Chavez – Conspiracy to distribute methamphetamine - 120 Months
Jose Esparza – Conspiracy to distribute methamphetamine - 130 Months
John Atkinson – Conspiracy to distribute methamphetamine - 120 Months
Annabel Vasquez – Conspiracy to distribute methamphetamine - 72 Months
Fantajamarie Cajmere Deleal – Conspiracy to distribute methamphetamine - 77 MonthsMetro Denver Federal, State and Local Law Enforcement and Prosecutors Come Together to Enforce Firearm Laws with Goal to Prevent Summer of Firearm ViolenceRead the Press Release
DENVER – Agencies from across Metro Denver have come together in an effort to prevent firearm violence this summer, the group announced today. The effort, which includes federal, state and local law enforcement agencies as well as federal and state prosecutors, will focus on firearm violations. The goal is to reduce gun crime.
The agencies involved in the Metro Denver Firearm Initiative include: The U.S. Attorney’s Office, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Aurora Police Department, the Denver Police Department, the Lakewood Police Department, the Arapahoe and Douglas County District Attorney’s Office, the Adams County District Attorney’s Office, the Jefferson County District Attorney’s Office and the Denver District Attorney’s Office.
These law enforcement agencies and prosecutors will work closely together to review gun crime investigations to determine which venue, federal court or state court, has the most severe prison sentence. Based on that analysis, charges will be filed in the venue with the toughest penalties.
“We have assembled a strong team to investigate and prosecute firearm violations,” said U.S. Attorney John Walsh. “It is our goal to reduce gun crime by focusing on the worst of the worst in Metro Denver who possess or use firearms.”
The penalties can be severe. In federal court, a prohibited person in possession of a firearm faces not more than 10 years in federal prison, and up to a $250,000 fine. Those who cannot possess firearms include: felons, illegal aliens, those addicted to drugs, and those adjudicated mentally ill. Also, if someone is the subject of a restraining order, or if they have a misdemeanor conviction for domestic violence they are also prohibited from possessing a firearm. If a defendant has three prior violent felony convictions or drug trafficking offenses, the defendant could be sentenced as an Armed Career Criminal. Armed Career Criminals face not less than 15 years and up to life in prison.
In addition to those who are prohibited from possessing a firearm, there are other crimes that have increased penalties for firearm possession and use.
* If someone uses or carries a firearm during a drug trafficking crime, the defendant faces a mandatory minimum of 5 years in federal prison consecutive to any other sentence.
* If someone possesses a firearm during a crime of violence, they also face a mandatory minimum of 5 years in prison consecutive to any other sentence.
* If a person brandishes a firearm during a crime of violence or during a drug trafficking crime, the penalty goes to a mandatory minimum of 7 years in prison consecutive to any other sentence.
* If a person discharges a weapon during a crime of violence or a drug trafficking crime, the defendant faces a mandatory minimum of 10 years in prison consecutive to any other sentence.
In each of these cases, the penalty goes up to life in prison, as well as a $250,000 fine.
If someone has information about a prohibited person carrying a firearm, or the illegal use of a firearm, please call your local police department, or 911 if it is an emergency. You can also reach the ATF at 800-800-3855.
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McLaughlin Man Sentenced for Failure to Pay Child SupportRead the Press Release
United States Attorney Brendan V. Johnson announced that a McLaughlin, South Dakota man charged with Failure to Pay Legal Child Support was sentenced on May 20, 2013 by U.S. District Judge Roberto A. Lange. Jesse L. Brown Otter, age 45, was sentenced to time served, a $100 special assessment to the Federal Crime Victims Fund, and child support restitution in the amount of $25,342.12.
Brown Otter was indicted on for failing to pay over $25,000 in past due child support by a federal grand jury on August 14, 2012. He was ordered by the Eighth Judicial Circuit Court, Corson County, to pay $150 per month for his minor child, commencing August 1, 1992. At the time of indictment, he had not made a child support payment since July 2007, and the total arrearage amount was $25,342.12. He pleaded guilty to the charge on February 26, 2013.
This case was investigated the Department of Health and Human Services, Office of Inspector GeneralAssistant U.S. Attorney Thomas J. Wright prosecuted the case.
McLaughlin Man Sentenced for Failure to Pay Child SupportRead the Press Release
United States Attorney Brendan V. Johnson announced that a McLaughlin, South Dakota man charged with Failure to Pay Legal Child Support was sentenced on May 20, 2013 by U.S. District Judge Roberto A. Lange. Jesse L. Brown Otter, age 45, was sentenced to time served, a $100 special assessment to the Federal Crime Victims Fund, and child support restitution in the amount of $25,342.12.
Brown Otter was indicted on for failing to pay over $25,000 in past due child support by a federal grand jury on August 14, 2012. He was ordered by the Eighth Judicial Circuit Court, Corson County, to pay $150 per month for his minor child, commencing August 1, 1992. At the time of indictment, he had not made a child support payment since July 2007, and the total arrearage amount was $25,342.12. He pleaded guilty to the charge on February 26, 2013.
This case was investigated the Department of Health and Human Services, Office of Inspector GeneralAssistant U.S. Attorney Thomas J. Wright prosecuted the case.
McLaughlin Man Pleads Guilty to Assault ChargesRead the Press Release
United States Attorney Brendan V. Johnson announced that Roman Evans Weasel, Sr., age 39, of McLaughlin, South Dakota appeared before U.S. District Judge Charles B. Kornmann on May 20, 2013 and pled guilty to a Superseding Information that charged him with Assault With a Dangerous Weapon and Domestic Assault by a Habitual Offender.
Each charge carries a maximum penalty of 10 years’ custody, a $250,000 fine or both, and a period of supervised release of 3 years. There is a $100 assessment to the Federal Crime Victims Fund and restitution may also be ordered.
The conviction stems from an incident during the early morning hours of March 5, 2012 when Weasel was at his home in McLaughlin. The victim, who was in a previous relationship with Weasel, came to his home and found Weasel and another person lying in bed together. Weasel saw the victim, became enraged and began to assault the victim with his fists and a knife he kept in his bedroom. As a result of the assault, the victim sustained multiple stab wounds and a broken nose. Weasel had previously been convicted on two or more occasions for assaults against intimate partners.
The investigation was conducted by the Bureau of Indian Affairs, Standing Rock Agency. The case is being prosecuted by Assistant U.S. Attorney Troy R. Morley.
A presentence investigation was ordered, and a sentencing date was set for September 9, 2013. The Defendant was remanded to the custody of the U.S. Marshal pending sentencing.
Maryland Man and WomanRead the Press Release
Plead Guilty to Pandering Charge
-Two Admit Luring Young Woman Into Prostitution-
WASHINGTON - Amina Hamid 20, and Charles Mayberry, 19, both of Oxon Hill, Md., pled guilty today to a charge of pandering, U.S. Attorney Ronald C. Machen Jr. announced.
Both defendants pled guilty in the Superior Court of the District of Columbia. The Honorable Robert I. Richter scheduled sentencing for July 19, 2013. They face a statutory maximum of five years in prison on the charge.
According to the government’s factual proffer at today’s plea hearing, in early 2013, Mayberry lured a young woman into working for him and Hamid by telling her that prostitutes who worked for him earned up to $1,000 per day. Thereafter, Hamid set up an ad on a website in which she advertised the young woman as “. . . the girl u can use like a toy.”
Hamid used her own cellphone number in the ad and handled calls from potential customers. Then she and Mayberry drove the young woman to agreed-upon locations with the customer. Hamid told her what to charge for various sex acts. The young woman turned over the proceeds to Hamid and Mayberry, who then gave her a share.
On May 10, 2013, an undercover police officer, posing as an interested customer, texted Hamid’s cell phone and made arrangements to meet the young woman at a hotel room on New York Avenue NE. Hamid and Mayberry delivered her to the hotel, where they waited for her to return with the money. When the undercover officer gave a pre-arranged signal, an arrest team moved in and arrested Hamid, Mayberry and the young woman.
In announcing today’s plea, U.S. Attorney Machen praised the work of the FBI/Metropolitan Police Department Joint Task Force on Human Trafficking, which investigated the case. He also commended the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Jason Manuel and Victim/Witness Advocate Tracey Hawkins. Finally, U.S. Attorney Machen commended Assistant U.S. Attorney Peter V. Taylor, who investigated and prosecuted this case.
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Maryland Leader of Guatemalan Drug Ring Sentenced to 15 Years in PrisonRead the Press Release
Greenbelt, Maryland – Chief U.S. District Judge Deborah K. Chasanow sentenced Edwin Galvez-Berganza, age 30, of Hyattsville, Maryland, today to 15 years in prison followed by five years of supervised release for conspiring to distribute cocaine.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Special Agent in Charge Karl C. Colder of the Drug Enforcement Administration - Washington Field Division; and Chief J. Thomas Manger of the Montgomery County Police Department .
“This sentence is a great example of HSI’s mission to identify international drug traffickers and disrupt and dismantle their criminal operations in the United States,” said ICE Homeland Security Investigations Special Agent in Charge in Baltimore William Winter. “Let there be no mistake, drug trafficking organizations are reaching right here into our homes and communities in Maryland and HSI remains committed to working with our federal, state and local law enforcement partners to combat these criminal organizations that want to profit from poisoning our children and destroying our way of life.”
According to his guilty plea, from 2005 to 2009 Berganza was a leader of a cocaine trafficking ring. Cocaine was flown from Guatemala to the United States, driven to Connecticut and then hidden in trailer hitches and driven from Connecticut to Berganza and his co-conspirators in Maryland. Each trailer hitch contained 3.5 kilograms of cocaine, which Berganza and his co-conspirators removed with a saw. Berganza also received cocaine that was hidden in candy. Berganza distributed the cocaine to co-conspirators and others.
In November 2006, law enforcement officers arrested two conspirators as they were transporting approximately 20 kilograms of cocaine from Connecticut to Berganza in Maryland. Two days later, Berganza fled the United States to Guatemala to avoid arrest. While in Guatemala, Berganza continued to ship packages of cocaine from Guatemala to Silver Spring, Maryland.
Berganza is responsible for the distribution of more than 150 kilograms of cocaine.
Six defendants have pleaded guilty and been sentenced to up to 10 years in prison.
United States Attorney Rod J. Rosenstein commended the HSI Baltimore, Montgomery County Police Department and DEA for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Mara Zusman Greenberg and James A. Crowell, who prosecuted this Organized Crime Enforcement Drug Task Force case.
Manhattan U.S. Attorney Announces Extradition of Richard Ammar Chichakli on Money Laundering, Wire Fraud, and Conspiracy ChargesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, today announced that RICHARD AMMAR CHICHAKLI, an associate of the convicted international arms dealer Viktor Bout, was extradited from Australia on charges that he allegedly conspired with Bout and others to violate the International Emergency Economic Powers Act (“IEEPA”) by attempting to purchase two aircraft from companies located in the United States, in violation of economic sanctions that prohibited such financial transactions. CHICHAKLI is also charged with money laundering conspiracy, wire fraud conspiracy, and six separate counts of wire fraud in connection with the attempted aircraft purchases. CHICHAKLI, a citizen of Syria and the United States, was arrested by Australian authorities on January 9, 2013, at the request of the United States. He will appear before U.S. Magistrate Judge Sarah Netburn for presentment and arraignment on May 25, 2013.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Richard Chichakli and Viktor Bout had common cause – the purchase of aircraft in violation of international sanctions against them for their involvement in facilitating arms delivery to some of the world’s most lethal combat zones. With his extradition today to face charges for his flagrant violation of international sanctions and other crimes, he will now face the same American justice Viktor Bout did.”
According to the Superseding Indictment previously filed in Manhattan federal court and other court documents:
CHICHAKLI was a close associate of Viktor Bout since the mid-1990s. Bout is currently serving a 25-year prison term as a result of his November 2011 conviction in the Southern District for conspiring to sell millions of dollars of weapons to the Fuerzas Armadas Revolucionarias de Colombia (the “FARC”), a designated foreign terrorist organization based in Colombia. Prior to his arrest on those charges in March 2008, in Thailand, and since the 1990s, Bout was an international weapons trafficker. He carried out his massive weapons-trafficking business by assembling a fleet of cargo airplanes capable of transporting weapons and military equipment to various parts of the world, including Africa, South America, and the Middle East. CHICHAKLI assisted Bout in the operations and financial management of his network of aircraft companies.
The arms Bout sold or brokered have fueled conflicts and supported regimes in Afghanistan, Angola, the Democratic Republic of the Congo, Liberia, Rwanda, Sierra Leone and Sudan. As a result of Bout’s role in pouring arms into these international conflicts, his relationship with CHICHAKLI, and Bout and CHICHAKLI’s close relationship with former Liberian President Charles Taylor, both Bout and CHICHAKLI have been the subject of United Nations Security Council (“UNSC”) sanctions restricting their travel and their ability to conduct business around the world. In addition, more than 25 companies affiliated with Bout and CHICHAKLI have been listed by the UNSC as subject to similar restrictions concerning their assets and financial transactions.
In 2004, consistent with the sanctions previously adopted by the UNSC concerning Liberia, the President of the United States issued an executive order prohibiting any transactions or dealings within the United States by individuals affiliated with former President Taylor. Accordingly, the U.S. Department of Treasury, pursuant to its authority under IEEPA, prohibited Bout from conducting any business in the U.S. In 2005, that prohibition was extended to CHICHAKLI.
The United Nations and IEEPA sanctions encumbered CHICHAKLI’s and Bout’s efforts to conduct business within their existing corporate structures. Accordingly, CHICHAKLI and Bout took steps to form new companies, and to register these companies in the names of other individuals in order to create the false appearance that they had no affiliation with them.
One such company – Samar Airlines – was created in 2004, right after the majority of United Nations and IEEPA sanctions became effective. CHICHAKLI and Bout were personally involved in the operational and business affairs and decisions of Samar Airlines, though they held out other individuals as being the officers of the company. In 2007, in violation of the IEEPA sanctions to which they were subject at the time, CHICHAKLI and Bout, acting through Samar Airlines, contracted to purchase two Boeing aircraft from companies located in the United States.
In connection with the purchase of these aircraft and related services, CHICHAKLI and Bout electronically transferred more than $1.7 million through banks in New York and into bank accounts located in the United States. They did so through a number of front companies, the assets of which were also owned and controlled by Bout, in order to evade the UNSC’s sanctions regime and IEEPA prohibitions. Upon the discovery that CHICHAKLI was connected to Samar Airlines, the U.S. Treasury Department blocked the funds that had been transferred into the bank accounts of the U.S. aviation companies.
The Superseding Indictment charges CHICHAKLI with nine separate offenses:
- Count One: Conspiracy to violate the International Emergency Economic Powers Act;
- Count Two: Money laundering conspiracy;
- Count Three: Wire fraud conspiracy; and
- Counts Four through Nine: Wire fraud.
If convicted, CHICHAKLI faces a maximum sentence of 20 years in prison on each of the nine counts. The case is assigned to U.S. District Judge William H. Pauley, III.
Mr. Bharara praised the outstanding investigative efforts of the DEA and thanked the Australian Federal Police, the Victoria State Police, the Australian Attorney General’s Department, the U.S. Department of Justice Office of International Affairs, the U.S. Department of State, and Interpol for their assistance in this matter.
The case is being handled by the Terrorism and International Narcotics Unit. Assistant United States Attorneys Jenna M. Dabbs and Christian R. Everdell are in charge of the prosecution.
The charges contained in the Indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty.
U.S. v. Richard Ammar Chichakli S2 Indictment
Man Charged with Arson for Fire at Children’s Autism FacilityRead the Press Release
LAS VEGAS, Nev. – Federal felony charges have been filed against a Las Vegas man for attempting to destroy a local children’s autism learning facility by fire and explosive devices, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Samuel Powers, 24, is charged in an indictment dated May 22, 2013, with one count of arson and one count of possession of unregistered firearms (Molotov cocktails). Powers was arrested by federal authorities yesterday, and today made his initial appearance before Magistrate Judge Carl W. Hoffman who accepted the defendant’s plea of not guilty to both counts of the indictment. Powers was ordered detained as a flight risk and danger to the community pending his trial, set for July 23, 2013, before U.S. District Judge Gloria M. Navarro.
The indictment alleges that on April 15, 2013, Powers damaged and attempted to destroy by means of fire and explosive materials an autism facility located at 7055 Windy Street in Las Vegas, and possessed unregistered Molotov cocktails.
If convicted, Powers faces five to 20 years on the arson charge and up to 10 years on the unregistered firearms charge, as well as fines of up to $250,000 on each charge.
This case is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Las Vegas Metropolitan Police Department, and the Clark County Fire Department, and prosecuted by Assistant U.S. Attorney Christina M. Brown.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Lower Brule Woman Charged with AssaultRead the Press Release
United States Attorney Brendan V. Johnson announced that a Lower Brule, South Dakota, woman has been indicted by a federal grand jury.
Monica Quilt, age 41, was indicted by a federal grand jury on May 15, 2013, for Assault With a Dangerous Weapon and Assault Resulting in Serious Bodily Injury. Quilt appeared before U.S. Magistrate Judge Mark A. Moreno on May 24, 2013, and pled not guilty to the indictment. The maximum penalty on each count upon conviction is 10 years of imprisonment, a $250,000 fine, or both. The charges are merely accusations, and Quilt is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Bureau of Indian Affairs, Lower Brule Agency, and Assistant U.S. Attorney Meghan N. Dilges is prosecuting the case. Quilt was remanded to the custody of the U.S. Marshal’s Service. A trial date has not yet been set.
Little Eagle Man Pleads Guilty to Child Abuse ChargeRead the Press Release
United States Attorney Brendan V. Johnson announced that Tyson J. Keepseagle, age 26, of Little Eagle, South Dakota appeared before U.S. District Judge Charles B. Kornmann on May 20, 2013 and pled guilty to Count I of the Indictment that charged him with Child Abuse.
The maximum penalty upon conviction is 15 years’ custody, a $250,000 fine or both, and a period of supervised release of 3 years. There is a $100 assessment to the Federal Crime Victims Fund and restitution may also be ordered.
The conviction stems from an incident on or around March 2, 2012 when Keepseagle was living with the victim’s mother in Little Eagle. Keepseagle was downstairs with the children, and when the victim’s mother went downstairs she saw Keepseagle holding down the victim, one hand covering her mouth and his other hand containing a fist full of the child’s hair. The victim’s mother immediately leapt on Keepseagle to get him off the victim, and Keepseagle then pinned the victim’s mother on the ground and began punching her.
The investigation was conducted by the Bureau of Indian Affairs, Standing Rock Agency. The case is being prosecuted by Assistant U.S. Attorney Troy R. Morley.
A presentence investigation was ordered, and a sentencing date was set for September 9, 2013. The Defendant was remanded to the custody of the U.S. Marshal pending sentencing.
Little Eagle Man Pleads Guilty to Assault ChargesRead the Press Release
United States Attorney Brendan V. Johnson announced that Ira Weasel, age 32, of Little Eagle, South Dakota appeared before United States District Judge Charles B. Kornmann on May 20, 2013 and pled guilty to an Indictment that charged him with Assault Resulting in Serious Bodily Injury.
The charge carries a maximum penalty of 10 years’ custody, a $250,000 fine or both, 3 years supervised release, and a $100 assessment to the Federal Crime Victims Fund. Restitution may also be ordered.
The conviction stems from an incident on December 24, 2012 when Weasel was socializing at his sister’s home in Little Eagle. Also present was the victim, among others. At some point during the evening, Weasel and the victim got into a verbal altercation, at which time Weasel rushed the victim, pinned her against a wall and began to strangle her. The victim lost consciousness and her body went limp. Weasel released his grasp causing the victim to fall face first onto the floor, where she began to convulse and remained unconscious for several minutes.
The investigation was conducted by the Bureau of Indian Affairs, Standing Rock Agency. The case is being prosecuted by Assistant U.S. Attorney Troy R. Morley.
A presentence investigation was ordered and a sentencing date was set for September 9, 2013. The Defendant was remanded to the custody of the U.S. Marshal pending sentencing.
Lawrence Non-Profit Settles to Resolve Allegations of Federal Grant FraudRead the Press Release
BOSTON – A Lawrence-based non-profit agency, funded largely by federal government grants, has entered into a settlement agreement to resolve allegations that several of its employees, including its former executive director, were paid for work on federal grants that was never done.
Specifically, the Greater Lawrence Community Action Council (GLCAC) applied for, and received, grants from the United States Department of Education to pay a program director and a program case manager to work on a full-time basis. In reality, the GLCAC program director and program case manager were simultaneously holding down part-time, paid positions with the Massachusetts Society for the Prevention of Cruelty to Children, where they worked during normal GLCAC hours. In addition, GLCAC was responsible for claims to the Department of Education for the indirect costs of paying GLCAC’s facilities manager to work on a full-time basis, when in fact, during warm weather months, the facilities manager was golfing one or more afternoons per week during normal GLCAC working hours.
GLCAC also submitted, or caused to be submitted, claims to the U.S. Department of Health and Human Services for the costs of paying its former executive director’s salary for working on a full-time basis, when in fact the former executive director worked only approximately 50 percent of the time that GLCAC claimed.
In the settlement, GLCAC does not dispute the government’s allegations.
“Non-profit agencies perform important work in our communities, oftentimes using public monies. Agencies receiving taxpayers’ dollars are expected to have a sense of integrity and to utilize funds for the actual purposes for which they are intended," said United States Attorney Carmen M. Ortiz. "Federal grant funds have become increasingly competitive in this fiscal climate. Communities suffer when funds are used inappropriately to subsidize employee moonlighting or recreational activities.”
“I am proud of the work of OIG Special Agents and our law enforcement colleagues whose efforts led to today's action,” said Brian Hickey, Special Agent in Charge of the U.S. Department of Education Office of Inspector General's Northeast Regional Office. “We will continue to work with our partners to protect the integrity of Federal education dollars.”
The total settlement amount is $80,282. GLCAC will receive a credit of $57,282 for amounts previously paid to the Department of Health and Human Services pursuant to an administrative audit finding.
Today’s settlement with GLCAC resolves a lawsuit filed by former GLCAC employee Ruth Tarbox under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. Ms. Tarbox will receive $11,500 as her share of the government’s recovery. The government commends Ms. Tarbox for bringing to light the allegations resolved in the settlement.
U.S. Attorney Ortiz and Brian Hickey, Special Agent in Charge, U.S. Department of Education, Office of Inspector General, Northeast Region, announced the resolution of this matter today. This matter was investigated by Ortiz’s Financial Litigation Unit and the Boston Office of the Inspector General for the Department of Education. It was handled by Assistant United States Attorney Gregg Shapiro of Ortiz’s Civil Division.
This case is docketed as United States ex rel. Tarbox v. Greater Lawrence Community Action Council, Inc., and Philip F. Laverriere, Sr., No. 11cv12334-DPW (D. Mass.).
To report waste, fraud, abuse or misconduct concerning federal programs, please visit the website for the Office of the Inspector General (OIG) for the various entities: Department of Justice, U.S. Health and Human Services, Department of Education, Department of Homeland Security, Social Security Administration and U.S. Housing and Urban Development.
Las Vegas Fraudster Facing Federal Charges for Multi-Million Dollar Telemarketing OperationRead the Press Release
On May 22, 2013, Michael Patrick Sullivan, Jr., 37, of Las Vegas, Nevada, was charged in a federal indictment with conspiracy to commit wire fraud and mail fraud, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. If convicted, Sullivan is subject to a term of imprisonment of up to 25 years, a fine of $250,000 and five years of supervised release.
The charge arose out of a telemarketing scam which operated in Las Vegas, Nevada, which the indictment alleged bilked over 3,000 victims of approximately 10 million dollars. Consumers were victimized in all fifty states, the District of Columbia and Puerto Rico, all ten Canadian provinces and the Northwest Territory of Canada, as well as Australia, Israel and the United Kingdom. There were at least twelve (12) victims in nine (9) of the thirty-eight (38) counties comprising the Southern District of Illinois. The indictment alleges that the scheme operated from December 5, 2006, until January 24, 2012.
The indictment alleges that Sullivan owned a telemarketing company, Vacation Max, which operated a timeshare resale scam. The company purported to be a Georgia corporation located in Delaware, but actually operated in Las Vegas, Nevada. The indictment alleges that the company falsely represented that they had found corporate buyers interested in acquiring blocks of timeshare units including the consumer's timeshare unit for purported business and tax purposes. The company solicited fees of up to several thousand dollars from each timeshare owner in purported pre-paid closing costs and related expenses. The indictment alleges that the purported sales did not occur and that Vacation Max did not successfully sell any consumer’s timeshare interest except a relatively small number at “firesale” prices.
This case is one of several cases recently prosecuted by the U.S. Attorney's Office for the Southern District of Illinois relating to timeshare resale fraud.
The prosecution of the case is being handled by Assistant U.S. Attorneys Bruce E. Reppert and Nathan D. Stump.
An indictment is a formal charge against a defendant. Under the law, a defendant is presumed to be innocent of a charge until proven guilty beyond a reasonable doubt to the satisfaction of a jury.
Largo Man Sentenced to More Than 12 Years in Prison for Child Pornography OffensesRead the Press Release
Tampa, Florida - U.S. District Judge Virginia M. Hernandez Covington sentenced David Lee Franklin (62, Largo) yesterday to twelve years and seven months in federal prison for transportation, receipt, and possession of child pornography. The court also ordered Franklin to forfeit computers, hard drives, and assorted CDs and DVDs that were involved in the offenses. Franklin pleaded guilty on February 26, 2013.
According to court documents, an undercover detective downloaded multiple image and video files depicting child pornography from Franklin over several months beginning in November 2011. On June 13, 2012, law enforcement officers executed a search warrant at Franklin's residence. Franklin agreed to an interview and confessed to downloading and viewing child pornography. Also at the time of the search, the officers observed that Franklin was downloading child pornography via the internet. The officers seized Franklin's computers and related equipment. Subsequent forensics review found that they contained several thousand images and videos of child pornography.This case was investigated by the Federal Bureau of Investigation, the Pinellas County Sheriff’s Office, the Largo Police Department, and the Florida Department of Law Enforcement as part of the FBI's Violent Crimes Against Children Task Force. It was prosecuted by Assistant United States Attorney Joseph W. Swanson.
It is another case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Joyce Tatsey Spoonhunter Found Guilty in U.S. Federal CourtRead the Press Release
The United States Attorney's Office announced that on May 22, 2013, in Great Falls, after a federal district court trial before Chief U.S. District Judge Dana L. Christensen, JOYCE TATSEY SPOONHUNTER, a 56-year-old resident of Browning, was found guilty of three counts of wire fraud. Sentencing is set for August 28, 2013. She is currently released on special conditions.
At trial, the following evidence and testimony was presented to the jury.
The North American Indian Days is a time for celebration on the Blackfeet Indian Reservation. Friends gather, eat, enjoy the warm summer days, and vendors attend to display their skills and products in order to generate income off the attendees. A tremendous amount of money is generated during the celebration.
SPOONHUNTER used her position in the Blackfeet Tribe to steal money from individuals who tried to reserve spots for vendor sites at the North American Indian Days. When the vendors arrived, their spots had not been reserved, and their payments to SPOONHUNTER had not been turned over to the Tribe. As a result, vendors were required to double-pay or move their reserved spots to an undesirable location at the North American Indian Days. Payments made to individuals other than SPOONHUNTER had no problem.
The amount SPOONHUNTER is accountable for was approximately $8,000.
Assistant U.S. Attorney Ryan G. Weldon prosecuted the case for the United States.
SPOONHUNTER faces, for each count, possible penalties of 20 years in prison, a $250,000 fine, and 3 years supervised release.
The investigation was conducted by the Federal Bureau of Investigation and the Blackfeet Internal Affairs.
Jerayr Rostamian and His Company Sentenced for Structuring Financial Transactions to Avoid Reporting Requirements and Conspiracy to Commit Money LaunderingRead the Press Release
Dana J. Boente, U. S. Attorney; Michael Anderson, Special Agent in Charge, Federal Bureau of Investigation; Mike Fields, Department of Health and Human Services, Office of Inspector General; Fred Duhy, Louisiana Department of Justice’s Medicaid Fraud Control Unit, and Gabriel Grchan, Special Agent in Charge, Internal Revenue Service-Criminal Investigation announced today that JERAYR ROSTAMIAN, age 50, from Northridge, California, was sentenced today to 40 months incarceration and fined $250,000 by U. S. District Judge Lance M. Africk after previously pleading guilty to structuring monetary transactions to avoid reporting requirements. In addition to the term of imprisonment, Judge Africk ordered that ROSTAMIAN be placed on three years of supervised release following his term of imprisonment, during which time the defendant will be under federal supervision and risks an additional term of imprisonment should he violate any terms of his supervised release. The corporation ROSTAMIAN owned, MED-TECH TECHNOLOGIES, INC., was sentenced today to five years probation and restitution in the amount of $3,722,480 to be paid to Medicare and Medicaid. MED-TECH TECHNOLOGIES, INC. previously plead guilty to a conspiracy to commit money laundering. Additionally, Judge Africk ordered MED-TECH’s assets forfeited.
According to court documents, MED-TECH participated in a criminal organization for the purpose of fraudulently billing Medicare and Medicaid. Recruiters found patients to bring to a series of medical clinics located in the greater New Orleans area for medical tests that were not performed and not medically necessary. The clinics' patients were moved between the various clinics and repeatedly perform the same unnecessary tests. The patients received prescriptions for drugs, usually narcotics, for their cooperation, and the recruiters were provided cash and prescription drugs for their services.
Once Medicare and Medicaid paid the clinics, MED-TECH TECHNOLOGIES, INC., engaged in a series of financial transactions designed to disguise the fact that the money had been obtained unlawfully and to hide the funds from Medicare and Medicaid. In particular, the clinics regularly and routinely purchased used medical equipment from MED-TECH. The prices the clinics paid for the used medical equipment was significantly more than the value of the medical equipment. Often brand new medical equipment could have been purchased for much less than the medical clinics paid MED-TECH for the used equipment. The clinic owners also paid exorbitant repair fees to MED-TECH, supposedly to repair the outdated equipment. For example, the clinics paid MED-TECH over $165,000 for an outdated machine that was worth less than $5,000. In total, MED-TECH laundered approximately $3.7 million for the clinics between January 2009 and April 2011.
After the fraudulent funds from the Louisiana-based clinics were deposited into bank accounts, ROSTAMIAN withdrew much of the funds in cash, in amounts just below the threshold that would trigger the bank to file a report with the government. ROSTAMIAN’S structured cash withdraws of the money he received from the clinics were designed to avoid federal transaction reporting requirements, in violation of federal law.
“This case should serve as a reminder that the New Orleans-based health care fraud law enforcement team will expand its reach well beyond the Louisiana borders, as necessary, to bring those individuals who defraud Medicare and Louisiana Medicaid to justice,” stated Michael Anderson, Special Agent in Charge, Federal Bureau of Investigation.
“IRS Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes,” stated IRS Special Agent in Charge Gabriel Grchan of the New Orleans Field Office. “There is a price to be paid for engaging in fraud schemes and Mr. Rostamian will now be held accountable for his actions.”
“Today's guilty pleas are part of an ongoing effort by HAS-OIL and our federal law enforcement partners to bring to justice those who prey on our elderly for financial gain. Our highly trained and motivated HAS-OIL special agents are combining cutting-edge fraud detection and analysis technology with old fashioned police work to protect and preserve the Medicare program,” added Mike Fields, Special Agent in Charge, Department of Health and Human Services, Office of Inspector General.
Louisiana Attorney General Buddy Caldwell said, “This aggressive multi-agency effort has dismantled a significant health care fraud operation and sends a clear message to those who rob taxpayer dollars and exploit vulnerable residents that depend on Medicaid and Medicare for care.”
ROSTAMIAN and MED-TECH are the most recent defendants in the scheme to be sentenced. Eleven individuals and six corporations have already pleaded guilty to various parts of this scheme, which resulted in approximately $21,885,000 in fraudulent Medicare and Medicaid billings.
The investigation was conducted by Special Agents of the Federal Bureau of Investigation; the U. S. Department of Health and Human Services, Office of Inspector General; the Louisiana Department of Justice, Medicaid Fraud Control Unit and the Internal Revenue Service-Criminal Investigation. The case was prosecuted by Assistant U. S. Attorneys Patrice Harris Sullivan, Jordan Ginsberg and G. Dall Kammer.
ISTA Pharmaceuticals, Inc. Plead Guilty to Federal Felony Charges; Will Pay $33.5 Million to Resolve Criminal lLability and False Claims Act AllegationsRead the Press Release
BUFFALO - U.S. Attorney William J. Hochul, Jr. announced today that pharmaceutical company ISTA Pharmaceuticals, Inc. pleaded guilty to conspiracy to introduce a misbranded drug into interstate commerce and conspiracy to pay illegal remuneration in violation of the Federal Anti-Kickback Statute before U.S. District Court Judge Richard J. Arcara. The guilty pleas are part of a global settlement with the United States in which ISTA agreed to pay $33.5 million to resolve criminal and civil liability arising from its marketing, distribution and sale of its drug Xibrom, one of the largest settlements ever in the Western District of New York.
According to Assistant U.S. Attorney MaryEllen Kresse, who handled the case, ISTA conspired to illegally introduce a misbranded drug, Xibrom, into interstate commerce. Under the Food, Drug and Cosmetic Act (FDCA), it is illegal for a drug company to introduce into interstate commerce any drug that the company intends will be used for uses not approved by the Food and Drug Administration (FDA). Xibrom is an ophthalmic, nonsteroidal, anti-inflammatory drug that was approved by FDA to treat pain and inflammation following cataract surgery. In order to expand sales of Xibrom outside of its approved use, ISTA conspired to introduce misbranded Xibrom into interstate commerce.
"Today's resolution sends a clear message that pharmaceutical companies cannot put profit ahead of people, by disregarding laws designed to protect the health of the American public," said United States Attorney William J. Hochul, Jr.
Between 2005 and 2010, some ISTA employees promoted Xibrom for unapproved new uses, including the use of Xibrom following Lasik and glaucoma surgeries, and for the treatment and prevention of cystoid macular edema. Continuing medical education programs were used to promote Xibrom for uses that were not approved by the FDA as safe and effective, and post-operative instruction sheets for unapproved uses were paid for by some company employees and provided to physicians. The evidence also showed that ISTA employees were told by management, in an effort to avoid detection, not to memorialize in writing certain interactions with physicians regarding unapproved new uses, and not to leave certain printed materials in physicians' offices relating to unapproved new uses.
In addition, ISTA pleaded guilty to conspiracy to offer and pay remuneration to physicians in order to induce those physicians to prescribe Xibrom, in violation of the federal Anti-Kickback Statute. Under the law, it is illegal to offer or pay remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs, for which payments are made in whole or in part under a Federal health care program. In this matter, certain ISTA employees, with the knowledge and at the direction of ISTA, offered and provided physicians with free Vitrase, another ISTA product, with the intent to induce such physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom. In addition, ISTA provided other illegal remuneration, including a monetary payment to sponsor an event of a non-profit group associated with a particular physician, a golf outing, a wine-tasting event, paid consulting or speaker arrangements, and honoraria for participation in advisory meetings which were intended to be marketing opportunities, with the intent to induce physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.
U.S. Attorney Hochul further stated, "The fact that ISTA offered doctors illegal inducements - such as a wine tasting, golf outing, and payments to attend what were in essence marketing sessions - makes the company's illegal conduct particularly deserving of the hefty penalty ISTA has agreed to pay."
Under the terms of the plea agreement, ISTA will pay a total of $18.5 million, including a criminal fine of $16,125,000 for the conspiracy to introduce misbranded Xibrom into interstate commerce, $500,000 for the conspiracy to violate the Anti-Kickback Statute, and $1,850,000 in asset forfeiture associated with the misbranding charge.
ISTA also entered into a civil settlement agreement, under which, according to Assistant U.S. Attorney Kathleen A. Lynch, the company agreed to pay $15 million to the federal government and to individual states in order to resolve claims arising from its marketing of Xibrom. ISTA's conduct caused false claims to be submitted to government health care programs. The civil settlement resolved allegations that ISTA promoted the sale and use of Xibrom for certain uses that were not FDA-approved and not covered by the Federal health care programs. The United States further alleged that ISTA's violations of the Anti-Kickback Statute resulted in false claims being submitted to federal health care programs. The federal share of the civil settlement is $14,609,746.16, and the state Medicaid share of the civil settlement is $390,253.84. The civil settlement resolves two lawsuits filed in the Western District of New York under the whistle blower provisions of the False Claims Act. Such provisions permit private parties to file suit on behalf of the United States for false claims and obtain a portion of the government's recovery.
Except as admitted in the plea agreement, the claims settled by the civil settlement agreement are allegations only, and there has been no determination of liability as to those claims. In addition to the criminal fines and asset forfeiture, ISTA's parent company, Bausch+Lomb, Inc., which acquired ISTA in June 2012, has agreed to maintain a Compliance and Ethics Program. Upon conviction for the criminal charges described above, ISTA will face mandatory exclusion from Federal health care programs.
Assistant U.S. Attorneys MaryEllen Kresse and Kathleen A. Lynch, who handled the Criminal and Civil aspects of the case respectively, stated that "the civil and criminal penalties imposed today fully redressed the misconduct engaged in by ISTA prior to its acquisition by Bausch + Lomb, Inc."
ISTA Pharmaceuticals Inc. Pleads Guilty to Federal Felony Charges; Will Pay $33.5 Million to Resolve Criminal Liability and False Claims Act AllegationsRead the Press Release
Pharmaceutical company ISTA Pharmaceuticals, Inc. pled guilty earlier today to conspiracy to introduce a misbranded drug into interstate commerce and conspiracy to pay illegal remuneration in violation of the Federal Anti-Kickback Statute, the Justice Department announced today. U.S. District Court Judge Richard J. Arcara accepted ISTA's guilty pleas. The guilty pleas are part of a global settlement with the United States in which ISTA agreed to pay $33.5 million to resolve criminal and civil liability arising from its marketing, distribution and sale of its drug Xibrom.ISTA pled guilty in the Western District of New York to criminal charges that the company conspired to illegally introduce a misbranded drug, Xibrom, into interstate commerce. Under the Food, Drug and Cosmetic Act (FDCA), it is illegal for a drug company to introduce into interstate commerce any drug that the company intends will be used for uses not approved by the Food and Drug Administration (FDA). Xibrom is an ophthalmic, nonsteroidal, anti-inflammatory drug that was approved by FDA to treat pain and inflammation following cataract surgery. In order to expand sales of Xibrom outside of its approved use, ISTA conspired to introduce misbranded Xibrom into interstate commerce.
Between 2005 and 2010, some ISTA employees promoted Xibrom for unapproved new uses, including the use of Xibrom following Lasik and glaucoma surgeries, and for the treatment and prevention of cystoid macular edema. The evidence showed that continuing medical education programs were used to promote Xibrom for uses that were not approved by the FDA as safe and effective, and that post-operative instruction sheets for unapproved uses were paid for by some company employees and provided to physicians. These activities are evidence of intended uses unapproved by FDA, which rendered the drug misbranded under the FDCA.
ISTA pled guilty to a felony based on evidence that some ISTA employees were told by management not to memorialize in writing certain interactions with physicians regarding unapproved new uses, and not to leave certain printed materials in physicians' offices relating to unapproved new uses. These instructions were given in order to avoid having their conduct relating to unapproved new uses being detected by others. ISTA agreed that this conduct represented an intent to defraud under the law.
In addition, ISTA pled guilty to a conspiracy to knowingly and willfully offering or paying remuneration to physicians in order to induce those physicians to prescribe Xibrom, in violation of the federal Anti-Kickback Statute. Under the law, it is illegal to offer or pay remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs, for which payments are made in whole or in part under a Federal health care program. In this matter, certain ISTA employees, with the knowledge and at the direction of ISTA, offered and provided physicians with free Vitrase, another ISTA product, with the intent to induce such physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom. In addition, ISTA provided other illegal remuneration, including a monetary payment to sponsor an event of a non-profit group associated with a particular physician, a golf outing, a wine-tasting event, paid consulting or speaker arrangements, and honoraria for participation in advisory meetings which were intended to be marketing opportunities, with the intent to induce physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.
Under the terms of the plea agreement, ISTA will pay a total of $18.5 million, including a criminal fine of $16,125,000 for the conspiracy to introduce misbranded Xibrom into interstate commerce, $500,000 for the conspiracy to violate the Anti-Kickback Statute, and $1,850,000 in asset forfeiture associated with the misbranding charge.
ISTA also entered into a civil settlement agreement under which it agreed to pay $15 million to the federal government and states to resolve claims arising from its marketing of Xibrom, which caused false claims to be submitted to government health care programs. The civil settlement resolved allegations that ISTA promoted the sale and use of Xibrom for certain uses that were not FDA-approved and not covered by the Federal health care programs, including prevention and treatment of cystoid macular edema, treatment of pain and inflammation associated with non-cataract eye surgery, and treatment of glaucoma. The United States further alleged that ISTA's violations of the Anti-Kickback Statute resulted in false claims being submitted to federal health care programs. The federal share of the civil settlement is $14,609,746.16, and the state Medicaid share of the civil settlement is $390,253.84. Except as admitted in the plea agreement, the claims settled by the civil settlement agreement are allegations only, and there has been no determination of liability as to those claims.
"As today's global resolution demonstrates, the Department of Justice is committed to making sure that pharmaceutical companies play by the rules," said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. "Health care fraud in any form undermines the integrity of our health care system and can drive up costs for all of us."
"Today's resolution sends a clear message that pharmaceutical companies cannot put profit ahead of people, by disregarding laws designed to protect the health of the American public," said United States Attorney William J. Hochul, Jr. "The fact that ISTA offered doctors illegal inducements - such as a wine tasting, golf outing, and payments to attend what were in essence marketing sessions - makes the company's illegal conduct particularly deserving of the hefty penalty ISTA has agreed to pay."
"It is especially concerning when companies actively take steps to conceal improper conduct which may jeopardize public health," said Antoinette V. Henry, Special Agent in Charge, Metro-Washington Field Office, FDA Office of Criminal Investigations. "We will continue to work tirelessly with the Department of Justice and our law enforcement counterparts to uncover such conduct."
In addition to the criminal fines and asset forfeiture, ISTA's parent company, Bausch+Lomb, Incorporated (B+L), has agreed to maintain a Compliance and Ethics Program. B+L has agreed that it will maintain policies and procedures that: (1) prohibit the involvement of sales and marketing personnel and others on the businesses' commercial team in the final decision-making process with respect to educational grants in the United States, while also ensuring that the educational programming is focused on objective scientific and educational activities and discourse; (2) require sales agents to discuss only those product uses that are consistent with what is indicated on the product's approved package labeling and to forward requests for information regarding uses of B+L's products not approved by FDA to a Medical Affairs Professional; and (3) prohibit the company from engaging in any conduct that violates the Anti-Kickback Statute, including the offering or paying of any remuneration to any person to induce such person to prescribe any drug for which payment may be made in whole or in part under a Federal health care program. The Program also requires that B+L's President of Global Pharmaceuticals conduct an annual review of the effectiveness of B+L's Program as it relates to the marketing, promotion, and sale of prescription pharmaceutical products, and certify that to the best of his or her knowledge, the Program was effective in preventing violations of Federal health care program requirements and the FDCA regarding sales, marketing, and promotion of B+L's prescription pharmaceutical products.
The civil settlement resolves two lawsuits filed under the whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and obtain a portion of the government's recovery. The civil lawsuits were filed in the Western District of New York and are captioned United States ex rel. Keith Schenker v. ISTA Pharmaceuticals, Inc. and United States, et al., ex rel. DJ PARTNERSHIP 2011, LLP v. ISTA Pharmaceuticals, Inc. As part of today's resolution, Mr. Schenker will receive approximately $2.5 million from the federal share of the civil recovery.
Upon conviction for the criminal charges described above, ISTA will face mandatory exclusion from Federal healthcare programs. Exclusion will mean that on the effective date of the exclusion, any ISTA labeled drugs in ISTA's possession would no longer be reimbursable by Medicare, Medicaid, or other Federal healthcare programs. In June 2012, B+L acquired ISTA. Simultaneous with the False Claims Act settlement and the entry of the plea, the U.S. Department of Health and Human Services' Office of Inspector General, ISTA, and B+L will enter into a Divestiture Agreement under which ISTA agrees to be excluded for 15 years, effective six months after the date of the settlement. Under the terms of the Divestiture Agreement, ISTA will transfer all assets to B+L or a B+L subsidiary and will stop shipping ISTA labeled drugs within six months of the Divestiture Agreement. Six months after the effective date of the Divestiture Agreement, all ISTA labeled drugs in the possession of ISTA or B+L will no longer be reimbursable by Medicare, Medicaid, and other Federal healthcare programs. Those ISTA labeled drugs in the stream of commerce at that time will continue to be reimbursable.
"We agreed to enter into this Divestiture Agreement based on the facts of this case, including that B+L did not have a corporate relationship with ISTA during the improper conduct," said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. "In addition, B+L acquired ISTA more than a year after the improper conduct ended, and B+L did not hire any of ISTA's executives or senior management."
The criminal case was prosecuted by Assistant Director Jeffrey Steger of the Consumer Protection Branch of the Civil Division of the Department of Justice and Assistant United States Attorney MaryEllen Kresse of the Office of the U.S. Attorney for the Western District of New York. They were assisted by Associate Chief Counsel Kelsey Schaefer of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services. The case was investigated by the Food and Drug Administration's Office of Criminal Investigations and Health and Human Services Office of Inspector General. The civil settlement was handled by Trial Attorneys Colin Huntley and Benjamin Young of the Commercial Litigation Branch of the Civil Division of the Department of Justice and Assistant United States Attorney Kathleen Lynch of the Office of the U.S. Attorney for the Western District of New York.
This resolution is part of the government's emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $10.4 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $14.3 billion.
German Rolando Vicente-Sapon Sentenced to Serve 15 Years in Prison for Transporting A Minor Across the Mexican Border for Unlawful Sexual ActivityRead the Press Release
Vicente had faced a 10-year mandatory minimum
CHATTANOOGA, Tenn. – On Thursday, May 23, 2013, German Rolando Vicente-Sapon, 41, of Guatemala, was sentenced by the Honorable Curtis Collier, U.S. District Judge, to serve 188 months in federal prison.
Following a three-day trial, a jury convicted Vicente-Sapon in November 2012 for transporting a minor across the Mexican border for unlawful sexual activity and two additional smuggling charges, also involving the minor who was an alien from Guatemala. According to proof presented at trial, the victim was 16 years old and facing an arranged marriage in Guatemala when Vicente-Sapon, who was then in his thirties, offered to help her come to the United States for a better life. Testimony showed that Vicente-Sapon paid $2000 for others to smuggle her to Chattanooga, Tenn. Once she arrived, he coerced her into having sexual relations with him and she relented, believing she had no other choice.
During the sentencing hearing, Vicente-Sapon claimed that he had fallen in love with the girl, a statement that Judge Collier found unbelievable.
Agencies involved in this investigation included Homeland Security Investigations and the Federal Bureau of Investigation. Jay Woods, Assistant United States Attorney, represented the United States.
Former St. Thomas Business Partners Sentenced to 6 Months in Prison in Tax SchemeRead the Press Release
St. Thomas, USVI – District Court Chief Judge Curtis V. Gomez on May 16, 2013 sentenced business owners Joseph Thomas Edge and his wife, Laura A. Edge, to six months in prison for attempting to evade or defeat tax, to be followed by six months of supervised release, announced Ronald W. Sharpe, United
States Attorney for the District of the Virgin Islands, and Michael J. DePalma, Acting Special
Agent-in-Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CI). Gomez also ordered the Edges to pay restitution in the amount of $271,674 to the Virgin Islands Bureau of Internal
Revenue.Joseph and Laura Edge pleaded guilty on December 12, 2012, to attempting to evade or defeat tax in violation of Virgin Islands law for the 2004 tax year. The Edges were part owners and operating partners of Aqua Adventures, a company located on St Thomas that provided water tours. According to the plea agreement, during the years, 2002 through 2006, the Edges attempted to evade a large part of the tax due and owing to the IRB by concealing their earned income. They concealed their income by causing personal debts to be paid through Aqua Adventures, and failing to report to IRB cash payments the company received from selling merchandise.
The case was investigated by IRS-CI, with assistance from IRB Criminal Investigation
Division. The case was prosecuted by Assistant United States Attorney Kelly Lake.Former Key West Bank Officer Pleads Guilty to Disclosing A Federal Grand Jury Subpoena with the Intent to Obstruct A Judicial ProceedingRead the Press Release
Tampa, Florida - United States Attorney Robert E. O'Neill announces that Karen Galo (33, Key West) pleaded guilty yesterday to unlawfully disclosing a federal grand jury subpoena to a third party with the intent to obstruct a judicial proceeding. Galo faces a maximum penalty of 5 years in federal prison.
According to the plea agreement, on October 9, 2008, Galo, in her capacity as an officer of Key West Bank, received two federal grand jury subpoenas related to an investigation into mortgage fraud and money laundering. Galo knew the subject of the grand jury subpoenas. After receiving the grand jury subpoenas at the bank, Galo contacted the subject and sent him the subpoenas by fax. Galo disclosed the subpoenas to the subject with the intent to obstruct the investigation being conducted in Tampa. Included with the grand jury subpoenas served on the bank was a warning letter notifying Galo that it is a federal crime to disclose a federal grand jury subpoena received by a financial institution. Galo included the letter in the fax sent to the subject, along with the two subpoenas. Two days after the subject received the grand jury subpoenas, he fled the United States.
This case was investigated by the U.S. Department of Homeland Security, Homeland Security Investigations. It is being prosecuted by Assistant United States Attorney Simon Gaugush.
Former Employee of Assisted Living Center Sentenced to 37 Months in Prison for FraudRead the Press Release
Oklahoma City, Oklahoma – Yesterday, JAMES LESTER HAUSAM, JR., 29, of Oklahoma City, Oklahoma, was sentenced to serve 37 months in prison in connection with a scheme to steal money from a resident at a metro retirement home, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.
In 2010, Hausam worked at an assisted-living center in Bethany, Oklahoma. There, he became friends with Monica Michelle Brown, who also worked at the center. Hausam befriended a ninety-six-old resident at the center, fraudulently gained access to the resident’s bank account, and stole more than $250,000 belonging to him. Hausam used online banking to write checks to themselves from the resident’s account, forged the resident’s signature on blank checks, and purchased personal items through a PayPal account they set up in the resident’s name.
On September 11, 2012, Hausam was charged in a one-count Information with conspiracy to commit mail fraud and to make and possess forged securities. The Information alleged that, from January through June of 2011, Hausam and Brown conspired to steal tens of thousands of dollars for their personal benefit from a bank account belonging to the assisted-living center resident, without his permission. On September 25, 2012, Hausam pled guilty to the conspiracy count. Hausam admitted that he asked the victim in 2010 for money to help with bills; the resident gave Hausam a $1,000 check and a few blank checks. Hausam later started accessing the resident’s bank account online and writing checks from that account. Hausam admitted he also forged the resident’s name on a blank check that the resident had given him. At the plea hearing, Hausam admitted that he used the funds for his personal benefit, but never told the ninety-six-old resident that he and Brown were writing checks for thousands of dollars from the account.
At yesterday’s sentencing, United States District Judge Robin J. Cauthron sentenced Hausam to serve 37 months in federal prison, followed by three years of supervised release. Hausam was also ordered to pay restitution to the victim in the amount of $249,653.38. Hausam was remanded to the custody of the U.S. Marshal to begin service of his sentence.
The alleged conspirator, Monica Michelle Brown (a/k/a Monica Agee), 40, from Oklahoma City, was indicted by a federal grand jury on November 7, 2012, and charged with conspiracy to defraud, mail fraud, and forgery of checks. If convicted, Brown faces up to 20 years in prison and a $250,000 fine. The public is reminded that the indictment is merely an accusation and that Brown is presumed innocent unless and until proven guilty.
Brown has not been arrested and remains a fugitive. Anyone with information on her whereabouts should contact the Federal Bureau of Investigation at 405-290-7770.
These cases are the result of an investigation conducted by the Federal Bureau of Investigation and the Bethany Police Department. The cases are being prosecuted by Assistant United States Attorney Chris M. Stephens.
Executives, Borrower Convicted in Massive Fraud Scheme That Led to Collapse of Bank of the CommonwealthRead the Press Release
NORFOLK, Va. – Following a multi-week trial, three top executives and a favored borrower have been convicted by a federal jury in Norfolk, Va. Accused of masking non-performing assets at the Bank of the Commonwealth for their own personal benefit and to the detriment of the Bank, this long-running scheme contributed to the failure of the Bank in 2011, costing the Federal Deposit Insurance Corporation (FDIC) an estimated $268 million.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Royce E. Curtin, Special Agent in Charge of the FBI’s Norfolk Field Office; Thomas J. Kelly, Special Agent in Charge of the Internal Revenue Service Criminal Investigation’s Washington, D.C., Field Office (IRS-CI); Christy L. Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); and Mark Bialek, Inspector General of the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau (FRB-CFPB OIG) made the announcement.
“The brazen greed and dishonesty of these four defendants toppled one of Virginia’s largest financial institutions and intensified the impact of the 2008 financial crisis on the public during the height of the fiscal storm,” said U.S. Attorney Neil H. MacBride. “Today’s verdict sends a clear message to top executives and insiders in the financial services industry that those entrusted with the health of our financial institutions will be held accountable when they violate that trust.”“Today, those responsible for the corruption leading to one of the biggest bank failures in Virginia history impacting our Hampton Roads community were held accountable,” said FBI Special Agent In Charge Royce E. Curtin. “The extensive two year investigation led by FBI Norfolk Division, in conjunction with IRS, SIGTARP, FDIC-OIG, and FRB-CFPB OIG, identified and unraveled a criminal enterprise conducting complex fraudulent financial transactions. This case reflects the FBI and its partners' commitment to protect our communities by aggressively investigating and bringing to justice individuals exploiting their influence or position for personal gain.”
“Today's conviction is a reminder that IRS Criminal Investigation is committed to unraveling complex financial transactions of individuals who scheme to defraud U.S taxpayers,” said Thomas J. Kelly, Special Agent in Charge, IRS Criminal Investigation, Washington DC Field Office. “We will continue to work with our law enforcement partners to protect the integrity of our financial system.”
"Today's verdict shows that the same rules apply to bank executives as to any other citizen, and the verdict should stand as a warning to anyone engaged in fraud related to TARP; you will be held accountable and brought to justice for your crimes," said Christy Romero, Special Inspector General for TARP (SIGTARP). "Edward Woodard and other senior executives at Bank of the Commonwealth and their network of co-conspirators cultivated a culture of deceit and corruption at the bank, exchanging personal favors and lining their pockets while defrauding customers, shareholders, and federal regulators and driving the bank into the ground. The selfishness required to engage in such a fraud with the expectation that taxpayers and members of the community would clean up the mess is both legally and morally offensive. I would like to commend U.S. Attorney MacBride and the Assistant U.S. Attorneys for their exceptional work prosecuting the case."
“The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General is pleased to join our law enforcement colleagues in bringing these individuals to justice,” said FDIC Inspector General Jon T. Rymer. “We applaud the efforts of the U.S. Attorney’s Office, its staff, and the special agents who worked this lengthy, complex investigation and trial. We especially appreciate the willingness of the Eastern District of Virginia to devote the time and resources needed to bring this case to trial. This case involves the largest bank failure in the Commonwealth of Virginia—one that caused more than $268 million in losses to the FDIC’s Deposit Insurance Fund and harmed people and businesses in the Tidewater, Virginia community. We are particularly concerned when individuals occupying positions of trust in a bank abuse their positions, conspire with others, and engage in criminal activities. We will continue to pursue such offenders in the interest of maintaining the integrity of our nation's banks and protecting the Deposit Insurance Fund.”
“Our office is committed to bringing to justice bank executives who engage in illegal activities that undermine the public trust,” said Mark Bialek, Inspector General of the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau. “We will continue to work with our law enforcement partners to vigorously pursue wrongdoers whose fraudulent actions materially impact the Federal Reserve Board’s supervision program.”
Edward J. Woodard, 70, served as the Bank’s chief executive officer and chairman of the board for more than three decades until he was forced to step down as chairman and ultimately retire from the Bank in December 2010, was convicted of conspiracy to commit bank fraud, bank fraud, false entry in a bank record, unlawful participation in a loan, and false statement to a financial institution. He is scheduled to be sentenced on Sept. 26, 2013. Each charge carries a maximum penalty of 30 years in prison.
Stephen G. Fields, 49, served as an executive vice president and commercial loan officer until he was terminated in December 2010. Fields was convicted of conspiracy to commit bank fraud, false entry in a bank record, false statement to a financial institution, and misapplication of bank funds. He is scheduled to be sentenced on Sept. 16, 2013. Each charge carries a maximum penalty of 30 years in prison.
Troy Brandon Woodard, 36, the son of CEO Edward Woodard, was employed by a wholly-owned subsidiary of the Bank as a vice president and mortgage loan specialist until he was terminated in January 2011. Brandon Woodard was convicted of conspiracy to commit bank fraud and unlawful participation in a loan. He is scheduled to be sentenced on Sept. 30, 2013. Each charge carries a maximum penalty of 30 years in prison.
Dwight A. Etheridge, 48, a favored borrower, owned and operated a residential and commercial development company, as well as an employment staffing company. Etheridge was convicted of conspiracy to commit bank fraud, misapplication of bank funds, and false statement to a financial institution. He is scheduled to be sentenced on September 18, 2013. Each charge carries a maximum penalty of 30 years in prison.
According to the evidence adduced at trial, in 2006, leaders at the Bank of the Commonwealth began an aggressive expansion to take the Bank beyond its traditional focus area of Norfolk and Virginia Beach to include branches in northeastern North Carolina and the Outer Banks. By December 2009, the Bank’s assets reached approximately $1.3 billion. These assets were built largely through brokered deposits. Brokered deposits are a financial tool that allows investors to pool their money and receive higher rates of return. Because of the high-volatility of these deposits, an institution must remain well-capitalized to accept and renew brokered deposits.
Evidence showed that many of the Bank’s loans were funded and administered without regard to industry standards or the Bank’s own internal controls. By 2008, the volume of the Bank’s troubled loans and foreclosed real estate soared. From 2008 through 2011, Bank insiders – Edward Woodard and Fields – masked the Bank’s true financial condition out of fear that the Bank’s declining health would negatively impact investor and customer confidence and affect the Bank’s ability to accept and renew brokered deposits.
To fraudulently hide the Bank’s troubled assets, these Bank insiders overdrew demand deposit accounts to make loan payments, used funds from related entities – at times without authorization from the borrower – to make loan payments, used change-in-terms agreements to make loans appear current, and extended new loans or additional principal on existing loans to cover payment shortfalls.
In addition, the evidence showed that Bank insiders also provided preferential financing to troubled borrowers to purchase Bank-owned properties. The troubled borrowers were already having difficulty making payments on their existing loans; however, the financing allowed the Bank to convert a non-earning asset into an earning asset, and the troubled borrowers obtained cash at closing to make payments on their other loans at the Bank or for their own personal purposes. The troubled borrowers purchased or attempted to purchase property owned by Bank insiders and Brandon Woodard. These real estate loans were fraudulently funded by the Bank.
The evidence also established that in late 2008, Edward J. Woodard caused the Bank to pay approximately $100,000 in fraudulent invoices purportedly for the Bank’s Suffolk branch when in fact they were for renovations at the personal residence of Troy Brandon Woodard.
In November 2008, the Bank of the Commonwealth submitted to the Federal Reserve, an application requesting approximately $28 million from the Troubled Asset Relief Program (TARP). Based on its regulator's concerns about the health of the Bank, the Federal Reserve later requested that the Bank withdraw its TARP application, which the Bank did.
From 2008 up to its closing in 2011, the Bank lost nearly $115 million. It is estimated that the Bank’s failure cost the federal government, through the deposit insurance fund, approximately $268 million.
Simon Hounslow, 48, served as an executive vice president and chief lending officer until the Bank closed in September 2011. Hounslow was acquitted of all charges.
The investigation was conducted by the FBI’s Norfolk Field Office, IRS-CI, SIGTARP, FDIC-OIG, and FRB-CFPB OIG. Assistant United States Attorneys Melissa E. O’Boyle, Katherine Lee Martin, and Uzo Asonye are prosecuting the case on behalf of the United States.
The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
President Obama established the 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.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Early Man Pleads Guilty to Meth ConspiracyRead the Press Release
A man who conspired to manufacture and distribute methamphetamine pled guilty May 23, 2013, in federal court in Sioux City.
David Robley, 52, from Early, Iowa, were convicted of conspiring to manufacture and distribute methamphetamine.
At the plea hearing, Robley admitted his involvement in a conspiracy from about 2010 through January 2013 that manufactured and distributed more than 50 grams of actual (pure) methamphetamine. According to pseudoephedrine purchase logs obtained in the investigation, starting in January 2010 through December 2012, Robley acquired at least 102.24 grams of pseudoephedrine for the manufacture of methamphetamine.
Sentencing before United States District Court Judge Mark W. Bennett will be set after a presentence report is prepared. Robley was taken into custody by the United States Marshal after the guilty plea and will remain in custody pending sentencing. Robley faces a mandatory minimum sentence of 10 years’ imprisonment and a possible maximum sentence of life imprisonment, a $10,000,000 fine, a special assessment of $100, and five years up to life of supervised release following any imprisonment.
The case is being prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated by the Iowa Division of Narcotics Enforcement and the Clay County Sheriff’s Office.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 13-4007.
Eagle Butte Man Indicted for Assault and Failure to Register as A Sex OffenderRead the Press Release
United States Attorney Brendan V. Johnson announced that an Eagle Butte, South Dakota man has been indicted by a federal grand jury for Assault with a Dangerous Weapon, Assault Resulting in Serious Bodily Injury and Failure to Register as a Sex Offender.
Chad Two Hearts, age 19, was indicted by a federal grand jury on May 20, 2013. He appeared before U.S. Magistrate Judge Mark A. Moreno on May 20, 2013 and pled not guilty to the indictments.
The maximum penalty upon conviction of Assault with a Dangerous Weapon and Assault Resulting in Serious Bodily Injury is 10 years in custody, a $250,000, or both; 3 years of supervised release; and a $100 special assessment on each count. Restitution may also be ordered.
The maximum penalty upon conviction of Failure to Register as a Sex Offender is 5 years in custody, a $250,000 fine, or both; at least 5 years of supervised release; and a $100 Special Assessment. Restitution may also be ordered.
The Assault charges relate to an alleged incident in which Two Hearts is accused of assaulting a Swiftbird man in July 2012 with a wooden board or club. The assault resulted in serious injury to the victim. The Failure to Register as a Sex Offender charge relates to Two Hearts’ alleged failure to register and update a registration between April 2008 and April 2012, as required under the Sex Offender Registration and Notification Act after being convicted of a sex offense.
The charges are merely accusations, and Two Hearts is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Federal Bureau of Investigation and the Cheyenne River Sioux Tribe Law Enforcement Division. Assistant U.S. Attorney Mikal Hanson is prosecuting the case.
Two Hearts was remanded to the custody of the U.S. Marshal. A trial date has not been set.
Eagle Butte Man Charged with AssaultRead the Press Release
United States Attorney Brendan V. Johnson announced that an Eagle Butte, South Dakota, man has been indicted by a federal grand jury for Assault Resulting in Serious Bodily Injury.
Stanley Morrison, age 32, was indicted by a federal grand jury on May 15, 2013. He appeared before US Magistrate Judge Mark A. Moreno on May 23, 2013, and pled not guilty to the indictment. The maximum penalty upon conviction is 10 years in custody, a $250,000, or both.
The charge relates to an alleged incident that occurred in January of 2013 in which Morrison is accused of assaulting a Cherry Creek man and that the assault resulted in serious injury to the victim. The charge is merely an accusation, and Morrison is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Cheyenne River Sioux Tribe Law Enforcement Division. Assistant US Attorney Mikal Hanson is prosecuting the case.
Morrison was released on bond pending trial. A trial date has not yet been set.
Dupree Woman Charged with Child Abuse and NeglectRead the Press Release
United States Attorney Brendan V. Johnson announced that a Dupree, South Dakota woman has been indicted by a federal grand jury.
Alisa Knight, age 29, was indicted by a federal grand jury on May 15, 2013 for Child Abuse and Neglect. Knight appeared before U.S. Magistrate Judge Mark A. Moreno on May 22, 2013 and pled not guilty to the Indictment.
The maximum penalty on each count upon conviction is 15 years of imprisonment, a $250,000 fine, or both; 3 years of supervised release and an additional 2 years of supervised release upon revocation. Restitution and a $100 special assessment to the Federal Crime Victims Fund may also be ordered.
The charges are merely accusations, and Knight is presumed innocent until and unless proven guilty.
The investigation is being conducted by the Federal Bureau of Investigation and Assistant U.S. Attorney Troy R. Morley is prosecuting the case.
Knight was remanded to the custody of the U.S. Marshals Service. A trial date has not been set.
Disability Doctor Peter J. Ajemian Sentenced in Manhattan Federal Court to Eight Years in Prison for His Role in LIRR Fraud SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that PETER J. AJEMIAN, a Board-certified orthopedist, was sentenced today in Manhattan federal court to eight years in prison for his role in the alleged massive fraud scheme in which Long Island Railroad (“LIRR”) workers claimed to be disabled upon early retirement so that they could receive disability benefits to which they were not entitled. Between the late 1990s and 2008, AJEMIAN recommended that at least 734 retiring LIRR employees receive disability benefits, and was responsible for treating nearly half of all LIRR employees who retired and received disability benefits in one four-year period. AJEMIAN pled guilty in January 2013 to one count of conspiracy to commit mail fraud, wire fraud, and health care fraud, and one count of health care fraud before U.S. District Judge Victor Marrero, who also imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara stated: “Today Dr. Ajemian begins to pay the price for being a key facilitator of a massive disability fraud on the LIRR, that he admitted resulted in losses of millions of dollars. This Office will continue to pursue those who participated in this scheme to abuse LIRR’s disability system and gain benefits to which they were not entitled.”
According to the Complaint, the Superseding Indictments, the Superseding Informations, and statements made in other public filings and in court:
The Railroad Retirement Board (“RRB”) is an independent U.S. agency that administers benefit programs, including disability benefits, for the nation’s railroad workers and their families. A unique LIRR contract allowed employees to retire at the relatively young age of 50 – the age of eligibility has since changed to 55 – if they had been employed by the LIRR for at least 20 years. Eligible employees are entitled to receive an LIRR pension, which is a portion of the full retirement payment for which they are eligible at 65. In addition, at full retirement age (between age 60 and age 65 depending on years of service) they are eligible to receive an RRB retirement pension. For LIRR workers who retired at 50 with only an LIRR pension, they would receive less than their prior salary and substantially lower pension payments than those to which they would be entitled at full retirement age. However, LIRR employees who retired and claimed disability could receive a disability payment from the RRB on top of their LIRR pension, regardless of age. A retiree’s LIRR pension, in combination with RRB disability payments, can be roughly equivalent to the base salary earned during his or her career.
Hundreds of LIRR employees have allegedly exploited the overlap between the LIRR pension and the RRB disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under penalty of prosecution in disability applications, allowed LIRR employees to retire as early as age 50 with an LIRR pension, supplemented by the fraudulently obtained RRB disability annuity. From 1995 through 2011, more than 75% of LIRR employees stopped working and began receiving RRB disability benefits, whereas during this same period, only 25% of retiring Metro-North employees stopped working and began receiving RRB disability benefits.
AJEMIAN is a Board-certified orthopedist who was instrumental in helping LIRR retirees receive disability benefits to which they were not entitled. Between the late 1990s and 2008, he declared over 94% of the LIRR employees he saw as patients disabled. As part of the massive fraud scheme, AJEMIAN prepared false documentation purporting to show the LIRR employees’ steady decline toward disability exactly at the time they pre-planned their retirement. He then provided to those LIRR employees a narrative for submission to the RRB that claimed they should receive a disability annuity. These medical narratives were completely fabricated or grossly exaggerated so that AJEMIAN could recommend a set of restrictions that, if legitimate, would render it impossible for the LIRR employees to continue performing their jobs. Many of the purportedly “objective” findings from the tests he conducted showed nothing more than normal degenerative changes one would expect to see in patients within the relevant age bracket.
AJEMIAN received approximately $800 to $1,200, often in cash, for these fraudulent assessments and narratives, as well as millions of dollars in health insurance payments for unnecessary medical treatments and fees for preparing fraudulent medical support for the claimed disabilities. Of approximately 453 LIRR annuitants studied, AJEMIAN received approximately $2.5 million in related payments from patients and insurance companies. In turn, those patients have received over $90 million in RRB disability benefit payments. In his plea agreement, Ajemian stipulated that the total intended losses from his fraud were between $100 and $200 million, and that the actual losses suffered by victims to date total $116.5 million.
In addition to his prison term, AJEMIAN, 63, of Oyster Bay Cove, New York was also sentenced to three years of supervised release. He has also agreed to forfeit $116.5 million and pay $116.5 million in restitution, and was ordered to pay a $200 special assessment.
In sentencing AJEMIAN, Judge Marrero said, “Putting all of these circumstances together conveys the gravity of Dr. Ajemian's criminal conduct in its grittiest perspective. Dr. Ajemian corrupted the license publicly granted to him to practice medicine, and betrayed the public trust embodied in that privilege. By his fraudulent actions, he not only distorted his professional duties, but flipped the physician's medical function on its head and made health care a mockery. In the cases encompassed by the charged conspiracy, Dr. Ajemian generally treated not ill employees, but fit ones. He provided physician's services not to restore these patients to good health, or prevent sickness, but to turn able-bodied employees into fully-pensioned annuitants falsely afflicted by certified lifetime disabilities.”
Thirty-two people have been charged in connection with the LIRR disability fraud scheme, 23 of whom have now pled guilty. The charges against the remaining defendants are merely allegations and they are all presumed innocent unless and until proven guilty.
Mr. Bharara praised the RRB-OIG, the FBI, and the MTA-OIG for their outstanding work in the investigation, which he noted is ongoing. He also acknowledged the previous investigation conducted by the New York State Attorney General’s Office into these pension fraud issues.
The Office’s Complex Frauds Unit is handling the case. Assistant U.S. Attorneys Justin Weddle, Daniel Tehrani, and Nicole Friedlander are in charge of the prosecution.
Customer Service Representative Indicted for Conspiracy to Issue Fraudulently Obtained Florida Driver Licenses and Aggravated Identity TheftRead the Press Release
Orlando, Florida - United States Attorney Robert E. O'Neill announces the return of an indictment charging Walter Brown (41, Kissimmee) with one count of conspiracy to knowingly and without lawful authority produce identification documents and nine counts of aggravated identity theft. If convicted, Brown faces up to 15 years in federal prison for the conspiracy charge and two years in federal prison for each count of aggravated identity theft charge.
According to the indictment, Brown was a Customer Service Representative in the Office of the Osceola County Tax Collector. Brown’s primary duty was to issue driver licenses and identification cards. Court documents show that in his capacity as a Customer Service Representative, Brown issued at least 200 Florida driver licenses and identification cards individuals who may not be legally entitled to the documents. In some instances, Brown fraudulently issued driver licenses and identification cards in multiple identities to the same person.
The Osceola County Tax Collector’s Office reported Brown to law enforcement after internal controls revealed suspicious activity involving his issuance of Florida State driver licenses and identification cards. The Tax Collector’s Office cooperated fully in the investigation. Brown was terminated from his employment.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Department of State Diplomatic Security Services, and the Florida Highway Patrol’s Bureau of Criminal Investigations and Intelligence. It is being prosecuted by Special Assistant United States Attorney Myrna Amelia Mesa.
Curtiss-Wright Controls Paid $1.35 Million to Resolve Allegations of Overcharging on Government ContractsRead the Press Release
BOSTON - The United States Attorney for the District of Massachusetts announced today that Curtiss-Wright Controls, Inc. (Curtiss-Wright), a defense contracting company based in Littleton, has paid $1.35 million to resolve civil claims related to alleged overcharges on two government contracts to provide parts for the Army’s line of Bradley Fighting Vehicles.
The government alleged that those overcharges violated the Truth in Negotiation Act (TINA). The investigation of the overcharges resulted from Defense Contract Audit Agency audits which indicated that Curtiss-Wright had failed to provide the Army with current, accurate and complete data concerning the parts it was using to fulfill the two Army contracts.
Pursuant to a settlement agreement, Curtiss-Wright paid $1.35 million to resolve the government’s civil allegations and has also implemented new procedures to help ensure timely and complete disclosure of cost and pricing information, so as to prevent similar TINA violations in the future. Curtiss-Wright has not admitted liability or wrongdoing in connection with the settlement.
“This office will continue to do everything in its power to ensure that companies who are paid under federal contract play by the rules and provide the pricing data that the law requires. Taxpayers are entitled to know that their money is being spent for legitimate governmental purposes,” said U.S. Attorney Carmen M. Ortiz.
U.S. Attorney Ortiz and Michael D. Conner, Special Agent in Charge of the U.S. Army Criminal Investigation Command, Boston Fraud Branch Office, made the announcement today. The investigation and settlement were handled by Assistant U.S. Attorneys Sonya Rao, Jennifer Cardello, and Patrick Callahan.Canton Man with Murder Conviction Faces Federal Charges for Having Six FirearmsRead the Press Release
A Canton man with a prior murder conviction was faces federal firearms charges after authorities found him with six firearms, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Torrey T. Gross, age 39,was indicted on one count of being a felon in possession of a firearm.
"It is profoundly troubling that a man with this criminal backgroud was able to get his hands on these fireams," Dettelbach said. "We will continue to use all the tools at our disposal to keep firearms from those who are forbidden from possessing them."
Gross was arrested on April 17, 2013, by Metro Narcotics, FBI Safe Streets Task Force and the Canton Police Department SWAT team during an execution of a Stark County Common Pleas Court Search Warrant. The search warrant yielded an S.K.S. semiautomtic rifle, a Ruger SR40C pistol, a Smith & Wesson Bodyguard 380 pistol, a Glock 17 pistol, a Glock 21, .45-caliber pistol, a Smith & Wesson, model 22A-1 .22-caliber pistol and various ammunition, according to the indictment.
Gross is forbidden from possessing firearms or ammunition because of a 1997 conviction for muder in Oakland County, Michigan, according to the indictment.
If convicted, Gross’ sentence will be determined by the Court after review of factors unique to this case, including his prior criminal record, if any, his role in the offenses and the unique 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 U.S. Attorney Teresa Dirksen.
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.
Cambria County Man Indicted on Firearms ViolationsRead the Press Release
Prosecution is part of Project Safe Neighborhoods Initiative
JOHNSTOWN, Pa. - On May 23, 2013, a resident of Johnstown, Pa., was indicted by a federal grand jury in Pittsburgh on a charge of violating federal firearms laws, United States Attorney David J. Hickton announced today.
The one-count indictment named Montez Ricardo Holland, 51.
According to the indictment presented to the court, on Jan. 4, 2013, Holland possessed a Sturm, Ruger & Company, Model P95DC, 9 mm semi-automatic pistol. On Apr. 27, 1998 , Holland was convicted in Lycoming County, Pa., of a drug trafficking crime, which is a crime punishable by imprisonment for a term exceeding one year. Federal law prohibits persons who have been convicted of a crime punishable by a term of imprisonment exceeding one year from possessing firearms or ammunition.
The law provides for a maximum total sentence of 10 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history of the defendant.
Assistant U.S. Attorney Stephanie L. Haines is prosecuting this case on behalf of the government.
The Laurel Highlands Resident Agency of the Federal Bureau of Investigation and the Cambria County Drug Task Force conducted the investigation leading to the indictment in this case.
According to Mr. Hickton, Holland is being prosecuted as part of Project Safe Neighborhoods, a collaborative effort by federal, state and local law enforcement agencies, prosecutors and communities to prevent, deter and prosecute gun crime.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Calvert County Man Pleads Guilty to Transporting Child PornographyRead the Press Release
Greenbelt, Maryland – David Dobbs, age 55, of Port Republic, Maryland, pleaded guilty today to transporting child pornography.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; and Colonel Marcus L. Brown, Superintendent of the Maryland State Police.
According to the plea agreement, on two occasions in 2010, Dobbs used a file sharing program to make his files of child pornography available to undercover law enforcement officers, who downloaded a total of 16 videos and five images of children engaged in sexually explicit conduct. On September 13, 2010, in addition to providing the officer access to the file sharing program, Dobbs engaged in a chat with the undercover officer, telling the officer that he liked “girls around seven years old and up.”
On April 13, 2012, Dobbs was interviewed in connection with another investigation and admitted to using a file sharing program and that he used a particular screen name when he chatted with the undercover officer. A search warrant was executed at Dobb’s residence and law enforcement seized a laptop computer and an SD card that was damaged and appeared to have been pierced with a blunt instrument. Child pornography was recovered from the computer and the SD card, including images of prepubescent children engaging in sexually explicit conduct.
As part of his plea agreement, Dobbs must register as a sex offender in the place where he resides, where he is an employee, and where he is a student, under the Sex Offender Registration and Notification Act (SORNA).
Dobbs faces a minimum mandatory sentence of five years in prison and a maximum of 20 years in prison. As part of his plea agreement, Dobbs and the government will recommend to the Court that a sentence of 90 months in prison, followed by a period of supervised release, is the appropriate disposition of the case. U.S. District Judge Peter J. Messitte has scheduled sentencing for July 25, 2013 at 9:30 a.m.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the "resources" tab on the left of the page.
United States Attorney Rod J. Rosenstein commended the FBI and Maryland State Police for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Kristi N. O’Malley, who prosecuted the case.
Black Hawk Man Pleads Guilty to Embezzlement from the South Dakota Army National GuardRead the Press Release
United States Attorney Brendan V. Johnson announced that Dennis Mallow, age 47, of Black Hawk, South Dakota appeared before U.S. Magistrate Judge Veronica L. Duffy on May 14, 2013 and pled guilty to Theft of Government Property. The maximum penalty upon conviction is 10 years of imprisonment and a $250,000 fine.
The charge relates to Mallow embezzling toolboxes, tools, equipment, gear, and other property, having a value in excess of $30,000, from the South Dakota Army National Guard between October 1, 2009 and September 7, 2012.
The investigation was conducted by the Federal Bureau of Investigation and the South Dakota Army National Guard. The case is being prosecuted by Assistant U.S. Attorney Wayne Venhuizen.
A presentence investigation was ordered and a sentencing date will be set. The defendant was released on bond pending sentencing.
Arrests Made in Conjunction with Benchmark InvestigationRead the Press Release
KNOXVILLE, Tenn. - On Thursday, May 23, 2013, four individuals were taken into custody by federal agents in conjunction with an investigation involving Benchmark Capital, Inc. Brian Murphy, Paulynn Wright, and Dona Rector were arrested Thursday morning by federal agents. Tiffiny Thompson voluntarily surrendered to authorities after being informed that charges has been filed against her. Murphy and Thompson pleaded not guilty during their arraignment before U.S. Magistrate Judge H. Bruce Guyton. The arraignment of Wright and Rector has been scheduled for May 24, 2013 at 10:00 am. All four were released pending trial, which will be scheduled at a status conference on June 4, 2013.
Charges against these four individuals are contained in a superseding indictment returned by a federal grand jury on May 21, 2013. Murphy, Thompson and Wright are charged with conspiracy to commit mail and wire fraud and money laundering. Rector is charged with conspiracy to commit wire fraud. The superseding indictment also contains additional charges against Joyce Allen and Kay Thomas, who were initially indicted in July 2012.
The money laundering conspiracy charge carries a maximum sentence of 20 years in prison. The maximum sentence for the fraud conspiracy charge is 30 years in prison.
The indictment alleges that Benchmark Capital, Inc. was engaged in an elaborate scheme that lured investors, many of whom were elderly, into investing their retirement savings and the equity in their homes in phony annuity investments. According to the indictment, more than $42.6 million was invested in the Benchmark scheme, resulting in a net loss of more than $18 million to investors. The scheme unraveled early last year, following the suicide of Charles Candler in March 2012.
This indictment is the result of an investigation by the Internal Revenue Service, U.S. Postal Inspection Service, and Federal Bureau of Investigation. Assistant U. S. Attorney Frank M. Dale, Jr. is representing the United States.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt