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20 March 2013
New York Man Sentenced to 11 Years in Prison for Mail Fraud and Attempting to Corruptly Influence a U.S. AttorneyRead the Press Release
A New York man was sentenced today in Buffalo to serve 11 years in prison for committing mail fraud and attempting to escape the charges by exerting pressure on a U.S. Attorney’s spouse and candidate for office, the Justice Department announced.
James F. Lagona, 52, of Snyder, N.Y., was sentenced by Chief U.S. District Judge William M. Skretny in the Western District of New York. Lagona was sentenced to serve nine years in prison on 27 mail fraud charges, one year in prison on one obstruction of justice charge and one year in prison for committing obstruction while on release in the fraud case. In addition to Lagona’s prison term, he was sentenced to serve three years of supervised release and ordered to pay restitution of $6,396,359 for the fraud charges.
On Feb. 23, 2011, in a case prosecuted by the U.S. Attorney’s Office for the Western District of New York, a federal jury found Lagona guilty of committing 27 counts of felony mail fraud related offenses for his role in the Watermark M-One Financial Services Ponzi scheme. According to evidence presented at trial, Lagona and his co-conspirators operated a scheme that solicited investors for waterfront real estate and promised a 10 percent return on investment after one year. In truth, no investments were made, and new investors were recruited to pay off the earlier investors. A total of 94 victims suffered a loss of over $6 million as a result of the scheme.
On Dec. 18, 2012, in a case prosecuted by the Justice Department’s Criminal Division, Lagona pleaded guilty to a one-count information charging him with endeavoring to influence, obstruct and impede the due administration of justice. Lagona has been detained since Nov. 15, 2012, pursuant to a criminal complaint.
During his plea proceeding in December, Lagona admitted to obtaining a private meeting with a campaign staffer working for U.S. Representative Kathy Hochul of New York, who was then involved in a close race for reelection against her opponent. Lagona also admitted that during the Nov. 2, 2012, meeting – four days before the election – he identified himself as a clergyman, claimed that he had been involved in discussions with the political party of Rep. Hochul’s election opponent, and falsely claimed that the opponent’s party was interested in featuring him in an advertisement or rally to claim wrongful prosecution and religious persecution. He told the campaign staffer that he would instead publicly support Rep. Hochul, if her spouse, Western District of New York U.S. Attorney William J. Hochul Jr., dismissed the criminal case against him. The campaign staffer subsequently reported the meeting to the FBI.
Lagona admitted to meeting with the campaign staffer a second time on Nov. 3, 2012. During the meeting, which was covertly recorded by the campaign staffer under the FBI’s supervision, Lagona admitted to specifying that he sought a “quid pro quo” in exchange for refusing to campaign with the party of Rep. Hochul’s opponent and for publicly supporting her instead. Lagona admitted he told the staffer that in exchange he wanted his case dismissed and for no further charges to be brought against him. Following the meeting, Lagona made efforts to follow up with the staffer by phone.
The criminal complaint in which Lagona was originally charged with obstruction, unsealed on Nov. 15, 2012, notes that the criminal investigation revealed no evidence that the campaign staffer, Rep. Hochul or her campaign ever intended to accept or considered accepting Lagona’s proposal, nor that the proposal was ever communicated to or considered by U.S. Attorney Hochul. The investigation has revealed no evidence that any member of the opposing party ever considered using Lagona during the campaign.
The fraud case was prosecuted by Assistant U.S. Attorney Gretchen L. Wylegala of the U.S. Attorney’s Office for the Western District of New York and investigated by the U.S. Postal Inspection Service Boston Division and the Internal Revenue Service-Criminal Investigation New York Field Office. The obstruction case was prosecuted by Trial Attorney J.P. Cooney of the Criminal Division’s Public Integrity Section and investigated by the FBI Buffalo Division.
New Haven Man Sentenced to 57 Months in Prison for Distributing CrackRead the Press Release
March 20, 2013David B. Fein, United States Attorney for the District of Connecticut, announced that DERRICK BROCK, also known as “Easy,” 26, of New Haven, was sentenced today by Senior United States District Judge Warren W. Eginton in Bridgeport to 57 months of imprisonment, followed by three years of supervised release. On November 6, 2012, BROCK pleaded guilty to one count of conspiracy to possess with intent to distribute cocaine base (“crack cocaine”).
According to court documents and statements made in court, this matter stems from an investigation conducted by the FBI New Haven Safe Streets Task Force, the New Haven Police Department and the Connecticut State Police into drug distribution and related violence allegedly being committed by members and associates of the Grape Street Crips in New Haven. During the investigation, BROCK, who was identified as a member of the Grape Street Crips, was intercepted over a court-authorized wiretap discussing the acquisition and distribution of crack cocaine with co-defendants in New Haven and Rhode Island.
BROCK was ordered not to associate with any of his co-defendants during his term of supervised release.
On April 9, 2012, a grand jury returned an indictment charging 18 individuals, including BROCK, with narcotics distribution offenses stemming from this investigation. To date, nine of the defendants have pleaded guilty. The other nine defendants are detained while awaiting trial.
With respect to the defendants awaiting trial, U.S. Attorney Fein stressed that an indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This case was being investigated by the FBI’s New Haven Safe Streets Task Force, which includes officers from the New Haven, Hamden and Milford Police Departments, and the State of Connecticut Department of Correction. The investigation was significantly assisted by the Connecticut State Police, the United States Marshals Service and the Westerly (R.I.) Police Department.
The investigation was funded in significant part by the United States Attorney’s Office Organized Crime Drug Enforcement Task Force and supported by the Office’s Project Safe Neighborhoods and Anti-Gang programs.
This case is being prosecuted by Assistant United States Attorneys Anthony E. Kaplan and H. Gordon Hall.
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(203) 821-3722 [email protected]Nelson County, Kentucky Drug Store Owner Guilty of Health Care Fraud and Wire FraudRead the Press Release
– Crume Drug Store owner billed private insurance companies and Medicare Part D for fraudulent prescriptions causing a combined loss of $250,188.72
LOUISVILLE, Ky. – The owner of Crume Drug Store, located in Nelson County, Kentucky, pleaded guilty in federal court today, before Magistrate Judge James D. Moyer, to a two count federal information, charging Timothy Sizemore with health care fraud and wire fraud, announced David J. Hale, United States Attorney for the Western District of Kentucky.
“Sizemore’s submission of fictitious claims for prescription drugs was simple, direct, outright theft from Medicare and private health insurers,” stated U.S. Attorney Hale. “This sort of fraud hurts every person in this country by contributing to the escalating costs of health care. My office is committed to prosecuting those who commit health care fraud and recovering restitution whenever possible.”
According to the plea agreement, Sizemore, age 37, of Bardstown, Kentucky, purchased Crume Drug Store in March 2010, then, between April 2010 and February 2012, knowingly devised and executed a scheme, to defraud Anthem and other private health insurance providers and Medicare Part D. Specifically, Sizemore created false names and placed them under his own Anthem policy number, created fraudulent prescriptions under those names, and billed Anthem for those fraudulent prescriptions, even though they were never actually filled. Also, Sizemore created fraudulent prescriptions using the names of Crume customers and local doctors, and billed the customers’ private insurance companies for those prescriptions even though they were never filled. This caused a loss of $154,112.33 to Anthem and private health care insurers. Further, during the same time period, Sizemore admits that he used the names of Crume customers and local doctors to create fraudulent prescriptions and billed Medicare Part D for those fraudulent prescriptions, which were never filled, causing the loss of $96,076.39 to Medicare Part D.
At sentencing, Sizemore could face no more than 30 years in prison, a fine of $500,000 and three years of supervised release. The plea agreement requires Sizemore to pay full restitution on or before May 3, 2013. Sentencing is scheduled before Chief District Judge Joseph H. McKinley, Jr. on July 1, 2013, at 11am in Louisville.
This case is being prosecuted by Assistant United States Attorney David Weiser and is being investigated by the Federal Bureau of Investigation (FBI) and U.S. Department of Health and Human Services Office of Inspector General.
Miami Beach Community Health Center CEO Pleads Guilty in $6 Million Embezzlement ScamRead the Press Release
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, Michael A. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Christopher B. Dennis, Special Agent in Charge, U.S. Department of Health and Human Services, Office of the Inspector General (HHS-OIG), announced that defendant Kathryn Abbate, 64, of Hollywood, FL, pled guilty today to theft of money from programs receiving federal funds, in violation of Title 18, United States Code, Section 666. Sentencing is scheduled for May 29, 2013 at 11:30 AM before U.S. District Judge Marcia G. Cooke. At sentencing, the defendant faces a maximum statutory sentence of up to10 years in prison.
According to the factual proffer field with the court, the defendant served as Chief Executive Officer of the Miami Beach Community Health Center (MBCHC) from 2002 to mid-2012. During this time, MBCHC was a Federally Qualified Health Center (FQHC) that provided medical care to persons regardless of ability to pay or insurance status. As an FQHC, MBCHC received millions of dollars of federal funding each year from 2008 to 2012 through cash grants and Medicaid reimbursements.
According to the factual proffer, beginning around 2008 and continuing through around May 2012, Abbate embezzled money from MBCHC. First, Abbate caused MBCHC to pay her non-accrued vacation pay and other forms of compensation that totaled over $3 million from 2008 to 2012. Second, Abbate embezzled money from MBCHC by causing non-payroll checks to be issued from MBCHC payable to her. Specifically, from 2007 to 2012, Abbate caused MBCHC to disburse approximately 837 checks made payable to her totaling approximately $3 million (the Abbate Checks) for “community development.” No backup documentation (such as an invoice or receipt) was provided for any of these checks and money from these funds was misappropriated by Abbate, including for personal use.
According to the factual proffer, in May 2012, auditors requested backup documentation for the Abbate checks disbursed by MBCHC in 2011, totaling approximately $1 million. In response, Abbate caused false backup documentation to be provided to the auditors, falsely indicating that the $1 million had been paid to five doctors at a medical facility. In fact, however, the money had not been paid to these doctors, but had been misappropriated by Abbate.
Mr. Ferrer commended the investigative efforts of the FBI and HHS-OIG. The case is being prosecuted by AUSAs Michael N. Berger and Patrick Sullivan.
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.
Mercer County, N.J. Woman Admits Involvement in Trenton, N.J. Oxycodone RingRead the Press Release
TRENTON, N.J. – A Mercer County, N.J., woman today admitted her role in conspiring with Joseph “JoJo” Giorgianni, Charles Hall III and others to illegally distribute oxycodone pain pills, U.S. Attorney Paul J. Fishman announced.
Carol M. Kounitz, 57, of Hamilton, N.J., pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to an Information charging her with one count of conspiracy to distribute and possess with intent to distribute oxycodone.
According to documents filed in this case and statements made in court: Between August 2011 and September 2011, Carol M. Kounitz agreed with Charles Hall III, Stephanie Lima and Joseph A. Giorgianni to obtain oxycodone from a doctor in exchange for payment. In coordination with Hall, on Aug. 17, 2011, Kounitz went to a Nutley, N.J., doctor and obtained a prescription for 120 15-milligram oxycodone pills for resale. Kounitz and Lima later filled that prescription and gave the pills to Hall in exchange for payment. Kounitz, Hall and Lima made a second trip to the doctor on Sept. 14, 2011, during which she obtained a prescription for 120 30-milligram oxycodone pills, and Lima obtained a prescription for 120 15-milligram oxycodone pills. Kounitz and Lima later filled those prescriptions and provided the pills to Hall in exchange for payment. Kounitz understood Giorgianni to be overseeing the sale of the oxycodone that she and Lima provided to Hall.
The drug conspiracy count to which Kounitz pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a $1 million fine. Sentencing is scheduled for June 26, 2013.
U.S. Attorney Fishman credited special agents of the FBI’s Newark Field Office, under the direction of Acting Special Agent in Charge David Velazquez, for the investigation leading to today’s guilty plea.The government is represented by Assistant U.S. Attorneys Eric W. Moran and Matthew J. Skahill of the U.S. Attorney’s Office Special Prosecutions Division in Trenton and Camden, respectively.
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Defense counsel: Paul W. Norris Esq., Lawrenceville, N.J.
Kounitz Information
Members, associates of the bailey boys and LRGP gangs face murder and attempted murder charges in superseding indictmentsRead the Press Release
BUFFALO, N.Y.--U.S. Attorney William J. Hochul, Jr. announced today that a federal grand jury in Buffalo has returned two superseding indictments in the ongoing investigations into the Bailey Boys and LRGP, violent criminal gangs operating on Buffalo's East Side.
According to Assistant U.S. Attorney Anthony M. Bruce, who is handling the Bailey Boys case, a third superseding indictment charges Bailey Boys member Tyriq Brown, 20, of Buffalo, with the shooting and wounding of a rival gang member on July 29, 2011 on Kensington Avenue. It also charges Bailey Boys members Rayshod Washington and Raymel Weeder with the February 9, 2012 murder of Fred Rozier. According to the indictment, the murder involved a drug ripoff that went bad. Washington is also charged with racketeering for the January, 27 2012 robbery of an individual.
Based on this latest superseding indictment, members and associates of the Bailey Boys, who operate in an area of the City bounded by Winspear Avenue, the Kensington Expressway, Eggert Road and Main Street, now stand accused of three murders, six shootings, including four drive-by shootings, a robbery that involved the shooting of a victim who survived and a shooting that occurred during a neighborhood party with numerous children present. To date, two defendants have been convicted.
A superseding indictment involving the LRGP Gang charges three additional members and associates with racketeering stemming from their participation in the illegal activities of the street gang on Buffalo's East Side. The illegal activities included cocaine trafficking and conspiracy to murder of rival gang members. Furthermore, 10 previously charged defendants are facing additional charges.
Defendants Gregory Scott, Fred Keys and Ranole Goodwin are each charged with racketeering. Previously charged with cocaine trafficking in July 2012, Dewayne Gray, John Evans, Alexis Mills, Philip Brown, John Hayward, Demario Devon Nance, Kiara McNamee, Erika Gray, Timothy Finch and Dayshawn Brazier are also charged with racketeering. The racketeering charge carries a maximum sentence of life in prison, a $10,000,000 fine or both. According to Assistant U.S. Attorney Michael McCabe, who is handling the case, LRGP is named after Lombard, Rother, Gibson and Playter Streets. Defendant Dewayne Gray was the leader of the LRG-P organization from 2009 until early 2012 and oversaw the sale of crack cocaine by various LRG-P members from gang-controlled residences on Memorial Drive, Sobieski Street and Meyers Street in Buffalo. In April 2011, LRG-P members also conspired to kill a rival gang member, Amir Chambers, who was shot and killed on April 21, 2011 on Mills Street in Buffalo. To date, three defendants have been convicted.
"This is yet another example of the Office's commitment to prosecuting the most violent and dangerous criminals operating in Buffalo," said U.S. Attorney Hochul. "Today's developments add to the over 140 gang members we've charged to date, individuals responsible for numerous murders, attempted murders and other acts of violence in our neighborhoods. And the community should know that these efforts will only continue."
"Our gang investigations continue to clear cold case homicides that may not have been solved otherwise," said Christopher M. Piehota, Special Agent in Charge of the Buffalo FBI Office. "Not only do we arrest gang members, but we can provide the victims' family members with some amount of closure. The FBI recognizes the need to stay involved with our community partners after we remove gang members from their neighborhoods."
The superseding indictments are the result of an ongoing investigation on the part of the United States Attorney’s Office in close cooperation with the Erie County District Attorney’s Office, under the direction of District Attorney Frank A. Sedita, III, the Homicide Bureau of the Buffalo Police Department, under the command of Captain Michael McCarthy and Police Commissioner Daniel Derenda, the Federal Bureau of Investigation’s Safe Streets Task Force, under the Direction of Special Agent in Charge Christopher M. Piehota, the Erie County Sheriff’s Office, under the direction of Sheriff Timothy B. Howard, the Drug Enforcement Administration, under the direction of Special Agent in Charge Brian R. Crowell, New York Field Division, the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Resident Agent in Charge Frank Christiano, and the New York State Police, under the direction of Major Christopher Cummings.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
Longmont Man and Business Charged with Illegally Discharging Sewage into the UnionRead the Press Release
DENVER – John Albert Paquette, age 52, of Longmont, Colorado, and his company, East Point, LLC, have been charged by Information with knowingly discharging a pollutant without a permit from a point source into waters of the United States, the U.S. Attorney’s Office and the Environmental Protection Agency (EPA) Criminal Investigation Division announced. Paquette and an attorney representing the company appeared in U.S. District Court yesterday afternoon, where they were advised of their rights and the charges pending against them.
According to the Information, on June 20, 2012, Paquette and East Point, LLC, knowingly discharged 1,000 gallons of raw sewage from a hose into the Oligarchy Ditch, which flowed into the Union Reservoir, located in Longmont, Colorado.
“Protecting our environment, including the water we rely on, is a top priority of this U.S. Attorney’s Office,” said U.S. Attorney John Walsh. “Thanks to the investigative work of the EPA, we’ve been able to bring charges against a person and a company who intentionally dirtied water in the city of Longmont.”
“The defendant has been charged with dumping untreated sewage directly into a tributary of Union Reservoir, a popular recreational lake,” said Jeffrey Martinez, Special Agent in Charge of EPA’s criminal enforcement program in Colorado. “Illegally discharged sewage can sicken people, fish and wildlife. This case shows that those who try to save a buck by cutting corners will be vigorously prosecuted.”
If convicted, the company faces not more than 5 years probation, a fine of at least $5,000 and not more than $50,000 per day of violation. Paquette, if convicted, faces up to 1 year in prison and a fine of at least $2,500 and not more than $25,000 per day of violation.
This case is being investigated by the Environmental Protection Agency Criminal Investigation Division.
The defendants are being prosecuted by Assistant U.S. Attorney Suneeta Hazra.
The charges contained in the Information are allegations, and the defendants are presumed innocent unless and until proven guilty.
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Logan County, Kentucky Businessman Charged with Failing to Pay Income Taxes for 15 Year PeriodRead the Press Release
– Diverted income to “shell” companies to hide assets and employees from the Internal Revenue Service
BOWLING GREEN, Ky – The Owner and operator of a construction business that performed work on commercial poultry houses was indicted by a federal grand jury meeting in Bowling Green, Kentucky, on February 13, 2013, and was unsealed today, charging him with one count of personal income tax evasion, ten counts of employment tax evasion, and four counts of failure to report income tax announced David J. Hale, Untied States Attorney for the Western District of Kentucky.
According to the indictment, Norman Hostetler, age 41, of Russellville, Kentucky beginning on or about January 1, 1996, and continuing up and until at least June 6, 2011, in Logan County, Kentucky, and elsewhere, did willfully attempt to evade and defeat the payment of a large part of the income taxes owed by him to the United States of America. Hostetler concealed his income by, among other things, failing to file individual income tax returns with the Internal Revenue Service (IRS) for the calendar years 1996 through 2011.
Between 1998 through 2009, it is alleged by the indictment that Hostetler created and operated Stanley and Sons (S&S) Trust, in Orange County, California, to create and reinforce the false impression that it was a valid trust to be used for estate planning purposes. Hostetler also created and used a bank account for S&S as a “formal trust” designed to conceal and mislead the IRS as to the true nature of the account. Further, between 1998 and through 2009, Hostetler disguised and attempted to disguise a substantial amount of income, earnings, and assets from the IRS that he owned and personally controlled by diverting assets and income to entities, including (S&S) and Green River Enterprises.
Between March 2009 and June 2011, Hostetler used multiple shell companies to disguise his ownership of vehicles from the IRS. Eco-Trans, LLC and Smokey Mountain Management Business were allegedly set up by Hostetler to obscure the chain of ownership of vehicles purchased by the defendant between March 2009 and June 2011.
Hostetler is further charged with concealing his business, employees, and employee payroll from the IRS by not paying employment taxes to the IRS and by failing to file employment tax returns (Form 941) on behalf of his employees from January 2007 through July 31, 2009. Form 941 is used to report an employer's withholding of employees’ federal taxes from their employees’ compensation, including Social Security tax, income tax, and Medicare tax.
If convicted at trial, Hostetler faces 59 years in prison, a fine of ¬$3,150,000, and 3 years’ supervised release.
This case is being prosecuted by Assistant United States Attorney Joshua Judd and is being investigated by IRS Criminal Investigation Division. If you have any information as to the location of Norman Hostetler please contact the IRS Criminal Investigative Division at 270-901-3048.
The indictment of a person by a Grand Jury is an accusation only and that person is presumed innocent until and unless proven guilty.
Le Center Man Pleads Guilty to Receiving Child PornographyRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 47-year-old Le Center man pleaded guilty to receiving several videos containing child pornography. Harold Duane Davenport pleaded guilty to one count of receipt of child pornography. Davenport, who was indicted on November 5, 2012, entered his plea before United States District Court Judge David S. Doty.
In his plea agreement, Davenport admitted that from September 16, 2009, through February 6, 2010, he knowingly received visual depictions over the Internet that involved minors engaged in sexually explicit conduct. In addition, Davenport admitted that he possessed more than 600 images of child pornography, including images and videos portraying sadistic or masochistic conduct or other depictions of violence.
For his crime, Davenport faces a potential maximum penalty of 20 years in prison, with a mandatory minimum penalty of five years in prison. Judge Doty will determine his sentence at a future hearing, yet to be scheduled.
This case is the result of an investigation by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the LeSueur County Sheriff’s Office, and the Minneapolis Police Department. It is being prosecuted by Assistant U.S. Attorney Nathan P. Petterson.Receipt of child pornography is against the law. In addition to prosecuting these cases, the Justice Department is presently funding a study focused on the correlation between involvement in child pornography and hands-on sexual abuse of children. A 2008 study (The Butner Study) published in the Journal of Family Violence found that up to 80 percent of federal inmates incarcerated for possession, receipt, or distribution of child pornography also admitted to hands-on sexual abuse of children, ranging from touching to rape.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, PSC marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children and identify and rescue victims. For more information about PSC, please visit http://www.justice.gov/psc/ For more information about internet safety education, please visit http://www.justice.gov/psc/resources.html and click on the tab “resources.”Lancaster Man Sentenced to 121 Months’ Imprisonment for Distribution and Receipt of Child PornographyRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that Lloyd Hershey Wenger, Jr., age 46, of Lancaster, Pennsylvania was sentenced Tuesday by U.S. District Court Judge Sylvia H. Rambo to a 121-month term of imprisonment, followed by 20 years’ of supervised release. Judge Rambo further ordered that Wenger pay $5,000 in restitution. Wenger must also register as a sex offender.
According to United States Attorney Peter J. Smith, Wenger had contact with an undercover FBI agent and shared numerous image files that depicted children, some as young as infants, engaged in sexually explicit conduct that he possessed. A forensic examination of Wenger’s computer revealed over 1,800 image files and over 500 video files containing child pornography.
Wenger was indicted in February 2012 and pleaded guilty in August 2012.
This case is being brought as part of Project Safe Childhood, a U.S. Department of Justice nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys Offices, 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 identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.
This case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Daryl F. Bloom.
Knoxville Couple Convicted of Tax FraudRead the Press Release
KNOXVILLE, Tenn. – On Mar. 20, 2013, a federal jury in U.S. District Court for the Eastern District of Tennessee, at Knoxville, found James E. Beavers and Beverly S. Beavers, each guilty of conspiracy to defraud the United States and three counts of filing false claims for tax refunds. After the jury’s verdicts were announced, the defendants were remanded into federal custody by the Honorable Thomas Varlan, U.S. District Judge. Sentencing has been set for 10:00 a.m., August 7, 2013.
The evidence at trial showed that James Beavers held a Ph.D. in civil engineering and was employed as an engineering consultant. He was formerly the director of an academic engineering center at the University of Tennessee. His wife Beverly Beavers owned a small formalwear and jewelry store in Knoxville.
In June 2009 the Beavers arranged to have a fraudulent 2008 tax return prepared by PMDD Services LLC, tax return preparation firm that helped clients claim exorbitant tax refunds specifically intended to help the clients pay off their personal debts. The tax return falsely reported that the amount of their mortgage, limits on all their credit cards, and other personal debts were actually income and withheld federal income tax. This fictitious income and fictitious tax withholding was reported to the Internal Revenue Service (IRS) on false Forms 1099-OID, which were prepared by Penny Jones of PMDD Services based on information provided by the Beavers. Jones was convicted in the Southern District of Florida for her involvement in the same scheme. She is currently serving a sentence of 144 months in federal prison.
As a result of the fraudulently-inflated income and withholding, the 2008 tax returns for the Beavers claimed a fraudulent tax refund of over $591,000. Upon receiving the funds, the Beavers paid off their home mortgage. They then conveyed their newly-unencumbered real estate to sham trusts, in order to impede IRS efforts to collect the erroneously-paid refund. The Beavers later filed false amended tax returns for the 2006 and 2007 tax years, also prepared by Jones, requesting fraudulent tax refunds of $193,056 and $202,625 respectively.
“We will aggressively investigate and prosecute those who intentionally violate federal tax laws. Disagreement with the income tax laws and failure to recognize the authority of the government to tax will not excuse criminal conduct,” said U. S. Attorney Bill Killian.
The Beavers case was investigated by special agents of the IRS-Criminal Investigation. The case was prosecuted by Trial Attorneys Jonathan Marx and Jed Silversmith of the Department of Justice, Tax Division, with local assistance from Assistant U.S. Attorney Charles E. Atchley, Jr., with the U.S. Attorney’s Office for the Eastern District of Tennessee.
Kimball Nurse Sentenced for Fraudulently Obtaining A Controlled SubstanceRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 43-year-old Kimball nurse was sentenced for fraudulently obtaining a controlled substance, namely hydromorphone hydrochloride, commonly sold as Dilaudid. United States District Court Judge Patrick J. Schiltz sentenced Blake Daniel Zenner to 24 months in federal prison on one count of obtaining a controlled substance by fraud. In addition, Zenner was ordered to pay $340,000 in restitution. Zenner was charged on September 4, 2012, and pleaded guilty on September 26, 2012.
Following today’s sentencing, Dan Henson, Special Agent in Charge of the U.S. Food and Drug Administration’s Office of Criminal Investigations (“FDA-OCI”) Chicago Field Office, one of the federal investigative agencies in this case, said, “The defendant exhibited a blatant and heartless disregard for the patients he victimized. FDA-OCI is committed to investigating crimes like these that pose a significant threat to public health, and we commend the U.S. Attorney’s Office for its prosecution of this matter.”
In his plea agreement, Zenner admitted that from November 2010 to March 8, 2011, he fraudulently acquired Dilaudid while working as a registered nurse at a hospital in St. Cloud, Minnesota. Zenner accessed hospital lockboxes and used syringes to remove hydromorphone hydrochloride from intravenous bags intended for hospital patients. On some occasions, he injected the intravenous bags with saline solution to replace the missing Dilaudid before returning the bags to the lockboxes for patient use. As a result of Zenner’s actions, approximately 25 hospital patients were infected with bacteria.
This case was the result of an investigation by FDA-OCI and the U.S. Drug Enforcement Administration. It was prosecuted by Assistant U.S. Attorney Kimberly A. Svendsen.Kanawha County Man Gets Federal Prison Time for Illegal Possession of an Ak-47 Assault Rifle and Other FirearmsRead the Press Release
CHARLESTON, W.Va. –A Kanawha County man who previously admitted to illegally possessing numerous firearms including an AK-47 assault rifle was sentenced today to four years in federal prison, announced U.S. Attorney Booth Goodwin. Mark Daniel Davis, 52, of Rand, Kanawha County, W.Va., previously pleaded guilty to a charge contained in an indictment returned in May 2012.
On April 30, 2012, Deputy U.S. Marshals arrived at the defendant’s Rand residence to execute an arrest warrant. During the execution of the warrant, law enforcement officers observed the defendant standing inside of the residence. Davis failed to comply with law enforcement’s order to open the front door. As a result, deputy U.S. Marshals entered the residence through the back door and arrested the defendant. Deputy U.S. Marshals recovered a loaded 7.62 millimeter pistol from a bedroom night stand and a fully-loaded semi-automatic rifle with an attached bayonet.
Deputy U.S. Marshals also obtained a search warrant for a gun safe located at the residence. During the execution of the search warrant on the gun safe, law enforcement found six rifles, including an AK-47 rifle with a bayonet, magazines for each firearm and ammunition. Law enforcement also recovered body armor, which included a bulletproof vest, from the defendant’s living room area.
Davis was prohibited from possessing firearms because of a prior felony conviction in March 2003 in the Circuit Court of Wayne County, Michigan for assault.
This case was investigated by the U.S. Marshals Service. Assistant United States Attorney William King handled the prosecution. The sentence was imposed by United States District Judge Thomas E. Johnston.
This case was prosecuted as part of Project Safe Neighborhoods. Project Safe Neighborhoods is a nationwide commitment to reduce gun crime in the United States by networking existing local programs targeting gun crime
Justice Department Reaches Agreement with California <br /> City on Bailout Under the Voting Rights ActRead the Press Release
The Justice Department announced that it has reached an agreement with the city of Wheatland, Calif., that, if approved by the court, will allow it to bail out from its status as a “covered jurisdiction” under the special provisions of the Voting Rights Act, and thereby exempt the city from the preclearance requirements of Section 5 of the Voting Rights Act. Wheatland is located in Yuba County, Calif., which is a jurisdiction subject to Section 5. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia, or from the U.S. Attorney General, prior to their implementation. Section 4 of the Act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
The city of Wheatland filed its bailout action in the U.S. District Court for the District of Columbia on Jan. 14, 2013. City officials had contacted the attorney general prior to filing its action, indicating that the City was interested in seeking a bailout. The city provided the Justice Department with substantial information, and the department conducted an investigation to determine the city’s eligibility. Based on that investigation, the department is satisfied that the city of Wheatland meets the Voting Rights Act’s requirements for bailout.
“In the Voting Rights Act, Congress provided a means for a covered jurisdiction to be exempted from the preclearance requirements of Section 5 if the jurisdiction meets the specific eligibility requirements of the Act,” said Matthew Colangelo, Deputy Assistant Attorney General for the Civil Rights Division. “I am pleased that city officials worked cooperatively with the department in providing the information we requested and in resolving this matter in the way envisioned by the Voting Rights Act.”
The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the city’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the city that would have originally precluded a bailout if it had occurred during the 10 year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act, and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting . Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Iranian Narcotics Broker Sentenced in Manhattan Federal Court to 210 Months in Prison for Conspiring to Import Hundreds of Kilograms of Heroin to the United StatesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that SIAVOSH HENAREH, a citizen of Iran, was sentenced in Manhattan federal court to 210 months in prison for conspiring to import heroin into the United States. HENAREH was convicted in November 2012 after a two-week jury trial before U.S. District Judge Jed S. Rakoff. HENAREH was one of three defendants charged in connection with an international investigation of narcotics and weapons traffickers. His co-defendant, Cetin Aksu, pled guilty in August 2012 to conspiring to provide material support to Hizballah, conspiring to acquire anti-aircraft missiles, conspiring to import heroin into the United States, and making false declarations before a federal court. HENAREH’s other co-defendant, Bachar Wehbe, pled guilty in November 2011 to conspiring to provide material support to Hizballah, conspiring to acquire anti-aircraft missiles, and obstruction of justice. Judge Rakoff imposed HENAREH’s sentence.
Manhattan U.S. Attorney Preet Bharara stated: “The conduct for which Siavosh Henareh was sentenced today, along with the conduct of his co-defendants, serves as a stark reminder of the nexus between international narcotics trafficking and terrorist funding. Today’s stiff sentence befits the gravity of his crime, and we will continue to pursue narco-traffickers across the globe.”
According to the Indictment and evidence presented at trial:
Beginning in June 2010, HENAREH – an international narcotics broker – had over 30 meetings in countries including Turkey, Romania, and Greece with DEA confidential sources (the “CSs”) and potential heroin suppliers. During those meetings, and in a series of telephone calls, HENAREH agreed to arrange the importation of hundreds of kilograms of high-quality heroin into the United States. The CSs represented to HENAREH that the profits from the sale of the heroin in the United States would be used, among other things, to purchase weapons. In April 2011, in Bucharest, Romania, the CSs received a one-kilogram heroin sample from HENAREH’s co-conspirator in order to inspect its quality, and in anticipation of a subsequent, multi-hundred kilogram load. In July 2011, HENAREH volunteered his home as the location where approximately three million Euros would be brought to pay for 189 kilograms of heroin. He then helped his co-conspirators verify and count that money, before being arrested by the Romanian National Police.
While negotiating the heroin transaction, members of the narcotics conspiracy began to negotiate a weapons deal with the CSs. Specifically, Aksu, who also participated in the heroin conspiracy, met with the CSs and with Wehbe in furtherance of the weapons deal. Aksu and Wehbe subsequently arranged to purchase military-grade weaponry from the CSs on behalf of Hizballah. In those meetings, and in telephone calls and email messages, Aksu and Wehbe discussed the purchase of American-made Stinger surface-to-air missiles (“SAMs”), Igla SAMs, AK-47 and M4 assault rifles, M107 .50 caliber sniper rifles, and ammunition from an American base in Germany and other locations. In June 2011, in Kuala Lumpur, Malaysia, Aksu and Wehbe signed a written contract for the purchase of 48 American-made Stinger SAMs, 100 Igla SAMs, 5,000 AK-47 assault rifles, 1,000 M4 rifles, and 1,000 Glock handguns, for a total price of approximately $9.5 million. During the course of the weapons negotiations, Wehbe stated that he was purchasing the weapons on instructions from, and on behalf of Hizballah. Shortly thereafter, Wehbe and others caused approximately $100,000 to be transferred to the CSs as a down payment for the weapons purchase, including a $50,000 wire transfer to an undercover bank account.
In addition to his prison term, HENAREH, 58, was also sentenced to five years of supervised release. He was also ordered to pay a $100 special assessment.
Wehbe and Aksu are scheduled to be sentenced by Judge Rakoff on November 4, 2013 and August 22, 2014, respectively. Both defendants face a maximum term of life in prison, with a mandatory minimum term of 25 years in prison.
Mr. Bharara praised the outstanding work of the Special Operations Division of the DEA, the DEA Bucharest Country Office, the DEA Istanbul Country Office, the DEA Kuala Lumpur Country Office, the DEA Copenhagen Country Office, the DEA New Delhi Country Office, the DEA Athens Country Office, and the DEA Cyprus Country Office. Mr. Bharara also expressed his gratitude to the Southeast European Law Enforcement Center, the Romanian National Police, the Turkish National Police, the Malaysian National Police, the Greek Hellenic Police, the Cyprus National Police, and the Maldives Police Service. Mr. Bharara also thanked the U.S. Department of Justice Office of International Affairs, the National Security Division, and the United States Department of State for their ongoing assistance.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Benjamin Naftalis and Rachel Kovner are in charge of the prosecution.
Indiana Man Pleads Guilty to Lying to the Federal Bureau of InvestigationRead the Press Release
The United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today that on March 20, 2013, Paul R. Kramer, 63, of Vincennes, Indiana, pled guilty in federal district court to making false statements to Federal Bureau of Investigation agents.
Kramer was indicted along with the mayor of the city of Bridgeport, Illinois, on November 6, 2012, by a federal grand jury sitting in Benton, Illinois. The indictment charged Kramer with two counts of making false statements to federal officers. Each count of making false statements carries a maximum penalty of 5 years of imprisonment, a $250,000 fine, and up to 3 years of supervised release.
Sentencing for Kramer is scheduled for 10:30 a.m. on June 27, 2013.
“The plea in this case should serve as a reminder that lies do not stop investigations. This office and its federal and state partners will not be deterred by those who seek to subvert justice.” said United States Attorney Wigginton. “It also should serve as notice that there are 38 counties in Illinois which comprise the Southern District of Illinois, and residents in each of those counties may rest assured that my office will work diligently to insure that those who violate federal law will be found and prosecuted in any of those 38 counties.”
At his plea, Kramer admitted that on August 5, 2011, he had lied when he told agents that an invoice he faxed to agents regarding the rental of a backhoe to the City of Bridgeport, was prepared for him by a person by the name of “C.S.” and that he had lied when he said it was not prepared or given to him by Max R. Schauf. In written court filings, Kramer admitted that “C.S.” did not prepare the invoice and that, in fact, he had obtained the invoice from Max R. Schauf, who was then the mayor of the city of Bridgeport, Illinois.
Kramer also admitted that on August 12, 2011, he had lied when he told agents that he owned a backhoe that had been rented to the City of Bridgeport, Illinois. In written court filings, Kramer admitted that the statements and representations were false because he knew at the time that the backhoe was actually owned by Max R. Schauf, the mayor of City of Bridgeport, Illinois.
Note: Under the law, a defendant who is charged but has not pleaded guilty is presumed to be innocent of a charge and is entitled to a fair trial at which the Government must prove guilt beyond a reasonable doubt. A plea of guilty by a co-defendant does not extinguish the presumption of innocence for other defendants.
The case was investigated by agents of the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorneys Ranley R. Killian and William E. Coonan.
Hospice of Arizona and Related Entities to Pay $12 Million to Resolve False Claims Act Allegations Filed in MarylandRead the Press Release
Allegedly Submitted False Claims for Patients Who Did Not Have Terminal PrognosisBaltimore, Maryland – Hospice of Arizona, L.C., along with American Hospice Management, LLC, and their parent corporation, American Hospice Management Holdings, LLC, have agreed to pay $12 million to resolve allegations that they violated the False Claims Act by submitting or causing the submission of claims to the Medicare program for ineligible hospice services provided by Hospice of Arizona.
The settlement was announced today by United States Attorney for the District of Maryland Rod J. Rosenstein; Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department of Justice’s Civil Division; and Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General’s region including Arizona.
The Medicare hospice benefit is available for patients who elect palliative treatment (medical care focused on providing patients with relief from the symptoms, pain and stress of a serious illness) for a terminal illness, and have a life expectancy of six months or less if their disease runs its normal course. Today’s settlement resolves allegations that Hospice of Arizona and its related entities submitted or caused the submission of false Medicare claims between September 1, 2002 and December 31, 2010 for Hospice of Arizona patients that did not have a terminal prognosis of six months or less, or that did but were not eligible for the level of care billed.
The government alleges that Hospice of Arizona and its related entities engaged in certain practices that resulted in the submission of false claims, including pressuring staff to meet admissions and census targets, adopting procedures that delayed and discouraged discharges of ineligible patients, and failing to timely implement an adequate compliance program. As part of the settlement, American Hospice Management Holdings, LLC has agreed to enter into a Corporate Integrity Agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to the settlement.
“The hospice industry relies on the Medicare Trust Fund, and payments for unnecessary services jeopardize its financial viability,” said U.S. Attorney Rod J. Rosenstein.
“This settlement is the result of the Justice Department’s efforts to prevent the misuse of the taxpayer-funded Medicare hospice program, which is intended to provide comfort and care to terminally ill persons in the final stages of their disease” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department of Justice’s Civil Division.
“Medicare and taxpayers depend on hospice agencies to provide medically appropriate services to terminally ill patients,” said Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General’s region including Arizona. “When providers place more importance on the bottom line than on the care of these vulnerable patients, they can expect to face serious penalties.”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.2 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 billion.
The allegations settled today arose from a lawsuit filed by a former Hospice of Arizona employee under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. The whistleblower in this case will receive $1.8 million. The case is United States ex rel. Momeyer v. Hospice of Arizona, L.C., et al., No. 1:10-cv-280 (D. Md.).
Hospice of Arizona, L.C., American Hospice Management, LLC, and American Hospice Management Holdings, LLC deny the allegations.
United States Attorney Rod J. Rosenstein commended the investigative work performed by the Department of Health and Human Services Office of the Inspector General. Mr. Rosenstein also thanked Assistant U.S. Attorney Roann Nichols and Christelle Klovers of the Department of Justice’s Civil Division, who handled the case for the government.
Hospice of Arizona and Related Entities Pay $12 Million to Resolve False Claims Act AllegationsRead the Press Release
Hospice of Arizona L.C., along with a related entity, American Hospice Management LLC, and their parent corporation, American Hospice Management Holdings LLC, have agreed to pay $12 million to resolve allegations that they violated the False Claims Act by submitting or causing the submission of false claims to the Medicare program for ineligible hospice services, the Justice Department announced today.
The Medicare hospice benefit is available for patients who have a life expectancy of six months or less if their disease runs its normal course. Patients admitted to a hospice stop receiving care to cure their illnesses and instead receive medical care focused on providing them with relief from the symptoms, pain, and stress of a terminal illness. Today’s settlement resolves allegations that Hospice of Arizona, and its related entities, submitted or caused the submission of false Medicare claims between Sept. 1, 2002, and Dec. 31, 2010, for Hospice of Arizona patients who did not need end of life care or for whom the hospice billed at a higher reimbursement rate than it was entitled.
The government alleged that Hospice of Arizona and its related entities, engaged in certain practices that resulted in the admission of ineligible patients or inflated bills, including pressuring staff to find more patients eligible for Medicare, adopting procedures that delayed and discouraged staff from discharging patients from hospice when they were no longer appropriate for such services, and not implementing an adequate compliance program that might have addressed these problems. As part of the settlement, American Hospice Management Holdings has agreed to enter into a corporate integrity agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to the settlement.
“This settlement is the result of the Justice Department’s efforts to prevent the misuse of the taxpayer-funded Medicare hospice program, which is intended to provide comfort and care to terminally ill persons at the end of their lives,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department of Justice’s Civil Division.
“The hospice industry relies on the Medicare Trust Fund, and payments for unnecessary services jeopardize its financial viability,” said U.S. Attorney for the District of Maryland Rod J. Rosenstein.
“Medicare and taxpayers depend on hospice agencies to provide medically appropriate services to terminally ill patients,” said Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General’s region including Arizona. “When providers place more importance on the bottom line than on the care of these vulnerable patients, they can expect to face serious penalties.”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.2 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 billion.
The allegations settled today arose from a lawsuit filed by a former Hospice of Arizona, L.C. employee, Ellen Momeyer, under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States for false claims and share in any recovery. The whistleblower in this case will receive $1.8 million. The case is United States ex rel. Momeyer v. Hospice of Arizona, L.C., et al., No. 1:10-cv-280 (D. Md.).
This matter was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Maryland, and the Office of the Inspector General for the Department of Health and Human Services.
The claims settled by this agreement are allegations only; there has been no determination of liability.
Hickory, N.C. Man Charged with Methamphetamine Trafficking Near an Elementary School and Gun Related OffensesRead the Press Release
CHARLOTTE, N.C. – A Hickory, N.C. man has been charged with methamphetamine trafficking near an elementary school and gun related offenses announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney Tompkins is joined in making today’s announcement by 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; Greg McLeod, Director of the North Carolina State Bureau of Investigation; and Sheriff Coy Reid, of the Catawba County Sheriff’s Office.
A federal grand jury sitting in Charlotte returned a seven-count criminal indictment against Gary Carroll, 57, of Hickory, on Tuesday, March 19, 2013. According to allegations contained in the indictment, beginning in 2010 and through March 2013, Carroll did knowingly conspire to distribute and to possess with intent to distribute methamphetamine. According to the indictment and filed court documents, Carroll was involved in a drug trafficking conspiracy that involved more than 500 grams of methamphetamine. According to a filed criminal complaint, upon execution of a search warrant at Carroll’s residence in January 2013, law enforcement recovered 67 grams of methamphetamine, other drug paraphernalia, cash, four firearms – including an assault rifle – and a large quantity of ammunition and ammunition magazines. The indictment, criminal complaint, and court proceedings allege that Carroll’s trafficking activities took place from, among other places, his home, which is within 1,000 feet of a public elementary school.
Carroll is charged with one count of conspiracy to distribute and to possess with intent to distribute at least 500 grams of methamphetamine, which carries a mandatory minimum of 10 years and a maximum of life in prison and a $10 million fine; one count of possession with intent to distribute methamphetamine which carries a maximum of 20 years in prison and a $1 million fine; one count of possession with intent to distribute methamphetamine within 1,000 feet of a public elementary school which carries a maximum of 40 years in prison and a $2 million fine; one count of possession with intent to distribute at least 50 grams of methamphetamine which carries a minimum of five years and a maximum of 40 years in prison and a $5 million fine; one count of possession with intent to distribute at least 50 grams of methamphetamine within 1,000 feet of a public elementary school which carries a minimum of five years and a maximum of 80 years in prison and a $10 million fine; one count of possession of firearms in furtherance of drug trafficking which carries a minimum of five years and a maximum of 80 years in prison and a $10 million fine; and, possession of firearms after conviction for domestic violence offense which carries a minimum of 10 years and a maximum of life in prison and a $250,000 fine.
Carroll was arrested in February 2013 and has been released on bond. The charges contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law.
The investigation was handled by ICE-HSI, SBI, and CCSO. The case was prosecuted by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.
Grand Jury for the District of NebraskaRead the Press Release
United States Attorney Deborah R. Gilg announced the federal Grand Jury for the District of Nebraska has returned 15 indictments charging 16 defendants. Indictments are charging documents that contain one or more individual counts that are merely accusations, and every defendant is presumed innocent unless and until proven guilty.
* Kelsey Allen, age 38, of Orchard, Nebraska, is charged in a two count indictment. Count I alleges that on or about August 22, 2012, the defendant distributed a mixture or substance containing a detectable amount of methamphetamine. The maximum possible penalty includes imprisonment of up to 20 years, a $1 million fine, a 5 year term of supervised release and a $100 special assessment. Count II alleges that on or about January 23, 2013, the defendant possessed with intent to distribute a mixture or substance containing a detectable amount of methamphetamine. The maximum possible penalty includes imprisonment of up to 20 years, a $1 million fine, a 5 year term of supervised release and a $100 special assessment.* Juan Avalos, age 24, and Jose Avalos, age 27, both of Omaha, are charged in a three count indictment. Count I alleges that on or about February 1, 2013, the defendants possessed with intent to distribute 50 grams or more of actual methamphetamine. The maximum possible penalty includes imprisonment of not less than 10 years and up to life, a $10 million fine, a 5 year term of supervised release and a $100 special assessment. Count II alleges that on or about February 1, 2013, Juan Avalos was in possession of a firearm, to wit: a Davis Industries .380 caliber firearm after having been convicted of a felony. The maximum possible penalty includes imprisonment of 10 years, a $250,000 fine, a 3 year term of supervised release and a $100 special assessment. Count III alleges that on or about February 1, 2013, Jose Avalos was in possession of a firearm, to wit, an SCCY model CPX-1 9 mm handgun, knowing or having reasonable cause to believe that the firearm was stolen. The maximum possible penalty includes imprisonment of 10 years, a $250,000 fine, a 3 year term of supervised release and a $100 special assessment.
* Johnnie B. Davis, Jr., age 33, of Omaha, is charged with being a felon in possession of a firearm, to wit: a Mossberg 500A shotgun, on or about January 1, 2013. The maximum possible penalty includes imprisonment of 10 years, a $250,000 fine, a 3 year term of supervised release and a $100 special assessment.
* Jose Gonsalez-Lopez, age 37, is charged in a three count indictment. Count I alleges that beginning on or about November 26, 2012, and continuing to on or about March 7, 2013, the defendant conspired with others to distribute and possess with intent to distribute 50 grams or more of actual methamphetamine. The maximum possible penalty includes imprisonment of not less than 10 years and up to life years, a $10 million fine, a 5 year term of supervised release and a $100 special assessment. Counts II and III allege that on or about November 29, and on or about December 4, 2012, the defendant distributed 5 grams or more of actual methamphetamine. The maximum possible penalty for each count includes imprisonment of not less than 5 years and up to 40 years, a $5 million fine, a 5 year term of supervised release and a $100 special assessment.
* Carlos Juan-Castaneda, age 35, of Omaha, is charged with illegal reentry into the United States on or about February 27, 2013, after deportation or removal. The maximum possible penalty if convicted includes imprisonment of 2 years, a $250,000 fine, 1 year of supervised release, and a $100 special assessment.
* John L. Main, age 61, of Omaha, is charged in a two-count indictment. Count I alleges that on or about August 6, 2008, Main filed a false Income Tax Return for calendar year 2006 by reporting gross receipts or sales during 2006 for his business, Main Concrete and Construction, to be $765,249 when in fact the sales were determined to be approximately $1,266,706. The maximum possible penalty includes imprisonment of 3 years, a $100,000 fine, 1 year of supervised release, and a $100 special assessment. Count II of the indictment alleges that on or about August 6, 2008, Main filed a false Income Tax Return for calendar year 2007 by reporting gross receipts or sales during 2007 for his business, Main Concrete and Construction, to be $534,892 when in fact the sales were determined to be approximately $925,045. The maximum possible penalty includes imprisonment of 3 years, a $100,000 fine, 1 year of supervised release, and a $100 special assessment.
* Miguel Martell-Rios, age 35, of Omaha, is charged with illegal reentry into the United States on or about March 6, 2013, after deportation or removal. The maximum possible penalty if convicted includes imprisonment of 2 years, a $250,000 fine, 1 year of supervised release, and a $100 special assessment.
* Thomas L. Payton, age 28, of Omaha, a drug user, is charged with being in possession of a firearm, to wit: a Russian Armory, Model SKS, 7.62mm Rifle, on or about January 15, 2013. The maximum possible penalty includes imprisonment of 10 years, a $250,000 fine, a 3 year term of supervised release and a $100 special assessment.
* Jose Picon-Hernandez, age 41, of Omaha, is charged with illegal reentry into the United States on or about February 17, 2013, after deportation or removal. The maximum possible penalty if convicted includes imprisonment of 2 years, a $250,000 fine, 1 year of supervised release, and a $100 special assessment.
* Daniel Ramirez-Rodriguez is charged in a three-count Indictment. Count I of the Indictment charges Ramirez-Rodriguez with misuse of a Social Security Number on or about September 4, 2012. The maximum penalty for this count includes imprisonment of 5 years, a fine of $250,000, followed by a term of supervised release of 3 years, and a special assessment of $100. Count II of the Indictment alleges on or about September 4, 2012, Ramirez-Rodriguez made a false statement and claimed to be a United States citizen with the intent to receive Federal and State benefits and to be employed in the United States. The maximum possible penalty for this count includes imprisonment of 5 years, a $250,000 fine, 3 years of supervised release, and a $100 special assessment. Count III charges that on or about September 4, 2012, Ramirez-Rodriguez misused a Social Security Card knowing that said document was not issued lawfully for his use. The maximum possible penalty for this count includes imprisonment of 5 years, a $250,000 fine, 3 years of supervised release, and a $100 special assessment.
* Larry Redwing, age 59, of Niobrara, Nebraska, is charged with possession of methamphetamine within the boundaries of the Santee Sioux Indian Reservation on or about February 11, 2012. The maximum possible penalty includes imprisonment of not more than 1 year, a $100,000 fine, a 1 year term of supervised release, and a $100 special assessment.
* Jesus Acosta Robles, age 48, of Omaha, is charged with bank robbery of the Wells Fargo Bank, 4650 South 24th Street, Omaha, Nebraska, on or about August 13, 2012. The maximum possible penalty, if convicted, includes 20 years imprisonment, a fine of $250,000, a 3 year term of supervised release, and a $100 special assessment.
* Leonel Torres-Garcia, age 40, of Emerson, Nebraska, is charged with illegal reentry into the United States on or about March 5, 2013, following deportation as an aggravated felon. The maximum possible penalty if convicted includes imprisonment of 20 years, a $250,000 fine, 3 years of supervised release, and a $100 special assessment.
* Skye Lynn Van Dyne, age 18, is charged with making a false statement to the Federal Bureau of Investigation on or about December 9, 2012. The maximum penalty for this count includes imprisonment of 5 years, a fine of $250,000, a 3 year term of supervised release, and a $100 special assessment.
* Luis Vasquez-Ramos, age 32, of Kearney, Nebraska, is charged with illegal reentry into the United States on or about February 13, 2013, after deportation or removal. The maximum possible penalty if convicted includes imprisonment of 2 years, a $250,000 fine, 1 year of supervised release, and a $100 special assessment.Forty-four Individuals Indicted in Health Care Fraud and Drug Distribution SchemeRead the Press Release
Seven Doctors, Four Pharmacists, Three Home Health Agency Owners Among Those Indicted
Forty-Four individuals have been charged in a health care fraud and drug distribution scheme, U.S. Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Special Agent in Charge Robert L. Corso of the Drug Enforcement Administration, Special Agent in Charge Robert D. Foley III, of the Federal Bureau of Investigation, Acting Special Agent in Charge Gilbert Salinas of the Bureau of Alcohol, Firearms, and Explosives, Lamont Pugh, Special Agent in Charge of the Inspector General of the Department of Health and Human Services, Acting Special Agent in Charge William Hayes of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Special Agent in Charge Erick Martinez of the Internal Revenue Service, Criminal Investigation, Detroit Police Chief Chester Logan, and Portsmouth, Ohio, Police Chief Robert Ware, II.
The 13-count superseding indictment charges 44 new defendants with a drug conspiracy involving prescription drug controlled substances such as OxyContin, Opana, Vicodin and other drugs. Health care fraud charges were filed against 32 of the defendants, while three defendants were charged with money laundering and three defendants were charged with being felons in possession of firearms.
The superseding indictment alleges that Sardar Ashrafkhan, Deepak Kumar, John Check and David Vezzossi, owners of home health agencies, would provide kickbacks, bribes, and other illegal benefits to physicians to induce them to write prescriptions for patients with Medicare, Medicaid, and private insurance. Patients were recruited into the scheme by patient recruiters or “marketers,” who would pay kickbacks and bribes to patients in exchange for the patients’ permitting the pharmacies and physicians to bill their insurance for medications and services that were medically unnecessary and/or never provided. During this conspiracy, prescriptions were presented to the Sav-Max (pharmacist Ahab Elmadhoun), Sav-Mart (pharmacist Waleed Yaghmour), Atrium (pharmacist Krina Patel and manager Sanjay Patel), or Caremax (pharmacist Jayshriben Gandhi and manager Guarang Gandhi) Pharmacies for filling. The medical professionals and health care agency owners would then bill the relevant insurers for services supposedly provided to the patients, without regard to the medical necessity of those prescriptions and services. Some of the pharmacists would bill insurers, including Medicare, Medicaid, and private insurers, for dispensing the medications, despite the fact that the medications were medically unnecessary and, in many cases, never provided. Other times, the pharmacists accepted cash from the recruiters for filling and dispensing medications.
The indictment further alleges a conspiracy to distribute controlled substances by the health care owners, physicians, pharmacies, and recruiters to facilitate the submission of false claims to Medicare, Medicaid, and private insurers. The home health care owners paid physicians associated with the scheme kickbacks in exchange for prescriptions for controlled substances for their patients which were filled at the respective pharmacies. The controlled substances involved included the Schedule II drug oxycodone (Oxycontin), the Schedule III drug hydrocodone (Vicodin, Lortab) the Schedule IV drug alprazolam (Xanax), and the Schedule V drug cough syrup with codeine.
The indictment further alleges illegal money laundering by pharmacists Waleed Yaghmour and Ahab Elmadhoun, and also by home health agency owner Sardar Ashrafkhan, a.k.a. “Dr. Khan.” The indictment further alleges individual charges of felon in possession of a firearm against marketers Toney Taylor and Troy Ivory, and home health agency owner John Stephen Check.
The 44 new defendants named in the 13-count indictment were pharmacists Krina Patel, 35, of Shelby Twp.; and office manager Sanjay Patel, 39, of Shelby Twp., Jayshriben Gandhi, 43, of Canton; and office manager Guarang Gandhi, 39, of Canton, pharmacist Ahab Elmadhoun, 40, of Canton; pharmacist Waleed Yaghmour, 46, of Dearborn; physicians Adelfo Pamatmat, 67, of Farmington Hills, physician John Geralt, 84, of Beverly Hills, physician Malik Dababneh, 53, of Oxford, physician Paul Kelly, 76, of Bath, physician Ravi Iyer, 42, of Novi, physician Muhammad Ahmed, 65, of Ypsilanti, physician assistant Timothy Spencer, 64, of Inkster, Wayne State Medical School graduate Javar Myatt-Jones, a.k.a. “Dr. Jones,” 33, of Chicago, foreign medical student Faraj Ghabag, 33, of Oregon, OH, home health agency owners Sardar Ashrafkhan, a.k.a. “Dr. Khan,” 55, of Warren, home health agency owner Deepak Kumar, 45, of Washington Twp., and his assistant Mohammad Mian, 44, of Oak Park, home health agency owner John Stephen Check, 53, of Dearborn Heights, and business partner co-owner David Vezzossi, 52, of West Bloomfield, marketer Frederick Till Jackson Sr., a.k.a. “Big Fred,” 52, of Detroit, marketer Tiffany Walker, a.k.a. “Mary Reed,” 45, of Detroit, Sierra Walker, a.k.a. “Tosha,” 25, of Detroit, marketer Toney Taylor, 44, of Detroit, marketer Jimmy Foster, 35, of Detroit, marketer James Blake, 32, of Sterling Heights, marketer Troy Ivory, 47, of Warren, marketer Jackie Renee Ivory, 32, of Ecorse, marketer Eric Hester, 40, of Ionia, marketer Felicia Jackson, 27, of Eastpointe, marketer Ayesha McCray, 30, of Detroit, marketer Jamall Gibson, 30, of Eastpointe, couriers Alfornia Johnson, a.k.a. “Con,” a.k.a “Alex,” a.k.a. “ShiCon,” 34, of Detroit, Phillip Burnett, a.k.a. “Frank,” a.k.a “Frank Burns,” 33, of Detroit, Ronnie Moses, a.k.a. “Red,” 23, of Detroit, Corey Williams, a.k.a. “CoCo,” 44, of Detroit, William Ashley Smith, a.k.a. “Cash,” of Portsmouth, OH, Robert Scott Dials, 25, of Portsmouth, OH, Cherish Lewis, 26, of Wheelersburg, OH, distributors Willie David Jackson, a.k.a. “Lil’ Dave,” 24, of Eastpointe, Lance Hatten, 29, of Columbus, OH, Josh Barnes, 33, of Wheelersburg, OH, Nathan Reed, a.k.a. “Reed,” 31, of Portsmouth, OH, and electronic transfer nominee Garland Holman, 30, of Detroit.
“The merger of health care fraud and drug trafficking is a disturbing trend that is not only robbing taxpayers, but also fueling addictions to prescription drugs,” McQuade said. “Prescription drug abuse has become a national epidemic, with more Americans dying from overdoses than from gunshot wounds.”
Robert L. Corso, Special Agent in Charge of DEA's Detroit Field Division stated, "Confronting the illegal diversion and abuse of controlled pharmaceuticals is a top priority of DEA and our law enforcement partners. The indictment alleges that this drug distribution organization includes members of the medical profession who abused their positions of trust and endangered the lives of countless people for pure profit. This was done by illegally distributing opiate painkillers and other controlled prescription medications throughout southeast Michigan and stretching to the southern reaches of Ohio. This investigation makes it clear that the DEA and our partners in law enforcement will continue to investigate and bring to justice those individuals that are responsible for the illegal distribution of prescription medicines."
FBI Special Agent in Charge Foley stated, "These arrests are the result of countless hours of hard work by the FBI and its law enforcement partners. We remain dedicated to pursuing and prosecuting any individuals who illegally exploit the health care system for their own personal gains.”
Acting ATF Special Agent in Charge Gil Salinas stated. “The combined law enforcement intelligence and resources were crucial in addressing this criminal element and in making our communities safer. ATF continues to pursue the those who continually endanger our communities. I commend the outstanding collaboration of our Violent Crime Task Force and our local, state, and federal law enforcement partners in undertaking this sweeping investigation.”
Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation added that these crimes committed by doctors and pharmacists were worse than many typical schemes. “These illegal activities are done primarily to make money and once the money is in the hands of the suspects, it’s hard for them to deny their involvement.”
"The public rightfully expects that doctors will uphold professional standards rather than exploit patients for personal gain" said Lamont Pugh III, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General's region including Michigan. "Working closely with our law enforcement partners, we will investigate and bring to justice those who harm the Medicare program and taxpayers by fraudulently submitting claims related to illegal diversion and/or distribution of addictive drugs."
Detroit Police Chief Logan stated, "The investigation of this case exemplifies the strong teamwork between the men and women of the Detroit Police Department and our state and federal law enforcement partners, along with members of the Portsmouth, Ohio Police Department. Having the United States Attorney’s Office prosecute this criminal case will be sending a strong message to those who choose to break the law. Together we will make a difference.”
Police Chief Robert Ware stated, “Portsmouth is along a corridor of U.S. Route 23 better known as the drug pipeline. The flow of drugs from Detroit to Portsmouth and to neighboring cities such as Huntington, West Virginia has changed lives and communities forever. Behind the scenes are some very dedicated, hardworking Officers, Deputies, State Troopers, Federal Agents and Prosecutors working together to bring justice to those poisoning our communities. What you have before you today is the culmination of some of those joint efforts to curb the flow of illegal drugs into our neighborhoods.”
Of the ten defendants charged in the earlier indictment, all have been convicted by pleas over the last year. Those defendants included Detroit and Ohio residents. Several have been sentenced already and others are due to be sentenced in the near future.
The investigation in this case was handled by the Drug Enforcement Administration, the Federal Bureau of Investigation, the Bureau of Alcohol Firearms and Explosives, Detroit Police Dept., Portsmouth, Ohio, Police Dept., Scioto County Sheriff’s Office, the Internal Revenue Service Criminal Investigation, the U.S. Immigration and Custom’s Enforcement’s Department of Homeland Security Investigations, the Department of Health and Human Services Office of Inspector General, and the Detroit Violent Crimes Task Force and Michigan State Police. The case is being prosecuted by Assistant U.S. Attorneys Terrence R. Haugabook, Michael Martin, and Wayne F. Pratt. They will be assisted by Assistant U.S. Attorneys Jonathan Grey and Gjon Juncaj of the Forfeiture Section.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Former Saltville Rescue Squad President SentencedRead the Press Release
ABINGDON, VIRGINIA -- The former president of the Saltville Rescue Squad was sentenced today in the United States District Court for the Western District of Virginia in Abingdon on healthcare fraud charges.
Following a jury trial last September, Eddie Wayne Louthian Sr., 60, of Saltville, Va., was found guilty on one count of conspiracy to commit healthcare fraud, one count of healthcare fraud, four counts of making false statements in relation to a healthcare matter and one count of making a false statement to a federal grand jury.
Today in District Court he was sentenced to 48 months in Federal prison and three years of supervised release thereafter.
“Mr. Louthian used the Saltville Rescue Squad as a vehicle to defraud the Medicare program,” said United States Attorney Timothy J. Heaphy. “A jury found him guilty to fraudulently billing Medicare for unnecessary services, acts for which he was now been justly punished. This office will continue to root out health care fraud, which drives up costs to consumers.”
“Not only did Mr. Louthian defraud the Medicare system of hundreds of thousands of dollars, he also robbed from seniors in need of medical care. Fraud like his inevitably drives prices up for medical services, which all of us end up paying for,” said Virginia Attorney General Ken Cuccinelli.
Monica Hicks, a member of the rescue squad also charged in the scheme, previously pleaded guilty to one count of conspiracy to commit healthcare fraud.
Following evidence presented by Virginia Assistant Attorneys General and Special Assistant United States Attorneys Janine Myatt and Vaso Doubles, a jury found that Louthian and Hicks conspired to fraudulently bill Medicare and Anthem Blue Cross Blue Shield for non-emergency ambulance services for Medicare eligible patients.In order to receive Medicare reimbursements for non-emergency ambulance transports patients must be bed-confined or otherwise in such a medical condition that ambulance transport is necessary. The jury found that the defendant was obtaining reimbursement for transporting patients that did not qualify for non-emergency transport.
The jury found that between December 6, 2005 and September 17, 2011, the defendant fraudulently billed Medicare approximately $1,650,000 and fraudulently received approximately $750,000 in reimbursements for Medicare ambulance transports.
In addition, the jury found that between December 20, 2005 and September 3, 2011, the defendant fraudulently billed Anthem approximately $1,000,000 and fraudulently received approximately $130,000 in reimbursements for ambulance transports.
The defendant was also found guilty of submitting fraudulent trip sheets and Certificates of Medical Necessity forms for billing purposes and made false statements before a Federal Grand Jury.
The District Court also imposed a money judgment against Louthian for $907,521, the full amount of the fraud. The court also forfeited assets associated with Louthian, including bank accounts, vehicles, real estate, and an ambulance service, in partial satisfaction of the money judgment. The court will determine the interest of other persons in these assets at a later hearing.
The investigation of the case was conducted by the Department of Health and Human Services Office of the Inspector General, the Virginia Office of the Attorney General’s Medicaid Fraud Control Unit and the Internal Revenue Service Criminal Investigation. Janine Myatt and Vaso Doubles prosecuted the case for the United States.
Former Hedge Fund Manager Recently Arrested in Italy After Being on Run for Five Years Named in Grand Jury Indictment That Alleges Market Manipulation Scam That Caused $200 Million in LossesRead the Press Release
LOS ANGELES – A German national who managed a series of hedge funds based in the Cayman Islands has been indicted on federal fraud charges alleging that he oversaw a stock manipulation scheme designed to “pump up” the reported returns of his hedge funds, while self-dealing for his own benefit to the detriment of the funds, in a fraud that caused investors to loss approximately $200 million.
Florian Wilhelm Jürgen Homm, 53, was named in a 10-count indictment that was returned late Tuesday afternoon by a federal grand jury in Los Angeles.
The indictment specifically charges Homm with one count of conspiracy to commit securities fraud, eight counts of securities fraud and one count of wire fraud. The indictment also contains a forfeiture allegation that would cause Homm, if he is convicted of any of the 10 counts in the indictment, to forfeit to the United States “any and all property, real and personal, which constitutes or is derived from proceeds traceable to” any crime to which he is found guilty.
Homm is currently in custody in Italy after being arrested on March 8 at the Uffizi Gallery in Florence. Homm was arrested pursuant to the United States’ request for his provisional arrest pending extradition, based on a criminal complaint relating to the alleged fraud that had been filed by federal prosecutors in Los Angeles. The indictment filed yesterday in Los Angeles replaces the criminal complaint as the charging document.
Homm was the founder and chief investment officer of Absolute Capital Management Holdings Limited, a Cayman Islands-based investment advisor that managed eight hedge funds from 2004 until September 2007. As part of the alleged scheme, Homm bragged to investors that Absolute Capital was named overall winner for 2006 of the European Hedge Fund Group, by the publication Hedge Fund Review.Court documents filed in United States District Court in Los Angeles – specifically, the indictment and the affidavit in support of the criminal complaint – allege that Homm directed the hedge funds to buy billions of shares of thinly traded, United States-based “penny stocks.” Homm caused most of the purchases of penny stocks to be made through Hunter World Markets, Inc., a broker-dealer in Los Angeles that Homm co-owned. Homm, who at the time of the alleged scheme resided in Palma de Majorca, Spain, also allegedly obtained shares of the penny stock companies through various businesses he controlled.
After the hedge funds invested hundreds of millions of dollars in the illiquid penny stocks, Homm’s co-conspirators used a secret instant messaging system to avoid the scrutiny of regulators and caused the hedge funds to trade the stocks among themselves in “cross-trades” made through the Los Angeles-based broker dealer. The cross-trades served to increase the trading prices of the previously illiquid stocks and, in turn, to boost the net asset values and apparent performance of the hedge funds, in a practice called “portfolio pumping.” This apparent performance improvement at the hedge funds generated additional fees for Homm and Absolute Capital. It also boosted Absolute Capital’s stock price on the London Stock Exchange, Alternative Investment Market, from which Homm profited by selling shares. As part of the stock manipulation scheme, Homm and others also allegedly sold their own shares of the penny stocks to the hedge funds managed by Homm.
The indictment alleges that Homm and several co-conspirators who have not been indicted at this time “fraudulently manipulated these stocks to inflate and/or artificially prop up their prices to exaggerate the purported profitability of the hedge funds holding them.
“This enabled the co-conspirators to sell their own shares of the penny stocks at the inflated prices to the hedge funds. The stock price inflation also served to fraudulently overstate the performance of the hedge funds which, in turn, generated substantial performance fees and other compensation for defendant Homm and his co-conspirators,” according to the indictment.
Folllowing allegations made by a “whistleblower” in 2006, Homm dumped tens of millions of dollars worth of his own shares in Absolute Capital and resigned from the firm in the middle of the night on September 18, 2007. The scheme allegedly netted Homm and his co-schemers more than $53 million via trades made through Hunter World Markets alone.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Each charge of conspiracy to commit securities fraud and securities fraud carry a statutory maximum penalty of 25 years in federal prison. The wire fraud count carries a maximum penalty of 20 years in prison.
The case against Homm is the product of an ongoing investigation by the Federal Bureau of Investigation. Agents in the FBI’s Los Angeles Field Office worked with the FBI’s Legal Attaché Office in Rome and its sub-office in Milan, where agents worked collaboratively with Italian authorities, to secure the apprehension of Homm. The U.S. Department of Justice Attaché in Rome provided substantial assistance.
The Securities and Exchange Commission provided assistance to the FBI’s investigation.Two years ago, the United States Securities and Exchange Commission filed a civil lawsuit in Los Angeles federal court against Homm and four other defendants, alleging a microcap stock manipulation scheme as part of “portfolio pumping” plot to increase the value of Absolute Capital (see: http://www.sec.gov/litigation/litreleases/2011/lr21865.htm).
Homm recently published a book that was translated into English under the title, Rogue Financier: The Adventures of an Estranged Capitalist.
Release No. 13-039
Former Employee of Santa Ana Star Casino Pleads Guilty to Embezzling Money from the CasinoRead the Press Release
Wife Pleads Guilty to Participating in Husband’s Embezzlement SchemeALBUQUERQUE – John Hoffman, 42, of Rio Rancho, N.M., entered a guilty plea this morning to the felony offense of theft by an employee of a Indian gaming establishment. His wife and accomplice, Michelle Fischer, 42, entered a guilty plea to the misdemeanor offense of theft from an Indian gaming establishment. The guilty pleas were announced by U.S. Attorney Kenneth J. Gonzales and Police Chief Harry Betz of the Santa Ana Tribal Police Department.
Hoffman pled guilty to a felony information charging him with embezzling money belonging to the Santa Ana Star Casino, which is operated by Santa Ana Pueblo, from Dec. 2010 to Aug. 2011. At the time, Hoffman was employed in the Marketing Department of the Santa Ana Star Casino. In entering his guilty plea, Hoffman admitted that, during the period covered by the information, he abused his position at the Santa Ana Star Casino by gaining access to active and inactive “Player’s Club” cards and adding money and credits to the cards without proper basis or authority. Hoffman further admitted that he then gave the cards to Fischer knowing that she intended to distribute the cards to others who would use the cards to gamble and who would give Hoffman and Fischer a percentage of their winnings.
Fischer pled guilty to a misdemeanor information charging her with theft of money belonging to the Santa Ana Star Casino. In entering her guilty plea, Fischer admitted obtaining “Player’s Club” cards to which she was not entitled from a casino employee, and giving the cards to others who used the cards to gamble with the understanding that Fischer would receive a percentage of their winnings. Fischer also admitted that she also used some of the cards to gamble knowing that she was not entitled to do so and for the purpose of obtaining a financial benefit.
Hoffman and Fischer were both released on conditions of release pending their sentencing hearings, which have yet to be scheduled. At sentencing, Hoffman faces a maximum penalty of 20 years in prison and Fischer faces a maximum penalty of one year in prison. Hoffman and Fischer will be required to make restitution to Santa Ana Star Casino in the amount for which the Court determined each to be responsible.
These cases were investigated by the Santa Ana Tribal Police Department and are being prosecuted by Assistant U.S. Attorney Kyle T. Nayback.
Former El Paso County Deputy Sheriff Pleads Guilty as Part of Ponzi SchemeRead the Press Release
DENVER – David N. Hawkins, age 43, of Colorado Springs, Colorado, pled guilty late last week before U.S. District Court Judge Robert E. Blackburn to one count of wire fraud and one count of money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation, and IRS – Criminal Investigation announced. Hawkins, who is free on bond, is scheduled to be sentenced by Judge Blackburn on June 7, 2013 at 11:00 a.m.
Hawkins was originally charged by Information on January 2, 2013. He waived his right to be charged by Indictment. According to the facts contained in the Information as well as the stipulated facts contained in the plea agreement, Hawkins was employed as a deputy sheriff for the El Paso County, Colorado Sheriff's Office. In 2006 Hawkins attended training courses on how to trade profitably in foreign currencies and the exchanges of foreign currencies (hereinafter, the "FOREX" or "foreign currency exchange" markets). He also attempted to self-educate himself concerning trading in the FOREX markets.
From in or about November 2009, when Hawkins obtained his first FOREX trading client, and continuing through early December 2011, he obtained in excess of $1.2 million from his colleagues at the El Paso County Sheriff’s Office, other law enforcement officers in El Paso County, and their respective friends and relatives for the purpose of trading these funds in the FOREX markets on their behalf. He had approximately 73 investors, most investors using personal savings or retirement funds accumulated over the years as their source of the investment funds. Estimated losses to investors collectively total approximately $215,643.
Hawkins made several false representations to investors, including investors would be guaranteed a return of 10% per month (or 120% per annum). These representations were false and at no time were the investments ever profitable.
Over time Hawkins removed investor funds from FOREX trading accounts into bank accounts he controlled. He would then use these funds either for his own personal expenses, for personal investments unrelated to FOREX investments, or to fund payments to those of his investors who requested to withdraw their principal investments. At one point, he used investor funds toward the purchase of two personal automobiles and mid- 2011 he used in excess of $150,000 in investor funds to purchase franchises and to set up operations for two semi-professional indoor arena football teams, one located in Danville, Illinois and the other in Mesquite, Texas. The teams never became operational.
“Ponzi schemes have taken the hard earned money of all too many Americans in the last few years,” said U.S. Attorney John Walsh. “In this case, a Deputy Sheriff took money meant for investment, and spent it on a variety of things, including personal items, giving no thought to the financial damage he is causing the colleagues, family and friends who trusted him. He will now face the consequences of his crimes.”
“If it sounds too good to be true it probably is. People should diligently check out claims of unusually high rates of return before investing. Don't become a victim of an investment scam", said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
“Working with our partners, the FBI is committed to investigating complex white collar crimes, especially when someone in a position of trust misuses that position to exploit innocent investors,” said FBI Denver Acting Special Agent in Charge Steve Olson.
Hawkins faces one count of wire fraud which carries a penalty of not more than 20 years in federal prison and a fine of up to $250,000. He also faces one count of money laundering which carries a penalty of not more than 10 years in federal prison and a fine of up to $250,000.
This case was investigated by the Federal Bureau of Investigation (FBI), and Internal Revenue Service – Criminal Investigation (IRS-CI).
The case is being prosecuted by Assistant U.S. Attorney Kenneth Harmon.
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Former Baptist Minister Sentenced to 12 Years ImprisonmentRead the Press Release
FOR IMMEDIATE RELEASECONTACT: Mary Hatton
www.usdoj.gov/usao/inn/ FAX (219) 852-2770
Hammond, Indiana - United States Attorney David Capp announced that Jack Allen Schaap, 55, of Crete, Illinois, was sentenced by Senior District Judge Rudy Lozano to 144 months imprisonment and 5 years of supervised release after pleading guilty to the felony offense of transportation of a minor with the intent to engage in criminal sexual activity.
According to documents filed by the government in this case, Schaap, as the Pastor of Hammond Baptist Church, Superintendent of its schools and a trusted advisor to the victim and her family, involved himself with counseling the victim, a then-16 year old church member who had been identified by an administrator at the school as vulnerable.Once their sessions began, Schaap met with her for longer durations and with increasing frequency over time, beginning with a few hours per week in April and May 2012, to semi-weekly in June and then daily or several times a day in July.Schaap encourage the victim to view him as not just her Pastor but also as her friend and finally, love interest.Schaap’s phone records revealed that in one month’s time he and the victim spoke on the phone or texted one another approximately 662 times.He also arranged to have the victim transported to Illinois and to Michigan so they could spend extended periods of time alone together.The government recovered photos taken at his property in Illinois and inside a cabin in Michigan which depicted Schaap and the victim in intimate poses.
This case resulted from an investigation by members of the Indiana Internet Crimes Against Children Task Force, including the Federal Bureau of Investigation, the Indiana State Police and the Lake County Sheriff’s Department.This case was prosecuted by Assistant United States Attorneys Jill Koster and Susan Collins.
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
Federal Jury Convicts Vallejo Woman of Bankruptcy and Mortgage Fraud SchemeRead the Press Release
SAN JOSE, CA— A federal jury convicted Vallejo resident Myra Holmes yesterday of one count of Bankruptcy Fraud, one count of Bank Fraud, and three counts of Making a False Statement to a Bank, United States Attorney Melinda Haag announced. The guilty verdict followed a three-week trial before U.S. District Court Judge Edward J. Davila. The jury acquitted Myra Holmes on two other false statement counts.
Evidence at trial showed that Holmes, 55, enriched herself by knowingly receiving from her father his half-interest in a Vallejo residence in which she lived. Holmes knew at the time she received this property that her father had previously declared bankruptcy and that as a result his half-interest in the Vallejo property now belonged to his Chapter 7 bankruptcy estate. Holmes took this half-interest in the Vallejo property without paying anything to the bankruptcy estate and also without notifying or obtaining the permission of the United States Bankruptcy Court or the bankruptcy trustee. After Holmes received her father’s half-interest in the Vallejo property, she drained the equity from the property through a fraudulent refinancing mortgage loan application. The jury found that Holmes falsely told World Savings Bank in her refinancing mortgage applications: (1) that she earned $15,000 a month; (2) that she had a bank account balance of $15,000; and (3) that she was not a party to a lawsuit. Evidence at trial showed that Holmes knew at the time she filed her refinancing mortgage applications that she was overstating her monthly income and account balance, and also knew that the bankruptcy trustee had recently filed a lawsuit against her seeking to recover the bankruptcy estate’s half-interest in the Vallejo property.
As a result of her bankruptcy fraud and mortgage fraud, Holmes received approximately $147,000 directly and arranged for personal debts to be paid (including her debts to Neiman Marcus, Lord & Taylor, Macy’s and Spiegel). By the end of April 2006, Holmes had spent on personal expenses (including gambling and shopping) all of the approximately $147,000 that she had fraudulently received as a result of the November 2005 refinancing of the Vallejo property. To date, Holmes has not repaid the bankruptcy estate for the funds she took out of the Vallejo property in the November 2005 refinancing.
Holmes is scheduled to be sentenced on July 1, 2013, before Judge Davila in San Jose. Judge Davila ordered that Holmes remain out of custody pending sentencing on a co-signed $50,000 release bond.
The maximum statutory penalty for 18 U.S.C. § 152(5) - Bankruptcy Fraud/Concealment of Assets - is five years' imprisonment, a $250,000 fine and restitution. The maximum statutory penalty for 18 U.S.C. § 1344 - Bank Fraud, and 18 U.S.C. 1014 - Making a False Statement to a Bank - is 30 years' imprisonment, a $1,000,000 fine and restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Joseph Fazioli and Assistant U.S. Attorney Grant Fondo are prosecuting the case with the assistance of Paralegal Specialist Lakisha Holliman and Legal Assistants Laurie Worthen and Kamille Singh. This prosecution is the result of a multi-year investigation by the Federal Bureau of Investigation.
Federal Jury Convicts Albuquerque Man for Unlawfully Possessing A FirearmRead the Press Release
Prior Felon Brandished Pistol at 17-Year-Old and Threatened to Kill HerALBUQUERQUE – A federal jury returned a guilty verdict this morning against Christian Alexander Sangiovanni, 32, of Albuquerque, N.M., for being a felon in possession of firearms and ammunition after a two-day trial, announced U.S. Attorney Kenneth J. Gonzales, 2nd Judicial District Attorney Kari E. Brandenburg, and Thomas G. Atteberry, Special Agent in Charge of the Phoenix Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
Sangiovanni was arrested in Aug. 2012, on an indictment charging him with being a felon in possession of a firearm and ammunition. The indictment alleged that Sangiovanni unlawfully possessed a firearm and ammunition on April 25, 2010, in Bernalillo County, N.M. At the time, Sangiovanni was prohibited from possessing firearms or ammunition because he previously had been convicted of the following three felony offenses in the 12th Judicial District Court for the State of New Mexico: embezzlement in 2000; sexual exploitation of children in 2001; battery on a police officer in 2003. He also previously had been convicted of possession of heroin with intent to distribute in the 4th Judicial District Court for the State of New Mexico in Guadalupe County in 2005.
According to the evidence at trial, on April 25, 2010, a 17-year-old high school student encountered Sangiovanni, an acquaintance she knew through a mutual friend, at a convenience store in the Northeast Heights of Albuquerque while running an errand for her mother. When the teenager parked her car, Sangiovanni got into the front passenger seat. After yanking the car keys out of the ignition and slapping a cellphone out of the teenager’s hand to prevent her from calling for help, Sangiovanni pulled a firearm out, brandished the weapon at the teenager, and threatened her against getting out of the car. During the encounter, Sangiovanni told the teenager that, “I have no problem blasting both of us right now, you first, then me.” After a time, Sangiovanni permitted the teenager to enter the store, make her purchase and return home.
Later that night, Sangiovanni sent the teenager an E-mail in which he threatened her against telling anyone about the violent encounter. Thereafter, Sangiovanni E-mailed the teenager photographs of himself holding a pistol to his head. On April 26, 2010, the teenager and her mother contacted the police and reported Sangiovanni’s threats against the teenager and provided the E-mails containing the threats and photographs of Sangiovanni holding the pistol to his head.
On May 3, 2010, after Sangiovanni continued to send threatening E-mails to the teenager, officers executed an arrest and search operation at a residence where Sangiovanni was staying. After arresting Sangiovanni on state charges, the officers found a Smith & Wesson, model 459, 9mm pistol with an extended magazine that contained rounds of ammunition. The pistol subsequently was identified by the teenager as the weapon that Sangiovanni brandished at her on April 25, 2010.
The jury deliberated approximately three hours before returning a guilty verdict.
Sangiovanni has been in federal custody since his arrest and remains detained pending his sentencing hearing, which has not yet been scheduled. Sangiovanni faces a maximum sentence of ten years in prison unless the court determines that he is an armed career criminal. In that event, Sangiovanni faces a mandatory minimum sentence of 15 years in prison.
U.S. Attorney Kenneth J. Gonzales said that the case was prosecuted as part of a federal anti-violence initiative that targets “the worst of the worst” offenders for federal prosecution. Under this anti-violence initiative, the U.S. Attorney’s Office and federal law enforcement agencies work with New Mexico’s District Attorneys and state, local and tribal law enforcement agencies to target violent or repeat offenders for federal prosecution with the goal of removing repeat offenders from communities in New Mexico for as long as possible.
District Attorney Kari E. Brandenburg added, “Our partnership with the U. S. Attorney’s Office is integral to reducing the violence in Bernalillo County. It is imperative to remove armed felons from our community.”
Today’s guilty verdict puts a violent offender back behind bars and off the streets. Anytime we can prevent a violent felon from possessing a firearm, our families and communities are safer,” stated ATF Special Agent in Charge, Thomas G. Atteberry. “I want to commend the leadership of U.S. Attorney Kenneth J. Gonzales and his prosecution team in pursuing federal firearms charges against Sangiovanni.” Mr. Atteberry also recognized the efforts of the dedicated ATF agents and the Albuquerque Police Department officers who perfected this criminal case.
The case was investigated by the Albuquerque office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives with assistance from the 2nd Judicial District Attorney’s Office and the Albuquerque Police Department, and is being prosecuted by Assistant U.S. Attorneys Norman Cairns and Adam S. Rowley.
Federal Charges Filed Against 13 Men as A Result of ATF Undercover Investigation in Kansas City, Kan.Read the Press Release
KANSAS CITY, KAN. – Thirteen men have been charged with federal firearms violations, drug trafficking or other crimes as a result of an ATF undercover investigation in Kansas City, Kan., U.S. Attorney Barry Grissom and ATF Special Agent In Charge Marino Vidoli announced today.
In addition, four other defendants were charged in state district court in Wyandotte County as a result of the investigation.
Investigators seized 46 firearms as well as cocaine, crack, methamphetamine, marijuana, prescription drugs and more than $17,500 in cash.
Seven defendants named in grand jury indictments that have been unsealed so far are:
Filiberto Avalos, 27, ten counts of unlawful possession of a firearm by an alien unlawfully in the United States, ten counts of unlawful possession of a firearm after a felony conviction, one count of distributing cocaine and five counts of distributing methamphetamine.
Marty D. Baskin, 30, one count of unlawful possession of ammunition after a felony conviction.
Rene A. Espinoza, 27, one count of unlawful possession of a firearm by an alien unlawfully in the United States.
Antonio Campos Morales, 30, one count of unlawful possession of a firearm by an alien unlawfully in the United States.
Michael Wuellner, Jr., 27, one count of conspiracy to possess with intent to distribute methamphetamine, one count of distributing cocaine, four counts of unlawfully possessing a firearm after a felony conviction and three counts of distributing methamphetamine, Jerrade D. Wilhelm, 19, one count of conspiracy to possess with intent to distribute methamphetamine, three counts of distributing cocaine, eight counts of unlawfully possessing a firearm after a felony conviction and two counts of distributing methamphetamine, Randall J. Chapman, 43, one count of conspiracy to possess with intent to distribute crack cocaine and 13 counts of distributing crack cocaine.Names of six other defendants have not been released.
Upon conviction, the crimes carry the following penalties:
Possession of a firearm by an alien unlawfully in the United States: A maximum penalty of 10 years in federal prison and a fine up to $250,000.
Unlawful possession of a firearm or ammunition after a felony conviction: A maximum penalty of 10 years in federal prison and a fine up to $250,000.
Distributing cocaine: A maximum penalty of 20 years and a fine up to $1 million.
Distributing methamphetamine: Not less than five years and not more than 40 years and a fine up to $5 million.
Unlawful possession of a firearm not registered in the National Firearms Registration and Transfer Record: A maximum penalty of 10 years and a fine up to $250,000.
Conspiracy to possess with intent to distribute methamphetamine: Not less than 10 years and not more than life and a fine up to $10 million.
Conspiracy to possess with intent to distribute crack cocaine: A maximum penalty of 20 years and a fine up to $5 million.
The ATF, the DEA, the Kansas City, Kan., Police Department and the Wyandotte County District Attorney’s Office investigated. Assisting with arrests were Homeland Security Investigations and the U.S. Marshals Service. Assistant U.S. Attorney Terra Morehead and Assistant U.S. Attorney Trent Krug are prosecuting.In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Fayetteville Man Sentenced for Drug DistributionRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announced that in federal court today Chief United States District Judge James C. Dever III sentenced MAJOR RAY BROWN, 30, to 132 months imprisonment, followed by 3 years supervised release.
A Federal Grand Jury returned a six-count Criminal Indictment on April 24, 2012. On December 10, 2012, BROWN pled guilty to Distribution of a Quantity of Cocaine Base (Crack), in violation of Title 21, United States Code, Section 841(a), and to Possession of a Firearm in Furtherance of a Drug Trafficking Crime, in violation of Title 18, United States Code, Section 924(c)(1)(A)(iii).
According to the investigation, BROWN trafficked crack/cocaine and firearms in Fayetteville from at least August 2010 to December 2011. On several occasions within this period of time, BROWN sold crack/cocaine and firearms to confidential informants working under the direction of law enforcement.
The first controlled purchase of a firearm and crack/cocaine from BROWN was conducted on August 9, 2010, less than one week after BROWN attended a Project Safe Neighborhoods (PSN) “Call-In” in Fayetteville. At the Call-In, BROWN and other felony probationers were educated on federal firearms laws and warned of the consequences of their actions should they continue to engage in crimes involving drugs, firearms, or violence. Offenders in attendance were also encouraged to become productive members of their communities, and were provided with information regarding job training and educational opportunities, housing, and public assistance.
This case was part of the Project Safe Neighborhoods 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, the Fayetteville Police Department, and the Cumberland County Sheriff’s Office. Assistant United States Attorney Toby Lathan represented the government.
Family Medicine Clinic in Harker Heights Settles False Claims Matter for $430,000Read the Press Release
United States Attorney Robert Pitman announced that in Waco, Dr. Bola Elemuren, a family practitioner d/b/a the Family Medicine Clinic (FMC) in Harker Heights, TX, along with her husband and office manager, John Ogunmuyiwa, have agreed to pay $430,000 to settle allegations of federal False Claims Act/Health Care Fraud violations involving the submission of false claims for payment to the TRICARE, Medicare and Medicaid programs.
The settlement agreement resolves allegations that, from 2003 to 2008, these defendants knowingly overcharged TRICARE for automated laboratory tests that diagnose the cause of vaginitis/bacterial vaginosis. The automated laboratory test at issue is a single procedure that must be billed under an inclusive billing code at a pre-determined rate. The agreement settles the claim that defendants “unbundled” and inflated their charges by separately billing the test under multiple CPT codes, at a higher total cost to the TRICARE program. The United States asserted that the unbundled claims defendants submitted made it appear, falsely, as if they had performed more than one test and, as a result, were entitled to more than one payment from the government.
The settlement agreement also resolves allegations that, from 2008 to 2012, the defendants knowingly billed TRICARE, Medicare, and Medicaid for diagnostic x-rays performed by unqualified and improperly trained personnel.
Following the United States’ investigation, the defendants agreed to settle the case for $430,000 without litigation. The settlement agreement is not an admission of liability by Dr. Elemuren, Ogunmuyiwa or FMC.
This matter was investigated by agents with the Department of Defense Criminal Investigative Service. Assistant United States Attorney John LoCurto handled the matter for the Government.
TRICARE is a federally funded statutory medical benefits program for military personnel, their spouses, and their dependents. Medicare is a federally funded program that covers the cost of medical care for individuals who are eligible based on their age, disability, or affliction with end-stage renal disease. Medicaid covers the cost of medical care for eligible low income individuals. The federal and state governments jointly fund the Medicaid program.Erie Man Pleads Guilty to Child Exploitation and Firearm OffensesRead the Press Release
ERIE, Pa. - A former resident of Erie, Pennsylvania, pleaded guilty in federal court to charges of violating federal firearms laws and laws relating to the sexual exploitation of children, United States Attorney David J. Hickton announced today.
Douglas E. Melter, 32, pleaded guilty to three counts before Senior United States District Judge Maurice B. Cohill, Jr.
In connection with the guilty plea, the court was advised that Melter attempted to induce a woman to procure a minor for Melter to sexually abuse and photograph naked. Melter also possessed computer images depicting minors engaging in sexually explicit conduct and possessed a firearm after having been convicted of multiple felonies.
Sentencing will be scheduled at a later date. The law provides for a total sentence of life in prison, a fine of$750,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the criminal history, if any, of the defendant.
Assistant United States Attorney Christian A. Trabold is prosecuting this case on behalf of the government.
The Federal Bureau of Investigation, the Pennsylvania State Police and the Erie Police Department conducted the investigation that led to the prosecution of Melter.
Launched in February 2006, Project Safe Childhood is a nationwide initiative designed to protect children from online exploitation and abuse. Led by the U.S. Attorneys' Offices, 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 identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Eagle Pass Contractor Enters Guilty Plea in Connection with Maverick County Bribery, Kickback and Bid-rigging SchemeRead the Press Release
In Del Rio, Texas, Eduardo De La Garza, owner of Rio Bravo Construction in Eagle Pass, faces up to ten years in federal prison after pleading guilty this morning to paying a bribe to an agent of an organization receiving federal funds in connection with an alleged bribery, kickback and bid-rigging scheme in Maverick County announced United States Attorney Robert Pitman and FBI Special Agent in Charge Armando Fernandez.
Appearing before United States Magistrate Judge Victor Garcia, De La Garza admitted that in May 2011, he submitted a $19,800 bid to Maverick County to construct a concrete pad at the intersection of Winsor Avenue and Bianca Road in Precinct 4. DeLaGarza further admitted that he has never constructed the pad even though he received two checks from Maverick County--a $9,900 check to commence work and then $9,900 check for the completion of the concrete pad. Furthermore, DeLaGarza admitted that he made a cash payment to an employee working in the Maverick County Auditor’s Office for each check he received. According to court records, both checks were issued to De La Garza without undergoing the appropriate internal review process by Maverick County.
DeLaGarza remains on bond pending sentencing which has yet to be scheduled.
This ongoing investigation is being conducted by the Federal Bureau of Investigation and the Texas Department of Public Safety. Individuals who have first-hand information about corruption, fraud, or bribery related to Maverick County are urged to contact the FBI at (210) 225-6741. Assistant United States Attorney Michael Galdo is prosecuting this case on behalf of the Government.
In 2010 and 2011, Maverick County received hundreds of thousands of federal dollars as part of Operation Stonegarden, a federal grant program that provides funding to state, local, and tribal law enforcement agencies to enhance their capabilities to jointly secure U.S. borders and territories.
Dual U.S.-Costa Rican Citizen Pleads Guilty in Connection with <br /> Costa Rica-based Business Opportunity Fraud VenturesRead the Press Release
Sean Rosales pleaded guilty in Miami federal court to one count of an indictment pending against him, charging conspiracy to commit mail and wire fraud, the Justice Department and the U.S. Postal Inspection Service announced today.
Rosales, a dual United States and Costa Rican citizen charged in connection with the operation of a series of fraudulent business opportunities, was arrested in Chicago late last year following his indictment by a federal grand jury in Miami on Nov. 29, 2011. Rosales was arrested based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The indictment is part of the government’s continued nationwide crackdown on business opportunity fraud.
Eleven other individuals have been charged in connection with business opportunity fraud ventures based in Costa Rica. Rosales is the eighth of those individuals to be convicted in the United States.
“The Department of Justice is committed to cracking down on financial fraud, including business opportunity fraud schemes,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “That is why we will continue to prosecute those who would deprive innocent, hardworking Americans of their hard-earned money by offering phony business opportunities.”
Beginning in May 2005, Rosales and his coconspirators fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Powerbrands Distributing Company. The business opportunities cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere.
Rosales, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Rosales operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.
The companies made numerous false statements to potential purchasers of the business opportunities, including that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
The companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to finalize deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser's merchandise display racks.
Rosales, using aliases, was a fronter for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a fronter, locator and reference for Premier Cards, a locator for Coffee Man, and a locator for Powerbrands.
Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wisconsin and Palm Beach Gardens, Fla.
“Fraudulent business opportunity sellers must realize that financial fraud victimizing Americans will be prosecuted vigorously, even if the schemers conduct their fraudulent operations from abroad,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas.”
“ The success of this investigation shows that the U.S. Postal Inspection Service is committed to working with the Department of Justice and our law enforcement partners, both foreign and domestically, to protect the American consumer from the predatory nature of business opportunity schemes ,” said Tony Gomez, Acting U.S. Postal Inspector in Charge in Miami.
Principal Deputy Assistant Attorney General Delery commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by Assistant Director Jeffrey Steger and trial attorney Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.
Dual U.S. Costa Rican Citizen Pleads Guilty in Connection with Costa Rica-Based Business Opportunity Fraud VenturesRead the Press Release
Operation Had Connections to Florida, New Mexico, Colorado, Nevada, Wisconsin and Pennsylvania
Sean Rosales pleaded guilty in Miami federal court to one count of an indictment pending against him, charging conspiracy to commit mail and wire fraud, the Justice Department and the U.S. Postal Inspection Service announced today.
Rosales, a dual United States and Costa Rican citizen charged in connection with the operation of a series of fraudulent business opportunities, was arrested in Chicago late last year following his indictment by a federal grand jury in Miami on Nov. 29, 2011. Rosales was arrested based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The indictment is part of the government’s continued nationwide crackdown on business opportunity fraud.
Eleven other individuals have been charged in connection with business opportunity fraud ventures based in Costa Rica. Rosales is the eighth of those individuals to be convicted in the United States.
“Fraudulent business opportunity sellers must realize that financial fraud victimizing Americans will be prosecuted vigorously, even if the schemers conduct their fraudulent operations from abroad,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas.”
“The Department of Justice is committed to cracking down on financial fraud, including business opportunity fraud schemes,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “That is why we will continue to prosecute those who would deprive innocent, hardworking Americans of their hard-earned money by offering phony business opportunities.”
Beginning in May 2005, Rosales and his coconspirators fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Powerbrands Distributing Company. The business opportunities cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere.
Rosales, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Rosales operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.
The companies made numerous false statements to potential purchasers of the business opportunities, including that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
The companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to finalize deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser's merchandise display racks.
Rosales, using aliases, was a fronter for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a fronter, locator and reference for Premier Cards, a locator for Coffee Man, and a locator for Powerbrands.
Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wisconsin and Palm Beach Gardens, Fla.
“The success of this investigation shows that the U.S. Postal Inspection Service is committed to working with the Department of Justice and our law enforcement partners, both foreign and domestically, to protect the American consumer from the predatory nature of business opportunity schemes,” said Tony Gomez, Acting U.S. Postal Inspector in Charge in Miami.
Principal Deputy Assistant Attorney General Delery commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by Assistant Director Jeffrey Steger and trial attorney Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.
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.
Disbarred New Jersey Attorney Sentenced to Three Years in Prison for Failing to Report Tax Preparation IncomeRead the Press Release
Evasion Resulted in Tax Loss of More Than $1 Million
CAMDEN, N.J. – A tax preparer and disbarred New Jersey lawyer was sentenced today to 36 months in prison for submitting false tax returns or failing to file returns for five years, resulting in a tax loss to the government of more than $1.1 million, U.S. Attorney Paul J. Fishman announced.
Joseph Gallagher, 69, of Rutherford, N.J., previously pleaded guilty before U.S. District Judge Noel L. Hillman to an Information charging him with one count of tax evasion. Judge Hillman imposed the sentence today in Camden federal court.According to documents filed in this case and statements made in court: For at least five years, Gallagher used a consulting company – established at Gallagher’s direction and purportedly operated by another person – to evade income taxes by having his income from working as a tax preparer deposited into the company’s bank account. Gallagher filed income tax returns with the IRS, failing to report $590,513, $600,157 and $682,373 for the calendar years 2004, 2005 and 2006, respectively. Gallagher failed to file any income tax return at all for calendar years 2007 and 2008, failing to report $715,694 and $770,445 for those years. In total, Gallagher admitted failing to report $3,359,182 in taxable income to the IRS, resulting in a tax loss to the government of $1,198,196.
In addition to the prison term, Judge Hillman sentenced Gallagher to two years of supervised release and ordered him to pay a $60,000 fine. He is also required to pay his more than $1 million in outstanding taxes to the IRS, plus interest and penalties.
U.S. Attorney Fishman credited special agents of IRS – Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen, with the investigation that resulted in today’s sentence.
The government is represented by Jacob T. Elberg, Deputy Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.
13-128Defense counsel: Brian Neary Esq., Hackensack, N.J.
Cordova Man Sentenced to 12 Years Following $700,000 Income Tax Fraud, Identity Theft SchemeRead the Press Release
Memphis, TN – Jeremy Lasane, 25, of Cordova, TN, was sentenced today to 12 years in prison for stealing government funds through the filing of false income tax returns and identity theft, announced Edward L. Stanton III, United States Attorney for the Western District of Tennessee.
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According to the indictment and information revealed at sentencing, between September 4, 2009 and October 28, 2011, Lasane and other individuals obtained the names, dates of birth, and Social Security numbers of individuals without their knowledge or consent, and thereafter filed taxes claiming refunds using this information. He and others then opened bank accounts and directed the U.S. Department of Treasury tax refunds associated with the false tax returns to be electronically deposited into these accounts.
Lasane paid individuals to obtain the victims’ personal identifiers and used this information to electronically file more than 240 false tax returns. This criminal behavior enabled him to fraudulently obtain over $700,000 during the scheme. The investigation revealed that during his scheme, Lasane spent large sums of money at Tunica casinos and bought several luxury vehicles, including a Maserati and Mercedes-Benz. These vehicles were forfeited to the United States Government.
Chief District Judge Jon P. McCalla ordered Lasane to pay restitution in the amount of $791,616 and further ordered him to serve three years of supervised release. There is no parole in the federal system.
The case was investigated by the United States Secret Service and IRS-Criminal Investigative Division. The case was prosecuted by Assistant United States Attorney Stephen Hall on behalf of the government.Columbia Man Sentenced for Illegal FirearmRead the Press Release
JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Columbia, Mo., man was sentenced in federal court today for illegally possessing a firearm.
James Douglas Cheek, 31, of Columbia, was sentenced by U.S. District Judge Beth Phillips to five years and three months in federal prison without parole.
On Oct. 4, 2012, Cheek pleaded guilty to being a felon in possession of a firearm. Cheek admitted that he was in possession of an FEG .45-caliber pistol on March 13, 2012. Law enforcement officers found Cheek, apparently asleep, sitting in the driver’s seat of a reported suspicious vehicle that was parked partially in a convenience store’s parking lot and partially in a yard. Cheek was arrested on outstanding warrants and officers found the loaded pistol on the driver’s side floor board of the car.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Cheek has prior felony convictions for assault, unlawful use of a weapon and leaving the scene of a motor vehicle accident.
This case is being prosecuted by Supervisory Assistant U.S. Attorney Lawrence E. Miller. It was investigated by the Boone County, Mo., Sheriff’s Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.Citizen of Jamaica Sentenced to Federal Prison for Passport Fraud and Identity Theft OffensesRead the Press Release
March 20, 2013David B. Fein, United States Attorney for the District of Connecticut, announced that TASHIANY MARTIN, 38, was sentenced today by Senior United States District Judge Warren W. Eginton in Bridgeport to two years and one day of imprisonment. On December 20, 2012, a jury found MARTIN guilty of one count of making false statements in a passport application and one count of aggravated identity theft.
According to the evidence introduced during the trial, in 2002, MARTIN, a citizen of Jamaica, obtained a New York driver’s license and a New York birth certificate by using the name of a former friend. In 2008, MARTIN used those documents to apply for a United States passport at the Connecticut Passport Agency in Norwalk.
The evidence at trial further revealed that MARTIN also used her friend’s identity in 2002 when she successfully applied for and obtained a U.S. passport and, in 2003, when she successfully applied for and obtained a job as a licensed practical nurse at a Rochester, N.Y. nursing home. MARTIN’s friend was a licensed practical nurse, but MARTIN was not.
MARTIN has been detained since her arrest on January 17, 2012. She faces deportation proceedings after she serves her prison term.
This matter was investigated by the United States Department of State, Bureau of Diplomatic Security. The case was prosecuted by Assistant United States Attorneys Henry Kopel and Ray Miller.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]Champlin Felon Sentenced for Possessing FirearmsRead the Press Release
MINNEAPOLIS— Earlier today in federal court, a 21-year-old Champlin felon was sentenced for possessing a nine-millimeter pistol and a .44-caliber revolver. United States District Court Chief Judge Michael J. Davis sentenced Deandre Franklin to 60 months in federal prison on one count of being a felon in possession of a firearm. Franklin was indicted on July 23, 2012, and pleaded guilty on November 13, 2012.
In his plea agreement, Franklin admitted that on January 2, 2012, he traveled with two women to Bill’s Gun Shop in Robbinsdale. The women purchased .44-caliber ammunition, nine-millimeter ammunition, and ammunition magazines. Minneapolis police later stopped their car in north Minneapolis and found two firearms in the vehicle, a Glock, nine-millimeter pistol and a Charter Arms, .44-caliber revolver. One of the guns was found on Franklin and the other was discovered under his seat.
Because he is a felon, Franklin is prohibited under federal law from possessing firearms at any time. He was previously convicted of second-degree drug possession in Hennepin County in 2011.This case was the result of an investigation conducted by the Safe Streets Task Force. Safe Streets is a FBI-sponsored task force that focuses on combating violent street crime as well as gang and drug trafficking offenses. The case was prosecuted by Assistant U.S. Attorney LeeAnn K. Bell.
Bradford Man Sentenced to 150 Months in Jail for ArsonRead the Press Release
ERIE, Pa. - A former resident of Bradford, Pennsylvania, has been sentenced in federal court to 150 months in jail and ordered to make restitution in the amount of$2,887.42 on his conviction of violating federal arson laws, United States Attorney David J. Hickton announced today.
United States District Judge Sean J. McLaughlin imposed the sentence on Damon Leroy Kayes, 43.
According to information presented to the court, Kayes damaged Players Downtown bar at 12 Mechanic Street, Bradford, Pennsylvania by throwing a lit Molotov cocktail at the front door of the establishment, which at the time was crowded with patrons.
Prior to imposing sentence, Judge McLaughlin stated that Kayes had a serious criminal history involving multiple violent offenses. Judge McLaughlin also noted the serious risk of harm to the bar's patrons that Kayes entirely disregarded.
Assistant United States Attorney Christian A. Trabold prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Bureau of Alcohol, Tobacco, Firearms and Explosives and the City of Bradford Police Department for the investigation leading to the successful prosecution of Kayes.
Bergen County, N.J., Man Sentenced to 54 Months in Prison for Conspiring to Defraud Investors of $1 Million Through Bogus InvestmentsRead the Press Release
NEWARK, N.J. – The former New Jersey-based operator of Suarez Investment and Development LLC was sentenced today to 54 months in prison for his role in a conspiracy that bilked victims out of $1 million through fraudulent investment schemes, U.S. Attorney Paul J. Fishman announced.
Joseph Suarez, 48, of Woodcliff Lake, N.J., previously pleaded guilty before U.S. District Judge William J. Martini to an Information charging him with one count of conspiracy to commit wire fraud. Judge Martini imposed the sentence today in Newark federal court.According to documents filed in this case and statements made in court:
Suarez conspired with others, including Katherine Ferro, 38, of Port St. Lucie, Fla., a disbarred attorney, to commit wire fraud by inducing their victims to invest a total of $1 million dollars into various fraudulent schemes. Suarez admitted he convinced an individual to invest more than $300,000 in connection with certain business ventures, including a credit card factoring scheme. Credit card factoring is a form of accounts receivable where businesses can receive cash in advance of future credit card receipts.
Suarez also admitted that he and Ferro convinced an individual to invest approximately $222,000 in a plan to purchase D2 diesel fuel from foreign sources and resell the fuel at a profit. Suarez admitted that, contrary to the representations he and Ferro made regarding how the funds would be used, nearly all of the $222,000 wired into Ferro’s attorney trust account was depleted by transferring large amounts into other accounts for their personal use.
Suarez and Ferro also used false representations to convince additional victims to invest approximately $500,000 in the D2 diesel fuel purchase and sale plan. Ferro executed a written escrow agreement with several of these additional victims, which stated, among other things, that the investment would remain in Ferro’s attorney trust account for the duration of the investment period. Days after the victims wired the $500,000 investment into accounts controlled by Suarez and Ferro, Ferro transferred substantially all of the funds into other accounts.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge David Velazquez; and IRS – Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s sentence. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the leadership of Director Andrew Calamari; and the Bergen County Prosecutor’s Office, under the direction of John L. Molinelli, for their assistance.In addition to the prison term, Judge Martini sentenced Suarez to serve two years of supervised release. Suarez will also be required to pay restitution in an amount to be determined.
Ferro pleaded guilty in March 2012 to wire fraud and awaits sentencing.The government is represented by Assistant U.S. Attorney Mala Ahuja Harker of the U.S. Attorney’s Office Economic Crimes Unit 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.
13-129Defense counsel: Curtis LaForge Esq., Saddle Brook, N.J.
Bergen County, N.J., Man Admits Downloading Images and Videos of Child Sexual AbuseRead the Press Release
NEWARK, N.J. – A Bergen County, N.J., man today admitted knowingly receiving over the Internet images and videos of child sexual abuse, U.S. Attorney Paul J. Fishman announced.
Joseph Anthony Amari, 81, of Fair Lawn, N.J., pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to Count One of an Indictment charging him with receipt of child pornography.
Amari, who was initially federally charged by complaint in 2009, is currently serving a sentence in state prison following a separate state conviction for endangering the welfare of two minors. The court stayed the federal prosecution pending the resolution of the state charges.
Amari admitted during his guilty plea that he used peer-to-peer file-sharing software to download images and videos in February 2007 of children being sexually abused.
Amari faces a mandatory minimum penalty of five years in prison and a maximum potential penalty of 20 years, as well as a $250,000 fine. Sentencing is currently scheduled for May 13, 2013.
U.S. Attorney Fishman credited the FBI Cyber Crimes Task Force in New Jersey, under the direction of Acting Special Agent in Charge David Velazquez in Newark, with the investigation leading to today’s plea. He also thanked the Bergen County Prosecutor’s Office, under the direction of Prosecutor John L. Molinelli, and the Fair Lawn Police Department, under the direction of Chief of Police Erik Rose.
The government is represented by Assistant U.S. Attorneys Jane H. Yoon and Shirley U. Emehelu of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense counsel: Chester Keller, Esq., Newark, N.J.
Amari Indictment
Bennington Man SentencedRead the Press Release
Used USDA Inspection Legend Fraudulently
Albany, New York — CRAIG ACTON, age 44, of Bennington Vermont, was sentenced today by Chief United States District Judge Gary L. Sharpe to 2 years of probation and 50 hours of community service for his fraudulent use of a United States Department of Agriculture inspection legend on meat products that he sold commercially, announced United States Attorney Richard S. Hartunian. ACTON previously entered a guilty plea on August 23, 2012.
Between January and June of 2011, in Greene County and elsewhere in New York, ACTON purchased meat products commercially, repackaged that meat using the “USDA” inspection legend stamp of another company, and then resold the meat commercially without authorization. ACTON intended to mislead the consumers who purchased his product into believing that his product was properly inspected.
United States Attorney Hartunian praised the outstanding efforts of the Department of Agriculture’s Office of Inspector General and Food Safety Inspection Service in this investigation. He stated, “The public relies on the integrity of our food supply, and my office will aggressively prosecute anyone who fraudulently subverts the USDA’s important food safety regulations.”
This case was investigated by the United States Department of Agriculture’s Office of Inspector General and Food Safety Inspection Service .
Anti-Government Movement Member Sentenced to over Eight Years in Prison for Conspiracy and Money Laundering CrimesRead the Press Release
LAS VEGAS, Nev. – A member of an anti-government movement known as the “Sovereign Movement,” was sentenced today to 98 months in prison followed by three years of supervised release, and ordered to forfeit $1.29 million in assets and pay $95,782 in restitution for his conviction on conspiracy and money laundering crimes, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Shawn Rice, 50, of Seligman, Ariz., was sentenced by U.S. District Judge James C. Mahan. Rice was convicted by a jury in July 2012 of one count of conspiracy to commit money laundering, 13 counts of money laundering, and four counts of failure to appear.
“Persons who commit financial crimes victimize organizations, government and the public,” said U.S. Attorney Bogden. “Our office and our federal partners will work jointly with local and state law enforcement to ensure that these persons are caught and prosecuted.”
“The FBI deserves a lot of credit for bringing this case to fruition,” said Paul Camacho, Special Agent in Charge of IRS Criminal Investigation for Nevada. “There was an element of greed to Mr. Rice’s crimes. As with most cases we see, it is greed that gets people in trouble.”
According to the evidence introduced at trial, from about March 2008 to March 2009, Rice and co-defendant Samuel Davis, 57, of Council, Idaho, laundered approximately $1.3 million of monies that they thought were from the theft and forgery of stolen official bank checks. Rice and Davis laundered the monies through a nominee trust account controlled by Davis and through an account of a purported religious organization controlled by Rice. Davis and Rice took approximately $74,000 and $22,000, respectively, in fees for their money laundering services.
Rice and Davis were originally charged in March 2009. Rice failed to make required court appearances in the case on March 8 and March 9, 2010, and was a fugitive for almost two years before he was re-arrested in December 2011.
Davis pleaded guilty and was sentenced in October 2011 to 57 months in prison. Davis failed to self-report to federal prison, and was arrested in August 2012 in Stanley, South Dakota. Davis was charged and convicted of violating his conditions of release and failing to self-surrender, and sentenced to an additional eight months in prison, consecutive to the 57 months imposed in October 2011.
Davis and Rice are heavily involved in the “Sovereign Movement,” an extreme anti-government organization whose members attempt to disrupt and overthrow government and other forms of authority by using “paper terrorism” tactics, intimidation and harassment, and violence. Members believe they do not have to pay taxes and believe the federal government deceived Americans into obtaining social security cards, driver’s licenses, car registrations, and wedding licenses, etc., and that if these contracts are revoked; persons are “sovereign citizens.” Members of the sovereign movement also believe that U.S. currency is invalid. They widely use fictitious financial instruments such as fraudulent money orders, personal checks, and sight drafts, and participate in “redemption” schemes where the fictitious financial instruments are used to pay creditors. Davis is a national leader of the movement, traveling nationwide to teach different theories and ideologies of the movement. Rice allegedly claims that he is a lawyer and Rabbi, and uses his law school education and businesses to promote his sovereign ideas and to gain credibility in the community.
The case was investigated by the FBI-led Nevada Joint Terrorism Task Force, which also includes ATF, Henderson Police Department, IRS Criminal Investigation, Las Vegas Metropolitan Police Department, Nevada Department of Public Safety, North Las Vegas Police Department, and other federal, state and local law enforcement agencies in Nevada, Council, Idaho, and Flagstaff and Seligman, Arizona.
The case is being prosecuted by Assistant U.S. Attorneys J. Gregory Damm and Nicholas D. Dickinson.
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.
Alleged Al-Qaeda Operative Charged in New York for Terrorism Offenses Against Americans OverseasRead the Press Release
BROOKLYN, N.Y. – A six-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Ibrahim Suleiman Adnan Adam Harun, also known as “Spin Ghul,” with conspiracy to murder American military personnel in Afghanistan, conspiracy to bomb American diplomatic facilities in Nigeria, conspiracy to provide material support to al-Qaeda, providing material support to al-Qaeda, and related firearms and explosives counts.1 The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York on February 21, 2012, and relates to Harun’s alleged activities in Afghanistan, Pakistan, and Africa beginning in 2001.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; John Carlin, Acting Assistant Attorney General for National Security; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Raymond W. Kelly, Commissioner, New York City Police Department.
According to court documents, Harun, who was born in Saudi Arabia but claims citizenship in Niger, was extradited from Italy to the United States on October 4, 2012, and arraigned in a sealed proceeding in federal court in Brooklyn, New York on October 5, 2012. The case is scheduled for a public status conference before United States District Judge Edward R. Korman at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, N.Y, on March 22, 2013 at 2:30 p.m.
Harun is charged with crimes related to his alleged terrorist activities on behalf of al-Qaeda beginning in 2001. According to the indictment and other court documents, beginning in 2001, the defendant traveled from Saudi Arabia to Afghanistan with the intent to fight violent jihad. He arrived in Afghanistan shortly before the September 11, 2001 attacks. He then joined al-Qaeda, received military-type training at al-Qaeda training camps, and ultimately fought against United States and Coalition forces in Afghanistan with an al-Qaeda fighting group based in Pakistan. According to the indictment, Harun allegedly attempted to kill United States military personnel in Afghanistan between 2002 and 2003. In 2003, in Pakistan, Harun received further al-Qaeda training and traveled to Africa with the intent to conduct attacks on United States diplomatic facilities in Nigeria. While in Nigeria, Harun allegedly conspired with others to bomb such facilities.
According to the indictment and other documents, after the arrest of a co-conspirator, the defendant traveled to Libya, en route to Europe, but was apprehended in early 2005. The defendant then remained in Libyan custody until June 2011, when he was released by the Libyan government. He was then arrested by Italian authorities after assaulting officers on board a refugee ship bound for Italy. As noted, the defendant was indicted in the United States on February 21, 2012, and charged with (1) conspiring to murder United States nationals; (2) conspiring to bomb United States government facilities; (3) conspiring to provide material support to al-Qaeda; (4) providing material support to al-Qaeda; (5) using firearms in furtherance of crimes of violence; and (6) using explosives in furtherance of one or more felonies.
On July 5, 2012, the Naples Court of Appeals found the defendant extraditable to face the charges in the indictment pending against him in U.S. federal court, pursuant to the bilateral extradition treaty between the United States and Italy. On September 14, 2012, the Italian Minister of Justice ordered the defendant extradited. Federal agents took the defendant into custody in Italy on October 4, 2012, and he arrived in the United States on that same day.
If convicted of all the charges in the indictment, Harun faces a maximum possible sentence of life in prison.
“As alleged in the indictment, the defendant was a prototype al-Qaeda operative, trained by al-Qaeda in terrorist tradecraft, deployed to fight American servicemen, and dispatched to commit terrorist attacks throughout the world,” said United States Attorney Lynch. “Whether they try to attack our servicemen on the battlefield, or scheme to kill our diplomats and citizens in embassies abroad, terrorists will find no refuge. The United States will use every tool at our disposal to protect our nation’s security and stop terrorist attacks before they happen.” Ms. Lynch expressed her gratitude to the law enforcement personnel who took part in the investigation, including Department of Defense Army investigators. She also thanked the Italian Ministry of Justice, the Prosecutor’s Office in Palermo, Italy, and other Italian police authorities in their support of the investigation and extradition of the defendant.
“The indictment unsealed today seeks to hold accountable an alleged al-Qaeda operative who targeted U.S. personnel and diplomatic facilities across two continents. His arrest and extradition to the United States are important milestones in our ongoing counterterrorism efforts. I thank the many agents, analysts and prosecutors who brought about this significant case,” said Acting Assistant Attorney General for National Security Carlin.
FBI Assistant Director-in-Charge Venizelos said, “Vowing allegiance to al-Qaeda and training to commit violent jihad are not the worst of Harun’s alleged crimes. The allegations include actually attacking U.S troops and plotting to use explosives to kill U.S. diplomats. As alleged, Harun not only intended to, but did commit acts of terrorism against Americans. Now he is subject to the American justice system. We remain committed to protecting the safety of Americans and our national security.”
Police Commissioner Kelly said, “As more al-Qaeda operatives continue to be flushed from hiding, the NYPD remains vigilant to the fact that terrorists have repeatedly since 9/11 plotted to kill more Americans. We are determined not to let that happen. I want to commend our federal partners and the U.S. Attorney in the prosecution of this important case.”
The government’s case is being prosecuted by Assistant United States Attorneys David Bitkower, Shreve Ariail and Amanda Hector of the United States Attorney’s Office for the Eastern District of New York. Assistance was provided by Alamdar Hamdani, Joseph Kaster, and Annamartine Salick of the Counterterrorism Section of the Justice Department’s National Security Division, and by William Nardini of the Justice Department’s Office of International Affairs.
The Defendant:
IBRAHIM SULEIMAN ADNAN ADAM HARUN, also known as “Spin Ghul”
Age: 43_____________________________
1 The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Albuquerque Man Arraigned on Federal Child Pornography ChargesRead the Press Release
ALBUQUERQUE – William Winzenburg, Jr., 27, of Albuquerque, N.M., was arraigned this morning on an indictment charging him with child pornography offenses.
During this morning’s proceedings, Winzenburg entered a not guilty plea to the fourcount indictment which charges him with two counts of receiving visual depictions of minors engaged in sexually explicit conduct and two counts of possession of a visual depiction of minors engaged in sexually explicit conduct. According to the indictment, Winzenburg received child pornography in Nov. 2012, and possessed child pornography in Feb. 2013. The four offenses allegedly occurred in Bernalillo County.
Winzenburg was arrested on Feb. 7, 2013 on a criminal complaint filed by the FBI based on an investigation initiated by the Bernalillo County Sheriff’s Office (BCSO) in Nov. 2013, after receiving information from the National Center for Missing and Exploited Children that that a specific IP address was being used to receive child pornography. According to the criminal complaint, after the investigation revealed that the IP address was subscribed to Winzenburg, on Feb. 7, 2013, the FBI and BCSO executed a search warrant at Wenzenburg’s residence and seized computers and computer-related media which allegedly contained child pornography.
Winzenburg has been in federal custody since his arrest and remains detained pending trial, which has yet to be scheduled.
If convicted, Winzenburg faces a maximum penalty of not less than 15 years or more than 40 years in prison on each of the two receipt of child pornography charges. If convicted on the possession of child pornography charges, Winzenburg faces a maximum penalty of not less than 10 years or more than 20 years in prison. The sentencing exposure on the child pornography charges is enhanced as a result of Winzenburg’s prior sexual abuse conviction.
The case was investigated by the FBI, BCSO and the New Mexico Regional Computer Forensic Laboratory, and is being prosecuted by Assistant U.S. Attorney Charlyn E. Rees. It was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice (DOJ) to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and DOJ’s 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 http://www.justice.gov/psc/.
The Operation also was brought as a part of the New Mexico Internet Crimes Against Children (ICAC) Task Force’s mission, which is to locate, track, and capture Internet child sexual predators and Internet child pornographers in New Mexico. There are 64 federal, state and local law enforcement agencies associated with the ICAC Task Force, which is funded by a grant administered by the New Mexico Attorney General’s Office. Anyone with information relating to suspected child predators and suspected child abuse is encouraged to contact federal or local law enforcement.
Charges in indictments and criminal complaints are merely accusations. All criminal defendants are presumed innocent unless proven guilty beyond a reasonable doubt.
10 Linked to Network of Marijuana Grow Houses Across Three Southland Counties Arrested on Federal Drug Trafficking ChargesRead the Press Release
RIVERSIDE, California – Federal and state authorities this morning arrested 10 defendants charged in a federal criminal complaint that accuses them of participating in a wide-ranging drug conspiracy that operating marijuana grow houses across Los Angeles, Riverside and San Bernardino counties.
As part of the investigation led by the Drug Enforcement Administration, authorities this morning arrested 10 out of 11 people named in the complaint and executed search warrants at 26 locations – which includes 15 grow houses – stretching from Arcadia to Corona to Fontana. One defendant remains a fugitive who is being sought by authorities. During this morning’s operation, authorities seized more than $250,000 in cash, seven guns (including an assault rifle) and more than 8,000 marijuana plants.
A 124-page affidavit in support of the criminal complaint outlines an investigation into a narcotics trafficking ring allegedly led by Arcadia resident Raymond Lam. The drug trafficking organization purchased or leased single-family residences, which were converted to indoor farms with the sole purpose of growing marijuana. Each house contained industrial-size marijuana growing operations that contained, on average, 1,000 to 2,000 marijuana plants.
The marijuana grow houses exhibited identical arrangements that included specific types of hydroponic growing equipment and stolen electricity obtained through sophisticated bypasses of utility meters. After the marijuana was harvested, it was sold throughout California and across the United States. Previously during the two-year investigation, authorities shut down 15 grow houses and seized nearly 15,000 marijuana plants, nearly 1,000 pounds of harvested marijuana and four firearms.
The 11 defendants named in the criminal complaint filed in United States District Court in Riverside are charged with conspiracy to manufacture, to distribute, and to possess with intent to distribute marijuana. The 10 defendants arrested this morning are: Raymond A. Lam, who also used the name “Nam A. Lam,” 42, of Arcadia, accused of being the overall leader of the drug trafficking organization and overseeing the acquisition of residences that were converted into full-scale, industrial-type marijuana grows;
Simon Lam, 32, of Arcadia, a top lieutenant to Raymond Lam;
Ken Ho, also known as “Ken Lam,” 33, of Arcadia, a top lieutenant to Raymond Lam;
San S. Voong, also known as “Chen Sheng Wang,” 35, of Arcadia, another top lieutenant to Raymond Lam;
Phieu Tran, 35, of El Monte;
Augustine Bazan Camacho, 41, of Pomona, allegedly a veteran “plant tender” who was responsible for maintaining many of the grow houses;
Thanh Van Phu, 33, of El Monte;
Luc Kai Phoung, who is also known as “Wong Fong,” “Al Fong “ and “Na Na,” 50, of Rosemead, who allegedly built the electrical and utility meter by-pass systems used at the grow houses;
Steven Huytu Lam, 52, of Walnut; and
Li Ya Si, 42, of Temple City.
These 10 defendants are expected to make their initial court appearances this afternoon in federal court in Riverside.
The final defendant named in the criminal complaint – Andy Tran, who used several aliases, including “Long Kim Tank,” 39, of Monterey Park, and allegedly was a top lieutenant to Raymond Lam – is a fugitive currently being sought by authorities.
The criminal complaint outlines several seizures made during the investigation. For example, special agents with the DEA and officers with the Riverside County Sheriff’s Department executed a search warrant on Cedar Creek Road in Eastvale on February 10, 2012, when they discovered a residence that had been completely converted into a sophisticated marijuana grow house. Inside the residence, investigators found Camacho hiding under a hydroponic bin on the second floor of the residence. During the search, they seized more than 1,800 marijuana plants and more than 50 pounds of processed marijuana. There was a sophisticated electrical bypass system that was used to divert from the meter the electricity used to power the ballasts and lights to grow the marijuana plants.
In another search in Eastvale, this one on a residence on Bluebell Street in November 2012, authorities discovered that the entire residence had been converted into industrial-sized marijuana grow with 857 marijuana plants. Approximately 43 pounds of marijuana were found inside the residence.
Two months ago, during a search of a residence on Village Meadow in Riverside, authorities discovered another industrial-sized marijuana grow that had 576 marijuana plants.
During this morning’s takedown, search warrants were executed at locations in Eastvale, Corona, Fontana, Riverside, Rancho Cucamonga, Chino, Diamond Bar, El Monte, Arcadia, Los Angeles (90015), Monterey Park, Walnut and Temple City.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The narcotics conspiracy charge in the indictment carries a statutory maximum penalty of life – and a mandatory minimum sentence of 10 years – in federal prison.
The investigation into drug trafficking organization allegedly run by Raymond Lam was conducted by the Drug Enforcement Administration, the Riverside County Sheriff’s Department and the San Bernardino County Sheriff’s Department.
The following agencies provided substantial assistance during this morning’s takedown: the Riverside Police Department; the El Monte Police Department; the Fontana Police Department; the Chino Police Department; IRS - Criminal Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Los Angeles County Sheriff’s Department; the United States Marshals Service; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the Federal Bureau of Investigation; the Los Angeles Police Department; and the Arcadia Police Department.
Release No. 13-040
19 March 2013
Two Plead Guilty in Trenton, N.J., Narcotics RingRead the Press Release
TRENTON, N.J. – A Mercer County, N.J., man today admitted his role in a conspiracy to distribute oxycodone pain pills, U.S. Attorney Paul J. Fishman announced. An Atlantic City, N.J., man also admitted to engaging in related drug transactions by obtaining oxycodone pills and to being a felon in possession of a firearm.
Giuseppe A. Scordato, 47, of Hamilton, N.J, pleaded guilty to an Information charging him with one count of conspiracy to distribute and possess with intent to distribute oxycodone. Eugene Brown, 71, of Atlantic City, NJ, also pleaded guilty to an Information charging him with one count of distribution of oxycodone and one count of being a felon in possession of a firearm. Scordato and Brown entered their guilty pleas before U.S. District Judge Michael A. Shipp in Trenton federal court.
According to documents filed in this case and statements made in court: Between November 2011 and July 2012, Scordato obtained oxycodone-based prescription pain pills from Joseph A. “JoJo” Giorgianni, Mary Manfredo and Charles Hall III from a restaurant on Martin Luther King Boulevard in Trenton (“JoJo’s Steakhouse”) and a clubhouse located next door to JoJo’s Steakhouse (“Giorgianni’s Clubhouse”). He would sell those pills and remit the proceeds to Giorgianni and Manfredo at JoJo’s Steakhouse in exchange for a portion of the proceeds from those sales.
Eugene Brown admitted to engaging in related drug transactions. On May 12, 2012, Brown traveled from Atlantic City to Trenton to provide Endocet® pills, an oxycodone-based pain pill, to Charles Hall III in exchange for payment. Brown also admitted to previously giving Endocet® pills to Hall in Atlantic City and Camden, N.J. Brown, who previously had been convicted of a felony, admitted to possessing a .22 caliber semi-automatic pistol on July 20, 2012.
The drug conspiracy and distribution charges are punishable by a maximum potential penalty of 20 years in prison and a $1 million fine. The offense of being a felon in possession of a firearm is punishable by 10 years in prison and a $250,000 fine. Sentencing for Scordato is scheduled for June 25, 2013, and for Brown, June 26, 2013.
U.S. Attorney Fishman credited special agents of the FBI’s Trenton Resident Agency, Newark Field Office, under the direction of Acting Special Agent in Charge David Velazquez, for the investigation leading to today’s guilty pleas.
The government is represented by Assistant U.S. Attorneys Eric W. Moran and Matthew J. Skahill of the U.S. Attorney’s Office Special Prosecutions Division in Trenton and Camden, respectively.
13-127
Defense counsel: Scordato: Scott Krasny Esq., West Trenton, N.J.
Brown: Bruce Throckmorton Esq., TrentonScordato, Giuseppe Information
Brown, Eugene InformationTwo Co-Conspirators Sentenced for Mortgage Fraud SchemeRead the Press Release
DENVER – Michael Jacoby, age 44, of Castle Rock, Colorado, and Derek Zar, age 30, of Commerce City, Colorado, were sentenced last Friday by visiting U.S. District Court Judge Kathryn H. Vratil to serve 108 months in prison and 63 months in prison respectively, for a mortgage fraud scheme, the U.S. Attorney’s Office, the Federal Bureau of Investigation, and IRS-Criminal Investigation announced. Following his 108-month prison sentence, Jacoby was ordered to spend 5 years on supervised release and pay $2,979,712 in restitution. Following his 63-month sentence, Zar was ordered to spend 3 years on supervised release and pay $1,417,902 in restitution.
Michael Jacoby, Derek Zar and co-conspirator Susanne Zar were found guilty by a jury on August 30, 2012. The guilty verdicts were the result of a four-week trial. Susanne Zar is scheduled to be sentenced on July 2, 2013. All were indicted by a federal grand jury in Denver on September 27, 2010. A superseding indictment was filed on September 15, 2011.
According to the indictments and testimony at trial, between January 2005 and continuing through September 2006, in the State and District of Colorado, the defendants, knowingly devised and intended to devise a scheme to defraud various financial institutions and other commercial lenders that funded residential mortgages, and to obtain moneys, funds, and other property owned by and under the custody and control of those financial institutions and commercial lenders by means of materially false and fraudulent pretenses and representations. In furtherance of the scheme, one or more of the defendants participated in real estate transactions involving 18 properties located in Colorado.
It was part of the scheme that Derek Zar and a co-defendant bought homes at purported discounted rates because they paid cash. Jacoby often lent them the cash for these initial purchases and was then was paid back with interest. Furthermore, Jacoby acted as the realtor for the sales. Derek Zar and a co-defendant usually bought the homes through limited liability companies they owned and operated and then resold these homes within a very short time period to themselves as individuals at inflated prices financed by mortgage loans. Additionally, Susanne Zar often refinanced the homes with mortgage loans based on an inflated value. Sometimes the inflated value was supported by false documentation showing a higher initial purchase price than the actual initial purchase price. The defendants also prepared and submitted and caused to be prepared and submitted applications for loans which contained various materially false and fraudulent representations.
It was further part of the scheme for the co-defendants to cause to be submitted false appraisals for some of the properties. Jacoby usually recommended an appraiser to the mortgage broker for the loan approval. He supplied the appraiser with inflated values of comparable homes or omitted information concerning the home sales so the appraiser would overvalue the current home. At closing, through a grant program, the defendants funneled money back to the home buyer who was one of the defendants. They concealed from the lenders and other parties associated with the transactions that the home buyer was receiving a kickback for buying the home.
“As the financial crisis of 2008 showed, mortgage fraud harms all Americans, not just banks and homeowners,” said U.S. Attorney John Walsh. “In this case, two people who scammed the system of millions ended up spending years in federal prison.”
“Mortgage fraud undermines public confidence in achieving the American dream and jeopardizes the well-being and stability of our financial institutions,” said FBI Denver Acting Special Agent in Charge Steve Olson. “The sentences announced today redress some of the damage caused by these defendants. The FBI will continue to work diligently to identify and investigate those who perpetrate these types of schemes.”
“Mortgage fraud directly threatens the financial health of the communities in which we live; IRS CI will work diligently with our law enforcement partners to insure mortgage fraud is vigorously investigated and individuals are brought to justice,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
The case was investigated by special agents with the Federal Bureau of Investigation and IRS-Criminal Investigation.
The case was prosecuted by Assistant U.S. Attorneys Suneeta Hazra and Jamie Mendelson.
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