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13 May 2013
West Hollywood Doctor Indicted on Federal Charges for Writing Prescriptions for Narcotics After Being Ordered to StopRead the Press Release
LOS ANGELES – A West Hollywood doctor surrendered to federal authorities this morning after being indicted last Friday on federal drug trafficking charges that allege he wrote more than 1,200 prescriptions for powerful painkillers after a federal order revoked his authority to prescribe those drugs.
James William Eisenberg, 72, who resides in the Venice district of Los Angeles, surrendered this morning at the United States Courthouse, where he is expected to be arraigned this afternoon.
Eisenberg is named in an indictment that charges him with four counts of using a revoked DEA registration number and three counts of distribution of hydrocodone, which is the generic drug found in brand-name products such as Vicodin and Norco.
Eisenberg allegedly wrote the prescriptions while he worked out of several medical offices in West Hollywood, including a Santa Monica Boulevard storefront he called Pacific Support Services. Eisenberg also issued “medical marijuana” recommendations from these West Hollywood locations, according to court documents and DEA administrative records.
In order to legally prescribe controlled substances such as hydrocodone, physicians must be registered with the United States Attorney General and have a valid DEA registration number. On December 14, 2011, a DEA administrative judge determined that Eisenberg acted as a “drug dealer” and suspended his registration number. The DEA issued an order permanently revoking Eisenberg’s registration on July 24, 2012.
The orders issued by the administrative judge were based on findings that Eisenberg, who at the time was working out of a “medical marijuana” club in Arizona, “lacked a legitimate medical purpose and acted outside of the usual course of professional practice” when he wrote prescriptions for oxycodone (the generic form of a drug often best known as the brand-name OxyContin) and Xanax in exchange for $150 cash payments. The DEA judge also found that Eisenberg wrote “medical marijuana” recommendations to undercover officers posing as patients, and that Eisenberg prescribed OxyContin to one of the undercover agents “before [Eisenberg] had even performed a physical examination.”
DEA investigators later learned that Eisenberg continued to prescribe controlled substances, including hydrocodone, in violation of the DEA’s orders. A review of a California Department of Justice database that can be used to track prescriptions showed that, following the suspension of Eisenberg’s registration number, patients filled more than 1,700 of his prescriptions for controlled substances, including more than 1,200 prescriptions for hydrocodone. As charged in the indictment, Eisenberg wrote one of those prescriptions on December 27, 2011, less than two weeks after his registration number was suspended.
DEA investigators executed a federal search warrant on one of Eisenberg’s West Hollywood offices on February 19, 2013. The affidavit in support of the search warrant outlines evidence, including surveillance and undercover operations, that Eisenberg continued to write prescriptions for controlled substances in violation of the DEA’s revocation order. The evidence included an operation in which an undercover agent, posing as a patient, obtained a prescription from Eisenberg for hydrocodone and alprazolam (the generic form of a drug best known as Xanax). A receptionist at Eisenberg's office asked the undercover agent if “he was looking for medical marijuana” as well, according to the search warrant affidavit.
According to the affidavit, when a West Hollywood pharmacist refused to fill Eisenberg prescriptions for hydrocodone and alprazolam in June 2012, Eisenberg called the pharmacy and asked the pharmacist to make an “exception” and fill the prescription.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
If convicted of the seven counts in the indictment, Eisenberg faces a statutory maximum sentence of 46 years in federal prison.
The investigation into Eisenberg was conducted by the Drug Enforcement Administration.
Release No. 13-068
United States Attorney’s Office Honors Federal, State & Local Law Enforcement Personnel for Exceptional ServiceRead the Press Release
BOSTON - United States Attorney Carmen M. Ortiz recently recognized 152 officials from federal, state and local law enforcement agencies for exceptional service at the annual Law Enforcement Public Service Awards Ceremony.
The ceremony held at the United States Courthouse in Boston on May 8 identified 15 cases worthy of special recognition from 2012 for outstanding collaboration, investigative achievement, investigative excellence and victim assistance. The honorees were nominated by Assistant U.S. Attorneys involved in the investigation and prosecution of the cases.
During the event, US Attorney Ortiz praised law enforcement personnel or their accomplishments and recognized the demands placed upon them.
“This work can be difficult, and at times, it may seem thankless,” she said. “Please know that your efforts do not go unnoticed. What you have sacrificed - your personal safety, your precious time with your families – it is truly appreciated by our office, your agencies and the communities for which you have dedicated your esteemed service.”
Cases receiving recognition for Outstanding Collaborative Investigation were those that required exceptional efforts of investigators to overcome significant challenges and achieve a successful conclusion resulting from collaboration with multiple agencies. Cases and agencies highlighted in this category were as follows:
- U.S. v. John Alicea-Burgos, et al.
Recipients: Drug Enforcement Administration; Easthampton Police Department, Federal Bureau of Investigation; and Holyoke Police Department - U.S. v. GlaxoSmithKline, LLC
Recipients: U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations; Federal Bureau of Investigation; Department of Defense, Office of Inspector General, Defense Criminal Investigative Service; U.S. Food and Drug Administration, Office of Criminal Investigations; United States Postal Service, Office of Inspector General; U.S. Department of Veterans Affairs, Office of Inspector General; and Office of Personnel Management, Office of Inspector General - United States v. Luis Alberto Gonzalez, et al.
Recipients: Drug Enforcement Administration; Fairhaven Police Department; and Massachusetts State Police through the FBI North Shore Gang Task Force and Essex County Drug Task Force - U.S. v. Thomas A. Donahue
Recipients: Federal Bureau of Investigation and U.S. Immigration and Customs Enforcement, Homeland Security Investigations - U.S. v. Emadeddin Muntasser, et al.
Recipients: Federal Bureau of Investigation; U.S. Immigration and Customs Enforcement, Homeland Security Investigations; Massachusetts State Police; U.S. Immigration and Customs Enforcement, Customs and Border Protection; and U.S. Internal Revenue Service, Criminal Investigation - U.S. ex rel. Giddarie v. Sanofi-Aventis
Recipients: U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations; Federal Bureau of Investigation; United States Postal Service, Office of Inspector General; and Office of Personnel Management, Office of Inspector General.
Cases receiving recognition for Investigative Achievement were limited to those that substantially and significantly contributed to the mission of the U.S. Attorney’s Office and the Department of Justice. Cases and agencies highlighted in this category were as follows:
- U.S. v. Owens Brown
Recipients: Federal Bureau of Investigation; Boston Police Department; and Massachusetts State Police Gang Task Force. - U.S. v. Ralph F. DeLeo, et al.
Recipients: Federal Bureau of Investigation; Massachusetts Department of Correction; Boston Police Department; Medford Police Department; and U.S. Internal Revenue Service, Criminal Investigation - U.S. ex rel. Susan Hutcheson v. Blackstone Medical, Inc.
Recipient: Department of Defense, Office of Inspector General, Defense Criminal Investigative Service - U.S. v. Dion, et al., U.S. v. Rickaby, U.S. v. Savage, and U.S. v. Lapierre, et al.
Recipients: U.S. Postal Inspection Service; U.S. Internal Revenue Service; and U.S. Internal Revenue Service, Criminal Investigation - Operation Magic Wand
Recipients: Drug Enforcement Administration and Boston Police Department - U.S. v. Orthofix, Inc. and U.S. v. Thomas Guerrieri
Recipient: U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations
Cases receiving recognition for Investigative Excellence were reserved for those whose actions led to the arrest of a dangerous subject or the exposure of a significant criminal conspiracy. The case need not be prosecuted in the District of Massachusetts, but related to a federal or international matter. Cases and agencies highlighted in this category were as follows:
- U.S. v. Jose L. Baez
Recipients: Bureau of Alcohol, Tobacco, Firearms and Explosives; Boston Fire Department, Fire Investigation Unit; Boston Police Department; Massachusetts State Police, Fire and Explosion Investigation Unit; and Cambridge Fire Department - U.S. v. Rezwan Ferdaus
Recipients: Federal Bureau of Investigation and Worcester Police Department - Operation Holitna
Recipient: U.S. Immigration and Customs Enforcement, Homeland Security Investigations
The award recipients in Operation Holitna also received a Victim Service Award for their tireless efforts to rescue child victims of sexual abuse and pornography. Operation Holitna has led to the identification of about 160 child victims worldwide and arrests of 33 and 16 individuals internationally and domestically, respectively. Untold numbers of children have been saved from these predators due the exceptional efforts of those recognized.
- U.S. v. John Alicea-Burgos, et al.
Union Official from Jersey City Local Sentenced to Six Months in Prison for Embezzling MoneyRead the Press Release
NEWARK, N.J. – The president of Local 148 of the Production Workers Union was sentenced today to six months in prison for conspiring with the secretary-treasurer/recording secretary to steal money from the union by taking unauthorized salary increases and bonuses, U.S. Attorney Paul J. Fishman announced.
Stephen P. Arena, 58, of Nesconset, N.Y., previously pleaded guilty before U.S. District Judge Stanley R. Chesler to Count One of a 24-count Indictment, which charged Arena with conspiracy to embezzle money and funds from Local 148. Judge Chesler imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
Local 148 of the Production Workers Union of the Allied, Novelty, and Production Workers of America, located in Jersey City, N.J., represents workers from various trades, including bus drivers, hotel workers, and factory workers.
Arena, the union’s president, and David J. Caivano, its secretary-treasurer/recording secretary, conspired to embezzle money belonging to Local 148 by giving themselves unauthorized salary increases and bonuses with no legitimate union purpose and which had not been authorized by the union or its members. Arena admitted he conspired with Caivano to embezzle money from the union.
Caivano pleaded guilty before Judge Chesler to unlawfully engaging in a financial transaction with a labor union and was sentenced to three years of probation.In addition to the prison term, Judge Chesler sentenced Arena to two years of supervised release and fined him $5,000. Arena’s plea agreement also requires him to repay the union approximately $110,000 in restitution.
U.S. Attorney Fishman credited special agents of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Robert L. Panella; investigators from the U.S. Department of Labor, Office of Labor Management Standards, New York District Office, under the direction of District Director Andriana Vamvakas, with the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney Office’s Organized Crime/Gangs unit, in Newark.
13-192Defense counsel: Nicholas G. Kaizer Esq., New York
Two Local Men Sentenced for Supporting Foreign TerroristsRead the Press Release
MINNEAPOLIS—Today in federal court, U.S. District Court Chief Judge Michael J. Davis sentenced two local men for providing material support to foreign terrorists. Mahamud Said Omar, also known as Sharif Omar, age 46, of Minneapolis, was sentenced to 180 months in federal prison on each of Counts 1 through 4, and 240 months in federal prison on Count 5, with the prison sentences to run concurrently. He was also ordered to remain on life-long supervised release once he has served his prison term. Kamal Said Hassan, age 28, of Minneapolis, was sentenced to 120 months in federal prison on each of Counts 1 and 2 and 96 months in federal prison on Count 3, to be served concurrently, followed by 20 years of supervised release.
Omar was indicted on August 20, 2009, on Count 1: conspiracy to provide material support to terrorists; Count 2: providing material support to terrorists; Count 3: conspiracy to provide material support to a Foreign Terrorist Organization; Count 4: providing material support to a Foreign Terrorist Organization; and Count 5: conspiracy to kill, kidnap, maim, and injure overseas. He was arrested in the Netherlands in November of 2009 and extradited to the United States in August of 2011. In October 2012, he was tried and convicted of these crimes. He remains in custody.On February 18, 2009, Hassan pleaded guilty to Counts 1 and 2 of an information, alleging he provided material support to terrorists and providing material support to the Foreign Terrorist Organization al-Shabaab. He admitted that he had traveled to Somalia, had graduated from an al-Shabaab training camp, and had participated in an al-Shabaab ambush of Ethiopian soldiers. Then, on August 12, 2009, he was charged with and entered a guilty plea to Count 3 of a superseding information, alleging that he made false statements to the Federal Bureau of Investigation (“FBI”) during interviews with the FBI in early 2009. Those charges were based on the fact that Hassan had lied to the FBI about his continued involvement with al-Shabaab after completing training in an al-Shabaab camp. He pleaded guilty to that crime and remains in custody.
Following today’s sentencings, John Carlin, Acting Assistant Attorney General for National Security, said, “With today’s sentences, two individuals who played crucial roles in raising funds and recruiting fighters from the United States to assist al-Shabaab are being held accountable. I thank the many agents, analysts, and prosecutors responsible for this extensive investigation and the many successful prosecutions that have resulted.”
U.S. Attorney B. Todd Jones added, “Fighting terrorism, whether at home or abroad, remains the number-one priority of the U.S. Department of Justice. To that end, we must continue to counter violent extremism and radicalization through tough prosecution whenever necessary and education and outreach efforts whenever possible. We need to keep our young people from being recruited and trained by foreign terror organizations, not only because of the threat to themselves and others elsewhere in the world but because of the danger they pose if they return to this country.”
From September 2007 through August 2009, Omar, a Somali citizen who was a lawful permanent resident of the United States, conspired with others to provide financial assistance as well as personnel to al-Shabaab, a Somali group designated a Foreign Terrorist Organization by the U.S. State Department in March 2008. Specifically, while on a trip to Somalia in early 2008, Omar visited an al-Shabaab safe-house, providing those in charge with hundreds of dollars for the purchase of AK-47 assault weapons, to be used by the Minneapolis men who had traveled there to fight with al-Shabaab. After returning to the United States, Omar facilitated the travel of several young men from Minnesota to Somalia, where they trained with and fought for al-Shabaab. In the fall of 2008, he assisted six additional men, some of whom were as young as 17 years of age, in traveling from Minnesota to Somalia. Later that year, Omar left the United States for Saudi Arabia and eventually sought asylum in the Netherlands.
Prior to departing from Minnesota in December 2007, Hassan engaged in fund-raising and attended meetings at a Minneapolis mosque, restaurant, and private residence for the purpose of developing and implementing the plan to induce Somali men in Minneapolis to travel to Somalia to fight for al-Shabaab. Once in Somalia, he participated in, among other things, an attack by al-Shabaab on a convoy of Ethiopians who were traveling in Somalia. In addition, he assisted in the construction of an al-Shabaab training camp, and he appeared in an al-Shabaab propaganda video that encouraged others to travel to Somalia and join al-Shabaab.J. Chris Warrener, Special Agent in Charge of the Federal Bureau of Investigation’s Minneapolis Field Office, which leads the Minnesota Joint Terrorism Task Force, the primary investigative entity in this case, said, “Today marks a significant point in our efforts to identify and neutralize the efforts of al-Shabaab to support terrorist operations from their American Diaspora. It represents years of hard work by the FBI Joint Terrorism Task Force, our many state, local, and federal partners, as well as countless courageous leaders and parents in the Minneapolis Somali community. While the sentencing today represents closure to two very significant cases, our overall investigation continues with our full commitment.”
This case arose out of “Operation Rhino,” a federal investigation that has focused primarily on the disappearance of approximately 20 young, ethnic Somali men from the Twin Cities area during the past six years. The young men were recruited to fight with al-Shabaab against Somalia’s internationally recognized Transitional Federal Government and African Union peacekeeping troops in Somalia.
The earliest groups of identified “travelers” departed the United States in October and December of 2007, while others left in February 2008, August 2008, September 2008, November 2008, and October 2009. Upon arriving in Somalia, the men resided in al-Shabaab safe houses in Southern Somalia until constructing an al-Shabaab training camp, where they were thereafter trained. Senior members of al-Shabaab and a senior member of al-Qaeda in East Africa conducted those trainings.
In July 2008, men from Minneapolis as well as other Americans participated in an al-Shabaab ambush of Ethiopian troops. One of those men, Shirwa Ahmed, who had resided at the safe house with Omar and Hassan, detonated a vehicle-borne improvised explosive device as one of five coordinated suicide bombings on October 29, 2008, in Bosaso and Hargeisa, Somalia. Ahmed is believed to have become the first American suicide bomber. On May 30, 2011, Farah Mohamed Beledi, one of the men charged with terrorism offenses in October 2009, was killed at a checkpoint in Somalia as he attempted to detonate his suicide vest. To date, approximately 18 individuals have been charged in the course of Operation Rhino, and eight defendants have been convicted. The remaining ten are believed to be fugitives or have been killed in Somalia.
These cases were the result of an investigation by the FBI’s Minneapolis Joint Terrorism Task Force, with the assistance of the Netherlands National Police Service, the Netherlands Ministry of Security and Justice, the Justice Department’s Office of International Affairs, the U.S. Department of State, and the U.S. Department of Defense.
It was prosecuted by Assistant U.S. Attorneys Charles J. Kovats, John Docherty, and LeeAnn K. Bell, as well as William M. Narus of the Counterterrorism Section of the U.S. Department of Justice’s National Security Division.Two Broward Residents Plead Guilty to Identity TheftRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael J. DePalma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), announced that defendants Nathaniel Troy Maye, a/k/a Troy May, 44, and Tiwanna Tenise Thomason, 40, both of Ft. Lauderdale, both pled guilty on Friday, May 10, 2013, to one count of possession of 15 or more unauthorized access devices, in violation of Title 18, United States Code, Sections 1029(a)(3) and 2, and one count of aggravated identity theft, in violation of Title 18, United States Code, Sections 1028A(a)(1) and 2.
Sentencing has been scheduled for July 19, 2013, before U.S. District Judge William J. Zloch. At sentencing, the defendants each face a maximum of up to 10 years in prison for the possession of unauthorized access devices charge, and a mandatory sentence of 2 years in prison for the aggravated identity theft charge.
According to court documents, on January 5, 2013, a cooperating source (CS) met with Thomason and Maye. During the meeting, Maye told the CS that he had a large number of stolen identities on a flash drive, and discussed using the stolen identities to file fraudulent tax returns and get refunds from those returns. On January 7, 2013, Maye gave the CS a flash drive containing 50 names, dates of birth, and accompanying social security numbers.
On January 8, 2013, the IRS executed a search warrant at Thomason’s apartment. During the search, the IRS recovered numerous electronic storage devices, including computers and flash drives. On two of the flash drives, the IRS found the personal identifying information of thousands of individuals, most of whom were from outside the state of Florida. The personal identifying information included the names, dates of birth, addresses, and social security numbers of numerous individuals.
Mr. Ferrer commended the investigative efforts of IRS-CI. The case is being prosecuted by Assistant U.S. Attorney Strider Dickson.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Two Area Women Charged with Submitting Fraudulent Bills for Home Health ServicesRead the Press Release
CORPUS CHRISTI, Texas - Sylvia Salinas Ramirez, of Driscoll, and Debra Jean Velasquez, of Robstown, have surrendered to authorities following the return of an indictment alleging they perpetrated a scheme to defraud the Texas Medicaid program through fraudulent home health billings, United States Attorney Kenneth Magidson announced today along with Texas Attorney General Greg Abbott.
The 14-count indictment was returned Wednesday, May 8, 2013. Ramirez, 51, and Velasquez, 41, were taken into custody this morning and are expected to make an appearance before U.S. Magistrate Judge Janice Ellington this afternoon, at which time the issue of bond will be decided.
Ramirez and Velasquez are charged with one count of conspiracy to commit health care fraud, six counts of health care fraud, four counts of wire fraud and three counts of aggravated identity theft.
The indictment alleges the women were employed by the Corpus Christi office of MRNG Inc. doing business as Caring Touch Home Health. During that time, Ramirez and Velasquez allegedly submitted false and fraudulent bills to Medicaid and the managed care organizations known as Evercare of Texas LLC and Superior Health Plan Inc. for home health services that had not been provided. Evercare and Superior received funds from Medicaid to manage the home health care of Medicaid beneficiaries. According to the indictment, from on or about Aug. 1, 2009, through on or about June 15, 2010, Ramirez and Velasquez created false and fraudulent time sheets for current and former Caring Touch employees for home health services that were not provided. The indictment accuses Ramirez and Velasquez of then fraudulently billing Medicaid, Evercare and Superior in the name of Caring Touch for those non-existent services.
The indictment also alleges that in order to personally profit from their fraudulent billings, Ramirez and Velasquez allegedly created payroll records from the fraudulent time sheet which they sent to Caring Tough’s payroll staff. According to the indictment, Ramirez and Velasquez obtained the payroll checks generated from the false and fraudulent time records, forged the signatures of the payees, then cashed the checks and divided the money among themselves. The indictment does not accuse Caring Touch or the employees whose names were used on the false time sheets and checks of any wrongdoing.
The indictment alleges that from or about Aug. 1, 2009, through on or about June 15, 2010, Ramirez and Velasquez submitted and or caused others to submit approximately 628 false and false and fraudulent claims in the approximate aggregate sum of $345,393.41 for home health services which were not provided. As a result, Texas Medicaid, Evercare and Superior paid the approximate aggregate sum of $155,127.72, according to allegations.
Conspiracy to commit health care fraud and each of the six counts of health care fraud carry a maximum punishment of 10 years in federal prison without parole, upon conviction, while the four counts of wire fraud each carries a possible 20 year sentence. All of these charges also include a possible $250,000 fine. If convicted of aggravated identity theft, the defendants will serve a mandatory two-year additional prison term on each count which must be served consecutive to any other prison sentence imposed.
The charges were the result of a joint investigation conducted by officers and agents of the Corpus Christi Police Department, the FBI, Department of Health and Human Services - Office of Inspector General and the Texas Attorney General’s Medicaid Fraud Control Unit. Special Assistant United States Attorney Rex Beasley and Assistant United States Attorney Jeffery Preston are prosecuting the case.
A defendant is presumed innocent unless convicted through due process of law.Topeka Man Charged with Producing Child PornRead the Press Release
TOPEKA, KAN. – A Topeka man has been charged with producing child pornography, U.S. Attorney Barry Grissom said today.
Jonathan Kearn, 38, Topeka, Kan., is charged in a federal criminal complaint filed in U.S. District Court in Topeka with one count of producing child pornography, one count of distributing child pornography and one count of possessing child pornography.
The affidavit in support of the criminal complaint says the investigation began in April 2013 when Kearn is alleged to have contacted an investigator working undercover with the Queensland Police Service in Queensland, Australia. Kearn sent the agent photographs of naked children. After being contacted by Australian police, Homeland Security Investigations (HSI) Cyber Crime Center, Child Exploitation Investigations Unit followed an electronic trail leading to Kearn. Investigators served a search warrant at Kearn’s residence in Topeka and seized child pornography.
If convicted, he faces a penalty of not less than 15 years and not more than 30 years on the charge of producing child pornography, not less than 5 years and not more than 20 years on the charge of distributing child pornography and not more than 10 years on the charge of possessing child pornography. Homeland Security Investigations (HSI) investigated. Assistant U.S. Attorney Christine Kenney is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.Timberlake Man Sentenced for Bribery of A Public OfficialRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announced today that Senior United States District Judge W. Earl Britt sentenced WILLIAM NEVILLE DOWE, of Timberlake, North Carolina, for Bribery of a Public Official, in violation of Title 18, United States Code, Section 201(b)(2)(C). DOWE was sentenced to 36 months’ imprisonment, followed by a three-year term of supervised release.
The investigation revealed that DOWE worked as a corrections officer at Federal Correctional Institution-Butner, in Butner, North Carolina, from 2006 to September 2012. Between July 2011 and June 2012, DOWE smuggled contraband, including cigarettes, alcohol, pornographic magazines, cellular phones and marijuana, inside the federal institution and sold the contraband to inmates. Agents estimate that DOWE received bribes amounting to approximately $15,000.
The investigation of this case was conducted by the Department of Justice Office of the Inspector General, United States Postal Service, and the North Carolina State Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Kimberly A. Moore.
Three Sentenced in Conspiracy to Commit Visa FraudRead the Press Release
Wilfredo A. Ferrer, United States Attorney for the Southern District of Florida, Alysa D. Erichs, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), announced the sentencing of three defendants who had engaged in a visa fraud case.
At today’s sentencing, that U.S. District Judge Jose E. Martinez sentenced Sarah Tipfun to 60 months in prison, to be followed by one year of supervised release. Chatchai Nakornprai, a/k/a Tony, was sentenced to 24 months in prison, to be followed by one year of supervised release. Defendant Boonting Nuampaton, a/k/a Tina, was sentenced to 18 months in prison, to be followed by 1 year of supervised release. The defendants had previously pled guilty to conspiracy to commit visa fraud and bribery, in violation of Title 18, United States Code, Section 371 and 1546, and 201(b)(1)(A).
According to the factual proffer submitted in connection with the plea, Sara Tipfun owned two Thai restaurants in the Treasure Coast and was attempting to obtain fraudulent immigration documents for her employees. During the investigation, an undercover agent (UCA) posing as a corrupt ICE agent who could fraudulently obtain and sell genuine Lawful Permanent Resident Cards (otherwise known as I-551 cards or green cards) was introduced to Tipfun.
From December 2011 to October 11, 2012, Tipfun, Nakornprai, Nuampatona and others arranged for 43 Thai nationals to meet with the UCA in an attempt to buy illegal green cards. The UCA conducted several undercover meetings with others in order to process (i.e., photograph and fingerprint) the aliens and obtain completed I-485 forms (green card applications) from them. All of these meetings were audio-recorded. During these meetings, the UCA was introduced to other restaurant owners who also participated in the scheme. Some of these owners recruited and transported aliens to and from the meetings with the UCA, helped the aliens fill out I-485 forms and gather their immigration documents, lent some of the aliens money to purchase the illegal green cards and, according to Tipfun, charged the aliens additional money on top of the price of the green card for introducing the alien to Tipfun and the UCA.
Mr. Ferrer commended the investigative efforts of ICE-HSI, ICE-ERO, U.S. Marshal’s Office, and the Florida Department of Alcohol and Tobacco. The case is being prosecuted by Assistant U.S. Attorneys Shaniek Maynard, Carmen Lineberger and Antonia Barnes.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Three Defendants Plead Guilty to Participating in Massive Immigration Fraud SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York announced that XIA PING WEN, SONG LUO, and XIAO FENG XU, have each pled guilty in connection with a massive immigration fraud scheme involving thousands of asylum applications submitted to immigration authorities by at least 10 law firms. WEN pled guilty on May 7, 2013, before Magistrate Judge Gabriel Gorenstein, and LUO pled guilty on May 10, 2013, before U.S. District Court Judge John G. Koeltl. XU pled guilty today before Magistrate Judge Frank Maas.
Manhattan U.S. Attorney Preet Bharara said: “The United States opens its arms to victims of persecution across the globe, and our asylum laws are the vehicle through which we are able to provide that critical safety net. Those who orchestrate fraud under the asylum laws, like the defendants in this case, make it more difficult for genuine victims, and we will come down hard on them.”
According to the Indictments against WEN, LUO, and XU, and other documents filed in this case:
XU worked as an office manager at a law office in New York, New York, and LUO worked as a paralegal at a law firm also located New York City (collectively the “Law Firms”). The Law Firms fabricated stories of persecution in connection with the asylum applications of clients that often followed one of three fact patterns: (a) forced abortions performed on women pursuant to China’s family planning policy; (b) persecution based on the client’s belief in Christianity; or (c) political or ideological persecution, typically for membership in China’s Democratic Party or Falun Gong. Since 2006, the Law Firms have submitted more than 1,000 asylum applications. XU, LUO, and other employees at the Law Firms, profited by creating and submitting these asylum applications on behalf of Chinese alien applicants. WEN provided various services to the Law Firms, and other law firms, including selling fake documents in aid of the fraudulent asylum applications.
LUO, XU, and WEN each pled guilty to one count of conspiring to commit immigration fraud, and each face a maximum of five years in prison. LUO, 34, of Queens, New York, is scheduled to be sentenced by U.S. District Court Judge John G. Koeltl on September 20, 2013. XU, 57, of Queens, New York, and WEN, 49, of New York, New York, are scheduled to be sentenced by U.S. District Court Judge Sidney H. Stein on September 19, 2013.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation (“FBI”) and the United States Citizenship and Immigration Services (“USCIS”).
The prosecution is part of “Fiction Writers,” a joint investigation led by the United States Attorney’s Office for the Southern District, the FBI, and the USCIS. To date, 29 defendants have been charged with participating in nine separate but overlapping immigration fraud schemes in New York City, including eight lawyers. Seven defendants have now been convicted. The charges against the remaining defendants are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The prosecution is being handled by the Office’s Organized Crime Unit. Assistant U.S. Attorneys Harris Fischman, Robert Boone and Brian Blais are in charge of the prosecution.
U.S. v. Xia Ping Wen Indictment
U.S. v. Xiao Feng Xu Indictment
U.S. v. Xiao Feng Xu IndictmentStorm Lake Man Sentenced to Federal Prison for Methamphetamine ConspiracyRead the Press Release
A man who conspired to manufacture and distribute methamphetamine was sentenced May 10, 2013, to more than five years in federal prison.
Rodney Brock, 43, from Storm Lake, Iowa, received the prison term after a February 7, 2013, guilty plea to conspiring to manufacture and distribute methamphetamine.
At the guilty plea, Brock admitted his involvement in a conspiracy from about July 2011 through October 2012 that manufactured and distributed at least 50 grams of actual (pure) methamphetamine. According to pseudoephedrine purchase logs obtained in the investigation, starting in July 2011 through October 2012 Brock himself acquired at least 34.9 grams of pseudoephedrine for the manufacture of methamphetamine, and associates of Brock acquired at least 55 grams of pseudoephedrine for the manufacture of methamphetamine by Brock. On July 5, 2012, law enforcement officers executed a search warrant at Brock’s residence and seized a number of items indicative of methamphetamine manufacturing.
Brock was sentenced in Sioux City by United States District Court Judge Mark W. Bennett. Brock was sentenced to 66 months’ imprisonment. A special assessment of $100 was imposed. He must also serve a five-year term of supervised release after the prison term. There is no parole in the federal system.
Brock is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated by the Storm Lake Police Department, Buena Vista County Sheriff’s Office, Clay County Sheriff’s Office, and the Iowa Division of Criminal Investigation.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 12-4097.
Somerset Optometrist and Eye Care Group Sued for Medicare and Medicaid FraudRead the Press Release
CITY, KY - The U.S. Attorney’s Office filed a lawsuit today against a Somerset optometrist and his practice group, alleging that Dr. Philip Robinson and Associates in Eye Care P.S.C., defrauded the Medicare and Medicaid programs.
The lawsuit alleges that the defendants sought and received payment from Medicare and Medicaid for unnecessary eye examinations and for services Robinson didn’t provide.
According to the complaint, Robinson frequently visited area nursing homes and often claimed to treat more than 100 nursing home patients in a single day. The complaint alleges that on certain dates, these services would have required more than 20 hours’ worth of direct patient care per day, and that Robinson was not working inside these nursing homes more than 8 hours per day.
The complaint also claims that the defendants sought payment for routine monthly eye examinations that were unreasonable and unnecessary given the patients’ conditions. Many nursing home patients received an eye examination from Robinson every four to five weeks for five years or more. At times, Robinson billed Medicare for certain eye examinations more than any other optometrist in the United States.
The complaint accuses the defendants of violating the False Claims Act. If found liable, the defendants would face financial penalties between $5,500 and $11,000 per false claim, and would have to repay Medicare and Medicaid three times the amount of the U.S. Government’s loss for the fraud.
“Under the guise of caring for nursing home residents, these defendants exploited the Medicare and Medicaid programs,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “Individuals paying for eye care with money from their own pocket would not be expected to pay a doctor to simply monitor their vision with a monthly exam, especially if the exams were as brief and superficial as what Robinson provided. Health care programs funded with taxpayer dollars are no different.”
The investigation preceding the complaint was conducted by agents with the Department of Health and Human Services, Office of Inspector General and the Kentucky Attorney General’s Medicaid Fraud and Abuse Control Unit. Assistant U. S. Attorney Paul McCaffrey will represent the U.S. Attorney’s Office in this case.
Sheldon Harmon Pleads Guilty to Bank Fraud, Money Laundering and False Statements to a BankRead the Press Release
Formerly of Ridgefield, Washington, Defendant Admits to Fraudulent Loan Applications Totaling $3.825 Million Dollars to Umpqua BankPORTLAND, Ore. - Sheldon Harmon, formerly of Ridgefield, Washington now of St. George, Utah pled guilty before U.S. District Judge Marco A. Hernandez today to one count of bank fraud, one count of false statements to a bank, and two counts of money laundering.
Harmon refinanced a commercial real property located in Vancouver, Washington through Umpqua Bank’s commercial lending in Beaverton, Oregon. To qualify for the loan, Harmon submitted several false leases to Umpqua Bank indicating that multiple tenants were renting approximately 90% of the commercial property and paying rent to Harmon of almost $70,000 per month. During the underwriting process, Harmon had business signs for the tenants made and hung them outside office space in the building and during a tour of the building, showed Umpqua Bank’s representatives where the tenants purportedly worked. In fact, none of the tenants were leasing the office space in the building as represented by Harmon and not one of them had made a lease payment to Harmon. Based on Harmon’s misrepresentations, Umpqua loaned him $3.825 million dollars and Harmon took out cash proceeds of over $1 million. Harmon admitted that he laundered over $500,000 of the loan proceeds through his bank account.
“Individuals who steal from financial institutions through deception will be prosecuted by this office. We will not permit the integrity of our banking system to be manipulated by cheats,” said U.S. Attorney Amanda Marshall. Marshall thanked the Internal Revenue Service and the United States Postal Service for their combined investigative efforts.
“Lying to a bank in order to trick them into giving you other people’s money is criminal and runs counter to ideals, like honesty and fair dealing, which are essential to the strength of our financial system,” said Steven J. Bellis, Assistant Special Agent in Charge of IRS Criminal Investigation in Oregon. “I am pleased that IRS Special Agents bring their unique expertise in following the money to cases like this in order to help hold people engaging in fraud accountable for their actions.”
Bank fraud and false statements to a bank carry a maximum term of 30 years in prison. Money laundering carries a maximum penalty of 10 years. Sentencing is set for August 12, 2013.
This investigation was conducted by Special Agents Abraham Smith and Nicholas Warner at the Internal Revenue Service - Criminal Investigation and the United States Postal Inspection Service. This case is being prosecuted by Assistant U.S. Attorneys Michelle Kerin and Katie Lorenz.
Seven Sentenced in Meth CasesRead the Press Release
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(304) 234-7725 ● Contact: Chris Zumpetta-Parr, Public Affairs SpecialistFollow us on Twitter @NDWVnews
ELKINS, WEST VIRGINIA - Eight individuals were recently sentenced in United States District Court in Elkins by Chief Judge John Preston Bailey, with seven of the sentencings related to the manufacture of methamphetamine.
According to United States Attorney William J. Ihlenfeld, II, the following individuals appeared before Judge Bailey for sentencings:
RICHARD WAYNE WEAVER, age 38, of Horner, West Virginia, was sentenced to 135 months imprisonment to be followed by six years of supervised release. WEAVER entered a plea of guilty on September 18, 2012, to “Conspiracy to Manufacture, Possess with Intent to Distribute and Distribute Methamphetamine from May of 2011 to July of 2012 in the Northern District of West Virginia.” WEAVER was remanded to the custody of the United States Marshal pending designation to a Federal institution. The case was investigated by the Upshur County Sheriff’s Department, the Buckhannon Police Department and the United States Marshals Service.
ROBERT ALLEN COOK, age 49, of Moorefield, West Virginia, was sentenced to 78 months imprisonment to be followed by three years of supervised release. COOK entered a plea of guilty on November 30, 2012, to “Possession of Material Used in the Manufacture of Methamphetamine” for conduct that occurred in January of 2012, in Hardy County. CHAMP, who is free on bond, will self-report to the designated Federal institution. The case was investigated by the West Virginia State Police, the Hardy County Sheriff’s Department and the Moorefield Police Department.
ANDREW CARR, age 18, of Lahmansville, West Virginia, was sentenced to 48 months imprisonment to be followed by three years of supervised release. CARR entered a plea of guilty on December 11, 2012, to “Possession of Material Used in the Manufacture of Methamphetamine.” CARR, who is free on bond, will self-report to the designated Federal institution. This case was investigated by the Grant County Sheriff’s Department, the West Virginia State Police-BCI and United States Forest Service/Homeland Security Investigations.
STEVEN B. MILLER a/k/a “PASCO,” age 40, of Dryfork, West Virginia, was sentenced to 57 months imprisonment to be followed by three years of supervised release. MILLER entered a plea of guilty on December 11, 2012, to “Possession of Material Used in the Manufacture of Methamphetamine.” MILLER, who is free on bond, will self-report to the designated Federal institution. This case was investigated by the Randolph County Sheriff’s Department, the West Virginia State Police-BCI and United States Forest Service/Homeland Security Investigations.
PAULA LYNN CHAMP, age 30, of Purgitsville, West Virginia, was sentenced to 33 months imprisonment to be followed by three years of supervised release. CHAMP entered a plea of guilty on November 30, 2012, to “Possession of Material Used in the Manufacture of Methamphetamine” for conduct that occurred in January of 2012, in Hardy County. CHAMP, who is free on bond, will self-report to the designated Federal institution. The case was investigated by the West Virginia State Police, the Hardy County Sheriff’s Department and the Moorefield Police Department.
ARCHIE RAY ARBOGAST, age 36, of Durbin, West Virginia, was sentenced to five years probation, with the first six months being under home confinement. ARBOGAST entered a plea of guilty on December 11, 2012, to “Possession of Material Used in the Manufacture of Methamphetamine.” This case was investigated by the Randolph County Sheriff’s Department, the West Virginia State Police-BCI and United States Forest Service/Homeland Security Investigations.
KELLEY LEIGH COHENOUR, age 35, of Marlinton, West Virginia, was sentenced to five years probation. COHENOUR entered a plea of guilty on February 7, 2013, to “Possession of Material Used in the Manufacture of Methamphetamine.” This case was investigated by the West Virginia State Police (Pocahontas County Detachment), the Pocahontas County Sheriff’s Office and the Pocahontas County Community Corrections.
These cases were prosecuted by Assistant United States Attorney Stephen D. Warner. LAWAN GADDY, age 24, of Lewis County, West Virginia, was sentenced to 21 months imprisonment to be followed by three years of supervised release. GADDY entered a plea of guilty on December 14, 2012, to “Providing a False Statement to a Federal Firearms Licensee in the Acquisition of a Firearm” on September 20, 2011. GADDY, was remanded to the custody of the United States Marshal pending designation to a Federal institution. This case was prosecuted by Assistant United States Attorney Zelda E. Wesley and investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Weston Police Department.Salinas Realtor Sentence to 14 Months Imprisonment for Tax EvasionRead the Press Release
SAN JOSE, California – Cheryl Savage was sentenced last week to 14 months in prison, and ordered to pay a $10,000 fine and $123,463 in restitution for tax evasion, United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in José M. Martinez announced.
Savage, age 57, of Monterey, California, pleaded guilty on September 12, 2012. According to court documents, Savage has been a realtor since 1981, becoming a broker in 1988 when she opened Steinbeck ERA Realty, a real estate brokerage in Salinas, California. On her business website, Savage describes herself as knowledgeable in 1031 Tax Deferred Exchanges. A 1031 Tax Deferred Exchange occurs when a taxpayer sells rental property and reinvests the sales proceeds in replacement rental property. In this way, a taxpayer can defer the recognition of capital gains tax until the replacement rental property is sold.
In 2004 Savage sold two rental properties, realizing $777,014 taxable gain. Savage used those sales proceeds to purchase her primary residence at Via Del Milagro in Monterey, California. In October 2005, she filed her 2004 federal income tax return falsely reporting that the proceeds from the sale of her rental properties were used to purchase a replacement rental property. Savage also falsely reported that she had received rental income from Via Del Milagro. The rental payments Savage reported on Schedule E of her 2004 federal income tax return were actually from a tenant who leased another property Savage owned.
Savage was charged by a federal grand jury on October 4, 2011 with three counts of tax evasion. She pleaded guilty to one count.
The case is being prosecuted Assistant U.S. Attorney Cynthia Stier. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Salina Man Sentenced to 6+ Years on Drug, Gun ChargesRead the Press Release
TOPEKA, KAN. – A Salina man has been sentenced to 78 months in federal prison on drug trafficking and firearms charges, U.S. Attorney Barry Grissom said today.
Chris Alan Martin, 46, Salina, Kan., pleaded guilty to one count of possession with intent to distribute methamphetamine, one count of possession of a firearm in furtherance of drug trafficking and one count of unlawful possession of a firearm after a felony conviction. After investigators arranged to buy methamphetamine from Martin, the I-70 Drug Task Force obtained a search warrant for his residence in Salina. Investigators seized methamphetamine and three handguns. Martin was prohibited by federal law from possessing a firearm following a 2008 felony conviction for possession of methamphetamine.
Grissom commended the I-70 Drug Task Force and Assistant U.S. Attorney Randy Hendershot for their work on the case.
Rochester Man Sentenced for Selling Fake Christmas OrnamentsRead the Press Release
BUFFALO, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Hakan Umsu, 32, of Rochester, N.Y., who was convicted of criminal copyright infringement involving Christmas ornaments that he was selling at kiosks in local malls, was sentenced to one year probation by U.S. District Court Judge Richard J. Arcara.
Special Assistant U.S. Attorney Fauzia K. Mattingly, who handled the case, stated that Umsu had obtained the ornaments from a company in China which were replicas of the copyright-protected holiday ornaments created by Rudolph & Me, Inc., a family-owned company located in Sarasota, FL. The defendant then sold the ornaments at kiosks in local malls during the retail holiday season.
The sentencing is the result of an investigation by Special Agents of Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge, James C. Spero.Rochester Man Pleads Guilty to Fraud and Money Laundering ConspiraciesRead the Press Release
ROCHESTER, N.Y.-- U.S. Attorney William J. Hochul, Jr. announced today that Kenneth M. Griffin, 45, of Rochester, N.Y., pleaded guilty before U.S. District Judge Frank P. Geraci, to conspiring to commit mail and wire fraud and conspiring to engage in money laundering activities. The charges carry a maximum penalty of 20 years in prison, a fine of $500,000 or both.
Assistant U.S. Attorney John J. Field, who is handling the case, stated that the defendant owned and controlled an employment staffing business that he operated under various names, including LHT USA, Inc., and Cambridge Personnel, Inc. From August 2007 to June 2008, Griffin conspired with others to commit mail and wire fraud, and also to launder their ill-gotten gains, which totaled more than $500,000. Among other things, the fraud involved creating false invoices and other supporting documents that the defendant then sold to a series of financing companies on a weekly basis for immediate cash. When a financing company realized that it had been sold uncollectible invoices and stopped dealing with Griffin's business, the defendant would change business names and continue the scheme with another financing company.
For example, on April 15, 2008, $19,000 worth of false invoices were issued for Griffin's business, Cambridge Personnel. The invoices claimed that the defendant had provided services to various customers which he had not. Griffin then sold these false invoices to New Century Financial, the third and final victim of his scheme.
To conceal his involvement in the conspiracy, Griffin created corporations such as LHT USA and Cambridge Personnel, and put those corporations in the names of nominee owners. The defendant further concealed his involvement by laundering the proceeds of the fraud by using the services of a debit card company known as Comdata Corporation. Griffin and his co-conspirators created and used an account at Comdata to receive the proceeds of their fraud, and to conceal their ownership and control over these proceeds. They concealed their control and ownership over the fraudulently obtained money by transferring the funds on to Comdata debit cards, which are anonymous on their face. Griffin then provided these anonymous Comdata cards to lower-level employees with directions to go to ATMs around the Rochester area to withdraw cash and then return the cash to defendant.
“This case is another example of why it is so important for all to know who they are doing business with,” said U.S. Attorney Hochul. “Fraud costs American businesses and individuals literally billions of dollars each and every year. While this Office will continue to vigorously investigate and prosecute fraud wherever it occurs, still the best defense is for our citizens to guard against letting it happen in the first place. For more information on how to protect yourself, visit the www.Stopfraud.gov website, or contact our Office day or night.”
The plea is the culmination of an investigation on the part of Special Agents of the Internal Revenue Service, Criminal Investigation Division, under the direction of Special Agent-in-Charge Toni M. Weirauch, and Special Agents of the Federal Bureau of Investigation, under the direction of Acting Special Agent in Charge Richard M. Frankel.
Sentencing is scheduled for August 28, at 9:30 a.m. before Judge Geraci.
Ringleader Sentenced to Seven Years in Teacher Certification Cheating ScamRead the Press Release
Memphis, TN – Clarence Mumford, Sr., 59, of Memphis, was sentenced to 84 months in federal prison and ordered to pay $167,338.84 in restitution after pleading guilty in February 2013 to aggravated identity theft and to conspiring to commit mail fraud, wire fraud, Social Security fraud and identity theft, announced United States Attorney Edward L. Stanton III. Mumford, Sr. was originally charged in July 2012 in a 45-count indictment alleging a conspiracy to violate the laws of the United States, mail fraud, wire fraud, social security fraud, aggravated identity theft and fraud in connection with identification documents. The original indictment was superseded twice, once in August 2012, and a second time in September 2012, ultimately resulting in a 63-count indictment charging Mumford, Sr. and twelve other individuals.
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"At a time when school administrators and teachers -- especially those in West Tennessee -- are working so hard, with fewer resources, to meet the challenge of improving our educational system, it is galling that Mumford thought he could get away with his brazen scheme,” said U.S. Attorney Stanton. “His sentence demonstrates that crimes against the integrity of our schools will not be tolerated. We were proud to work with the United States Secret Service, the Tennessee Bureau of Investigation and the Shelby County District Attorney General’s Office to bring Mumford to justice. Criminals like him have no place in our schools. Our school systems have enough challenges already."
Mumford, Sr. is the ninth defendant sentenced in the case. In April 2013, United States District Judge John T. Fowlkes sentenced John Bowen, 64, of Memphis, Tennessee; Dante Dowers, 41, of Belle Glade, Florida; Valerie Humphrey, 47, of Oakland, Tennessee; Felippia Kellogg, 42, of Memphis; Carlo McClelland, 35, of Meridian, Mississippi; Carlos Shaw, 38, of Memphis; Jeryl Shaw, 40, of Puyallup, Washington and Shantell Shaw, 41, of Memphis (wife of Jeryl Shaw but no relation to Carlos Shaw). All but Dowers, who was sentenced to six months of home confinement, have been sentenced to prison.
In February, during Mumford, Sr.’s guilty plea hearing, it was revealed that numerous individuals paid Mumford, Sr. to arrange for PRAXIS examinations to be taken on their behalf. Many were teaching under temporary licenses and needed the examinations passed to retain their
jobs. Others were attempting to obtain teaching jobs, or were teachers seeking additional endorsements on their licenses, in subjects such as guidance counseling. Twenty-six individuals who had one or more examinations arranged by Mumford were named at the February hearing. Of those, many obtained teaching licenses in Tennessee and Mississippi based on the examinations. Many, however, never obtained licenses. Sometimes Mumford’s test-takers did not show up or did not pass.
Two witnesses who testified today at Mumford’s sentencing hearing stated that they paid Mumford $3,000 and $6,000, respectively, but neither received valid scores after paying Mumford. Both received passing scores for examinations taken by Mumford’s test-takers, but Educational Testing Services (“ETS”) flagged the tests taken on behalf of both witnesses for handwriting irregularities. Mumford told both to get doctors’ notes to explain the handwriting irregularities. One did so, and one refused, but it did not work out for either of them. Nevertheless, Mumford did not repay any of the money they had given him.
Investigators began to unravel the ring after Bowen was caught at Arkansas State University taking a test in the morning in one person’s name and in the afternoon in a second person’s name. Proctors caught Bowen and two others who had taken morning and afternoon sessions in multiple names. ETS, which created and administered the PRAXIS examinations, investigated and reported the incident to the Tennessee Department of Education, which referred the case to the Tennessee Bureau of Investigation. The United States Secret Service later joined the investigation.
Sentencing documents filed in the case reveal that Mumford arranged for at least 100 examinations on behalf of 50 different individuals. Mumford made over $100,000 during the course of the scheme.
This investigation is being conducted by the Tennessee Bureau of Investigation and the United States Secret Service. Assistant U.S. Attorney John Fabian and Special Assistant U.S. Attorney Kirby May represent the government.
The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Rhode Island Tax Preparer Sentenced to Federal Prison for Violating Court Order Barring Him from Preparing Tax Returns and Tax EvasionRead the Press Release
PROVIDENCE, R.I. – Michael Brier, 50, owner of Refunds Now Inc., a tax preparation firm based in Providence, R.I., was sentenced on Friday to 27 months in federal prison for violating a federal judge’s order permanently barring him from preparing tax returns for others, and for underreporting more than $1.1 million dollars in income between 2004 and 2009, and failing to pay nearly $400,000 in federal taxes, announced United States Attorney Peter F. Neronha and William P. Offord, Special Agent in Charge of the Boston office of the Internal Revenue Service (IRS), Criminal Investigation.
At sentencing, U.S. District Court Chief Judge Mary M. Lisi also ordered Brier to serve 3 years of supervised release upon completion of his prison term and to pay back taxes to the IRS in the amount of $399, 424. Brier pleaded guilty on February 11, 2013, to one count of criminal contempt and one count of tax evasion.
In November 2010, the court entered a preliminary injunction against Brier and his employees after finding that at least 300 tax returns prepared by Brier and Refunds Now understated customers’ tax liabilities, and that Brier and his employees fabricated tax deductions and credits on the returns. Brier and his employees prepared approximately 24,000 federal income tax returns between 2003 and 2007. An IRS examination 350 of those returns determined that 92 percent of them required adjustments, resulting in a government-estimated loss of more than $1.1 million dollars in tax revenue.
On March 7, 2011, U.S. District Court Judge Mary M. Lisi permanently barred Michael Brier and his employees from preparing federal income tax returns for others.
On April 26, 2011, IRS Criminal Investigation agents executed a court-authorized search at Refunds Now and seized copies of tax returns prepared by Brier and several of his employees that were filed after the date of the permanent injunction.
At the time of his guilty plea, Brier admitted to the court that he underreported his taxable income to the IRS between 2004 and 2009 totaling $1,152,679, and that he underpaid $399,424 in taxes to the IRS.
The case was prosecuted by Assistant U.S. Attorney Richard B. Myrus.Brier has been ordered to self-surrender by June 4, 2013, to begin serving his prison sentence.
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To assist the media and the public, a glossary of federal judicial terms and procedures is available at http://www.justice.gov/usao/justice101/Contact: 401-709-5357
[email protected]Rapid City Man Convicted on Assault ChargesRead the Press Release
United States Attorney Brendan V. Johnson announced that a Rapid City man, Richard Harris Bear Runner, was convicted on May 8, 2013 by a jury in federal court on charges of Assault with a Dangerous Weapon and Assault Resulting in Serious Bodily Injury.
Bear Runner, age 24, was indicted in November 2012 after an investigation conducted by the Bureau of Indian Affairs Office of Justice Services and the Oglala Sioux Tribe Department of Public Safety. The maximum penalty upon conviction is 10 years= imprisonment and/or a $250,000 fine.
Johnson said the charges relate to an incident occurring in September 2012 when Bear Runner assaulted a woman with a wooden stick that had a sharp hook on it, causing multiple cuts on her legs and back.
The case was prosecuted by Assistant U.S. Attorneys Sarah B. Collins and Wayne A. Venhuizen. A sentencing date has not been set.
Queens-Based Operator of 18 Chinese-Language Child Pornography Websites Pleads Guilty in Manhattan Federal CourtRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that YONG WANG, who operated 18 Chinese-language websites containing child pornography, pled guilty to advertising in connection with the sexual exploitation of children. WANG pled guilty Friday in Manhattan federal court before U.S. District Judge Paul G. Gardephe.
Manhattan U.S. Attorney Preet Bharara said: “Yong Wong made hundreds of thousands of dollars from a vast network of websites that he operated from the comfort and safety of his home while capitalizing on the sexual exploitation of children. But in fact he was not safe after all because the FBI infiltrated his network and caught up with him. This Office, along with our investigative partners, remains steadfast in our commitment to prosecute and punish those like Wang, who earn a living online at the expense of children’s well-being and innocence.”
According to the Indictment, other documents filed in Manhattan federal court, and statements made during WANG’s guilty plea proceeding:
WANG maintained 18 Chinese-language websites out of his apartment in Flushing, New York. Members could access numerous links to an extensive child pornography collection that included images and videos of children exposing their genitals, engaging in sexually explicit conduct with adults, and in sadistic and/or masochistic depictions. To access the websites, individuals had to purchase a “VIP membership” or accumulate a certain number of points. WANG charged customers $25 for a quarterly membership or $100 for a lifetime membership. Undercover FBI agents registered for a VIP membership with WANG and gained access to one of the websites which was titled - in Chinese - “Empire of the Young and Innocent Fragrances.” On the website, users were directed to different forums with links that were titled with descriptive names, such as “Young Young Empire,” “Young Girl Beauty Photos Military Region,” “Young Boy Movie Zone,” and “Exclusive Quality Young Girl Photos Set.” WANG made in excess of $700,000 in connection with his operation of these websites, which he forfeited as part of his plea agreement.
WANG, 28, of Flushing, New York, faces a maximum sentence of 30 years in prison and a mandatory minimum sentence of 15 years in prison. He is scheduled to be sentenced by Judge Gardephe on August 23, 2013 at 2:30 p.m.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. He also thanked the Chinese Ministry of Public Security for their cooperation and assistance.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Rosemary Nidiry and Zachary Feingold are in charge of the prosecution.
Wang, Yong Indictment
Pittsburg Mother and Son Plead Guilty to Conspiring to File False ClaimsRead the Press Release
OAKLAND, Calif. – Tonya Gilard and Tierre Crummie pleaded guilty last week to conspiring to file false tax returns, United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez announced.
According to the plea agreements, in January 2009, Gilard and Crummie assisted in filing false federal income tax returns with the IRS. Gilard obtained the personal identifying information of others, including her son, Crummie, which she used to file false federal income tax returns. Gilard and Crummie also filed tax returns in their own names that falsely claimed entitlement to the first-time homebuyer’s credit.
In furtherance of the conspiracy, Crummie provided Gilard with individuals’ bank account information and e-mail addresses, while another person provided names to use on the false tax returns. On April 30, 2009, a search warrant was executed at the defendants’ residence where $69,800.10 was seized. The defendants admitted the seized money was proceeds from the false refund scheme.
In total, 91 false federal income tax returns were filed as part of this scheme and $688,687 in false refunds were issued by the IRS.
Gilard, 44 and Crummie, 24, both of Pittsburg, California, were indicted on August 8, 2012. They were charged with one count of conspiracy to file false claims. They pleaded guilty to the sole count in the indictment.
The maximum statutory penalty for conspiracy to file false claims, in violation of Title 18 U.S.C. § 286 is 10 years in prison and a $250,000 fine. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Thomas Newman is the Assistant U.S. Attorney who is prosecuting this case along with Special Assistant U.S. Attorney Charles Parker. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Organizer of International Securities Fraud Ring Sentenced to Prison for Using Hackers to Falsely Inflate Stock PricesRead the Press Release
TRENTON, N.J. – The central organizer of a worldwide conspiracy to manipulate stock prices through a “botnet” network of virus-controlled computers was sentenced today in Trenton federal court to 71 months in prison, New Jersey U.S. Attorney Paul J. Fishman announced.
Christopher Rad, 44, of Cedar Park, Texas, was previously convicted, following a 9-day jury trial, of six counts arising from the fraud scheme: conspiring to further securities fraud using spam; conspiring to transmit spam through unauthorized access to computers; and four counts of transmission of spam by unauthorized computers.
The sentence was imposed by U.S. District Judge Joel A. Pisano, who also presided over the trial.
“Christopher Rad’s use of hackers to drive his pump-and-dump scheme illustrates a trend toward the modern mechanization of old-school scams,” said U.S. Attorney Fishman. “Law enforcement is constantly anticipating and adapting as criminals operate in a more virtual – and more global – world. As a result, Rad will spend years in prison for manipulating our markets to steal his millions.”
According to documents filed in this case and statements made in court:
Rad conspired with stock promoters in a scheme to manipulate the price and volume of dozens of particular stocks, including stocks with ticker symbols RSUV, QRVS, VSHE, SVXA and ASIC, in order to later sell them at an artificially inflated price – a practice known as a “pump and dump” scheme. The scheme began as early as November 2007 and continued through February 2009.
As part of the scheme, Rad organized others to manipulate the stock prices. He sought out and engaged spammers, then sent them precise language to include in their spam campaigns.
The spammers included two individuals who distributed spam through botnets. To create a botnet, viruses were sent out to infect computers around the world, creating a virtual army of hijacked computers. The spammers then caused the botnets to distribute spam to promote the stocks Rad wanted to manipulate. Infected computers were found in New Jersey, Europe, Russia and elsewhere. The botnet was controlled from command and control servers located overseas, including in Russia and China.
Rad, who went by the alias “billy_sack,” communicated with the spammers by Skype, in most instances knowing them only by their aliases. During the 22-month conspiracy, Rad paid the spammers more than $1.4 million, making payments through e-Gold and money wires. Payments intended for a botnet operator in Russia were made through at least eight different countries. The wire instruction notations included false information such as payments for “Dell Monitors,” “touch panels” and “transportation services.”
Rad also agreed with others to engage in bad-faith purchases of RSUV to create the impression among spam recipients that there was active trading in the stock.
At the same time, hackers hacked into the brokerage accounts of third parties, liquidated the stocks in those accounts, then used the accounts to purchase shares of some of the stocks the scheme sought to manipulate. This increased the volume of shares being traded and created an impression that the stocks were worth purchasing.In all, Rad made approximately $2.8 million from his schemes.
In addition to the prison term, Judge Pisano sentenced Rad to serve five years of supervised release and ordered him to pay a $30,000 fine. Restitution will be determined at a later date.
Rad’s coconspirators, Doyle Scott Elliott and James Bragg, previously pleaded guilty to securities fraud and transmission of spam through falsely registered e-mail addresses. They await sentencing.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation. He also thanked the U.S. Securities and Exchange Commission’s Division of Enforcement, led by Acting Director George Canellos.
The government is represented by Assistant U.S. Attorney Andrew S. Pak, of the Computer Hacking and Intellectual Property Section of the U.S. Attorney’s Office Economic Crimes Unit (ECU); Christopher J. Kelly, Deputy Chief of the ECU; and Erez Liebermann, Deputy Chief of the Office’s Criminal Division in Newark.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
13-191Defense counsel: Francis Montenegro Esq., Austin, Texas
Omaha Man Sentenced to 6 years for Child PornographyRead the Press Release
United States Attorney Deborah R. Gilg announced that Michael L. Abraham, age 47 of Omaha, was sentenced in federal court in Omaha, Nebraska for receiving and distributing child pornography. The Honorable John M. Gerrard sentenced Abraham to the custody of the United States Bureau of Prisons for six (6) years. There is no parole in the federal system. After his release from prison Abraham will begin a seven (7) year term of supervised release and will be required to register as a sex offender.
The sentencing stemmed from an undercover investigation by officers of the Nebraska State Patrol and the FBI Cyber Crimes Task Force. Officers discovered child pornography being shared online from an IP address assigned to Abraham’s home. On September 21, 2012, a search warrant was obtained for Abraham’s computer. A forensic review of the computer media revealed over 100 videos and in excess of 50,000 images of child pornography and child erotica.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys= Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov
This matter was investigated by the Omaha FBI=s Cyber Crime Task Force (CCTF), of which the Nebraska State Patrol, is a partner. The Omaha CCTF is a multi-jurisdictional task force consisting of eleven federal, state and local law enforcement agencies from Nebraska and Iowa. The mission of the Omaha CCTF is to investigate and apprehend high technology criminals and to protect our communities by preventing high technology crime and national security threats involving computers and computer networks. The Omaha CCTF was established on the premise that the capabilities of law enforcement agencies to investigate computer and high technology related crimes are enhanced in a task force setting involving the sharing of resources and expertise.
Minneapolis Felon Pleads Guilty to Possessing A .44-caliber RevolverRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 28-year-old felon from Minneapolis pleaded guilty to possessing a .44-caliber revolver. Eugene Denzel Johnson pleaded guilty to one count of being a felon in possession of a firearm. Johnson, who was indicted on November 20, 2012, entered his plea before United States District Court Judge Ann D. Montgomery.
In his plea agreement, Johnson admitted that on September 5, 2012, he was riding in a vehicle that police attempted to stop following a traffic violation. Johnson admitted that he jumped out of the passenger side of the vehicle, with a gun tucked into his waistband, and ran. Officers spotted the gun when Johnson exited the vehicle and chased him. Johnson was apprehended nearby a short time later. Officers recovered the gun after they used a canine to trace the path Johnson had taken.
Because he is a felon, Johnson is prohibited under federal law from possessing firearms at any time. He was previously convicted in Hennepin County for first-degree aggravated robbery (2005 and 2010), in Ramsey County for theft of a motor vehicle (2003), and in Dakota County for criminal damage to property (2003).For his crime, Johnson faces a potential maximum penalty of ten years in federal prison. Judge Montgomery will determine his sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by the Minneapolis Police Department and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Amber M. Brennan.
The case was charged under Project Exile Minneapolis. That law enforcement initiative was launched on July 22, 2010, as part of a city-wide effort to reduce gun violence. Through Project Exile, the Minneapolis Police Department and the ATF work together to apprehend serial criminals for violations of gun laws. The Hennepin County Attorney’s Office then teams up with the U.S. Attorney’s Office to determine where those offenders will most effectively be prosecuted – state or federal court. Those determinations are based on the offenders’ criminal histories and current charges, among other factors. To date, the U.S. Attorney’s Office has brought charges against almost two dozen serious habitual criminals through Project Exile Minneapolis.Michigan Woman Sentenced for Role in International Wire Fraud ConspiracyRead the Press Release
BUFFALO, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Renee Britton, 25, of Taylor, Michigan, who was convicted of wire fraud for her participation in an international wire fraud ring, was sentenced to eight months of home detention and three years of probation by Chief U.S. District Court Judge William M. Skretny. Britton was also ordered to pay up to $26,736.95 in restitution to victims of the scheme.
Assistant U.S. Attorney Fauzia K. Mattingly, who handled the case, stated that Britton received payments from victims who had applied for loans over the Internet with seemingly legitimate financial lenders which were in fact virtual companies being operated by scammers in Canada. The victims were led to believe that once they paid an up-front fee to Britton and others, they would receive the loan proceeds. The victims never received the loans or a refund of their payments. To date, defrauded victims have lost more than $3.5 million to the loan scheme, and approximately 2,700 victims of the fraud have been identified by law enforcement. In total, 21 individuals have been arrested in connection with this fraud scheme, and the cases are pending before the U.S. District Court in Buffalo.
The sentencing is the result of an investigation by Special Agents of Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge, James C. Spero.Martinsburg Resident Enters Plea of Guilty to Drug ChargeRead the Press Release
1125 Chapline Street, Federal Building, Suite 3000 ● Wheeling, WV 26003
(304) 234-7725 ● Contact: Chris Zumpetta-Parr, Public Affairs SpecialistFollow us on Twitter @NDWVnews
MARTINSBURG, WEST VIRGINIA - A 32-year old Martinsburg resident entered a plea of guilty in United States District Court in Martinsburg before Judge Gina M. Groh.
United States Attorney William J. Ihlenfeld, II, announced that:
CARLOS EDWARD CAREY, age 32, of Martinsburg, entered a plea of guilty to “Distribution of Crack Cocaine within 1,000 feet of the Blue Ridge Community and Technical College.” CAREY, who is free on bond pending sentencing, faces at least 1 and up to 60 years imprisonment and a fine of $4,000,000, due to a prior felony drug conviction in the Northern District of West Virginia. This case was prosecuted by Assistant United States Attorney Jarod J. Douglas and investigated by the Eastern Panhandle Drug & Violent Crime Task Force, consisting of officers from the West Virginia State Police - Bureau of Criminal Investigation, the Martinsburg Police Department, and the Berkeley County Sheriff’s Department.
Man Who Recorded Girls with Hidden Camera Sentenced to 15 Years in Prison for Production of Child PornographyRead the Press Release
CAMDEN, N.J. – A Morris County, N.J., man was sentenced today to 180 months in prison for using hidden cameras to record young girls in his home, U.S. Attorney Paul J. Fishman announced.
Ronald Oshrin, 50, of Budd Lake, N.J., previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez, to an Information charging him with one count of production of child pornography. Judge Rodriguez imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
Oshrin admitted that between 2007 and April 2012, he installed hidden cameras in a bedroom and a bathroom of his home in order to record nine young girls in various states of undress. Oshrin edited the videos to produce still photographs and, during that time period, distributed the videos and the still photographs over the Internet. He also admitted to sexual contact with certain minors.
U.S. Attorney Fishman credited special agents of the FBI Newark Division’s Cyber Crime Task Force, under the direction of Special Agent in Charge Aaron T. Ford, and the Mount Olive Police Department, under the direction of Chief Mark Spitzer, for the investigation leading to the charge. He also thanked the Morris County Prosecutor’s Office for their role in the investigation.
In addition to the prison term, Judge Rodriguez sentenced Oshrin to 10 years of supervised release.The government is represented by Assistant U.S. Attorney Robert Frazer, Chief of the General Crimes Unit, and Assistant U.S. Attorney Elizabeth M. Harris of the U.S. Attorney’s Office General Crimes Unit in Newark.
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Defense counsel: James Patton Esq., Livingston, N.J.Lebanon Trucking Company Owners Sentenced for $800,000 Scheme to Defraud Tracker MarineRead the Press Release
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that that the owners of a Lebanon, Mo., trucking company have been sentenced for their roles in a conspiracy to defraud Tracker Marine, a Springfield, Mo.-based manufacturer of boats and trailers sold throughout North America.
James Keith Ivey, 53, and his wife, Melinda Kay Ivey, 43, both of Lebanon, were sentenced by U.S. District Judge Gary A. Fenner on Friday, May 10, 2013. James Ivey was sentenced to five years and 10 months in federal prison without parole. Melinda Ivey was sentenced to two years and six months in federal prison without parole. The Iveys are jointly and severally liable to pay $797,325 in restitution.
On Aug. 15, 2012 the Iveys were found guilty following a bench trial before U.S. District Judge Richard E. Dorr. The Iveys and co-defendant Paul Ray Hunting, 40, of Paso Robles, Calif., devised a scheme to defraud Tracker Marine, LLC, from January 2006 to April 2009, by inflating purchase orders and shipping invoices. During that time, the Iveys and Hunting caused more than 2,550 fraudulent invoices to be submitted to Tracker, which created a total loss of at least $797,325 to Tracker.
The Iveys owned and operated J&M Trucking, Inc., in Lebanon. Tracker contracted with J&M to transport boats and trailers to Tracker’s dealers located throughout North America. Hunting, formerly of Laclede County, Mo., was promoted to transportation manager for Tracker in 2006.
Hunting pleaded guilty to his role in both a wire fraud conspiracy and a money-laundering conspiracy as well as to failing to file an income tax return. Hunting, who was sentenced to one year and one day in federal prison, was ordered to pay $294,496 in restitution.
J&M’s compensation from Tracker was determined primarily by the distance its trucks traveled. Hunting caused Tracker to make payments to J&M in excess of the contract amount by listing an inflated and false number of billable miles on purchase orders. In exchange, James Ivey paid Hunting a portion of the revenue generated by the fraudulently increased billable miles, in cash. From 2006 to 2008, James Ivey paid Hunting a total of $265,775.
At the beginning of the scheme there was no set amount for Hunting’s increases to the billable miles on purchase orders. However, in April 2006, James Ivey and Hunting agreed on a set amount of 158 miles as being the amount Hunting would add to each purchase order, because when multiplied by the then-applicable reimbursement rate of $1.90 per mile, the result was an additional $300 per trip. This amount allowed for an even three-way split between Hunting, James Ivey and Melinda Ivey. The defendants continued the practice of inflating billable miles by 158 miles per trip, even after the reimbursement rate was increased to $2.10 per mile in January 2007.
However, J&M paid its drivers for the actual miles they drove, not the number of miles for which J&M invoiced Tracker.
In addition to the fraud conspiracy, James and Melinda Ivey were found guilty of a money-laundering conspiracy related to the cash payments to Hunting, which involved the proceeds of the mail and wire fraud conspiracy. Approximately every two weeks James Ivey, often accompanied by Melinda Ivey, met Hunting (usually in a parking lot in Lebanon) and paid Hunting his share of the proceeds generated from the fraudulent invoices, in cash. Hunting claimed some of those payments on his federal income tax return as income from a catering business, which was false. The Iveys claimed the payments represented a percentage of revenue generated by two trucks they claimed Hunting owned and was leasing to J&M, which was also false.
In addition to the fraud and money-laundering conspiracies, James and Melinda Ivey were convicted together in nine counts of wire fraud and James Ivey was convicted of 10 additional counts of wire fraud. The Iveys were each convicted of one count of making false statements to federal agents.
This case was prosecuted by Assistant U.S. Attorney Steven M. Mohlhenrich. It was investigated by the FBI and IRS-Criminal Investigation.
Las Vegas Physician Sentenced for Tax Evasion and Failing to File Income Tax ReturnsRead the Press Release
Robert David Forsyth, of Las Vegas, was sentenced late Friday in U.S. District Court in Las Vegas to 27 months in prison for income tax evasion and failing to file income tax returns, the Justice Department and the Internal Revenue Service (IRS) announced. He was also sentenced to 3 years of supervised release and ordered to pay $306,171. Forsyth was indicted in April 2012 and pleaded guilty to the indictment on April 22, 2013.
According to court documents, from 1999 through 2008, Forsyth worked as a physician and earned income from a variety of sources, including his medical practice, expert witness fees, and, beginning in 2002, Social Security benefits. Forsyth, however, failed to file an individual income tax return from 1999 through 2008. In fact, according to the indictment, Forsyth has not filed an income tax return since the 1994 tax year.
Court documents further established that instead of filing tax returns and paying his taxes, Forsyth, a Canadian citizen and U.S. permanent resident alien, closed all of his personal bank accounts and used a third party business to cash his paychecks. He made extensive use of cash including using cash to pay personal expenses in an effort to avoid detection. Throughout the years that Forsyth evaded payment of his taxes, he used income that he earned to fund his own lifestyle. Instead of paying the IRS, Forsyth spent money on gambling, luxury items, and hotel accommodations in San Jose, Calif., Costa Rica and Bangkok.
Assistant Attorney General Keneally commended the efforts of special agents from IRS-Criminal Investigation, who investigated the case, and Tax Division Trial Attorney Mark L. Williams, who prosecuted the case.
Lafayette Man Pleads Guilty to Possession of Child Pornography Containing Images of InfantsRead the Press Release
LAFAYETTE, La.: United States Attorney Stephanie A. Finley announced today that Ray Hatton III, 30, of Lafayette, pleaded guilty Tuesday before U. S. District Judge Richard T. Haik, to possessing child pornography involving some images of infants.
According to the evidence presented at the guilty plea, law enforcement authorities used computer surveillance software which detected the defendant downloading child pornography. He used the internet file sharing program Limewire to download the files. Limewire is an internet peer to peer site used to trade files among members and is regularly used to distribute child pornography. After obtaining a warrant, authorities searched his residence on March 8, 2012, and seized the defendant’s computer. Hatton was found to have downloaded 10 movies of child pornography. Some of the pornography depicted infants and very young children.
Hatton faces a minimum of five years to a maximum of 20 years incarceration, a $250,000 fine, and five years of supervised release. The Lafayette Police Department and the Department of Homeland Security conducted the investigation. Assistant U.S. Attorney John Luke Walker is prosecuting the case. Hatton was indicted Dec. 11, 2012.This case is part of Project Safe Childhood, a U.S. Department of Justice nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The U.S. Attorney’s Office and the U.S. Department of Homeland Security/Homeland Security Investigations/Immigration & Customs Enforcement (ICE) encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at (866) DHS-2ICE. Investigators are available at all hours to answer hotline calls. Tips or other information can also be submitted to ICE online at www.ice.gov/exec/forms/hsi-tips/tips.asp.
Kareem H. Wood Sentenced to Serve over 15 Years in Prison for Distribution of Crack CocaineRead the Press Release
GREENEVILLE, Tenn. – On May 13, 2013, Kareem Hussan Wood, 35, of Johnson City, Tenn., was sentenced to serve 188 months in prison, by the Honorable J. Ronnie Greer, U.S. District Judge. Upon his release from prison, he will be subject to supervised release under the supervision of the U.S. Probation Office for six years.
Wood pleaded guilty in December 2012 to distribution of crack cocaine. He faced a maximum statutory sentence of 30 years for the offense. Wood was the subject of an undercover investigation by the Johnson City Police Department into the distribution of crack cocaine, whereby he was recording selling crack cocaine on numerous occasions.
The Johnson City Police Department was responsible for the investigation leading to the indictment of Wood. Assistant U.S. Attorney J. Gregory Bowman represented the United States.
KC Employee Pleads Guilty to Fraud Scheme to Cheat Health Insurance ProgramRead the Press Release
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., employee pleaded guilty in federal court today to his role in a scheme in which hundreds of public employees defrauded their health insurance program of more than $300,000 by falsely claiming to have run marathons and competed in triathlons for cash incentives.
Matt Tholen, 29, of Kansas City, Mo., pleaded guilty before U.S. District Judge Gary A. Fenner to one count of wire fraud.
Tholen, who was employed by the city as an emergency medical technician, received health insurance coverage from Blue Cross/Blue Shield of Kansas City. As an insured, Tholen was eligible to participate in a wellness program offered by Blue Cross called Points to Blue. The program offered gift cards to Tholen and other insureds based upon entries made to the Points to Blue Web site, logging various exercise programs and diet programs completed by the insureds. Every 1,000 points earned translated to one dollar towards a gift card, up to a maximum of $250 annually for each insured. The more strenuous exercises earned more points.
Tholen admitted that he and other employees submitted false entries to the Points to Blue Web site, claiming they completed extremely strenuous activities in order to fraudulently obtain the maximum gift card of $250. To make even more money in this scheme, Tholen admitted, he and others submitted false entries for other employees and their eligible dependents, in exchange for receiving a portion of the fraudulent gift card proceeds.
Tholen made fraudulent Points to Blue submissions on behalf of 62 employees, resulting in 144 gift cards worth a total of $17,600. Among the fraudulent submissions, on Jan. 16, 2011 Tholen submitted an activity entry to Points to Blue stating that 5-year-old “TJ” had completed two marathons and two triathlons.
Under federal statutes, Tholen is subject to a sentence of up to 20 years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney John E. Cowles. It was investigated by the U.S. Postal Inspection Service Task Force, U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the Overland Park, Kan., Police Department.
Justice Department to Monitor Election in NebraskaRead the Press Release
The Justice Department announced today that the Civil Rights Division will monitor the election on May 14, 2013, in Douglas County, Neb. The monitoring will ensure compliance with the Voting Rights Act of 1965 and other federal voting rights statutes. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Justice Department personnel will monitor polling place activities in Douglas County. A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from the Office of Personnel Management, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Justice Department Files LawsuitAgainst Niagara County, New YorkRead the Press Release
The Department of Justice announced today the filing of a lawsuit against Niagara County, N.Y., alleging that Niagara County discriminated against Carisa Boddecker, a corrections officer with the Niagara County Sheriff’s Department, when it forced her to take a leave of absence during her pregnancy. According to the complaint, Niagara County’s actions were a violation of Title VII of the Civil Rights Act of 1964, as amended. Title VII is a federal statute that prohibits employment discrimination on the basis of sex, including pregnancy, as well as race, color, national origin and religion.
The suit, filed in the U.S. District Court for the Western District of New York in Buffalo, N.Y., alleges that Boddecker informed her employer of her pregnancy and requested an assignment with no inmate contact, as she was entitled to do under her employer’s pregnancy policy. However, according to the complaint, Niagara County failed to follow its own policy regarding assignments for pregnant corrections officers and also failed to provide the same accommodations to Boddecker that it had provided to corrections officers with other temporary medical disabilities. Instead, Niagara County placed Boddecker on an involuntary leave of absence and allowed her to return to work only after she filed a complaint of discrimination with the Equal Employment Opportunity Commission (EEOC). The United States’ complaint seeks a court order requiring Niagara County to develop and implement policies that would prevent its employees from being subjected to discrimination based upon sex. The United States also seeks monetary relief for Boddecker to compensate her for the damages she sustained as a result of the alleged discrimination.
Boddecker originally filed a charge of sex discrimination with the EEOC, whose Buffalo office investigated the matter, determined that there was reasonable cause to believe that discrimination had occurred, and referred the matter to the Department of Justice.
“Employers must provide pregnant women with the same accommodations they provide to employees who are not pregnant but who are similarly able or unable to work,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division. “Women should not have to choose between their pregnancies and their jobs, and the Civil Rights Division will continue to vigorously enforce the right of pregnant employees to be free of discrimination in the workplace.”
The continued enforcement of Title VII is a priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Department of Justice is available on its website at www.usdoj.gov/crt .
Related Materials:
Niagara County Complaint
Jury Finds Mexican National Guilty of Cocaine and Heroin TraffickingRead the Press Release
CHARLOTTE, N.C. – On Friday, May 10, 2013, a Charlotte federal jury convicted Jorge Molina-Sanchez, 24, of Mexico, of conspiring to distribute cocaine and heroin throughout North Carolina and related charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The jury returned the guilty verdict following a three-day trial which ended late Friday afternoon.
U.S. Attorney Tompkins is joined in making today’s announcement by Brock D. Nicholson, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Georgia and the Carolinas, and Sheriff Kevin L. Auten of Rowan County Sheriff’s Office (RCSO).
A federal criminal indictment filed in October 2012 charged Molina-Sanchez with conspiracy to distribute and to possess with intent to distribute at least five kilograms of cocaine and at least one kilogram of heroin, conspiracy to launder proceeds of drug trafficking, possession with intent to distribute cocaine, and possession of a firearm in furtherance of drug trafficking. He was found guilty of all charges.
According to filed documents, evidence presented at trial and witness testimony:
From in or about 2004 through 2011, Molina-Sanchez and his co-conspirators obtained hundreds of kilograms of cocaine from a supplier in California. The defendant and his co-conspirators transported the cocaine and redistributed it to other traffickers, who sold the cocaine throughout North Carolina. The street value of the cocaine was in excess of $30,000,000.
To avoid detection, Molina-Sanchez and his co-conspirators transported the cocaine and the drug proceeds hidden in compartments in vehicles. On one occasion, in March 2011, law enforcement found tens of thousands of dollars hidden in the air filter of a vehicle and in a void in the trunk of a car. In July 2011, law enforcement officers discovered and seized from a vehicle three kilograms of cocaine, a kilogram of heroin, and $138,460 in cash. Also in July 2011 while executing a search warrant, law enforcement discovered in Molina-Sanchez’s house a hand-drawn map of the location where the defendant’s sister had been stopped in Utah with eleven kilograms of cocaine in February 2011. Additional trial evidence included telephone conversations in September 2011, during which Molina-Sanchez asked a former co-conspirator to go to Las Vegas to inspect a vehicle and to transport cocaine back to North Carolina. When officers arrested Molina-Sanchez in October 2012, he was in possession of almost three ounces of cocaine, two handguns, and more than 100 rounds of ammunition.
Molina-Sanchez has been in local federal custody since he was arrested in October 2012 and will remain in custody until his sentencing date, which has not yet been set.
Molina-Sanchez faces a statutory mandatory minimum sentence of 15 years to life in prison, as well as a fine of up to $10,000,000, and at least five years of supervised release upon his release from prison. Federal sentences are served without the possibility of parole.
The case was investigated by HSI in Charlotte and RCSO, assisted by the Charlotte-Mecklenburg Police Department and its crime laboratory, the Iredell County Sheriff’s Office and its crime laboratory, and the North Carolina State Bureau of Investigation. The prosecution was handled by Assistant U.S. Attorney Steven R. Kaufman.
Judge Sentences Woman to Prison for Preparing False Income Tax ReturnRead the Press Release
Houston – Shirley M. Carrington has been ordered to prison following her conviction of willfully aiding and assisting in the preparation and presentation of a false U.S. Individual Income Tax Return, United States Attorney Kenneth Magidson announced today along with Lucy Cruz, special agent in charge of Internal Revenue Service - Criminal Investigation (IRS-CI). Carrington pleaded guilty Jan. 7, 2013.
Today, U.S. District Judge Vanessa Gilmore handed Carrington a sentence of 18 months in federal prison to be followed by one year of supervised release.
According to the written plea agreement filed in the record of the case, Carrington admitted she willfully prepared a false income tax return for a husband and wife that included a claim for losses from an alleged janitorial service sole proprietorship the taxpayers did not have. Carrington also admitted the return she prepared for the couple also claimed a false deduction for unreimbursed employee expenses and a false deduction for other miscellaneous deductions. Carrington admitted that the tax loss to the United States on the false tax return for which she pleaded guilty was $10,962.
Carrington further admitted in the plea agreement that the eight tax returns underlying the eight counts in the indictment in the case all claimed false losses from alleged janitorial sole proprietorships that none of the taxpayers had. Her relevant conduct, which is the total tax loss in the case, for purposes of sentencing was $199,472.
This matter was investigated by IRS Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Charles J. Escher.
Judge Hands Down Multiple Sentences in Houston Area Ecstasy ConspiracyRead the Press Release
HOUSTON – Six Houston residents, convicted for their roles in a multi-drug conspiracy operating in and around the Houston area over the course of approximately two years, have been ordered to serve time in federal prison, United States Attorney Kenneth Magidson announced today.
A federal jury convicted Thuong Thomas-More Vo, 37, Steven Marshal Boehning, 33, and Hung Van Dang, 36, on Aug. 29, 2012, following eight days of trial and approximately 10 hours of deliberations. Nanthato Phetphongsy, 36, Tay Luangpanh, 39, and Sourivong Nanthavongdouangsy, 31, had previously entered pleas of guilty.
At the lengthy hearing that concluded late Friday, U.S. District Judge Lee H. Rosenthal handed Vo a sentence of 109 months, while Boehning and Dang will serve respective terms of 38 and 36 months in federal prison. Phetphongsy, Luangpanh and Nanthavongdouangsy were ordered to serve 102, 78 and three months in prison, respectively. In handing down the sentence, Judge Rosenthal called their actions a “sinister scheme.” With the exception of Nanthavongdouangsy, who received a two-year-term of supervised release, the remaining five were further ordered to serve three years of supervised release following completion of their prison sentences.
A total of 16 people were charged in two separate indictments in relation to this case. To date, all have been convicted and 13 have now been ordered to prison.
The investigation targeted a Vietnamese and Laotian drug trafficking organization operating in Houston. The group primarily distributed ecstasy, but was also involved in the distribution of cocaine and hydroponic marijuana. Vo, among others in this case, was affiliated with the Houston-based Asian gang, known as NCP or “Northside Chink Posse.”
At trial, the government presented evidence that Vo, Boehning and Dang dealt with a now deceased drug trafficker who supplied them with ecstasy. Vo, who has a prior federal ecstasy trafficking conviction, had served as the broker for that drug trafficker and introduced Boehning and Dang to him. Vo approved the quantities and prices of ecstasy sold to Boehning and Dang who would then sell the ecstasy to their clients.
Three others who also had dealings with the same ecstasy trafficker testified at trial and described the methods used by the dealer. Two, who contended they were customers, described where they would meet to conduct drug transactions with this dealer and testified as to the coded language they used over the telephone when speaking about drug trafficking. The third person stated he was the supplier and indicated he had provided thousands of ecstasy pills to the dealer during the course of this conspiracy.
An FBI agent provided additional testimony as to conversations that took place between the dealer and Vo, Boehning and Dang about their drug trafficking business.
At the time of their pleas, Phetphongsy and Luangpanh each admitted their involvement in the distribution of significant quantities of ecstasy in and around the Houston area.
The case was the result of a two-year Organized Crime Drug Enforcement Task Force investigation dubbed Operation Iron Hide, led by the FBI and assisted by the Houston Police Department. The case was prosecuted by Assistant United States Attorneys Robert Johnson and Rob Jones.
Idaho Businessman Sentenced to Prison for Tax EvasionRead the Press Release
Michael George Fitzpatrick, 51, of Hope, Idaho, was sentenced to 42 months in prison by U.S. District Judge Larry A. Burns, the Justice Department and Internal Revenue Service (IRS) announced today. Fitzpatrick was also ordered to serve three years super vised released and to pay just under $1.4 million in restitution to the IRS for unpaid individual and corporate federal income taxes.
Fitzpatrick was convicted of two counts of tax evasion in January 2013 by a Coeur d’Alene, Idaho, jury. A previous jury had convicted him in September 2012 on two counts of failure to file corporate income tax returns but was unable to reach verdicts on the tax evasion counts. Fitzpatrick was remanded into custody immediately after the second trial.
According to the indictment and evidence introduced at both trials, Fitzpatrick operated a business selling products which purported to help individuals eliminate credit card debt. During 2003 and 2004, gross sales from the business, operating under the names Dynamic Solutions Inc. (DSI) and North American Educational Services Inc. (NAES), exceeded $9 million. At trial the government proved the corporations failed to report $3.7 million and Fitzpatrick himself failed to report over $500,000 in income, resulting in a total tax loss of $1,397,762.
The evidence further established that Fitzpatrick last filed an individual income tax return in 1996. At trial, Fitzpatrick argued at length that the income tax laws did not apply to him. However, the evidence showed he expended significant time and expense to put all of his property in the names of nominees.
The evidence at trial also established Fitzpatrick sent over $5 million offshore to a bank located in the Dominican Republic. Fitzpatrick accessed this money through the use of a debit card and through wire transfers. During this two-year period Fitzpatrick used over $1 million of his money hidden offshore to buy real estate and to gamble in Las Vegas on nine separate trips to the Bellagio Casino. He also paid a contractor to build a schoolhouse for his kids in his backyard in Hope, Idaho.
“This case sends a strong message that those who defy our nation's tax laws will be investigated and prosecuted to the fullest extent of the law,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. “The sentence imposed today demonstrates that anyone who attempts to evade taxes by hiding assets in offshore bank accounts faces significant time in prison for these crimes.”
“Paying taxes is a solemn obligation of citizenship,” said U.S. Attorney Wendy J. Olson. “Mr. Fitzpatrick’s conviction and sentence make clear that those who try to hide income or knowingly and falsely claim that the income tax laws do not apply to them will be prosecuted and ordered to pay. I commend the fine work of the Tax Division lawyers and the IRS criminal investigators in this case.”
“The license to run a business is not a license to avoid paying taxes,” said IRS Criminal Investigation Chief Richard Weber. “Today, Mr. Fitzpatrick has been held accountable for his actions of dodging his legal tax responsibilities to report all his income and pay his fair share of taxes. No one should doubt that IRS is committed to pursuing people hiding income offshore.”
Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally and U.S. Attorney Olson thanked special agents from the Boise, Idaho, and Seattle offices of IRS Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Lori A. Hendrickson, Christopher P. O’Donnell, and Erin S. Mellen, who prosecuted the case with valuable support from the U.S. Attorney’s Offices in Boise and Coeur d’Alene.
Idaho Businessman Sentenced to Prison for Income Tax EvasionRead the Press Release
WASHINGTON – Michael George Fitzpatrick, 51, of Hope, Idaho, was sentenced to 42 months in prison by U.S. District Judge Larry A. Burns, the Justice Department and Internal Revenue Service (IRS) announced today. Fitzpatrick was also ordered to serve three years of supervised release and pay just under $1.4 million in restitution to the IRS for unpaid individual and corporate federal income taxes.
Fitzpatrick was convicted of two counts of tax evasion in January 2013 by a Coeur d’Alene, Idaho, jury. A previous jury had convicted him in September 2012 on two counts of failure to file corporate income tax returns but was unable to reach verdicts on the tax evasion counts. Fitzpatrick was remanded into custody immediately after the second trial.
According to the indictment and evidence introduced at both trials, Fitzpatrick operated a business selling products which purported to help individuals eliminate credit card debt. During 2003 and 2004, gross sales from the business, operating under the names Dynamic Solutions, Inc. (DSI) and North American Educational Services, Inc. (NAES), exceeded $9 million. At trial the government proved the corporations failed to report $3.7 million and Fitzpatrick himself failed to report over $500,000 in income, resulting in a total tax loss of $1,397,762.
The evidence further established that Fitzpatrick last filed an individual income tax return in 1996. At trial, Fitzpatrick argued at length that the income tax laws did not apply to him. However, the evidence showed he expended significant time and expense to put all of his property in the names of nominees.
The evidence at trial also established Fitzpatrick sent over $5 million offshore to a bank located in the Dominican Republic. Fitzpatrick accessed this money through the use of a debit card and through wire transfers. During this two-year period Fitzpatrick used over $1 million of his money hidden offshore to buy real estate and to gamble in Las Vegas on nine separate trips to the Bellagio Casino. He also paid a contractor to build a schoolhouse for his kids in his backyard in Hope, Idaho.
“This case sends a strong message that those who defy our nation's tax laws will be investigated and prosecuted to the fullest extent of the law,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. “The sentence imposed today demonstrates that anyone who attempts to evade taxes by hiding assets in offshore bank accounts faces significant time in prison for these crimes.”
“Paying taxes is a solemn obligation of citizenship,” said United States Attorney Wendy Olson. “Mr. Fitzpatrick’s conviction and sentence make clear that those who try to hide income or knowingly and falsely claim that the income tax laws do not apply to them will be prosecuted and ordered to pay. I commend the fine work of the Tax Division lawyers and the IRS criminal investigators in this case.”
“The license to run a business is not a license to avoid paying taxes,” said Internal Revenue Service Criminal Investigation Chief Richard Weber. “Today, Mr. Fitzpatrick has been held accountable for his actions of dodging his legal tax responsibilities to report all his income and pay his fair share of taxes. No one should doubt that IRS is committed to pursuing people hiding income offshore.”
Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally and U.S. Attorney Wendy J. Olson thanked special agents from the Boise, Idaho and Seattle, Washington offices of IRS Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Lori A. Hendrickson, Christopher P. O’Donnell, and Erin S. Mellen, who prosecuted the case with valuable support from the United States Attorney’s Offices in Boise and Coeur d’Alene.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Hudson County, N.J., Man Admits Paying Bribes for $3.5 Million Line of CreditRead the Press Release
TRENTON, N.J. – A Hudson County, N.J., man today admitted his role in paying bribes valued at $49,000 to a bank officer at Mariner’s Bank in Edgewater, N.J., to renew a $3.5 million line of credit, U.S. Attorney Paul J. Fishman announced.
Rolando Cribeiro, 49, of North Bergen, N.J., pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an Information charging him with one count of bank bribery.
According to documents filed in this case and statements made in court:
Cribeiro was the owner of CP Building Corp., a/k/a C&P Floor Covering Inc., a/k/a C&P Building Enterprises, a/k/a Roly’s Carpet, a general contracting company located in West New York, N.J.
In 2008, Cribeiro was financially unqualified to renew a previously approved $3.5 million line of credit with Mariner’s Bank. Cribeiro made multiple payments to a bank officer who was assigned responsibility for Cribeiro’s line of credit. The corrupt payments were made in exchange for the bank officer renewing and continuing the line of credit. Cribeiro gave the bank officer a check for $6,500 and cash payments of approximately $5,000 and $3,500. Cribeiro also provided the bank officer with a rent-free apartment in Cribeiro’s apartment building in Newark, relieving the bank officer of approximately $35,000 in rent payments.
The bank bribery charge carries a maximum potential penalty of 30 years in prison and a maximum fine of $1 million. Sentencing is currently scheduled for Sept. 5, 2013.U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and criminal investigators from the U.S. Attorney’s Office in Newark, with the continuing investigation leading to the guilty plea.
The government is represented by Assistant U.S. Attorney Zahid N. Quraishi of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
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Defense counsel: Arthur P. Zucker Esq., Hackensack, N.J.Cribeiro Information
High Ranking Gulf Cartel Member Sentenced in Washington, D.C., to 35 Years in Prison for Drug TraffickingRead the Press Release
Aurelio Cano Flores, a Mexican national and high ranking member of the Gulf Cartel, was sentenced today to serve 35 years in prison for conspiring to import multi-ton quantities of cocaine and marijuana into the United States, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA).
Cano Flores, 40, aka “Yankee” and “Yeyo,” was sentenced by U.S. District Judge Barbara J. Rothstein in the District of Columbia. In addition to his prison term, Cano Flores was ordered to forfeit $15 billion in drug proceeds as part of a money judgment. At a post-trial hearing, the United States proved that from 2000 to 2010, the Gulf Cartel distributed in excess of 1.4 million kilograms of cocaine and 8,000 metric tons of marijuana. The money judgment represents the gross receipts of the Gulf Cartel’s drug sales into the United States from its principal distribution centers located along the U.S.-Mexico border.
“For over a decade, Aurelio Cano Flores worked with some of the most dangerous criminals in the world to import massive quantities of cocaine and marijuana into the United States,” said Acting Assistant Attorney General Raman. “As a leader of the Gulf Cartel, one of the most notorious criminal enterprises in Mexico or the United States, he endangered the lives of innocent people on both sides of the border. As a result of today’s sentencing, he will spend 35 years in federal prison as punishment for his crimes.”
“DEA and its partners use every law enforcement tool possible to bring to justice drug cartel leaders and facilitators who inflict damage on both sides of the border,” said DEA Administrator Leonhart. “Aurelio Cano-Flores used his position as a Mexican police officer to help one of the most violent and brutal drug trafficking organizations in the world bring vast amounts of drugs into the United States. Like many other cartel leaders, he posed a threat to the citizens of both the United States and Mexico. We are confident and pleased that justice was served today by the pronouncement of his lengthy U.S. prison sentence."
Following a trial that lasted over two weeks, Cano Flores was convicted by a federal jury on Feb. 26, 2013, of one count of conspiracy to distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana, knowing and intending the substances would be unlawfully imported into the United States.
Cano Flores was one of 19 defendants charged in a superseding indictment on Nov. 4, 2010, with drug trafficking offenses. He was extradited to the United States from Mexico in August 2011 and was ordered detained in federal custody pending trial.
Evidence presented at trial included dozens of lawfully intercepted telephone conversations between Cano Flores and other leaders of the Gulf Cartel, as well as testimony from previously convicted Cartel members. According to the trial evidence, Cano Flores began working for the Gulf Cartel in approximately 2001, while he was serving as a police officer in Mexico. During his time as a police officer, Cano Flores recruited others into the Gulf Cartel, collected drug money and escorted large shipments of cartel drugs to the U.S. border.
Cano Flores ultimately rose through the ranks of the Gulf Cartel to become a major transporter of narcotics within Mexico to the U.S. border and became the Cartel’s top representative in the important border town of Los Guerra, Tamaulipas, Mexico. As the “plaza boss” for Los Guerra, Cano Flores oversaw the mass distribution of cocaine and marijuana into the United States on a daily basis. Testimony established that between 2000 and 2010, the Gulf Cartel grew from an organization of only 100 members controlling three border towns to an organization of 25,000 people controlling the drug trade over approximately half of Mexico. As established during the trial, the means and methods of this conspiracy included corruption, murder, kidnapping and intimidation.
The case was prosecuted by Trial Attorneys Darrin McCullough and Sean Torriente of the Criminal Division’s Narcotic and Dangerous Drug Section. The Criminal Division’s Office of International Affairs provided significant assistance in the provisional arrest and extradition of Cano Flores, and the Asset Forfeiture and Money Laundering Section provided assistance at sentencing. The investigation in this case was led by the DEA Houston Field Division’s Organized Crime Drug Enforcement Strike Force and the DEA Bilateral Investigation Unit. The case was part of the Organized Crime Drug Enforcement Task Force’s Operation “Day of Reckoning.”
Henderson Man Sentenced for Drug and Weapon ChargesRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announced today that Senior United States District Judge W. Earl Britt sentenced SHYZER MONQUEZ ORMOND, 22, of Henderson, North Carolina to 70 months imprisonment, followed by 5 years of supervised release for knowingly and intentionally possessing with the intent to distribute a quantity of marijuana, a Schedule I controlled substance, in violation of Title 21, United States Code, Section 841(a)(1), and knowingly and intentionally possessing a firearm in furtherance of a drug trafficking crime in violation of Title 18, United States Code, Section 924(c)(1)(A).
On December 3, 2012, ORMOND pled guilty to the charges listed above. According to the investigation, on April 13, 2012, ORMOND was in a car that was stopped by a Henderson Police Officer because a 911 caller had described a man with a gun pointed out of the car window. There were four men inside the car and the responding officer had each man exit the vehicle one at a time. ORMOND ran from the scene, but the officer caught him. During the struggle an officer noticed ORMOND had a gun. A further search of ORMOND discovered 12 prepackaged individual bags of marijuana in his pants pocket.
This case was part of the Project Safe Neighborhoods (PSN) initiative which encourages federal, state, and local agencies to cooperate in a unified “team effort” against gun crime, targeting repeat offenders who continually plague their communities.
Investigation of this case was conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Henderson Police Department. Assistant United States Attorney, S. Katherine Burnette prosecuted the case.
Generic Drug Manufacturer Ranbaxy Pleads Guilty and Agrees to Pay $500 Million to Resolve False Claims Allegations, cGMP Violations and False Statements to the FDARead the Press Release
In the largest drug safety settlement to date with a generic drug manufacturer, Ranbaxy USA Inc. , a subsidiary of Indian generic pharmaceutical manufacturer Ranbaxy Laboratories Limited, pleaded guilty today to felony charges relating to the manufacture and distribution of certain adulterated drugs made at two of Ranbaxy’s manufacturing facilities in India, the Justice Department announced today. Ranbaxy also agreed to pay a criminal fine and forfeiture totaling $150 million and to settle civil claims under the False Claims Act and related State laws for $350 million.
The federal Food, Drug and Cosmetic Act (FDCA) prohibits the introduction or delivery for introduction into interstate commerce of any drug that is adulterated. Under the FDCA, a drug is adulterated if the methods used in, or the facilities or controls used for, its manufacturing, processing, packing, or holding do not conform to, or are not operated or administered in conformity with, current Good Manufacturing Practice (cGMP) regulations. This assures that a drug meets the requirements as to safety and has the identity and strength, and meets the quality and purity characteristics, which the drug purports or is represented to possess.
Ranbaxy USA pleaded guilty to three felony FDCA counts, and four felony counts of knowingly making material false statements to the FDA. The generic drugs at issue were manufactured at Ranbaxy’s facilities in Paonta Sahib and Dewas, India. Under the plea agreement, the company will pay a criminal fine of $130 million, and forfeit an additional $20 million.
“When companies sell adulterated drugs, they undermine the integrity of the FDA’s approval process and may cause patients to take drugs that are substandard, ineffective, or unsafe,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “We will continue to work with our law enforcement partners to ensure that all manufacturers of drugs approved by the FDA for sale in the United States, both domestic and foreign, follow the FDA guidelines that protect all of us.”
“This is the largest false claims case ever prosecuted in the District of Maryland, and the nation’s largest financial penalty paid by a generic pharmaceutical company for FDCA violations,” said U.S. Attorney for the District of Maryland Rod J. Rosenstein. “The joint criminal and civil settlement, which reflects many years of work by FDA agents and federal prosecutors, holds Ranbaxy accountable for a pattern of violations and should improve the reliability of generic drugs manufactured in India by Ranbaxy.”
Ranbaxy USA admitted to introducing into interstate commerce certain batches of adulterated drugs that were produced at Paonta Sahib in 2005 and 2006, including Sotret, gabapentin, and ciprofloxacin. Sotret is Ranbaxy’s branded generic form of isotretinoin, a drug used to treat severe recalcitrant nodular acne; gabapentin is a drug used to treat epilepsy and nerve pain; ciprofloxacin is a broad-spectrum antibiotic. In a Statement of Facts filed along with the Information, Ranbaxy USA acknowledged that FDA’s inspection of the Paonta Sahib facility in 2006 found incomplete testing records and an inadequate program to assess the stability characteristics of drugs. “Stability” refers to how the quality of a drug varies with time under the influence of a variety of factors, such as temperature, humidity, and light. Such testing is used to determine appropriate storage conditions and expiration dates for the drug, as well as to detect any impurities in the drug.
Ranbaxy also acknowledged that the FDA’s 2006 and 2008 inspections of the Dewas facility found the same issues with incomplete testing records and an inadequate stability program, as well as significant cGMP deviations in the manufacture of certain active pharmaceutical ingredients and finished products. Ranbaxy USA also acknowledged that in 2003 and 2005 the company was informed of cGMP violations by consultants it hired to conduct audits at the Paonta Sahib and Dewas facilities. Those cGMP violations resulted in the introduction into interstate commerce of some adulterated drugs.
Ranbaxy USA further admitted to failing to timely file required reports known to FDA as “field alerts” for batches of Sotret and gabapentin that had failed certain tests. With respect to Sotret, Ranbaxy USA was aware in January 2003 that a batch of Sotret failed an accelerated dissolution stability test but continued to distribute the batch into the United States for another 13 months. With respect to gabapentin, Ranbaxy USA was aware at various times between June and August 2007 that certain batches of gabapentin were testing out-of-specification, had unknown impurities, and would not maintain their expected shelf life. Nevertheless, Ranbaxy USA did not notify FDA and institute a voluntary recall until October 2007.
Ranbaxy USA also admitted to making false, fictitious, and fraudulent statements to the FDA in Annual Reports filed in 2006 and 2007 regarding the dates of stability tests conducted on certain batches of Cefaclor, Cefadroxil, Amoxicillin, and Amoxicillin and Clavulanate Potassium, which were manufactured at the Dewas facility. Ranbaxy USA was found to have conducted stability testing of certain batches of these drugs weeks or months after the dates reported to FDA. In addition, instead of conducting some of the stability tests at prescribed intervals months apart, the tests were conducted on the same day or within a few days of each other. This practice resulted in unreliable test results regarding the shelf life of the drugs. Ranbaxy USA also acknowledged that drug samples waiting to be tested were stored for unknown periods of time in a refrigerator, which did not meet specified temperature and humidity ranges for an approved stability chamber, and that this was not disclosed to the FDA.
The criminal case is U.S. v. Ranbaxy USA, Inc., JFM-13-CR-0238 (D. Md.).
Under the civil settlement, Ranbaxy has agreed to pay an additional $350 million to resolve allegations that it caused false claims to be submitted to government health care programs between April 1, 2003, and September 16, 2010, for certain drugs manufactured at the Paonta Sahib and Dewas facilities. The United States contends that Ranbaxy manufactured, distributed, and sold drugs whose strength, purity, or quality differed from the drug’s specifications or that were not manufactured according to the FDA-approved formulation. The United States further contends that, as a result, Ranbaxy knowingly caused false claims for those drugs to be submitted to Medicaid, Medicare, TRICARE, the Federal Employees Health Benefits Program, the Department of Veterans Affairs, and the U.S. Agency for International Development (USAID), which administers the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR).
The federal government’s share of the civil settlement amount is approximately $231.8 million, and the remaining $118.2 million will go to the states participating in the agreement.
The civil settlement resolves a lawsuit filed in U.S. District Court for the District of Maryland under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of today’s resolution, the whistleblower, Dinesh Thakur, a former Ranbaxy executive, will receive approximately $48.6 million from the federal share of the settlement amount. The case is U.S. ex rel. Thakur v. Ranbaxy Laboratories Limited, Case No. JFM-07-962 (D. Md.).
With the exception of the allegations to which Ranbaxy pleaded guilty in the Criminal Information, there has been no determination of liability as to the claims settled by the civil agreement.
Last year, FDA and Ranbaxy agreed to an injunction that prevents drugs produced at the Paonta Sahib and Dewas facilities from entering the U.S. market until the facilities have been brought into full compliance with the FDCA and its implementing regulations. Since September 16, 2008, when the FDA placed drugs from those facilities on an Import Alert, Ranbaxy has not imported drugs from those facilities into the U.S. In addition, the injunction requires Ranbaxy to review and verify data contained in Ranbaxy’s past drug applications to the FDA. United States v. Ranbaxy Laboratories, Ltd., et al. , Case No. JFM-12-250 (D. Md).
“The FDA expects that companies will comply with the cGMP requirements mandated by law so that consumers can be assured that their medical products are safe and pure,” said John Roth, director of the FDA’s Office of Criminal Investigations. “The investigation that led to this settlement uncovered evidence showing that certain lots of specific drugs produced at the Paonta Sahib facility were defective, in that their strength differed from, or their purity or quality fell below, that which they purported to possess. The FDA and its law enforcement partners will continue to aggressively pursue companies and their executives who erode public confidence in the quality and safety of medical products by distributing products that do not comply with the law.”
“I would like to express my appreciation for the exceptional work of our investigators and that of their FDA and Department of Justice partners,” said Michael G. Carroll, USAID Deputy Inspector General. “This settlement represents the culmination of years of investigative effort and signals our continuing commitment to the integrity of U.S. government systems and our determination to hold those who seek to defraud or mislead to account.”
The criminal case was prosecuted by the U.S. Attorney’s Office for the District of Maryland and the Civil Division’s Consumer Protection Branch. The civil settlement was negotiated by the U.S. Attorney’s Office for the District of Maryland and the Civil Division’s Commercial Litigation Branch. The case was investigated by agents from the FDA’s Office of Criminal Investigations and USAID’s Office of Inspector General. The FDA’s Office of Chief Counsel, HHS Office of Counsel to the Inspector General, Office of the General Counsel-CMS Division, and the National Association of Medicaid Fraud Control Units also provided assistance.
This criminal and civil resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $10.3 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.3 billion.
Related Materials:
Ranbaxy Settlement
Information
Attachment A
Attachment B
Attachment CGang Member Pleads Guilty in Dodge City Racketeering CaseRead the Press Release
WICHITA, KAN. – A member of a Dodge City street gang charged in a federal racketeering case has pleaded guilty, U.S. Attorney Barry Grissom said today.
Russell Worthey, 24, Dodge City, Kan., pleaded guilty to one count of conspiracy to commit racketeering and one count of possessing and discharging a firearm in a crime of violence. In his plea, Worthey admitted he was a member of the Norteno street gang when he was involved in the murder of Israel Peralta on June 8, 2009, in Dodge City. Worthey aided and abetted in the murder as well as an assault with deadly weapons upon the victims.
On the day of the murder, Worthey and co-defendant Anthony Wright were driving around Dodge City in Wright’s car. In a trailer park in the south part of town they ran across a group of Hispanic males at 201 E. McArtor, Lot 24. The males appeared to be members of a rival gang, the Surenos.
Later that day, Worthey, Wright and two other Nortenos went to the trailer park. Worthey was in the front passenger seat and Wright was driving. Two other Nortenos were riding in the back seat. When Wright parked the car, the two Nortenos in the back seat got out and ran toward the Hispanic males at Lot 24, with Worthey and Wright following. The two Nortenos in the lead fired at the men at Lot 24. Israel Peralta was struck several times by the gunfire and died from the injuries. Mariano Sorano also was struck by gunfire. The four Nortenos got back in their car and drove away from the scene.
In his plea, Worthey admitted that as a member of the Nortenos he was part of an ongoing criminal enterprise. The gang used murder, robbery, assault and the threat of violence to protect and expand its operations. He was one of 23 defendants indicted in May 2012 under a federal law called the RICO Act (Racketeering Influenced and Corrupt Organizations Act.
Worthey is set for sentencing July 29. He faces a maximum penalty of 20 years in federal prison and a fine up to $250,000 on the conspiracy charge, and a penalty of not less than 10 years and a fine up to $250,000 on the firearms charged.
Co-defendants who have pleaded guilty include: – Jason Najera, who was sentenced to 10 years in federal prison.
– Humberto Ortiz, who was sentenced to 46 months.
– Jose Neave, who is set for sentencing July 8.
– Anthony Wright, who is set for sentencing July 8.Grissom commended the Dodge City Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Ford County Sheriff’s Office, the Kansas Bureau of Investigation, Assistant U.S. Attorney Lanny Welch and Assistant U.S. Attorney Aaron Smith for their work on the case.
Fridley Man Sentenced for Robbing Retail StoreRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 46-year-old Fridley man was sentenced for robbing a Discount Tobacco and Groceries retail store at 315 Osborne Road Northeast in Fridley. United States District Court Judge Joan N. Ericksen sentenced Steven Eugene Daniels to 160 months in prison on one count of interference with commerce by robbery pursuant to the Hobbs Act. Daniels was indicted on September 11, 2012, and pleaded guilty on November 27, 2012.
In his plea agreement, Daniels admitted that on June 14, 2012, he and another man, who was carrying a firearm, entered the Discount Tobacco and Groceries store in Fridley. Both men then forced the store clerk to open the cash register. Daniels stole money from the cash register before both robbers fled the store. Daniels was later apprehended.
The Hobbs Act, passed by Congress in 1946, provides for federal jurisdiction for cases involving violent, habitual criminals who commit armed robbery in businesses involved in interstate commerce.
This case was the result of an investigation by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and the Anoka County Police Department. It was prosecuted by Assistant U.S. Attorney Richard A. Newberry.Fort Dodge Woman to Federal Prison for Meth ConspiracyRead the Press Release
A woman who conspired to distribute methamphetamine was sentenced May 10, 2013, to ten years in federal prison.
Christina Fulkerson, 39, from Fort Dodge, Iowa, received the prison term after a January 25, 2013, guilty plea to one count of conspiracy to distribute methamphetamine and one count of possessing with intent to distribute methamphetamine.
At the guilty plea, Fulkerson admitted her involvement in a conspiracy from about 2011 through October 2012 that distributed more than 150 grams of actual (pure) methamphetamine in the Fort Dodge, Iowa, area. Fulkerson also admitted to distributing more than 19 grams of methamphetamine during four separate transactions with individuals cooperating with law enforcement. On October 1, 2012, law enforcement officers executed a search warrant at Fulkerson’s residence and seized over 30 grams of actual (pure) methamphetamine which Fulkerson admitted she planned to distribute to others. Fulkerson’s residence was within 1000 feet of a protected location, Holy Rosary School Park.
Fulkerson was sentenced in Sioux City by United States District Court Judge Mark W. Bennett. Fulkerson was sentenced to 120 months’ imprisonment. A special assessment of $200 was imposed. She must also serve a ten-year term of supervised release after the prison term. There is no parole in the federal system.
Fulkerson is being held in the United States Marshal’s custody until she can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated by the Iowa Department of Narcotics Enforcement, Fort Dodge Police Department, Webster County Sheriff’s Office, Clay County Sheriff’s Office, Story County Sheriff’s Office, and the Iowa Division of Criminal Investigation.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 12-3049.
Former Wichita Area Physician on Supervised Release Charged with Firearm ViolationRead the Press Release
WICHITA, KAN. – A former Wichita area physician who is serving time on supervised release for a drug conviction has been arrested and charged with a federal firearms violation, U.S. Attorney Barry Grissom said today.
Lawrence M. Simons, 57, Wichita, is charged with one count of unlawful possession of a firearm after a felony conviction. An investigator’s affidavit alleges that on April 17, 2013, Simons possessed a .32 caliber pistol that he gave to a bail bondsman as partial payment for bonding him out of jail.
In January, 2010, Simons, a former employee of the Schneider Medical Clinic in Haysville, Kan., was sentenced to 24 months in federal prison to be followed by three years on supervised release after he pleaded guilty to two counts of unlawfully distributing a controlled substance. In his plea, he admitted he prescribed fentanyl and that the prescriptions were not issued for a legitimate medical purpose or made in the usual course of medical practice because the person who received the prescription was not his patient.
An affidavit supporting the firearm charge alleges that in April 2013 an agent of the Bureau of Alcohol, Tobacco, Firearms and Explosives learned that Simons had given a pistol to Steven Woodin, proprietor of S&F Bail Bonds in Wichita. Simons owed Woodin for bonding him out of jail on a $25,000 bond in a Sedgwick County District Court case involving a charge of making a criminal threat.
Under federal law, convicted felons are prohibited from possessing firearms.
If convicted, Simons faces a maximum penalty of 10 years in federal prison and a fine up to $250,000. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Assistant U.S. Attorney Alan Metzger is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Former Hedge Fund Co-Founder, Anthony Chiasson, Sentenced in Manhattan Federal Court to 78 Months in Prison for Insider TradingRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that ANTHONY CHIASSON, a former portfolio manager and co-founder of the hedge fund Level Global Investors (“Level Global”), was sentenced in Manhattan federal court to 78 months in prison for crimes stemming from his involvement in insider trading schemes that netted nearly $70 million in illegal profits for Level Global. CHIASSON and co-defendant Todd Newman, a former portfolio manager of Diamondback Capital Management (“Diamondback”), were convicted of securities fraud charges on December 17, 2012, following a six-week jury trial. At trial, CHIASSON was convicted of one count of conspiracy to commit securities fraud, and five counts of securities fraud. He was sentenced today by U.S. District Judge Richard J. Sullivan.
Manhattan U.S. Attorney Preet Bharara said: “With his sentence today, Anthony Chiasson chose to be part of a corrupt circle of friends that cheated the market to gain an unfair trading advantage, and for that, he lost his career, his reputation and now he has lost his liberty. Such catastrophic losses should deter those who would be tempted to break the law, but for those who are undeterred, we are not going away.”
According to the Superseding Indictment, other court documents, statements made in court, and the evidence presented at trial:
CHIASSON was part of a criminal club of portfolio managers and analysts who obtained material nonpublic information (“Inside Information”), directly and indirectly, from employees who worked at public companies. Specifically, CHIASSON’s research analyst, Sam Adondakis, together with research analysts at other investment firms – including Jesse Tortora, Jon Horvath and Danny Kuo – shared Inside Information with each other which they then provided to their portfolio managers.
For example, in 2008 and 2009, CHIASSON received Inside Information from Adondakis related to Dell’s quarterly earnings, which Adondakis had received from Newman’s analyst, Tortora, and Sandy Goyal, an analyst who worked at another firm. Goyal had a source inside Dell’s investor relations department who provided numerous updates on Dell’s earnings in advance of Dell’s earnings announcements for multiple quarters. CHIASSON traded on the Dell Inside Information in advance of its May 2008 and August 2008 quarterly earnings announcements, netting $58.5 million in illegal profits for his firm. Additionally, after CHIASSON received the Dell Inside Information from Adondakis in advance of the August 2008 Dell trade, he directed Adondakis to create a trading “template” which omitted the fact that the trade was based on inside information.
In 2009, CHIASSON also obtained inside information concerning NVIDIA Corporation’s earnings from Adondakis, who had obtained the information from analyst Danny Kuo, who worked at an investment firm in California. Adondakis passed specific numbers for NVIDIA’s gross margins to CHIASSON in the days leading up to the company’s earnings announcement of those numbers on May 7, 2009. CHIASSON’s trading in NVIDIA resulted in approximately $10 million in illegal trading profits for Level Global.
In addition to the prison term, Judge Sullivan sentenced CHIASSON, 39, of New York, New York, to one year of supervised release. CHIASSON was also ordered to pay a $5 million fine.
At trial, Newman, 48, of Needham, Massachusetts, was convicted of one count of conspiracy to commit securities fraud, and four counts of securities fraud. He was sentenced on May 2, 2013 to 54 months’ imprisonment.
Horvath, 43, and Kuo, 37, each pled guilty to one count of conspiracy to commit securities fraud and two counts of securities fraud in September 2012 and April 2012, respectively. Tortora, 35, Adondakis, 41, and Goyal, 40, each pled guilty to one count of conspiracy to commit securities fraud and one count of securities fraud in May 2011, April 2011, and June 2011, respectively. All five of these defendants await sentencing.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Securities and Exchange Commission.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
Assistant U.S. Attorneys Antonia M. Apps, Richard C. Tarlowe, and John T. Zach are in charge of the prosecution.