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Friday 11 January 2013
Lower Brule Man Pleads Guilty to Abusive Sexual ContactRead the Press Release
US Attorney Brendan V. Johnson announced that Douglas LaRoche, age 44, of Lower Brule, appeared before US District Judge Roberto A. Lange on January 9, 2013, and pled guilty to the Superseding Information that charged him with Abusive Sexual Contact. The maximum penalty upon conviction is 3 years of imprisonment, $250,000 fine, or both.
The charge stems from an incident when LaRoche knowingly engaged in and attempted to engage in sexual contact with someone, who at the time was incapable of appraising the nature of the conduct and was physically incapable of declining participation in and communicating unwillingness to engage in the sexual contact.
The investigation was conducted by the Federal Bureau of Investigation. Assistant US Attorney Meghan N. Dilges is prosecuting the case. LaRoche was remanded to the custody of the US Marshal pending sentencing. A sentencing date has been set for April 1, 2013.
Local Attorney Indicted for Bank FraudRead the Press Release
Memphis, TN – Sharon Anderson, 49, of Oakland, Tennessee, has been charged in a one-count indictment charging bank fraud, announced United States Attorney for the Western District of Tennessee, Edward L. Stanton III. Anderson, an attorney with offices in Cordova, was arrested this morning and is expected to be released this afternoon on bond after an appearance before U.S. Magistrate Judge Diane K. Vescovo.
# # # #
According to the indictment, Anderson defrauded First Citizens Bank in connection with a mortgage loan for the purchase of property in Memphis by submitting a fraudulent settlement statement to the bank. At the closing of the sale, Anderson disbursed $65,000 to the seller of the property and $8,950.78 to the buyer of the property. She prepared a settlement statement that she provided to the seller that reflected these disbursements based on a sales price of $97,500, a First Citizens Bank loan of $78,000, and a $31,126.08 “seller second” mortgage from the seller to the buyer.
However, Anderson prepared a different settlement statement for First Citizens Bank. The settlement statement sent to First Citizens Bank fraudulently represented a $96,126.08 disbursement to the seller and represented that the buyer would pay $22,175.30 at the closing. The settlement statement submitted to First Citizens Bank fraudulently indicated that the buyer was investing money to purchase the property when, in fact, he obtained a portion of the loan proceeds as cash out of the closing. The “second seller” mortgage listed on the settlement statement provided to the seller was a fiction to divert funds from the seller to the buyer.
This investigation is being conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney John Fabian represents the government.Justice Department Settles Lawsuit for Violation of the FACE ActRead the Press Release
The Justice Department announced today that a settlement has been reached with David Hamilton for violations of the Freedom of Access to Clinic Entrances (FACE) Act. Under the terms of the agreement Hamilton will pay $2,500 in compensatory damages to the victim of Hamilton’s use of force outside the EMW Women’s Surgical Center in Louisville, Ky. The United States and Hamilton came to the agreement at a settlement conference held Jan. 7, 2013, in Louisville. On Jan. 10, 2013, the United States sent Hamilton’s attorney a joint stipulation of dismissal to be filed with the court as soon as Hamilton tenders payment.
The agreement settles a lawsuit the United States filed against Hamilton for his alleged violation of the FACE Act, which makes it unlawful for any person to use force to intentionally injure, intimidate, or interfere with, or attempt to injure, intimidate, or interfere with, anyone because that person is or has been obtaining or providing reproductive health services. The United States’ complaint alleged that on Jan. 30, 2010, Hamilton, a regular protester, grabbed and pushed a volunteer escort at the center. At the time of the incident, the victim was attempting to escort a patient to the front entrance of the center. The complaint alleged that Hamilton’s actions constituted a use of force that intimidated and interfered with individuals who were attempting to obtain and provide reproductive health services at the center.
The FACE Act limits statutory compensatory damages to $5,000. The $2,500 Hamilton agreed to pay will go to the victim in this matter per the terms of the statute. Hamilton no longer resides in the Louisville area.
“It is absolutely crucial that those individuals who desire reproductive health services be able to obtain them in an environment that is free of interference, intimidation and fear,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “By continuing to enforce the Freedom of Access to Clinic Entrances Act, we are helping to ensure that they are able to do so.”
This civil action was filed by Civil Rights Division Special Litigation Section Deputy Chief Julie Abbate and Trial Attorneys Aaron Fleisher and Jack Morse.
Justice Department Seeks to Shut Down Florida Tax PreparerRead the Press Release
The Justice Department announced today that it has sued a Kissimmee, Fla., tax return preparer, seeking to bar him permanently from preparing federal tax returns for others. The civil injunction suit, filed in Orlando, Fla., with the U.S. District Court for the Middle District of Florida, alleges that Carlos A. Cabrera and his business – Cabrera Financial Group – prepare federal income tax returns for customers that claim improper losses for non-existent businesses and fabricated education credits in order to unlawfully understate customers’ tax liabilities.
According to the civil injunction complaint, Cabrera prepared over 17,000 tax returns for 2009 and 2010, with an average tax understatement of $4,222 per return for returns the Internal Revenue Service examined. The government suit alleges that the total losses to the U.S. Treasury from Cabrera’s misconduct could be tens of millions of dollars for those two years alone.
This lawsuit is part of the Justice Department’s nationwide crackdown on tax scams, including the preparation of fraudulent federal tax returns. Over the last decade, the Justice Department has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. More information about these cases and the Justice Department’s Tax Division can be found on the Department’s web site.
Related Materials:
United States v. Carlos A. Cabrera
Complaint for Permanent Injunction and Other Relief (PDF)
Justice Department Reaches Agreement to Protect Rights of Military and Overseas Voters in IllinoisRead the Press Release
The Justice Department announced that yesterday it reached an agreement with Illinois officials to help ensure that military service members, their family members and other U.S. citizens living overseas have an opportunity to participate fully in the upcoming Feb. 26, 2013, special primary election, and the April 9, 2013, special election to fill a vacated seat in the state’s 2nd Congressional District. The agreement is necessary to ensure Illinois’s compliance with the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA) as amended by the 2009 Military and Overseas Voter Empowerment Act (MOVE Act).
The agreement, filed yesterday evening, which must be approved by the federal district court in Chicago, requires that by Jan. 15, 2013, the state will ensure expedited transmittal of ballots for the special primary election to UOCAVA voters who have requested them by that date. The agreement also requires that by Jan. 31, 2013, the state will resolve any candidate petition challenges and ensure expedited notice to UOCAVA voters of the final list of candidates for the special primary election. The voted ballots must be postmarked by Feb. 25, 2013, and received by March 6, 2013, to be counted in the special primary election.
The agreement also requires that by March 8, 2013, the state will ensure expedited transmittal of ballots for the April 9, 2013 special election to all UOCAVA voters who have requested them. Under Illinois law, the voted ballots must be postmarked by April 8, 2013, and received by April 23, 2013 to be counted in the special election.
In addition, for both the special primary election and the special election, the state will provide all UOCAVA voters the option of returning their marked ballots by email, fax or express mail at no expense to the voter.
“This agreement reflects this department’s continued and resolute commitment to ensure that members of our armed forces, their families and overseas citizens are offered a full and meaningful opportunity to vote in all federal elections, including special elections scheduled to fill vacated seats,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I am pleased that we are able to reach this agreement with Illinois officials, which will ensure that these voters can fully participate in the state’s upcoming special primary election and special election.”
The UOCAVA requires states to allow uniformed service voters, serving both overseas and within the United States, and their families and overseas citizens to register to vote and to vote absentee for all elections for federal office. In 2009, Congress enacted the MOVE Act, which made broad amendments to UOCAVA. Among those changes was a requirement that states transmit absentee ballots to voters covered under UOCAVA, by mail or electronically at the voter’s option, no later than 45 days before federal elections.
Under the terms of the agreement, the state will also provide detailed reports to the department concerning the transmission of ballots for the special primary election and special election. The state will also take actions as are necessary to assure that UOCAVA voters shall have a fair and reasonable opportunity to participate in future federal elections, including actions needed to fully remedy any potential UOCAVA violations arising from Illinois law governing the state’s special election calendar.
More information about UOCAVA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/misc/activ_uoc.php . Please report any complaints to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Related Materials:
Illinois Complaint
Illinois Proposed Consent DecreeJeffery W. Larson Sentenced in U.S. District CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Billings, on January 10, 2013, before Chief U.S. District Judge Richard F. Cebull, JEFFERY W. LARSON, a 46-year-old resident of Billings, was sentenced to a term of:
- Prison: 84 months
- Special Assessment: $100.00
- Restitution: $2,000.00
- Supervised Release: 10 years
LARSON was sentenced in connection with his guilty plea to receipt of child pornography.
In an Offer of Proof filed by Assistant U.S. Attorney Marcia K. Hurd, the government stated it would have proved at trial the following:
Law enforcement officers were investigating allegations of child pornography access by users utilizing the peer-to-peer file sharing network Gigatribe. One investigation involved a person in Billings who had child pornography available to share via the file sharing program. An undercover agent downloaded a number of child pornography files from that person in early January 2012. A search warrant was obtained for the residence and served on January 18, 2012.
LARSON was one of the occupants of the residence. When questioned, LARSON admitted that he used the peer-to-peer file sharing program Gigatribe to receive and possess thousands of child pornography videos and images. He detailed the search terms he used to find child pornography, how he saved it to various computers and other equipment, and how he had been doing so for a lengthy period of time.
Agents seized various computer equipment at LARSON's residence. A forensic examination revealed thousands of images and movies of child pornography that LARSON had received via the Internet for years and continuing until the equipment was seized. LARSON possessed images and movies of children clearly prepubescent and children engaged in sadistic or masochistic abuse or other depictions of violence.
Because there is no parole in the federal system, the "truth in sentencing" guidelines mandate that LARSON will likely serve all of the time imposed by the court. In the federal system, LARSON does have the opportunity to earn a sentence reduction for "good behavior." However, this reduction will not exceed 15% of the overall sentence.
The investigation was conducted by a cooperative effort between the Federal Bureau of Investigation, the Billings Police Department, and the Internet Crimes Against Children (ICAC) Task Force.
Jackson Men Indicted for Illegal Firearm PossessionRead the Press Release
Jackson, TN – Kirby Ross, 20, of Jackson, TN, and Demario Harris, 29, of Jackson, TN, were each indicted by a federal grand jury for firearms related charges, announced U.S. Attorney Edward L. Stanton III.
Ross was indicted on December 17, 2012 for a violation of 18 U.S.C. § 922(j), possession of a stolen firearm. If convicted, he faces up to 10 years in prison and three years supervised release. Harris was indicted on December 17, 2012 for a violation of 18 U.S.C. § 922(k), possession of a firearm with an obliterated serial number. If convicted he faces up to five years in prison and three years supervised release.
On October 5, 2012, Ross and Harris were approached by investigators with the Tennessee Bureau of Investigation and the Jackson Police Department outside a residence in Jackson, Tennessee, on suspicion of drug charges. Ross was found to be in possession of a Glock, Model 22, .40 caliber semi-automatic pistol that had been reported as stolen. Harris was found to be in possession of a Ruger, Model Security Six .357 revolver with an obliterated serial number.
Ross is scheduled for an initial appearance before U.S. District Judge J. Daniel Breen at 2:00 p.m., Friday, January 11, 2013.
The case is being investigated by the Jackson Police Department, the Tennessee Bureau of Investigation, and the Multijurisdictional Violent Crime and Gang Task Force. Assistant U.S. Attorney Vic Ivy is prosecuting the case.
# # # #Identity Thief Sentenced to 2 Years in Federal PrisonRead the Press Release
Tampa, FL - U.S. District Judge Virginia M. Hernandez Covington today sentenced Linval Thompson a/k/a Cory Howard a/k/a Miguel Cruz to 24 months in federal prison for aggravated identity theft. The court also sentenced Thompson to a one-year term of supervised release, upon his release from prison. Thompson (22), an illegal alien from Jamaica, pleaded guilty to the charges in October 2012. He will be deported to Jamaica following his sentence of incarceration.
According to information contained in court documents, on October 28, 2011, Thompson used the identity and Social Security number of an innocent victim to open a bank account at the Wells Fargo Bank. He subsequently used that bank account to deposit and withdraw money as he needed it.
This case was investigated by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), along with the Tampa Police Department. It was prosecuted by Assistant United States Attorney Jay L. Hoffer of the Tampa Division.
Idaho Businessman Convicted of Income Tax EvasionRead the Press Release
Assistant Attorney General for the Tax Division Kathryn Keneally, U.S. Attorney for the District of Idaho Wendy J. Olson and the Internal Revenue Service (IRS) announced today that a Coeur d’Alene, Idaho, jury convicted Michael George Fitzpatrick, 51, of Hope, Idaho, of two counts of income tax evasion after a four-day trial before U.S. District Judge Larry A. Burns. In September 2012, Fitzpatrick was tried on four tax fraud counts. That jury rendered guilty verdicts on two counts of failure-to-file 2004 corporate income tax returns but was unable to reach verdicts on the tax evasion counts. The verdict today was the result of a second trial on those two charges. Fitzpatrick was remanded into custody immediately.
According to the indictment and evidence introduced at both trials, Fitzpatrick operated a business selling products which purported to help individuals eliminate credit card debt. During 2003 and 2004 the business’s gross sales exceeded $9 million, operating under the names Dynamic Solutions Inc. (DSI) and NAES. The evidence proved Fitzpatrick last filed an individual income tax return in 1996. At trial the government proved the corporations failed to report $3.7 million and Fitzpatrick himself failed to report over $500,000 in income, resulting in a total tax loss of almost $1.4 million.
The evidence at trial established that Fitzpatrick sent over $5 million offshore to WWIN, a “warehouse” bank located in the Dominican Republic. Fitzpatrick accessed this money through the use of a debit card and through wire transfers. During a two-year period, Fitzpatrick used his offshore funds to purchase his personal residence and two four-unit apartment buildings in northern Idaho, with a combined cost of over $700,000. Fitzpatrick also wired $114,980 from his offshore bank accounts to the Bellagio Casino during nine trips to Las Vegas.
Sentencing is scheduled for May 13, 2013. The maximum penalty Fitzpatrick faces on each count of tax evasion is five years in prison and a $250,000 fine. The two convictions for failure to file corporate income tax returns each carry a maximum penalty of one year in prison and a $100,000 fine.
“Paying income tax is a solemn obligation of citizenship,” said Olson. “Those who hide income and evade taxes by sending money off-shore, undermine our democracy. This verdict sends a strong message that those who seek to avoid their tax responsibilities will be punished to the fullest extent of the law.”
“This verdict should send a clear message, it’s imperative for all Americans to pay their share of taxes and those who commit income tax evasion will be brought to justice,” said Stephen Boyd, IRS Criminal Investigation Special Agent in Charge for the State of Idaho.
The case was investigated by special agents from the Boise, Idaho, office of IRS-Criminal Investigation and prosecuted by Tax Division Trial Attorneys Lori A. Hendrickson, Christopher P. O’Donnell and Erin S. Mellen, with valuable support from the U.S. Attorney’s Offices in Boise and Coeur d’Alene.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Idaho Businessman Convicted of Income Tax EvasionRead the Press Release
WASHINGTON – U.S. Attorney Wendy J. Olson, Assistant Attorney General for the Tax Division Kathryn Keneally, and Internal Revenue Service (IRS) announced today that a Coeur d’Alene, Idaho, jury convicted Michael George Fitzpatrick, 51, of Hope, Idaho, of two counts of income tax evasion after a four-day trial before U.S. District Judge Larry A. Burns. In September 2012, Fitzpatrick was tried on four tax fraud counts. That jury rendered guilty verdicts on two counts of failure-to-file 2004 corporate income tax returns but was unable to reach verdicts on the tax evasion counts. The verdict today was the result of a second trial on those two charges. Fitzpatrick was remanded into custody immediately.
According to the indictment and evidence introduced at both trials, Fitzpatrick operated a business selling products which purported to help individuals eliminate credit card debt. During 2003 and 2004 the business’s gross sales exceeded $9 million, operating under the names Dynamic Solutions, Inc. (DSI) and NAES. The evidence proved Fitzpatrick last filed an individual income tax return in 1996. At trial the government proved the corporations failed to report $3.7 million and Fitzpatrick himself failed to report over $500,000 in income, resulting in a total tax loss of almost $1.4 million.
The evidence at trial established that Fitzpatrick sent over $5 million offshore to WWIN, a “warehouse” bank located in the Dominican Republic. Fitzpatrick accessed this money through the use of a debit card and through wire transfers. During a two-year period, Fitzpatrick used his offshore funds to purchase his personal residence and two four-unit apartment buildings in northern Idaho, with a combined cost of over $700,000. Fitzpatrick also wired $114,980 from his offshore bank accounts to the Bellagio Casino during nine trips to Las Vegas, Nevada.
Sentencing is scheduled for May 13, 2013. The maximum penalty Fitzpatrick faces on each count of tax evasion is five years in prison and a $250,000 fine. The two convictions for failure to file corporate income tax returns each carry a maximum penalty of one year in prison and a $100,000 fine.
“Paying income tax is a solemn obligation of citizenship,” said Olson. “Those who hide income and evade taxes by sending money off-shore undermine our democracy. This verdict sends a strong message that those who seek to avoid their tax responsibilities will be punished to the fullest extent of the law.”
“This verdict should send a clear message, it’s imperative for all Americans to pay their share of taxes and those who commit income tax evasion will be brought to justice,” said Stephen Boyd, IRS Criminal Investigation Special Agent in Charge for the State of Idaho.
The case was investigated by special agents from the Boise, Idaho, office of IRS Criminal Investigation and prosecuted by Tax Division Trial Attorneys Lori A. Hendrickson, Christopher P. O’Donnell, and Erin S. Mellen, with valuable support from the United States Attorney’s Offices in Boise and Coeur d’Alene.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Halfway House Escapee Sent Back to Prison for Failing to Return When OrderedRead the Press Release
NEW BERN - United States Attorney Thomas G. Walker announced that in federal court yesterday afternoon, United States District Judge Louise W. Flanagan sentenced BENNIE JOSEPH DUNLAP, III, 26, of Raleigh, to 21 months in prison, followed by a 3 year term of supervised release, on a single charge of Escape in violation of Title 18, United States Code, Section 751.
Pursuant to DUNLAP’s guilty plea and other evidence in the case, in November of 2011 a federal judge sentenced DUNLAP on a charge for possession of a firearm while being a convicted felon. As a part of the sentence, DUNLAP was ordered to serve a term of imprisonment in the custody of the United States Bureau of Prisons (BOP).
Under its own rules and policies, and at its discretion, the BOP may transfer an inmate to a halfway house to serve a portion of the term of imprisonment ordered by the court. Service of a term of incarceration at a halfway house is a privilege. Although inmates are given limited privileges to leave a halfway house to, among other things, seek gainful employment and obtain medical care, inmates are at all times in the custody and control of the BOP through the halfway house staff. When authorized to leave, inmates may only be away from the halfway house for the duration of time authorized by the halfway house. Moreover, when authorized to leave, inmates must only go to the authorized location, and then promptly return to the halfway house as instructed.
The evidence showed that on June 21, 2012, the BOP transferred DUNLAP to the halfway house known as Community Corrections Center, Cavalcorp Ltd. (hereinafter “Cavalcorp”), located at 312 Tryon Road in Raleigh, North Carolina. Upon transfer to Cavalcorp, DUNLAP was advised orally and in a written document as follows:
This is your official notification that should you be unaccountable at work, pass, or any other approved site, or if you leave the center without permission, you will be charged with escape.
Contrary to popular belief by the inmate population, you DO NOT HAVE 72 HOURS TO TURN YOURSELF IN before escape charges are filed.
Criminal Escape charges may be pursued with the US Attorney’s Office in each and every case.DUNLAP executed a document containing this official notification. Above DUNLAP’s signature the document also stated, “I have read the above information and fully understand that if I leave the center without permission, or am unaccountable at any time, I can be charged criminally with Escape. I also understand that there is no grace period to turn myself back in to avoid being charged.”
The evidence showed that on June 21, 2012, DUNLAP was also advised orally and in writing of the contents of an “Acknowledgment of Custody” form. This form advised DUNLAP that, “The willful failure of a prisoner to remain within the extended limits of his confinement or to return within the time prescribed to an institution or facility designated by the Attorney General shall be deemed an escape from custody of the Attorney General...” DUNLAP executed the acknowledgment under the section which stated:
I understand that, while at CAVALCORP LTD. COMPREHENSIVE SANCTION CENTER, I am in the custody of the Attorney General of the United States / Bureau of Prisons. I further understand that leaving the facility without permission from the staff shall be deemed an escape from the custody of the Attorney General. I also understand that leaving my place of employment or training without permission from the staff, or failure to return to the facility within the time prescribed shall be deemed an escape from the custody of the Attorney General of the United States supervision.The evidence further showed that on July 31, 2012 at approximately 7:40 am, DUNLAP signed out, and was authorized to leave Cavalcorp for the limited purpose of going to Wake Medical Center. DUNLAP was instructed that while away he was to be in telephone contact with Cavalcorp every 2 hours. DUNLAP was to immediately return to Cavalcorp after visiting Wake Medical Center.
DUNLAP failed to report his whereabouts to Cavalcorp by phone as instructed, and was unaccountable from 7:40 a.m until approximately 3:00 pm. At approximately 3:00 pm on July 31, 2012, DUNLAP called Cavalcorp and advised that he was not at Wake Medical Center. Cavalcorp staff ordered DUNLAP to immediately return to the halfway house. DUNLAP did not return as instructed. At approximately 4:15 pm on July 31, 2012, DUNLAP called Cavalcorp again and was ordered to immediately return to Cavalcorp. DUNLAP did not return as instructed. At approximately 5:30 on July 31, 2012, DUNLAP called Cavalcorp again and was ordered to immediately return to Cavalcorp. DUNLAP did not return as instructed.
DUNLAP made no contact with Cavalcorp for two full days between the evening of July 31, 2012 and August 2, 2012. At 6:15 pm on August 2, 2012 DUNLAP called and was again ordered to immediately return to Cavalcorp. Later that night at 10:54 pm, DUNLAP returned to Cavalcorp, and was arrested shortly thereafter.
At the sentencing on January 10, 2013, DUNLAP faced an advisory United States Sentencing Guideline range of 6 to 12 months in prison. Upon motion of the United States, however, the Court upwardly departed and varied to a sentence of 21 months in prison, citing the inadequacy of the defendant’s criminal history category and the need to deter DUNLAP and others from this type of offense. Investigation of this case was conducted by the United States Marshals Service. Assistant United States Attorney William M. Gilmore represented the United States.
Grand Junction Real Estate Developers Arrested for Bank FraudRead the Press Release
DENVER – Franklin Thad Harris, age 57, and Merlin D. Unruh, age 51, both of Grand Junction, Colorado, were arrested today in Grand Junction for a bank fraud scheme, the United States Attorney’s Office, the Federal Bureau of Investigation and IRS Criminal Investigation announced. Harris and Unruh were indicted by a federal grand jury in Denver on January 8, 2013, for charges of bank fraud and money laundering. The indicted remained under seal until their arrest. There initial appearance took place in Grand Junction earlier today, where they were advised of their rights. The two were released on bond, and are due back in court in Grand Junction on Tuesday, January 15, 2013 at 3:00 p.m. for arraignment.
According to the indictment, on or about October 2007 through December 2008, Harris and Unruh executed a scheme to defraud First National Bank of the Rockies (FNBR) by using false and fraudulent representations and documentation, which were material to FNBR’s decision to approve requests to withdraw funds for construction expenses. Harris engaged primarily in the business of constructing housing developments throughout the Grand Junction area. Unruh was also in the construction business and was utilized as a general contractor for projects with Harris.
Chatfield was a residential housing subdivision project developed by Harris and Unruh. Chatfield IV was a proposed fourth section of the Chatfield subdivision, to be constructed on 11.75 acres located at 3152 E Road, Grand Junction, Colorado. Harris had another project named Thunder Valley, a proposed residential subdivision with single-family detached units, to be constructed on 12.9 acres at 3079 F ½ Road, Grand Junction, Colorado. TDSM was a Colorado real estate Company owned and operated by Harris and Unruh.
On October 19, 2007, TDSM obtained a draw-down line of credit loan in the amount of $2,050,000.00, for the purpose of developing Chatfield IV. Over the course of the Chatfield IV loan, from October 2007 through July 2008, Harris and Unruh made five draw requests, resulting in a total disbursement by FNBR of $1,524,112.83. On or about April 4, 2008, TDSM obtained a draw-down line of credit loan in the amount of $2,625,000.00 for the purpose of developing Thunder Valley. Over the course of the Thunder Valley I Loan, from April 2006 through December 2008, Harris and Unruh made nine draw requests, resulting in a total disbursement by FNBR of $2,290,474.48.
For the purpose of executing and facilitating their fraud scheme, Harris, Unruh and others committed acts and made material misrepresentations and omissions to FNBR including submitting: false and fraudulent information, altered invoices, duplicate invoices and false information concerning costs incurred for work done. Harris and Unruh knowingly and fraudulently misrepresented to FNBR the nature of the work performed and progress made at the Chatfield and Thunder Valley development sites when in fact they diverted Chatfield IV and Thunder Valley I Loan proceeds for their personal use. Furthermore, they conducted financial transactions to conceal and disguise the use and control of the construction draw proceeds obtained; and when confronted by representatives of FNBR about their fraudulent draw requests, Harris and Unruh either knowingly provided false information or refused to provide any information or supporting documentation.
“Individuals who defraud banks impose costs on all Americans who use our banking system, and will be held accountable,” said U.S. Attorney John Walsh. “In this case, the defendants lined their pockets claiming to access their line of credit to develop residential housing.”
“The FBI will continue to work in collaboration with our law enforcement partners to protect financial institutions against individuals who fraudulently exploit banking practices in furtherance of their criminal schemes,” said FBI Denver Special Agent in Charge James Yacone.
“IRS Criminal Investigation will work diligently with our law enforcement counterparts to insure bank fraud is vigorously investigated and brought to justice, said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
Harris and Unruh were each charged with thirty-five counts of bank fraud, six counts of money laundering and one count of conspiracy to commit money laundering. If convicted of bank fraud they face not more than 30 years in federal prison, and a fine of up to $1,000,000 per count. If convicted of money laundering they face not more than 10 years in federal prison, and a fine of up to $250,000 per count.
This case was investigated by agents with Federal Bureau of Investigation (FBI) and IRS-Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Michelle Heldmyer.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
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Fraud Case Settled for $170,000Read the Press Release
The United States Attorney for the District of South Dakota, Brendan V. Johnson, announced that Black Hills Tree Farm (“BHTF”) and Western Hills Tree Farm (“WHTF”), both of Philip, South Dakota, jointly paid $170,000 to settle allegations that they defrauded the United States Department of Agriculture (“USDA”) crop insurance program.
The claim was brought under the federal False Claims Act and alleged that between September 1, 2005, and November 15, 2006, BHTF and WHTF engaged in a scheme to sell hail damaged trees for which BHTF already received crop insurance payments. BHTF was obligated to return all monies received from the sale of those trees to the crop insurance program. Instead, BHTF used WHTF as a third party to accomplish the sale and conceal from the USDA the true sale price of the trees.
“The crop insurance program is of vital importance to our farmers and ranchers, and my office will continue our efforts to vigorously protect the integrity of the program,” said Johnson.
According to the Settlement Agreement, BHTF and WHTF deny the allegations made by the United States, but settled the case without admitting liability to avoid the delay, uncertainty, inconvenience, and expense of protracted litigation.
"The Federal Crop Insurance Program is a central component of our nation's farm safety net, and when one farmer takes advantage of that system, all farmers are hurt. To preserve the safety net for honest, hard-working farmers, the Risk Management Agency actively works to decrease fraud, waste and abuse in the Federal Crop Insurance Program," said Brandon Willis, Acting Administrator of USDA's Risk Management Agency, which manages the Federal Crop Insurance Program.
The investigation was conducted by the USDA, Office of Inspector General. The United States was represented by Assistant United States Attorney Robert Gusinsky.
Four More Sentenced in Case of Filing Fraudulent Tax Returns in the Name of Deceased PeopleRead the Press Release
Four more people were recently sentenced for their roles in a $1.7 million scheme to defraud the United States by obtaining false and fraudulent U.S. Treasury tax refund checks using the identities of deceased people, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Darryl Williams, Special Agent in Charge of the Internal Revenue Service – Criminal Investigation’s Cincinnati office.
Elian Zayed (AKA Nasser Zayed and Nick Zayed), 45, of Westlake was sentenced to 2 ½ years in prison and ordered to pay $177,744 in restitution after pleading guilty to conspiracy and mail fraud.
Samer Sammor, 40, of Broadview Heights, was sentenced to 18 months in prison and ordered to pay $25,429 in restitution after pleading guilty to making a false claim against the U.S.
Eric J. Howard, 42, of Tampa, Florida, was sentenced to more than five years in prison and ordered to pay $177,744 in restitution after pleading guilty to conspiracy to commit mail fraud, mail fraud and aggravated identity theft.
Lamia Suleiman, 44, of Lutz, Florida, was sentenced to three years of probation and ordered to pay $177,744 in restitution after pleading guilty to misprision of a felony.
“The theft of anyone’s identity is a serious offense, but stealing the identities of the recently departed to defraud all the other taxpayers is particularly egregious,” said Steven M. Dettelbach, the U.S. Attorney for the Northern District of Ohio. “These sentences should cause anyone who would engage in this conduct to reconsider.”
Five other people were sentenced to prison last year for their roles in a related scheme.
From 2009 to at least August 2011Zayed, Suleiman, Howard, Samor and other co-conspirators defrauded the United States by filing false and fraudulent tax returns, many in the names of recently deceased taxpayers, according to court documents.
The co-conspirators directed the refunds to controlled locations in Florida. The U.S. Treasury checks generated by the false tax returns were sent by U.S. mail to co-conspirators located in Ohio. The Ohio co-conspirators then sold and distributed those Treasury checks for negotiation at various businesses and banking institutions, according to court documents.
The IRS estimated that the scheme involved at least $1.7 million in fraudulently obtained tax returns.
The case was prosecuted by Assistant United States Attorneys Margaret Sweeney and Gary D. Arbeznik following an investigation was by the the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, and the United States Postal Service.Four Additional Defendants Plead Guilty in Connection with the LIRR Disability Fraud SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that MARIA RUSIN, the office manager of Dr. Peter J. Ajemian’s medical practice, GREGORY NOONE, a former Long Island Railroad (“LIRR”) manager of engineering operations, DANIEL DENIS, a former LIRR ticket agent, and REGINA WALSH, a former LIRR director of employee operations, pled guilty to charges related to the allegedly massive fraud scheme in which LIRR workers claimed to be disabled upon early retirement so that they could receive disability benefits to which they were not entitled. RUSIN and WALSH pled guilty today before U.S. Magistrate Judge Henry B. Pitman. NOONE and DENIS pled guilty before Judge Pitman on January 8, 2013 and January 9, 2013, respectively.
According to the Complaint, the Superseding Indictment, the Superseding Informations, and statements made in other public filings and in court:
The LIRR Disability Fraud Scheme
The Railroad Retirement Board (“RRB”) is an independent U.S. agency that administers benefit programs, including disability benefits, for the nation’s railroad workers and their families. A unique LIRR contract allowed employees to retire at the relatively young age of 50 – the age of eligibility has since changed to 55 – if they had been employed by the LIRR for at least 20 years. Eligible employees are entitled to receive an LIRR pension, which is a portion of the full retirement payment for which they are eligible at 65. In addition, at full retirement age (between age 60 and age 65 depending on years of service), they are eligible to receive an RRB retirement pension. For LIRR workers who retired at 50 with only an LIRR pension, they would receive less than their prior salary and substantially lower pension payments than those to which they would be entitled at full retirement age. However, LIRR employees who retired and claimed disability could receive a disability payment from the RRB on top of their LIRR pension, regardless of age. A retiree’s LIRR pension, in combination with RRB disability payments, can be roughly equivalent to the base salary earned during his or her career.
Hundreds of LIRR employees have allegedly exploited the overlap between the LIRR pension and the RRB disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under oath in disability applications, allowed LIRR employees to retire as early as age 50 with an LIRR pension, supplemented by the fraudulently obtained RRB disability annuity. From 2004 through 2008, 61% of LIRR employees who stopped working and began receiving RRB disability benefits were between the ages of 50 and 55. In contrast, only 7% of employees at Metro-North who stopped working and received disability benefits during the same time period were between the ages of 50 and 55.
Rusin’s Obstruction of Justice
In August 2010, RUSIN participated in a voluntary interview with criminal investigators in the Southern District of New York, and falsely denied knowing that almost all of Dr. Peter Ajemian’s patients from the LIRR were retiring at the same time that they were claiming occupational disability from the United States Railroad Retirement Board. RUSIN also falsely claimed that she was never told that an LIRR patient was planning to retire except when the patient was directed to see her to pay for a narrative, and that this usually occurred at the end of the process of seeing Ajemian—about two weeks to one month prior to the worker’s retirement. In addition, RUSIN falsely claimed to have no understanding about how an occupational disability would affect the payout for an LIRR worker who was retiring.
RUSIN, 57, of Farmingdale, New York, and WALSH, 64, of New Hyde Park, New York will be sentenced by U.S. District Judge Victor Marrero on May 13, 2013 and NOONE, 63, of East Islip, New York, will be sentenced by Judge Marrero on July 12, 2013. DENIS, 60, of East Rockaway, will be sentenced by U.S. District Judge Kimba Wood on July 11, 2013. A chart setting forth the counts to which each defendant pled guilty, as well as the maximum penalties, is attached.
Thirty-two people have been charged in connection with the LIRR disability fraud scheme, 16 of whom have now pled guilty. The charges against the remaining defendants are merely allegations and they are all presumed innocent unless and until proven guilty.
Mr. Bharara praised the RRB-OIG, the FBI, and the MTA-OIG for their outstanding work in the investigation, which he noted is ongoing. He also acknowledged the previous investigation conducted by the New York State Attorney General’s Office into these pension fraud issues.
The Office’s Complex Frauds Unit is handling the case. Assistant U.S. Attorneys Justin Weddle, Daniel Tehrani, Nicole Friedlander, Danya Perry and Amy Garzon are in charge of the prosecution.
Former Tsa Officer Sentenced to More Than Five Years in Prison for Accepting Bribes from Drug TraffickerRead the Press Release
January 11, 2013David B. Fein, United States Attorney for the District of Connecticut, announced that CHRISTOPHER ALLEN, 47, of Palm Beach Gardens, Fla., formerly a Transportation Security Administration officer based at Palm Beach International Airport, was sentenced today by United States District Judge Janet C. Hall in New Haven to 68 months of imprisonment, followed by three years of supervised release, for accepting cash in exchange for facilitating the transportation of illegal narcotics through airport security without detection. Two other former TSA officers, a former Westchester County Police officer and a former Florida State Trooper have also been charged and convicted as a result of this investigation.
“This defendant received cash payments to assist a known drug trafficker pass safely through airport security with oxycodone pills destined for illegal trafficking in Connecticut,” stated U.S. Attorney Fein. “Corruption within the ranks of those who are entrusted with the responsibility for screening air travelers and their baggage can never be tolerated. I commend the DEA Task Force for shutting down a pipeline of highly addictive prescription pills from Florida to Connecticut, and for bringing to justice this federal employee and others who participated in this illegal scheme.”
This matter stems from “Operation Blue Coast,” an investigation headed by the Drug Enforcement Administration’s Bridgeport High Intensity Drug Trafficking Area Task Force into the large-scale trafficking of oxycodone pills from Florida to Connecticut. The investigation revealed that an individual regularly purchased oxycodone from suppliers in Florida, transported the oxycodone to Connecticut by commercial airline or automobile, and sold the pills to various Connecticut-based narcotics dealers. The narcotics trafficker purchased oxycodone pills in Florida for approximately $5.00 per pill, and traveled from Florida to Connecticut several times a week carrying up to 8,000 oxycodone pills per trip. He then used drivers to transport him to and from narcotics transactions during which he would sell the pills to Connecticut-based dealers for between $10.00 and $13.00 per pill. After exchanging low-denomination currency for larger notes, he transported the proceeds of his oxycodone sales from Connecticut to Florida, either by having a courier drive the money or by using commercial airline flights. The Connecticut-based dealers sold the pills to lower-level dealers and drug customers for between $23.00 and $30.00 per pill.
According to court documents and statements made in court, ALLEN, while employed as a TSA officer at Palm Beach International Airport in West Palm Beach, Fla., accepted cash payments from the narcotics trafficker to ensure that the trafficker would not be stopped by TSA officers as he carried oxycodone pills through airport security on his way to Connecticut. On four occasions between May and August 2011, the narcotics trafficker, who by this time was cooperating with law enforcement, paid ALLEN $500 in cash to allow the trafficker to travel safely through airport security. On two of these trips, the narcotics trafficker traveled with an undercover law enforcement officer.
As disclosed in court, the evidence in this case includes recorded conversations involving ALLEN, the cooperating narcotics trafficker and the undercover law enforcement officer.
ALLEN was arrested on September 13, 2011. On April 16, 2012, he pleaded guilty to one count of extortion under color of right and one count of receipt of a bribe by a public official.
Twenty individuals have been charged as a result of this investigation. Jonathan Best, a TSA officer based at Palm Beach International Airport, Brigitte Jones, a TSA officer based at Westchester County Airport in White Plains, Justin Kolves, a former Florida State Trooper and Michael Brady, a former Westchester County Police officer, also pleaded guilty and have been sentenced to prison terms of 76 months, 45 months, 84 months and 37 months, respectively.
This matter is being investigated by the Drug Enforcement Administration’s Bridgeport High Intensity Drug Trafficking Area Task Force, which includes personnel from the Connecticut State Police and the Bridgeport, Milford, Norwalk, Stamford and Westport Police Departments; the Drug Enforcement Administration in Florida and the U.S. Department of Homeland Security Office of Inspector General. In addition, the U.S. Marshals Service and the Greenwich, Monroe, Danbury and Waterbury Police Departments have assisted the investigation.
U.S. Attorney Fein also acknowledged the cooperation of the Westchester County Department of Public Safety and the Florida Highway Patrol, and the substantial assistance provided by the United States Attorney’s Office for the Southern District of Florida.
This case is being prosecuted in the District of Connecticut by Assistant United States Attorneys Rahul Kale and Tracy Lee Dayton.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
[email protected]Former State Department Employee Sentenced to 30 Months in Prison for Carrying Out Identity Theft Scam-Got Access to Information While in A Student Work Program-Read the Press Release
WASHINGTON – Rodney P. Quarles, Jr., 26, of Charlotte Hall, Md., was sentenced today to 30 months in prison for taking part in an identity theft scam in which he and others used stolen credit cards to make more than $70,000 in purchases.
The sentencing was announced by U.S. Attorney Ronald C. Machen Jr., Barry Moore, Assistant Director for Domestic Operations, U.S. Diplomatic Security Service, Gary R. Barksdale, Inspector in Charge, Washington Division, U.S. Postal Inspection Service, and David Beach, Special Agent in Charge of the Washington Field Office, U.S. Secret Service.
Quarles pled guilty in October 2012 in the U.S. District Court for the District of Columbia to a charge of conducting illegal transactions with credit cards. He was sentenced by the Honorable Richard W. Roberts. As part of his plea agreement, Quarles agreed to pay $71,774 in restitution to Chase Bank USA NA.
According to a statement of offense, signed by the defendant as well as the government, Quarles worked from September 2007 through March 2008 for the Department of State’s Bureau of Consular Affairs. He was a member of the student work program, assigned to the Washington, D.C., Passport Office. His job responsibilities primarily consisted of destroying old passports and passports that had been reported lost or stolen. Part of the process entailed accessing files of individuals whose passports were being destroyed on a State Department database.
During his time on the job, Quarles agreed to engage in a conspiracy in which he and others used, without authorization, stolen credit cards to purchase goods and to obtain funds. The scheme’s participants included a mail sorter for the U.S. Postal Service, who stole envelopes that he suspected contained credit cards. The names on these cards were passed along to Quarles, who used the State Department database to retrieve information that helped activate the accounts.
With the accounts activated, Quarles and others used the stolen credit cards to purchase goods and obtain funds in the District of Columbia, Maryland and other jurisdictions. All told, the conspirators completed transactions totaling at least $71,774 to obtain cash, jewelry, high-end electronic equipment, gift cards, and other items. During the scheme, Quarles and others also unsuccessfully attempted to conduct another $133,494 in transactions.
In announcing the sentence, U.S. Attorney Machen, Assistant Director Moore, Inspector in Charge Barksdale, and Special Agent in Charge Beach commended the efforts of those who investigated the case from the State Department’s Bureau of Diplomatic Security, Postal Inspection Service, and Secret Service. They also praised those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialists Carolyn Cody, Tasha Harris, and Lenisse Edloe; Victim Advocate Yvonne Bryant; Assistant U.S. Attorney Catherine K. Connelly, who investigated the matter, and Assistant U.S. Attorney Matt Graves, who investigated and prosecuted the matter.
13-006Former Santa Fe Resident Pleads Guilty to Federal Child Pornography ChargeRead the Press Release
ALBUQUERQUE – This morning, Carl Labadie, 60, a Colorado resident, entered a guilty plea to possession of a visual depiction of minors engaged in sexually explicit conduct under a plea agreement with the U.S. Attorney’s Office.
Labadie pled guilty to an indictment charging him with possessing child pornography in Santa Fe, N.M., on March 1, 2012. At the time he committed the offense, Labadie was a resident of Santa Fe, where he was self-employed as an acupuncture and massage therapist.
In his plea agreement, Labadie acknowledged that on March 1, 2012, agents of the New Mexico State Police (NMSP) and Homeland Security Investigations (HSI) executed a search warrant at his Santa Fe residence and seized computers and computer-related media. The search warrant was obtained based on a NMSP undercover investigation that began in Jan. 2012, which determined that an Internet Protocol Address registered to Labadie was being used to distribute child pornography.
While the agents were executing the search warrant at Labadie’s residence, Labadie voluntarily participated in an interview with NMSP and HSI agents during which he admitted using file-sharing programs to download child pornography. Labadie further admitted engaging in this illegal conduct for approximately four years.
Labadie also acknowledged that an examination of the images and videos on his computers and computer-related media by the National Center for Missing and Exploited Children revealed 5,350 images and 200 videos of 129 children who have been identified as child pornography victims and have been rescued.
After entering his guilty pleas, Labadie was remanded into the custody of the U.S. Marshals Service pending his sentencing hearing, which has yet to be scheduled. Under the terms of his plea agreement, Labadie will sentenced to four years of imprisonment to be followed by a term of supervised release to be determined by the Court. Labadie will pay $500.00 in restitution to each of two victims whose images he possessed on his computers and computer-related media. He also will be required to register as a sex offender.The case was investigated by the NMSP, HSI and the New Mexico Regional Computer Forensic Lab, and is being prosecuted by Assistant U.S. Attorney Charlyn E. Rees.
U.S. Attorney Kenneth J. Gonzales said that Labadie was charged as part of Operation Artemis, an investigative effort by federal, state and local law enforcement affiliates of the New Mexico Internet Crimes Against Children (ICAC) Task Force aimed at identifying individuals throughout New Mexico involved in the distribution, receipt, and possession of child pornography through peer-to-peer file sharing programs. In March 2012, federal, state and local law enforcement officers executed thirteen unrelated federal and state search warrants at residences throughout New Mexico, and seized computers and computer-related evidence related to child pornography offenses. To date, six individuals have been arrested for violating federal and state child pornography laws based on the search warrants executed as part of Operation Artemis. The law enforcement agencies that participated in Operation Artemis include: HSI, NMSP, New Mexico Attorney General’s Office, FBI, Albuquerque Police Department, Los Lunas Police Department, Santa Fe Police Department, Rio Rancho Police Department, and the New Mexico Regional Computer Forensic Lab.
Operation Artemis 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 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.
Former Postal Service Employee Sentenced for Stealing MailRead the Press Release
Baltimore, Maryland - U.S. District Judge Ellen L. Hollander sentenced Deborah Jean Gibson, age 57, of Windsor Mill, Maryland today to a year and a day in prison followed by three years of supervised relief for theft of mail by a postal service employee. Judge Hollander also ordered Gibson to pay restitution of $1,215.39.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Paul Bowman of the U.S. Postal Service, Office of Inspector General (OIG).
According to her plea agreement, Gibson was a U.S. Postal Service employee for approximately 13 years. Gibson worked as a mail processing clerk at the Linthicum facility, manually feeding mail into a delivery bar code sorter, and preparing mail for delivery to postal customers.
In November 2011, complaints were received that greeting cards containing gift cards that had been processed through the Linthicum facility were not delivered. In February 2012, a stack of opened greeting cards were found in the facility and identified as having been processed by the machine operated by Gibson. Thereafter, on two occasions, Postal Service OIG agents observed Gibson stealing gift cards from the mail and placing the contents into her pockets or purse.
After Gibson was seen stealing mail again on May 3, 2012, Postal Service OIG agents confronted her and recovered the stolen mail from her purse. Federal search warrants executed at Gibson’s car and residence recovered additional stolen mail. In all, 71 mail pieces and 50 gift cards/personal checks were recovered.
Gibson admitted that she stole from over 250 victims, resulting in an attempted loss of between $10,000 and $30,000.
United States Attorney Rod J. Rosenstein praised the U.S. Postal Service, Office of Inspector General for its work in the investigation and thanked Assistant U.S. Attorney Rachel M. Yasser, who prosecuted the case.
Former Law Firm IT Chief and Contract Employee Vendor Indicted in $4.8 Million Billing Fraud and Kick-back SchemeRead the Press Release
CHICAGO — The former chief information officer of a Chicago-based international law firm who was charged previously, and the president of a company that provided contract technology workers who was charged for the first time and arrested today, were indicted for allegedly engaging in a fraudulent billing and kickback scheme that netted each of them more than $2 million. NICHOLAS DEMARS, the president of NS Mater, a defunct firm that provided contract employees and technology to assist in office automation, web and database development, and general information technology, was arrested today and indicted with DAVID TRESCH, the former law firm officer who supervised the work and billing related to the contract employees.
For the first six years of the scheme that began in 2004, Demars allegedly paid Tresch a portion of the profits that NS Mater made from work its contract employees performed at the victim law firm. During the last two years ending in June 2012, Tresch allegedly received kickbacks totaling nearly all of the false billings that the law firm paid NS Mater for work that was not performed.
Tresch, 51, and Demars, 57, both of Itasca, were each charged with 10 counts of mail fraud in an indictment that was returned by a federal grand jury yesterday and unsealed today after Demars was arrested. Demars was released on bond after appearing this morning before U.S. Magistrate Judge Sidney Schenkier in U.S. District Court. Tresch, who was released on bond after he was arrested in August, will be arraigned at a later date in Federal Court.
The indictment also seeks forfeiture of $4,819,253 representing the combined net proceeds that both men allegedly obtained from the scheme, as well as their respective homes, Demars’ condominium in Chicago, and a residence in Lake Geneva, Wis., and more than $225,000 that was seized from Tresch along with his camping trailer, a van, and a luxury automobile.
The charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Thomas R. Trautmann, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
According to the initial complaint, the victim law firm, which was not identified by name, reported Tresch’s alleged criminal activity and cooperated in the investigation. The firm, which has offices worldwide, hired Tresch in May 2004 and he held several positions in the information technology department before he was promoted in July 2011 to chief information officer.
The indictment alleges that between November 2004 and March 2011, the law firm issued checks totaling approximately $7.68 million to NS Mater, and Demars, in turn, kicked back $1.14 million to Tresch. In 2004 and 2005, Demars allegedly paid kickbacks directly to Tresch after paying legitimate NS Mater contract employees and payroll administrators for work they had performed for the law firm. Beginning in April 2006, allegedly to conceal the kickbacks, Demars began paying Tresch by issuing checks to Tresch’s wife and treating her as an employee of NS Mater, even though both defendants knew that she was not an employee and had not performed any work, according to the indictment. Tresch’s wife is not a defendant.
Subsequently, in late 2010, Tresch learned that that the law firm would soon stop using NS Mater contract employees, and, in February 2011, the firm directed Tresch to no longer permit NS Mater to provide personnel for the information technology department. Between November 2011 and June 2012, Demars allegedly continued submitting invoices to Tresch totaling more than $1.1 million, falsely representing that NS Mater performed work that both defendants knew was not performed. Tresch submitted the false invoices, which the firm paid, and of the $1.1 million paid during this period, Demars kicked back approximately $970,000 to Tresch, while retaining the remainder for himself, the indictment alleges.
Each count of mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. The Court may impose an alternative fine totaling twice the loss to the victim or twice the gain to the defendant, whichever is greater. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The government is being represented by Assistant U.S. Attorney Terra Reynolds.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Indictment
Former Harris County Deputy Convicted for Aiding Ecstasy LoadsRead the Press Release
HOUSTON - Former Harris County Deputy Sheriff Jesus Martinez, of Humble, has been convicted of aiding possession of a controlled substance, United States Attorney Kenneth Magidson announced today.
According to the factual summary in support of the plea today, a public corruption task force conducted a sting operation in which an informant asked Martinez, 30, to provide protection for a delivery of money or marijuana.
On July 23, 2012, the informant met with an undercover police officer, who appeared to be engaged in a drug transaction. At that time, Martinez drove his Harris County Sheriff’s Office (HCSO) patrol car through the parking lot as protection. The informant contacted Martinez after the delivery and stated that the deal resulted in “X” (3,4 Methylenedioxy-methamphetamine or MDMA), a Schedule I Controlled Substance which is also known as “X” or Ecstasy. The informant then asked Martinez to follow him out of the parking lot.
U.S. District Judge David Hittner, who accepted the plea today, has set sentencing for April 8, 2013, at which time Martinez faces up to 20 years in federal prison and a possible $1 million fine.
The operation was conducted by the FBI-led public corruption task force which included the Houston Police Department and the Texas Rangers. Also assisting in the overall investigation was Drug Enforcement Administration and the HCSO among others.
Assistant United States Attorney Jim McAlister is prosecuting the case.
Former Deputy Sheriff Pleads Guilty to Civil Rights ViolationsRead the Press Release
Craig Billings, 39, a former deputy sheriff with the Murray County Sheriff’s Office in Sulphur, Okla., pleaded guilty today in federal court to a one-count information charging him with Deprivation of Rights for using unreasonable force and violating the civil rights of an individual who was being booked into the Murray County Jail.
According to court documents, on Oct. 8, 2011, Billings, while working in his capacity as a deputy sheriff, physically assaulted the victim, who was handcuffed at the time and not a physical threat to anyone. Billings tackled the victim to the ground, positioned himself over the victim, grabbed the victim by the chin and began to bang the victim’s head into the floor. In so doing, Billings subjected the victim to unreasonable force, punishing him for verbally offending Billings. As a result, the victim sustained a mild concussion and suffered pain and swelling to his head. Billings knew that he was prohibited from using physical force on a restrained arrestee who is not a physical threat, and assaulted the victim anyway.
“Every person in America has the right to be free from excessive physical force when they are taken into custody by law enforcement officers,” said Assistant Attorney General Thomas E. Perez of the Department of Justice’s Civil Rights Division. “While the vast majority of officers uphold this right on a daily basis, the Department of Justice and the Civil Rights Division will vigorously prosecute officers who do not act in accordance with the Constitution.
Billings was remanded into custody at the time of his guilty plea. He faces a maximum sentence of 10 years in prison. A sentencing date has not yet been set.
This case was investigated by the Ardmore Resident Agency of the Oklahoma City Division of the FBI and is being prosecuted by Assistant U.S. Attorney Dean Burris for the Eastern District of Oklahoma and Trial Attorney Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
Former Citizens Bank Teller Pleads Guilty to EmbezzlementRead the Press Release
BOSTON - A Rhode Island woman was convicted today of embezzling more than $375,000 from the accounts of Citizens Bank customers.
Maria DaSilva, 44, pleaded guilty before U.S. District Judge Richard Stearns to violating the federal bank fraud statute.
From February 2008 through January 2012, while she was working as a bank teller at the North Attleboro branch of Citizens Bank, DaSilva embezzled over $375,000 from the accounts of three elderly bank customers by forging withdrawal slips on various accounts held by these customers.
Sentencing is scheduled for May 8, 2013. DaSilva faces up to 30 years in prison, to be followed by five years of supervised release and a $1,00,000 fine.
United States Attorney Carmen M. Ortiz and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Jeremy Sternberg of Ortiz’s Economic Crimes Unit.
Former Chicago Police Officer and Two Members of Latin Kings Street Gang Sentenced in Indiana for Roles in Racketeering ConspiracyRead the Press Release
WASHINGTON – A former Chicago police officer and two members of the Latin Kings street gang were sentenced this week in Indiana to serve prison time for their roles in a racketeering conspiracy and other related charges, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana.
Former Chicago Police Officer Alex Guerrero, 41, of Chicago, was sentenced today to serve 228 months in prison and five years of supervised release. Antonio Gudino, aka “Chronic,” 31, of Hammond, Ind., was sentenced yesterday to serve 175 months in prison and two years of supervised release. Brandon Clay, aka “Cheddar,” “Cheddar Boy,” “Swiss” and “Slick” 25, of Chicago, was sentenced Wednesday to serve 360 months in prison and five years of supervised release. Guerrero, Gudino and Clay were each sentenced by U.S. District Judge Rudy Lozano in the Northern District of Indiana.On Aug. 2, 2012, Guerrero pleaded guilty to one count each of conspiracy to participate in racketeering activity, conspiracy to possess with intent to distribute and distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana, interference with commerce by threats or violence, and use and carrying of a firearm during and in relation to crimes of violence and drug trafficking. On July 31, 2012, Gudino and Clay each pleaded guilty to one count of racketeering conspiracy.
According to the third superseding indictment filed in this case, the Latin Kings is a nationwide gang that originated in Chicago and has branched out throughout the United States. The Latin Kings is a well organized street gang that has specific leadership and is composed of regions that include multiple chapters. The third superseding indictment charges that the Latin Kings were responsible for at least 19 murders, including juveniles and one pregnant woman, in the Chicago/Northwest Indiana area and Big Spring, Texas.
According to the third superseding indictment, the Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault and threats against those who violate the rules or pose a threat to the Latin Kings. Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”
During their guilty plea proceedings, Guerrero, who was a Chicago Police Department officer, admitted to being associated with the Latin Kings, and Gudino and Clay admitted to being Latin King members from an early age. They also acknowledged they were aware that the Latin Kings distributed more than 150 kilograms of cocaine and 1,000 kilograms of marijuana over the course of the racketeering conspiracy. Guerrero admitted in his plea agreement that he was responsible for possession of and distribution of 150 kilograms or more of cocaine. Gudino and Clay admitted to participating in street activities to further the drug trafficking and other gang activities.Guerrero also admitted to participating in robberies at the direction of Latin Kings leader and co-conspirator Sisto Bernal. Specifically, Guerrero acknowledged that in approximately December 2006, he entered into the Hammond residence of James Walsh, a rival gang member. Guerrero and his police partner and co-defendant Antonio Martinez physically restrained Walsh and others while the home was searched and robbed. Guerrero admitted that by committing these crimes while employed as a Chicago police officer, he abused a position of public trust in a manner that significantly facilitated the commission or concealment of the offense. Bernal and Martinez previously pleaded guilty for their roles in the racketeering and robbery conspiracies.
Guerrero resigned from the Chicago Police Department following his plea hearing.
Clay acknowledged that on Feb. 25, 2007, he, along with four other defendants, rode on a “mission” from Illinois to Griffith, Ind. While armed with three firearms, they were ordered to shoot to kill rival gang members who were attending a party. Once the two rival members – James Walsh and Gonzalo Diaz – left the party, several Latin Kings members, including Clay, rode up in a vehicle, and Clay and another defendant got out of the vehicle and shot and killed Walsh and Diaz. On April 22, 2009, Clay, along with two other defendants, drove to a rival gang neighborhood and caused the shooting death of Christiana Campos, a member of a rival gang.
Twenty-three Latin Kings members and associates have been indicted in this case. Twenty have pleaded guilty; one was found guilty following a jury trial; one awaits trial; and one remains a fugitive.
This case was investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; ICE Homeland Security Investigations; the National Gang Intelligence Center; the Chicago Police Department; the Houston Police Department; the Griffith Police Department; the Highland Police Department; the Hammond Police Department; and the East Chicago Police Department.The case is being prosecuted by Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section and David J. Nozick of the U.S. Attorney’s Office for the Northern District of Indiana. Assistant U.S. Attorney Andrew Porter of the U.S. Attorney’s Office for the Northern District of Illinois provided significant assistance.
The third superseding indictment is not evidence of guilt. The defendants who have not been convicted are innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Former Bank President and Other Officers Indicted in Massive Fraud That Preceded the Collapse of First National BanksRead the Press Release
SAVANNAH, GA: The former president and six other officers of First National Bank of Savannah were indicted by a federal grand jury, accused of defrauding First National Bank and other banks out of millions of dollars. The long-running scheme allegedly contributed to the failure of First National Bank in 2010, which will cost the FDIC deposit-insurance fund over $90 million.
The 35-count indictment, returned today in federal court in Savannah, charges the following former officers of First National Bank:
* Heys Edward McMath III, 58, who served as the President and CEO of the bank. McMath is charged with conspiracy, bank fraud, misapplication of bank funds and false statements to influence a bank.
* Stephen Michael Little, 65, who served as the Executive Vice President and CFO of the bank. Little is charged with conspiracy and bank fraud.
* Robert Wilson Dailey, 51, who served as the City President and Senior Lending Officer of the bank. Dailey is charged with conspiracy, bank fraud, and false entries made in bank records.
* Jay Patrick Gardner, 62, who served as a Vice President and the Chief Credit Officer of the bank. Gardner is charged with conspiracy and bank fraud.
* Isaac Jefferson Mulling, 53, who served as a Senior Vice President and commercial loan officer of the bank. Mulling is charged with conspiracy, bank fraud, false statements to influence a bank, and false entries made in bank records.
* Alan Robert Fleming, 36, who served as the City President of the Tybee Island branch and a commercial loan officer of the bank. Fleming is charged with conspiracy, bank fraud, misapplication of bank funds, false statements to influence a bank, and false entries made in bank records.
* Jeffrey Allen Farrell, 44, who served as the City President of the Richmond Hill branch and a commercial loan officer of the bank. Farrell is charged with conspiracy, bank fraud, false statements to influence a bank, and false entries made in bank records.
United States Attorney Edward J. Tarver said, “The State of Georgia leads the nation in bank failures, with 84 banks failing since 2008, including First National Bank. As the nation still recovers from a banking crisis of epic proportions, citizens should know this: no matter the complexity of the scheme, bank officers who place FDIC-funds at risk through fraud and other criminal conduct will be brought to justice.”
According to the allegations in the indictment, as First National Bank’s financial condition began to deteriorate, the Defendants schemed to hide from the bank, members of the bank’s Board of Directors and from federal regulators millions of dollars in non-performing loans. The Defendants accomplished the scheme by unlawfully loaning money to unqualified nominees to make interest and other payments on other non-performing loans; enticing others to take over non-performing loans with hidden promises, side deals and other terms unfavorable to First National Bank; and recruiting other banks to fund non-performing loans based upon fraudulent misrepresentations about the quality of the loans. To assist in their scheme, the Defendants falsified and fabricated numerous bank documents and records.
This case is the result of a joint investigation conducted by the Board of Governors of the Federal Reserve Office of Inspector General; the FDIC Office of Inspector General; the U.S. Department of Treasury Office of Inspector General; the U.S. Secret Service; and the United States Attorney’s Office. First Assistant United States Attorney James D. Durham and Assistant United States Attorney Jennifer Solari are prosecuting the case on behalf of the United States.Former Attorney Sent to Prison for A Decade in $7 Million Ponzi SchemeRead the Press Release
HOUSTON - Billy Frank Davis, aka Bill F. Davis, a former attorney residing in Houston, has been sentenced to 10 years in federal prison for perpetrating a decade-long investment fraud scheme that victimized more than 20 investors of approximately $7.8 million, United States Attorney Kenneth Magidson announced today.
Davis pleaded to one count of wire fraud Oct. 15, 2012. Today, U.S. District Judge David Hittner, who accepted the guilty plea, handed Davis a 120-month sentence to be followed by a three-year-term of supervised release before a courtroom packed with victims who were all wearing red ribbons as a sign of solidarity. Although Davis pleaded guilty to a single count, he had admitted to the entirety of his fraudulent scheme and agreed to be held accountable for all of the losses incurred by his victims. He was also ordered to pay $7.8 million in restitution.
In handing down the sentence, Judge Hittner went above the sentence recommended by the U.S. Sentencing Guidelines. At the hearing, Judge Hittner read from a number of victim impact statements, most from victims who had known Davis for 20 years or more. One letter read as follows: “[Davis] exploited the most fundamental of human relationships and did it both knowingly and intentionally. He deserves the same level of consideration he gave his friends as he was robbing all of us – none.” Another victim described Davis as a “smooth talking parasite or predator who will do harm to more honest people if ever back on the street. He has stolen most all of my retirement cash and destroyed my marriage. I do not sleep.”
In addition to the victim letters read in open court, Judge Hittner allowed one victim to speak at the sentencing hearing. “Every cent Bill Davis stole was from a very good friend and he took advantage of that friendship on every occasion,” the victim stated. After noting Davis’s ability to maintain his image of success helped enable him to commit his crimes, the same victim closed by saying: “Mr. Davis, as for your image, the last image I want to see of you is you being led away in handcuffs in an orange jumpsuit.” After pronouncing the sentence, Judge Hittner ordered Davis to be taken immediately into custody where he will remain pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
During the past 10 years, Davis, 68, held himself out to friends and potential investors as being involved in the real estate investment business. While Davis did conduct some legitimate business activity during this time period, a substantial portion of the funds he solicited were simply part of a Ponzi scheme Davis was operating in an effort to satisfy old debts and to fund his personal lifestyle. In acknowledging his criminal conduct at the time of his guilty plea, Davis admitted to using a variety of ploys to perpetuate his Ponzi scheme, all of which involved falsely representing to investors the existence or nature of various real estate investment opportunities, accepting funds from investors under such false pretenses, and then using the investor funds in a manner other than as represented to investors.
The case was investigated by the FBI and prosecuted by Assistant United States Attorney Jason Varnado.
Fifth Test-Taker Pleads Guilty in Teacher Certification Cheating ScamRead the Press Release
Memphis, TN – Jeryl Shaw, 40, of Memphis, pled guilty to aiding and abetting the creation of a fraudulent identification document in connection with the teacher certification cheating scam directed by ringleader Clarence Mumford, Sr., 59, of Memphis, announced United States Attorney for the Western District of Tennessee, Edward L. Stanton III. This plea, along with previous guilty pleas by John Bowen, 63; Felippia Kellogg, 42; Shantell Shaw, 40; and Carlos Shaw, 87; of Memphis, brings to five the total number of guilty pleas thus far in Mumford Sr.’s teacher certification cheating scam. Jeryl Shaw is the husband of Shantell Shaw. Neither are related to Carlos Shaw.
The original indictment in the case, filed in July 2012, charged Mumford Sr. with orchestrating a scheme that began as early as 1995 to pay test-takers to take teacher certification examinations on behalf of teachers and hopeful teachers. In August, a superceding indictment charged Dante Dowers, 40, of Belle Glade, Florida and Mumford Sr.’s son, Clarence Mumford Jr., 28, of Memphis. And in September, a second superceding indictment charged ten more individuals, including Samuel Campbell, 39, of Jackson, Mississippi; Darcel Gardner, 35, of Columbus, Mississippi; Steve Holmes, 53, of Memphis, Tennessee; Valerie Humphrey, 47, of Oakland, Tennessee; Carlo McClelland, 35, of Meridian, Mississippi; Jacklyn McKinnie, 44, of Memphis, Tennessee; Jadice Moore, 30, of Port Gibson, Mississippi; Sarah Richard, 54, of Richland, Mississippi; Jeryl Shaw, 40, of Memphis, Tennessee; and Kimberly Taylor, 36, of Charleston, Mississippi. Cedrick Wilson, 34, of Memphis, Tennessee, was charged in a separate indictment related to the scam in October 2012.
In previous guilty plea hearings, Bowen and Kellogg admitted being paid by Mumford to take numerous tests. Bowen admitted that after he met Mumford Sr. during the 1994-1995 school year – when Bowen was a substitute teacher and Mumford Sr. was the assistant principal at Humes Junior High School – he took at least three to four tests per year from 2000 to 2010. Kellogg admitted that after she met Mumford in May 2009, she took a number of tests over a one and a half year period and received approximately $4,000 from Mumford. Carlos Shaw, who was formerly an assistant principal at the Memphis Academy of Science and Engineering and also taught at Carver High School and Booker T. Washington High School, was first approached by Mumford Sr. approximately ten years ago and admitted taking approximately 10 to 15 tests for payments ranging from $200 to $700. Shantell Shaw admitted that she met Mumford at Trezevant High School in 2008 when she was a new teacher and Mumford, Sr. was her mentor, and that she took approximately 12 to 15 tests for total payments of approximately $8,000.
During Bowen’s guilty plea hearing, it was revealed that investigators began to unravel the ring after Bowen was caught in June 2009 at Arkansas State University in Jonesboro taking an afternoon examination in one man’s name after having taking a morning examination in a woman’s name. Other test-takers paid by Mumford Sr. were at the same test location on the same date doing the same thing. ETS investigated and later referred the case to the Tennessee Department of Education, which referred the case to the Tennessee Bureau of Investigation. After the investigation was brought to the United States Attorney's Office in the summer of 2011, the United States Secret Service also joined the investigation. Investigators interviewed dozens of individuals, and obtained bank, phone and testing records to identify participants in the scheme.
During Jeryl Shaw’s guilty plea hearing, Shaw admitted taking approximately three tests in the 2008-2009 time frame and admitted providing his driver’s license to Mumford via his wife, Shantell Shaw. Mumford used Jeryl Shaw’s driver’s license to create fake identification documents that enabled Jeryl Shaw to take tests on behalf of others. Jeryl Shaw has never been a teacher. He has a degree in polymer chemistry.
This investigation is being conducted by the Tennessee Bureau of Investigation and the United States Secret Service. Assistant U.S. Attorney John Fabian and Special Assistant U.S. Attorney Kirby May represent the government.Ferris Kleem Sentenced to Three Years in Prison, Fined $250,000 for Bribery ConvictionRead the Press Release
Contractor Ferris Kleem was sentenced to three years in prison, fined $250,000 and ordered to pay $24,000 in restitution to Cuyahoga County after previously pleading guilty to one count of bribery concerning programs receiving federal funds, law enforcement officials said.
Kleem, 54, of Berea, engaged in a conspiracy between 2006 through July 28, 2008 in which Kleem provided things of value to Cuyahoga County Commissioner Jimmy Dimora, County Auditor Frank Russo and county employee J. Kevin Kelley in return for those men performing acts and promising to perform official acts to benefit Kleem and his interests, according to court documents.
In 2006, Kleem asked Dimora and Russo to assist him in obtaining a county grant to build a pedestrian bridge at Coe Lake in Berea. County commissioners eventually voted to award a $150,000 grant to the city of Berea for the project, according to court documents.
In 2008, Kleem asked Dimora and Russo to assist his brother with a smoking violation at his restaurant. Dimora made phone calls inquiring about the violation, according to court documents.
In 2008, Kleem helped arrange a trip to Las Vegas for Dimora, Russo, Kelley and others. Kleem gave Dimora and Russo $6,000 in cash each -- $1,000 to cover the cost of airfare and $5,000 for gambling. The money was enough to ensure that Dimora and Russo gambled enough to be “comped” suites at the Mirage, as Kleem had arranged, according to court documents.
While in Las Vegas, Kleem gave Dimora approximately $3,500 in gaming chips. He also hired a prostitute, at Dimora’s request, for $1,000 and escorted the prostitute to Dimora’s suite, according to court documents.
While in Las Vegas, Kleem and Dimora discussed details of bids for work on the county’s Juvenile Justice Center project, work for which Kleem was bidding. They also discussed having a specific inspector assigned to the Snow Road resurfacing project. The inspector was eventually assigned to the job, as a result of Kelley’s efforts and Dimora’s influence, according to court documents.
The case was prosecuted by Assistant United States Attorneys Antoinette T. Bacon, Ann C. Rowland and Nancy L. Kelley following an investigation by the FBI and IRS – Criminal Investigation.
Federal Inmate Pleads Guilty to Assaulting Another InmateRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 46-year-old woman pleaded guilty to assaulting another inmate at the Federal Correctional Institute in Waseca, Minnesota. Felecia Thomas pleaded guilty to one count of assault with a dangerous weapon. She did not enter into a plea agreement with the United States, but, rather, offered a “straight plea” to the single count in the indictment, which was filed on May 15, 2012.
The indictment alleges that on June 10, 2011, Thomas, who was then serving time at the correctional facility in Waseca following a 2004 conviction for arson and use of explosives in commission of a felony, assaulted an inmate with a rope. The rope allegedly had been removed from a laundry bag.
For her crime, Thomas faces a potential maximum penalty of ten years in prison. U.S. District Court Chief Judge Michael J. Davis will determine her sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by the Federal Bureau of Investigation and the U.S. Bureau of Prisons. It is being prosecuted by Assistant U.S. Attorneys John E. Kokkinen and Lola Velazquez-Aguilu.Defendant’s Plead Guilty to Violations of the Racketeer Influenced Corrupt Organization Act, the Federal Gun Control and Controlled Substances Acts, and Obstruction of JusticeRead the Press Release
TRAVIS HUDSON, age 29; RODERICK WIGGINS, age 22; SHAYNE LEBLANC, age 40, all residents of Harvey, Louisiana; as well as TOREY RICHARDSON, age 21, a resident of Marrero, Louisiana; and AKAI SULLIVAN, age 27, a resident of New Orleans, Louisiana, all pled guilty in federal court yesterday before U.S. District Judge Lance M. Africk to Violations of the Racketeer Influenced Corrupt Organization Act, the Federal Gun Control and Controlled Substances Acts, and Obstruction of Justice, announced
U. S. Attorney Dana J. Boente.TRAVIS HUDSON
Pled guilty to:
Count 1 – RICO Conspiracy
Possible sentence – maximum term of life imprisonment, a maximum fine of $250,000.00 and a five years of supervised release following any term of imprisonment.Count 21 – Distribution of Cocaine Base.
Possible sentence – maximum of twenty (20) years imprisonment, a maximum fine of $1,000,000.00, and three (3) years of supervised release following any term of imprisonmentRODERICK WIGGINS and TOREY RICHARDSON, both pled guilty to:
Count 1 – RICO Conspiracy
Possible sentence – each face a maximum term of life imprisonment, a maximum fine of $250,000.00 and five years of supervised release following any term of imprisonment.Count 2 – Conspiracy to Distribute and Possess with Intent to Distribute over 25 grams Cocaine Base
Possible sentence – each face a maximum term of life imprisonment, a fine of up to $10,000,000.00 and at least five (5) years of supervised release following any term of imprisonment.Count 5 – Conspiracy to Possess Firearms During and In Relation to Crimes of Violence and Drug Trafficking Offenses
Possible sentence – each face a maximum of twenty (20) years imprisonment, a maximum fine of $250,000.00, and at least three (3) years supervised release following any term of imprisonment.SHAYNE LEBLANC, pled guilty to a one count Bill of Information with violations of Conspiracy to Manufacture and Possess with the Intent to Distribute a Quantity of Cocaine Base.
LEBLANC faces a maximum term of imprisonment of twenty (20) years imprisonment, a maximum of $1,000,000.00 in fines and at least three (3) years supervised release following any term of imprisonment.AKAI SULLIVAN, pled guilty to Count 6 Obstruction of Justice. SULLIVAN faces a maximum of twenty (20) years imprisonment, a maximum of $250,000.00 in fines and a maximum of three (3) years supervised release following any term of imprisonment.
This case arose out of a joint investigation by ATF, FBI, and the Jefferson Parish Sheriff’s Office. This investigation targeted an area which exhibited a disproportionate amount of violent crimes and narcotics trafficking. During the course of the investigation, specific individuals were identified as the main perpetrators of many of the violent acts and much of the narcotics distribution. It was revealed that a group of individuals operated in various areas of Harvey, Louisiana, specifically the neighborhoods known as Scottsdale and Haydel. This group controlled these areas for their narcotics distribution activities through violence and through threats of violence, to include murder, attempted murder, obstruction and assaults. They were referred to as the “Harvey Hustlers” and/or “Murder Squad”.
The “Murder Squad”, or “MS”, was a faction of the Harvey Hustlers composed primarily of individuals residing in the Harvey, Louisiana area of Jefferson Parish, Louisiana. While they primarily operated on the Westbank of Jefferson Parish, members conducted business in other parts of the Eastern District of Louisiana. The “Harvey Hustlers” also referred to as “HH” originated in the Harvey area in the mid-1980s. Members of the organization “hustled” meaning they distributed illegal narcotics. The original goal of the Harvey Hustlers was to make money from sales of illegal narcotics.
Sentencing for these defendants is scheduled for April 18, 2013.
The case was investigated by the Bureau of Alcohol, Tobacco and Firearms, Federal Bureau Investigation, and the Jefferson Parish Sheriff’s Office. The case is being prosecuted by Assistant United States Attorneys Duane A. Evans and Bill McSherry.
(Download Indictment - TRAVIS HUDSON )
(Download Indictment - RODERICK WIGGINS )
(Download Indictment - TOREY RICHARDSON )
(Download Indictment - SHAYNE LEBLANC )
(Download Indictment - AKAI SULLIVAN )
Defendants Charged in Conspiracy to Manufacture and Pass Counterfeit Currency Are SentencedRead the Press Release
LUBBOCK, Texas — Harley Graves, 29, of Lubbock, Texas, was sentenced this morning by U.S. District Judge Sam R. Cummings to 41 months in federal prison, following his guilty plea in August 2012 to one count of conspiracy to manufacture, possess and pass counterfeit U.S. currency. In addition, Graves was ordered to pay $4,600 restitution, jointly and severally with his two convicted co-defendants. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
The two other defendants who were charged in the case have been convicted and were sentenced last month. Thomas Vasquez, 36, of Lubbock, pleaded guilty to a misprision of a felony and was sentenced to six months in federal prison and Augustine Moreno, 50, pleaded guilty to one count of conspiracy to possess and pass counterfeit U.S. currency and was sentenced to 27 months in federal prison. Graves and Moreno have been in custody; Vasquez was ordered to surrender to the Bureau of Prisons on January 25, 2013.
According to documents filed in the case, Graves admitted that he came to Lubbock to do a large counterfeit deal that was arranged by Vasquez. He also admitted that he manufactured counterfeit U.S. currency in his hotel room in Lubbock. He also admitted that he passed some of that currency at small restaurants in Lubbock. Moreno admitted that he obtained counterfeit currency from Vasquez and that he assisted others in passing the currency by driving them to various locations in his car. Moreno also admitted that he passed several counterfeit bills at small restaurants and a Kohls in Lubbock. Vasquez admitted allowing individuals that he knew possessed the counterfeit currency to use his car to deliver the counterfeit currency to other individuals who would pass it or to individuals who passed the currency themselves, and did not make it known to authorities. He also allowed individuals to stay at his house while making the counterfeit currency.
The case was investigated by the U.S. Secret Service. Assistant U.S. Attorney Ann Roberts was in charge of the prosecution.
Court Finalizes Consent Decree to Transform the New Orleans Police DepartmentRead the Press Release
Today, U.S. District Court for the Eastern District of Louisiana entered an order granting the joint motion of the United States and the city of New Orleans to enter the consent decree regarding the New Orleans Police Department (NOPD). This order is a critical milestone in reforming the long-troubled NOPD and is an important step in dealing with the public safety crisis in New Orleans and in restoring community confidence in the New Orleans criminal justice system. The court’s order ensures critical changes to policy and practices, oversight by a federal monitor and transparency so that the community can continue to participate in and track the reform process. The order finalizes this binding agreement that was extensively negotiated between the department and the city, and allows for that agreement’s immediate implementation. The department and the city signed the agreement in July 2012.
“The Department of Justice appreciates the court’s careful attention to this matter,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “The court’s action today ensures that the people of New Orleans will have a police department that respects the Constitution, ensures public safety and earns the confidence of the community. This decree will provide the city with important tools to reduce crime, ensure effective, constitutional policing and restore public confidence in NOPD.”
As outlined in the court’s order, approval of the consent decree comes after thorough review of the consent decree to determine if it is fair, reasonable and adequate to address the long-standing constitutional deficiencies within NOPD. The review included hearing extensive testimony from the United States, the city, the Office of the Independent Police Monitor, the Fraternal Order of Police and the Police Association of New Orleans and many other New Orleans stakeholders and residents. The testimony reaffirmed both that NOPD engages in unconstitutional conduct, and that there is a public safety crisis in New Orleans that the NOPD can only address by implementing the reforms required by the decree.
The court’s approval of the consent decree comes at a time of continuing and serious public safety challenges in New Orleans.
“The deficiencies within NOPD that the Department of Justice identified during its extensive investigation continue to plague New Orleans,” said Assistant Attorney General Perez. “Time is of the essence. We look forward to the immediate implementation of the agreement, and stand ready to work with all stakeholders in New Orleans to continue the reform process.”
The department opened an investigation into NOPD in May 2010 after Mayor Landrieu asked for the department’s help with a complete transformation of NOPD. After a thorough investigation of NOPD’s policies and practices the department issued a letter of findings in March 2011 that outlined a pattern of unconstitutional conduct and violations of federal law that stemmed from entrenched practices within NOPD. These constitutional violations include use of excessive force; unconstitutional stops, searches and arrests, and; discriminatory and biased policing based on gender, race, national origin and sexual orientation.
“In his first days in office, Mayor Landrieu called for a comprehensive federal civil rights investigation of NOPD, and said that ‘nothing short of the complete transformation is necessary and essential to ensure safety for the citizens of New Orleans.’ This consent decree provides the roadmap for the complete transformation of NOPD,” said Assistant Attorney General Perez.
The court documents can be viewed at www.justice.gov/crt/about/spl/nopd.php.
Contractor Sentenced to Six Months’ Home Confinement for Violating Clean Air Act in Asbestos Removal JobRead the Press Release
CAMDEN, N.J. – A Bergen County, N.J., man was sentenced today to three years of probation, including six months of home confinement, for conspiring to violate the federal Clean Air Act by improperly removing asbestos from a building, U.S. Attorney Paul J. Fishman announced.
Vele Bozinoski, 61, of Elmwood Park, N.J., previously pleaded guilty before U.S. District Judge Noel L. Hillman to an Indictment charging him with violating the Clean Air Act’s asbestos work practice standards and with conspiring with others to commit that offense. Judge Hillman imposed the sentence today in Camden federal court.According to documents filed in the case and statements made in court:
In February 2007, Bozinoski hired workers to remove insulation at the former Garden State Paper Mill, a facility that contained more than 160 linear feet of asbestos-containing material. Bozinoski conspired with others to fail to thoroughly inspect the facility for the presence of asbestos or to notify the Environmental Protection Agency of the presence of asbestos, prior to commencing insulation removal, as was required by federal law. Bozinoski also conspired with others to fail to ensure that material containing asbestos was wet prior to stripping it off pipes and other facility components or to seal asbestos-containing material in leak-tight containers until it was collected for disposal.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge David Velazquez; and special agents of the U.S. Environmental Protection Agency, Criminal Investigation Division, under the direction of Special Agent in Charge William V. Lometti, with the investigation leading to today’s sentence.The Government is represented by Assistant U.S. Attorney Kathleen P. O'Leary of the U.S. Attorney's Office Health Care and Government Fraud Unit in Newark.
13-021
Defense counsel: Lori M. Koch Esq., Assistant Federal Public Defender, Newark
Connecticut Couple Arrested on Tax Evasion and Conspiracy ChargesRead the Press Release
Husband and wife John and Sandra Cote, both of Brooklyn, Conn., were arrested on tax charges, the Justice Department and Internal Revenue Service (IRS) announced today. On Dec. 18, 2012, a federal grand jury in New Haven, Conn., returned an indictment charging the Cotes with conspiracy to defraud the IRS and four counts of tax evasion. Sandra Cote was arrested and appeared in court on Jan. 9, 2013, in Providence, R.I. John Cote was arrested Jan. 10, 2013, and his initial appearance in court took place today in Miami.
According to the indictment, the Cotes had not filed a timely or valid tax return since 1994, despite earning income from John Cote’s work as a consultant in the high technology welding industry. The IRS assessed John Cote’s unpaid 1995-1996 taxes based on Forms 1099-MISC. Per the indictment, the Cotes responded to IRS efforts to assess and collect taxes for these years by concealing income and assets from the government and by submitting obstructive letters and other documents, including fake financial instruments and false criminal complaints against IRS employees. For the years 1998-2009, the Cotes allegedly prevented the companies for which John Cote consulted from filing Forms 1099 bearing his Social Security Number with the IRS and caused these companies to pay his compensation to nominee bank accounts, including accounts in Costa Rica, Antigua and Sweden. The Cotes also used a nominee entity called “Sandra Cote, Overseer of God's Battery Ministry, and Her Successors, a Corporation Sole (*an unincorporated Altruistic Spiritual Order)” to conceal income and assets from the IRS. In 2003, Sandra Cote conveyed their personal residence to this entity.
An indictment merely alleges that crimes have been committed and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted on all counts, the Cotes face a maximum potential sentence of 25 years in prison and fines of up to $1,250,000.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Melissa Siskind and Jeff McLellan of the Justice Department’s Tax Division are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax .
Collin County Couple Arrested for Health Care Fraud ViolationsRead the Press Release
Department of Justice
Office of Public AffairsSHERMAN, Texas – A Collin County, Texas, husband and wife have been arrested and charged with health care fraud violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
John Mitchell Rutoskey, 59, and Gwenice Rutoskey , 54, were arrested early this morning at their McKinney, Texas, home without incident. On Dec. 12, 2012, the Rutoskey’s were named in an indictment returned by a federal grand jury charging them with conspiracy to commit health care fraud, six counts of health care fraud, causing false representations in relation to federal health care programs, and two counts of money laundering. The Rutoskey’s will make an initial appearance today before U.S. Magistrate Judge Amos Mazzant.
If convicted of these charges, the Rutoskey’s face up to 10 years in federal prison for each health care fraud and money laundering charge. They face up to five years in federal prison for the charge of causing false representations in relation to federal health care fraud programs.
This case is being investigated by the Federal Bureau of Investigation, the Department of Health and Human Services, the Texas Attorney General’s Office, and the McKinney Police Department. This case is being prosecuted by Assistant U.S. Attorney James Peacock.
Any individuals with knowledge of these or other health care fraud violations are encouraged to contact the Department of Health and Human Services’ fraud hotline at 1-800-HHS-TIPS (447-8477)
A grand jury indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
####Chicago Man Pleads Guilty to Bringing Minor to Illinois for Prostitution; Admits Forced Sex-Trafficking of Four VictimsRead the Press Release
CHICAGO — A Chicago man is facing a mandatory minimum of 10 years and a maximum sentence of life in prison after pleading guilty today to transporting a minor from Wisconsin to Illinois for prostitution. The defendant, CARL BRANDON SMITH, also admitted that he engaged in forced sex-trafficking of the victim, as well as a second minor and two young adult women. Between 2010 and early 2012, Smith forced his victims to engage in commercial sex acts, used physical violence, and threatened to kill them if they ever left him. The guilty plea was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Thomas R. Trautmann, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
Smith, also known as “Moo,” 25, of Chicago, is scheduled to be sentenced on April 5 by U.S. District Judge Amy St. Eve. Smith has remained in federal custody since he was arrested last April last and charged with two counts of sex-trafficking of a minor and by force, two counts of sex-trafficking by force, and one count of transporting a minor across state lines to engage in prostitution.
According to a plea agreement, Smith met Victim B in December 2010 and began contacting her via phone, text, and social media, asking her to move to Chicago, intending that she be his “girlfriend” and also engage in prostitution. In February 2011, Smith drove from Chicago to Victim B’s residence in Wisconsin, and then drove her from Wisconsin to his apartment in Chicago, acknowledging that she was under 18 at the time.
Once in Chicago, Smith “dated” Victim B for approximately a week before Victim B began working as a prostitute under his employ. Between February and July 2011, Victim B engaged in commercial sex acts at Smith’s direction. Smith acted as Victim B’s pimp, advertised her for commercial sex on internet sites, and instructed her to have sex with customers in his apartment and in area motels. Victim B had sex with numerous men per week and gave a portion of the money she earned to Smith.
As part of the guilty plea, Smith stipulated that he acted as a pimp for Victim A, also a minor, and forced her to engage in prostitution during 2010. Smith inflicted physical violence on Victim A when she gave him “attitude” or when she indicated that she no longer wanted to work as a prostitute. On one occasion, Smith beat Victim A so severely that one eye swelled shut.
Similarly, Smith stipulated to using and threatening violence against both Victims C and D, both adults, while acting as their pimp and forcing them to engage in commercial sex acts in 2011 and early 2012.
The DuPage County Sheriff’s Office, the Naperville and Aurora police departments, and the Cook County Human Trafficking Task Force assisted in the investigation. The government is being represented by Assistant U.S. Attorney Christopher Grohman and Felicia Manno Alesia.
Plea Agreement
California Man Sentenced to 34 Years in Prison for Traveling to the Dominican Republic and Sexually Abusing Minor BoysRead the Press Release
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Alysa D. Erichs, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), Miami Field Office, announce that defendant Troy Douglas Brimm, 50, of Modesto, California, was sentenced on Thursday, January 10, 2013, to 34 years in prison, followed by a life term of supervised release for traveling from the United States to the Dominican Republic and engaging in illicit sexual conduct with minors.
On August 29, 2012, a jury convicted the defendant of two counts of traveling from the United States to Puerto Plata, Dominican Republic, to engage in illicit sexual conduct with minor boys, and committing the offense while required to be registered as a previously convicted sex offender under the federal Sex Offender Registration and Notification Act and California law.
According to trial evidence, on October 23, 1991, Brimm was convicted of sodomy with a 16-year old boy in Stanislaus County, California. On January 21, 1997, Brimm was convicted of receipt and distribution of material involving the sexual exploitation of minors in the United States District Court for the Eastern District of California. On July 18, 2001, Brimm was convicted of performing lewd and lascivious acts with a child under fourteen (14) years old, again in Stanislaus County, California. Brimm was required to register as a sex offender as a result of these prior convictions.
Evidence at trial also showed, that on October 20, 2009, Brimm flew to the Dominican Republic, where he sought out shoe-shine boys, offered them food and money, and then performed sex acts with these boys.
Mr. Ferrer commended the investigative efforts of ICE-HSI, the Dominican National Police, and the Puerto Plata Prosecutor’s Office. Mr. Ferrer also thanked the Miami-Dade Police Department and the United States Marshal’s Service for their assistance in this investigation. The case was prosecuted by Assistant U.S. Attorneys Maria Medetis and Francis Viamontes.
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.
Brandon Man Sentenced to 32 Years in Federal Prison for Armed RobberiesRead the Press Release
Tampa, Florida - U.S. District Judge Virginia M. Hernandez Covington today sentenced Yener Vahit Belli (28, Brandon) to 32 years in federal prison for brandishing a firearm during two different armed robberies. The court also sentenced Belli to a five-year term of supervised release following his incarceration, and ordered him to pay restitution to several of his victims.
Belli pleaded guilty on October 4, 2012. Previously, co-defendant Kara Denise Guggino, who admitted to acting as Belli's getaway driver for several of his armed robberies, pleaded guilty and was sentenced to 10 years incarceration.
According to court documents, Belli, aided and abetted by co-defendant Guggino, committed a series of armed robberies of convenience stores in October 2010. On October 13, 2010, Belli, with assistance from Guggino, committed an armed robbery of a Chevron gas station and convenience store located at 939 Brandon Boulevard, in Brandon. Belli went into the convenience store brandishing a Tec-9 semi-automatic firearm, and demanded that the store clerk put the money from the register into a paper bag. He also demanded cigarettes. Belli stole $580 in cash from the store and a pack of cigarettes.
On October 19, 2010, Belli, again along with Guggino, committed an armed robbery of a 7-11 store located at 1531 Brandon Boulevard, in Brandon. Belli went in the store displayed a Tec-9 semi-automatic firearm, demanded cash, a carton of Newport cigarettes, and scratch-off lottery tickets. He ordered customers to lay on the floor, prior to fleeing the store with $72 in cash and 61 lottery tickets. When Belli and Guggino were arrested on October 22, 2010, a Tec-9, 9mm semi-automatic firearm that Belli had used in the commission of several of the armed robberies was recovered in the car in which the two had been driving.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and the Hillsborough County Sheriff's Office. It was prosecuted by Assistant United States Attorney Mark E. Bini, Colleen Murphy-Davis, and Jay L. Hoffer.
Bergen County, N.J., Man Convicted of Distributing, Receiving and Possessing Images of Child Sexual AbuseRead the Press Release
NEWARK, N.J. – A Bergen County, N.J., man was convicted today of two counts of distribution of child pornography, two counts of receipt of child pornography and one count of possession of child pornography, U.S. Attorney Paul J. Fishman announced.
The jury returned the guilty verdict against Martin J. Villalobos, 41, of Lodi, N.J., following a one-week trial before U.S. District Judge Stanley R. Chesler in Newark federal court.
According to documents filed in this case and the evidence at trial:
As part of an undercover investigation, special agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations discovered an individual sharing images of child pornography over the internet. Agents used the IP address of the computer to identify Villalobos as the individual sharing the child pornography. After obtaining a search warrant, agents found Villalobos in a locked bedroom with eight computer hard drives, more than 100 DVDs and other electronic media. A forensic analysis of the materials found in Villalobos’s bedroom revealed that he was in possession of more than 5,000 photographs and more than 150 videos of minors and prepubescent minors, nude and/or engaged in sexual acts with one another and with adults. Other evidence found in Villalobos’s possession showed that he routinely used the internet to solicit, receive and distribute child pornography.
The receipt and distribution counts each carry a minimum penalty of five years in prison and a maximum penalty of 20 years in prison. The possession count carries a maximum penalty of 10 years in prison. Sentencing is scheduled for April 11, 2013.
U.S. Attorney Fishman credited special agents of ICE HSI, under the direction of Special Agent in Charge Andrew M. McLees in Newark, for the investigation leading to today’s conviction.
The government is represented Assistant U.S. Attorneys Joseph B. Shumofsky and Nicholas P. Grippo of the U.S. Attorney’s Office Criminal Division in Newark.
13-023
Defense counsel: Pro se
Axius Ceo Roland Kaufmann Pleads Guilty to Conspiracy to Pay Bribes in Stock SalesRead the Press Release
WASHINGTON – Roland Kaufmann, CEO of Axius Inc., pleaded guilty today in Brooklyn for conspiring to bribe stock brokers, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of New York Loretta E. Lynch.
Kaufmann, 60, a Swiss citizen, pleaded guilty before U.S. District Judge John Gleeson in the Eastern District of New York to one count of conspiracy to violate the Travel Act.
“Roland Kaufmann conspired to bribe stock brokers and fleece investors in Axius stock,” said Assistant Attorney General Breuer. “He took the crooked path, and now faces the prospect of years in prison. Although he committed his crimes from outside the United States, U.S. authorities tracked him down and he has now been held to account. This case shows our determination to prosecute all those who seek to corrupt U.S. securities markets.”
“Roland Kaufman sought to game the system with his scheme to bribe stockholders to help him artificially raise the price of his company’s stock,” said U.S. Attorney Lynch. “He reached across the ocean to insert his deception into U.S. markets, thereby placing investors at risk. We will continue to bring our resources to bear against anyone who would harm the integrity of United States capital markets for their own personal financial gain, even when those who try to exploit our investors are hatching their schemes from abroad.”
“The flagrant market manipulation engaged in by Kaufmann was designed to make him rich,” said George Venizelos, Assistant Director in Charge, FBI New York Field Office. “Absent the undercover agent, the scheme also would have made honest investors much poorer. The FBI is committed to policing the securities industry to prevent unjust enrichment for cheaters, victimization of honest investors, and the undermining of public confidence in market integrity.”
“This case demonstrates the value of a coordinated approach by law enforcement authorities,” said Richard Weber, Chief, Internal Revenue Service (IRS) Criminal Investigation. “As a result of the collaborative effort in this investigation, investors were protected from further financial harm. IRS Criminal Investigation is always ready to lend its financial investigative expertise to the investigation of complex and sophisticated financial crimes.”
Kaufmann admitted to conspiring with co-defendant Jean-Pierre Neuhaus, another Swiss citizen, to violate the Travel Act by bribing stock brokers. Axius, which refers to itself as a “holding company and business incubator” that develops other businesses, is incorporated in Nevada, and its principal offices are in Dubai, United Arab Emirates. As part of the scheme, Kaufmann and Neuhaus, while located overseas, enlisted the assistance of an individual they believed had access to a group of corrupt stock brokers; this individual was in fact an undercover law enforcement agent. Kaufmann and Neuhaus believed that the undercover agent controlled a network of stockbrokers in the United States with discretionary authority to trade stocks on behalf of their clients.
According to court documents, Kaufmann and Neuhaus instructed the undercover agent to direct brokers to purchase Axius shares that were owned or controlled by Kaufmann in return for a secret kickback of approximately 26 to 28 percent of the sale price. Kaufmann and Neuhaus instructed the undercover agent as to the price the brokers should pay for the stock, and Kaufmann specifically instructed the undercover agent, in Neuhaus’s presence, that the brokers would have to pay gradually higher prices for the shares they were buying. Kaufmann and Neuhaus directed the undercover agent that the brokers were to refrain from selling the Axius shares they purchased on behalf of their clients for a one-year period. By preventing sales of Axius stock, Kaufmann and Neuhaus intended to maintain the fraudulently inflated share price for Axius stock. Kaufmann and Neuhaus agreed to sell approximately $3.5 million to $5 million worth of Axius shares through the undercover agent’s stock brokers.
Kaufmann and Neuhaus were arrested on March 8, 2012. On Oct. 10, 2012, Neuhaus pleaded guilty to conspiracy to commit securities fraud and violate the Travel Act.
At sentencing, scheduled for May 17, 2013, Kaufmann faces a maximum penalty of five years in prison. As part of his plea agreement, Kaufmann agreed to forfeit $298,740 that victims lost as a result of the crime.
This case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ilene Jaroslaw of the Eastern District of New York. The case was investigated by the FBI New York Field Office and the IRS New York Field Office. The department also thanks the Securities and Exchange Commission for its assistance in this matter.
Axius Ceo Roland Kaufmann Pleads Guilty <br /> to Conspiracy to Pay Bribes in Stock SalesRead the Press Release
WASHINGTON – Roland Kaufmann, CEO of Axius Inc., pleaded guilty today in Brooklyn for conspiring to bribe stock brokers, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of New York Loretta E. Lynch.
Kaufmann, 60, a Swiss citizen, pleaded guilty before U.S. District Judge John Gleeson in the Eastern District of New York to one count of conspiracy to violate the Travel Act.
“Roland Kaufmann conspired to bribe stock brokers and fleece investors in Axius stock,” said Assistant Attorney General Breuer. “He took the crooked path, and now faces the prospect of years in prison. Although he committed his crimes from outside the United States, U.S. authorities tracked him down and he has now been held to account. This case shows our determination to prosecute all those who seek to corrupt U.S. securities markets.”
“Roland Kaufman sought to game the system with his scheme to bribe stockholders to help him artificially raise the price of his company’s stock,” said U.S. Attorney Lynch. “He reached across the ocean to insert his deception into U.S. markets, thereby placing investors at risk. We will continue to bring our resources to bear against anyone who would harm the integrity of United States capital markets for their own personal financial gain, even when those who try to exploit our investors are hatching their schemes from abroad.”
“The flagrant market manipulation engaged in by Kaufmann was designed to make him rich,” said George Venizelos, Assistant Director in Charge, FBI New York Field Office. “Absent the undercover agent, the scheme also would have made honest investors much poorer. The FBI is committed to policing the securities industry to prevent unjust enrichment for cheaters, victimization of honest investors, and the undermining of public confidence in market integrity.”
“This case demonstrates the value of a coordinated approach by law enforcement authorities,” said Richard Weber, Chief, Internal Revenue Service (IRS) Criminal Investigation. “As a result of the collaborative effort in this investigation, investors were protected from further financial harm. IRS Criminal Investigation is always ready to lend its financial investigative expertise to the investigation of complex and sophisticated financial crimes.”
Kaufmann admitted to conspiring with co-defendant Jean-Pierre Neuhaus, another Swiss citizen, to violate the Travel Act by bribing stock brokers. Axius, which refers to itself as a “holding company and business incubator” that develops other businesses, is incorporated in Nevada, and its principal offices are in Dubai, United Arab Emirates. As part of the scheme, Kaufmann and Neuhaus, while located overseas, enlisted the assistance of an individual they believed had access to a group of corrupt stock brokers; this individual was in fact an undercover law enforcement agent. Kaufmann and Neuhaus believed that the undercover agent controlled a network of stockbrokers in the United States with discretionary authority to trade stocks on behalf of their clients.
According to court documents, Kaufmann and Neuhaus instructed the undercover agent to direct brokers to purchase Axius shares that were owned or controlled by Kaufmann in return for a secret kickback of approximately 26 to 28 percent of the sale price. Kaufmann and Neuhaus instructed the undercover agent as to the price the brokers should pay for the stock, and Kaufmann specifically instructed the undercover agent, in Neuhaus’s presence, that the brokers would have to pay gradually higher prices for the shares they were buying. Kaufmann and Neuhaus directed the undercover agent that the brokers were to refrain from selling the Axius shares they purchased on behalf of their clients for a one-year period. By preventing sales of Axius stock, Kaufmann and Neuhaus intended to maintain the fraudulently inflated share price for Axius stock. Kaufmann and Neuhaus agreed to sell approximately $3.5 million to $5 million worth of Axius shares through the undercover agent’s stock brokers.
Kaufmann and Neuhaus were arrested on March 8, 2012. On Oct. 10, 2012, Neuhaus pleaded guilty to conspiracy to commit securities fraud and violate the Travel Act.
At sentencing, scheduled for May 17, 2013, Kaufmann faces a maximum penalty of five years in prison. As part of his plea agreement, Kaufmann agreed to forfeit $298,740 that victims lost as a result of the crime.
This case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ilene Jaroslaw of the Eastern District of New York. The case was investigated by the FBI New York Field Office and the IRS New York Field Office. The department also thanks the Securities and Exchange Commission for its assistance in this matter.
Anchorage Woman sentenced to 84 monthsRead the Press Release
Anchorage, Alaska B U.S. Attorney Karen L. Loeffler announced today that a woman from Anchorage, Alaska was sentenced on Thursday, January 10, 2013, in federal court in Anchorage for her role in an Anchorage drug distribution conspiracy.
Erica Tolliver, 35, from Anchorage, Alaska, was sentenced by United States District Court Judge Timothy M. Burgess to 84 months in prison and 3 years of supervised release for her role in a conspiracy to distribute crack cocaine in Anchorage. Tolliver had previously plead guilty to an indictment charging her and her co-conspirator, Kelvin Washington, a/k/a, “Special K,” with one count of drug conspiracy. Her co-conspirator, Kelvin Washington, a/k/a, “Special K,” was sentenced to 96 months in prison and 3 years of supervised release for his role in the conspiracy on November 20, 2012.
According to Assistant U.S. Attorney Kelly Cavanaugh, who prosecuted the case, Tolliver and Washington made several sales of crack cocaine out of their shared residence in an Anchorage apartment to a confidential informant working for the Anchorage Police. Anchorage Police searched the apartment and found more crack and powder cocaine, as well as two firearms, and nearly $10,000 in cash. Interspersed with the $10,000, Anchorage Police found money they had used to purchase the crack cocaine from the co-conspirators. The total amount of cocaine that was recovered through controlled sales to a confidential informant and during the search of the apartment was 26 grams of crack cocaine and 68 grams of powder cocaine.
Ms. Loeffler commended the Anchorage Police Department, Alaska State Troopers and Drug Enforcement Administration for the investigation leading to the successful prosecution of Tolliver.
Allentown Couple Charged in Straw Purchase SchemeRead the Press Release
PHILADELPHIA - Tracy Martin, 48, and Marie Hinds, 41, both of Allentown, PA were charged today by indictment with orchestrating the straw purchase of two guns, announced United States Attorney Zane David Memeger. According to the indictment, Martin directed Hinds to purchase a 9mm pistol and a .32 caliber pistol for him, in January 2011, from an Army Navy store in Whitehall, PA. The couple allegedly lied on the federal firearms form by indicating that the guns were for Hinds. The indictment further alleges that Martin lied to an agent with the Bureau of Alcohol, Tobacco, Firearms, and Explosives by claiming the guns were secured in a safe in his home when he knew they were not.
If convicted, Martin faces a maximum possible sentence of 15 years in prison, three years of supervised release, a fine of up to $750,000; Hinds faces a maximum possible sentence of 10 years in prison, three years of supervised release, and a fine of up to $500,000.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and is being prosecuted by Assistant United States Attorney Joseph LaBar.
Click here to view the indictment
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Alexandria Man Sentenced to 25 Years for Shooting Military Buildings in Northern VirginiaRead the Press Release
ALEXANDRIA, Va. – Yonathan Melaku, 24, of Alexandria, Va., was sentenced today to 25 years in prison, followed by 10 years of supervised release, for damaging property and firearm violations involving five separate shootings at military installations in Northern Virginia between October and November 2010 and attempting to injure veterans’ memorials at Arlington National Cemetery.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Debra Evans Smith, Acting Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by United States District Judge Gerald Bruce Lee.
On Jan. 26, 2012, Melaku pled guilty to a three-count information that included injuring property of the United States, use of a firearm during a crime of violence, and attempted injury to veterans’ memorials on U.S. property. The defense and government jointly recommended in the plea agreement a sentence of 25 years in prison.
“Yonathan Melaku is a self-radicalized terrorist who carried out a campaign of fear that escalated until his arrest,” said U.S. Attorney MacBride. “He took calculated steps to target specific military buildings, cover up his crimes, and plan even more destruction should his message not be heard. This sentence is just punishment for the danger he poses to our community.”
“The partnerships and resources shared on the FBI's Joint Terrorism Task Force enhanced the investigation into the multiple shootings that threatened our region and ultimately resulted in today’s sentence,” said FBI Acting ADIC Smith. “I want to thank our law enforcement partners who make up the JTTF including Prince William County Police, Virginia State Police, Fairfax and Arlington Police, the Naval Criminal Investigative Service, the Coast Guard Investigative Service, U.S. Park Police, and Pentagon Force Protection Agency, as well as the Military District of Washington and the U.S. Marine Corps for their dedicated work throughout this investigation.”
According to court records, Melaku carried out a series of five shootings from Oct. 17, 2010, through Nov. 2, 2010, at the following locations: the National Museum of the Marine Corps (twice), the Pentagon, a Marine Corps recruiting sub-station in Chantilly, Va., and a U.S. Coast Guard recruiting office in Woodbridge, Va. Each shooting took place late at night or early in the morning and involved multiple 9mm rounds fired at each building. The cost for repairs at the facilities exceeded $100,000.
During the second shooting at the National Museum of the Marine Corps, Melaku set up a video camera within the interior of his vehicle to record the shooting incident. The video shows Melaku repeatedly firing a handgun out the passenger-side window, and he narrates the incident on the video and states, among other things: That’s my target. That’s the military building. It’s going to be attacked” and at the conclusion of multiple shots, exclaiming “Allahu Akbar” repeatedly.
Melaku attempted to flee law enforcement after being spotted on the property of Ft. Myer in Arlington, Va., at approximately 1:30 a.m. on June 17, 2011. During the pursuit, he dropped a backpack that contained numerous spent 9mm shell casings; four bags containing ammonium nitrate, and a spiral notebook with numerous Arabic statements referencing the Taliban, al Qaeda, Osama bin Laden, “The Path to Jihad,” as well as a list of several other individuals associated with foreign terrorist organizations.
At the time of his apprehension, Melaku was attempting to enter the area of Arlington National Cemetery containing graves of deceased Iraq and Afghanistan war veterans, intending to desecrate and injure the grave markers by spray-painting the markers with Arabic statements and by leaving the ammonium nitrate he was carrying at the sites of the grave markers.
On June 17, 2011, during a search of his residence, FBI search teams found Melaku had stored within the bedroom closet of his residence a typed list titled “Timer” that included nine items that Melaku admitted are consistent with what would be required to construct the firing mechanism for an explosive device. Four of those items had been crossed through.
In interviews with law enforcement after his arrest, Melaku said he targeted military-associated buildings to send a message that the U.S. should not be involved in the Iraq and Afghanistan wars and to intimidate those who supported U.S. involvement. He planned to desecrate nearly 2,400 grave markers at Arlington National Cemetery and leave ammonium nitrate at the scene to instill fear in the public. He stated that he planned further crimes, including blowing up a military fuel truck, if his message was not heard.
The investigation was conducted by the FBI Washington Field Office’s Joint Terrorism Task Force, including the police departments of Arlington County, Fairfax County and Prince William County; the Pentagon Force Protection Agency; the Virginia State Police; the Naval Criminal Investigative Service; the Coast Guard Investigative Service; the U.S. Park Police; U.S. Marine Corps Base Quantico; and the Military District of Washington Provost Marshal Office.
Assistant United States Attorneys Daniel Grooms, Neil Hammerstrom, and Lynn Haaland of the National Security and International Crime Unit are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Alabama Man Pleads Guilty to Stolen Identity Refund FraudRead the Press Release
Washington - Kenneth Jerome Blackmon Jr., a resident of Montgomery, Ala., pleaded guilty today to aggravated identity theft and access device fraud, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents, Blackmon was involved in a scheme to use stolen identities to file false federal income tax returns with the IRS. Blackmon admitted to acquiring identity information, to using that information on false tax returns, and to directing fraudulent tax refunds onto debit cards. He admitted to possessing at least fifteen Social Security numbers for the purpose of obtaining fraudulent tax refunds from the IRS.
Blackmon faces a maximum potential sentence of 10 years in prison for the access device fraud count and a mandatory two-year sentence for the aggravated identity theft count. He is also subject to fines and mandatory restitution.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Justin Gelfand and Jason Poole of the Justice Department’s Tax Division are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at justice.gov/tax.
PRESS CONTACT: Clark Morris
Email: [email protected]
Telephone: (334) 551-1755
Fax: (334) 223-761723 Defendants Indicted on Federal Drug Trafficking ChargesRead the Press Release
SAVANNAH, GA - Today, a federal grand jury returned an Indictment charging 23 defendants with conspiracy to distribute large amounts of marijuana, cocaine and crack cocaine in the Southern District of Georgia and elsewhere. One of the defendants is also charged with the unlawful possession of 23 kilograms of cocaine with the intent to distribute it.
The indictments follow a two-year Organized Crime Drug Enforcement Task Force (OCDETF) investigation into drug trafficking activities within Savannah, Atlanta and elsewhere. Agents of the Drug Enforcement Administration (DEA), Chatham County Counter-Narcotics Team (CNT), Beaufort County South Carolina Sheriff’s Department, and the South Carolina Law Enforcement Division, among other agencies conducted the joint investigation. The investigation culminated in arrests and search warrants being executed on November 29, 2012, in the following Georgia locations: Pooler, Garden City, Savannah, Atlanta, and Brunswick. Search Warrants were also executed in South Carolina. During the investigation, agents seized kilograms of cocaine with an estimated street value of over $2.7 million. Agents seized pounds of marijuana, with a street value of almost $50,000, over $300,000 in cash, and numerous automobiles. Additionally, agents seized 10 firearms from convicted felons.
United States Attorney Edward Tarver said, “Drug dealers beware. If you are pushing poison into our community, law enforcement will unite. We will hunt you down. We will find you. We will prosecute you to the fullest extent of the law, and we will forfeit your property.”
The 23 defendants indicted on federal charges include:
TELLY SAVALAS RILEY, (Age 37, Crescent, Georgia) a/k/a “Jack,”
a/k/a “KoJak,”
GRILLY HOLLOWAY, JR., (Age 33, Savannah, Georgia)
a/k/a “Cheese,”
a/k/a “Grill Cheese,”
RASHAWN AHAMD STEWART, (Age 31, Savannah, Georgia)
a/k/a “Black,”
a/k/a “Magic,”
a/k/a “Black Magic,”
a/k/a “Smokey,”
a/k/a/ “Spot,”
STEVEN PATRICK MCCOY, (Age 37, Savannah, Georgia)
a/k/a “Patche,”
a/k/a “Scratch,”
a/k/a “Lil Pat,”
a/k/a “Project,”
JACK LEE BROWN, (Age 42, Savannah, Georgia)
a/k/a “Smooth,”
ANTHONY DETHER AARON, (Age 35, Savannah, Georgia)
a/k/a “The Tire Doctor,”
a/k/a “Joe Jizzle,”
a/k/a “Jizzleasy,”
LEONARD ANTHONY KENNEDY, (Age 36, Savannah, Georgia)
a/k/a “Jamal Harris,”
a/k/a “Bernard Anthony Gramm,”
JARVIS KING, (Age 42, South Carolina)
a/k/a “Jeezy,”
a/k/a “Anthony Jarvis King,”
a/k/a “Anthony Heyward,”
a/k/a “Timothy Monroe Hughes,”
a/k/a “Ghost,”
CHAD FITZGERALD MCCOY, (Age 31, Atlanta, Georgia)
a/k/a “Feezy,”
MICHAEL JERNARD SINGLETON, (Age 29, Savannah, Georgia)
a/k/a “Cheese,”
DYSHAWN JAMEL BEASLEY, (Age 34, Savannah, Georgia)
a/k/a “Aubrey Beasley,”
LEROY CHISHOLM, (Age 37, Savannah, Georgia)
a/k/a “Fats,”
RON BERNARD ALLEN, (Age 36, Savannah, Georgia)
a/k/a “Ron Low,”
VINCENT BRYANT, (Age 43, Savannah, Georgia)
a/k/a “Vincent Lonon,”
a/k/a “Chill,”
a/k/a “Chilly,”
RICARDO JAMAINE CRAWFORD, (Age 41, Savannah, Georgia)
a/k/a “Rico,”
JAWYANNA PORCHAI PRINGLE, (Age 29, Savannah, Georgia)
a/k/a “Jiggie,”
JOSEPH LAMAR MEDLOCK, (Age 29, South Carolina)
a/k/a “Poochie Medlock,”
MICHAEL LAVON BOSTIC, (Age 33, Savannah, Georgia)
a/k/a “Mike B,”
MICHAEL DEWAYNE JACKSON (Age 40, Jacksonville, Florida)
EDWARD LEROY WILLIAMS, (Age 44, Crescent, Georgia)
GEORGE LENARD MORAN, (Age 30, Crescent, Georgia)
WILLIE JONES, (Age 30, Savannah, Georgia)
a/k/a “Willie Banks,”
a/k/a “Zay Glass,”
a/k/a “Mike James,”
a/k/a “Wille James,”
a/k/a “Orlando Norvell King,”
a/k/a “Willie Pollie,” and
JAMES WRIGHT (Age 38, Savannah, Georgia)The defendants face a possible life sentence if convicted of the charges. Mr. Tarver stressed that an indictment is only an accusation and is not evidence of guilt. The Defendants are entitled to a fair trial, during which it will be the Government’s burden to prove the defendants’ guilt beyond a reasonable doubt.
Assistant United States Attorneys E. Greg Gilluly, Jr. and Karl I. Knoche are prosecuting the case for the United States. For additional information, contact First Assistant United States Attorney James D. Durham at (912) 201-2547.100-month Sentence for Convicted Felon Who Had 9 Firearms, MarijuanaRead the Press Release
CONTACT: Fred Alverson
Public Affairs Officer
COLUMBUS – David P. Crail, 35, of Dublin, Ohio was sentenced to 100 months in prison for being a convicted felon in possession of firearms, growing marijuana at a house in Dublin, Ohio and making a false statement in an application for a U.S. passport.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), Columbus Police Chief Kimberly Jacobs and Franklin County Sheriff Zach Scott announced the sentence handed down today by U.S. District Judge Algenon L. Marbley.
According to court documents, members of the FBI Columbus Metropolitan Violent Crimes Task Force tracked Crail to 3256 Rothschild Court in Dublin on April 27, 2010 after they received information from the FBI in Michigan that Crail was wanted there. Crail was living in Dublin at the time under the name of Raymond Howard Lyons. Crail had applied for a passport using fraudulent documents with that name.
When task force officers searched the house, they found an indoor marijuana growing operation and seized 130 marijuana plants. Investigators also found three handguns, five rifles and a shotgun located in Crail’s bedroom. Task force officers arrested Crail.
Crail pleaded guilty on October 19, 2012 to one count of manufacturing marijuana, one count of illegally transporting firearms, and one count of making a false application on a passport. He was sentenced to 100 months on each count with the sentences to run concurrently. He has been in custody since his arrest.
Crail was convicted in February 2000 on state charges of assault with a weapon in Michigan. Federal law prohibits convicted felons from owning or possessing firearms or ammunition.
“The defendant committed three separate offenses while on the run from felony charges in Michigan,” Assistant U.S. Attorney David Bosley wrote in a memorandum filed with the court prior to sentencing. “He also used this name to buy firearms and apply for a United States Passport. The defendant acquired the numerous firearms in his residence after being convicted of a felony and some of them while on the run for new felony charges.”
Stewart commended the cooperative investigation by members of the task force and Assistant U.S. Attorney Bosley, who prosecuted the case on behalf of the U.S. government.
Thursday 10 January 2013
Wyoming Man Sentenced for Assault Resulting in Serious Bodily InjuryRead the Press Release
U.S. Attorney for the District of Wyoming Christopher A. Crofts announced today that on January 4, 2013, Byron Friday, a 47 year old Northern Arapaho Tribal Member, was sentenced for assaulting a woman on the Wind River Indian Reservation, resulting in serious bodily injury to the woman. The case involved an incident on May 11, 2012, wherein Friday assaulted the victim and her children, who were trying to get Friday out of their home. Mr. Friday was sentenced by Chief U.S. District Judge Nancy D. Freudenthal, pursuant to a plea agreement, to 20 months imprisonment, three years of supervised release, and a $100.00 special assessment. The case was investigated by the Bureau of Indian Affairs and the Federal Bureau of Investigation.
Woman Convicted on Federal Child Exploitation ChargesRead the Press Release
CONCORD, N.H. – Lisa Biron, 43, of Manchester was convicted today in United States District Court for the District of New Hampshire on child exploitation charges, including transportation of a child for illegal sexual conduct and manufacturing and possessing child pornography, announced United States Attorney John P. Kacavas.
The investigation began in September of last year when an 18-year-old male went to the Manchester Police and reported that he met the defendant, Lisa Biron on Craig’s List and that she had shown him videos of a minor child engaged in sexual activity. The investigation then revealed that in May of 2012, the defendant took a minor child to Ontario, Canada where she produced videos of that minor engaged in sexual activity. A search warrant was executed for Lisa Biron’s computer which revealed that she had produced additional images of child pornography.
U.S. Attorney Kacavas would like to thank the Federal Bureau of Investigation, Department of Homeland Security Immigration and Customs Enforcement, Customs and Border Protection, the Hillsborough County Attorney’s Office, the Manchester Police Department, the Strafford County House of Corrections and the Ontario Provincial Police for their efforts in bringing this case to a successful prosecution.West Virginia Attorney Sentenced to Federal Prison Time for Tax EvasionRead the Press Release
Mullins failed to pay more than $389,000 in taxes; defendant also overbilled public defender program by nearly a quarter of a million dollars
BECKLEY, W.Va. – U.S. Attorney Booth Goodwin announced today that West Virginia attorney Charles B. Mullins II was sentenced to 18 months in federal prison for tax evasion. Mullins, 52, of Daniels, Raleigh County, W.Va., previously pleaded guilty in August 2012. Mullins admitted that for years 2006-2009, he failed to pay more than $389,000 in taxes. Mullins also admitted that he owes the state public defender program $223,605 and Alabama-based Daniels Capital Corporation (“DCC”) $184,030 by making false statements concerning the amount of work he did on court-appointed criminal defense work.
U.S. Attorney Booth Goodwin stated, "Lawyers hold a position of public trust. When that trust is broken, the public and the legal profession suffer. It is particularly disappointing when a member of the bar is convicted of wrongdoing. The sentence of the court in this case will hopefully send a clear message that such conduct cannot be tolerated.”
Mullins practiced law in Pineville, Wyoming County, W.Va. Mullins admitted that he deposited money into his client trust account, which included legal fees, reimbursements from settlements for private clients, as well as his personal income. Mullins further admitted that he then wrote checks for his personal use directly from his law office’s client trust account. Mullins admitted that on his federal income tax returns, he did not report as income the money that he used personally from his law office’s trust account. Mullins also admitted that he did not provide the client trust account ledgers to his accountant to aid in the preparation of his taxes. In an effort to conceal the personal expenditures from his trust account, Mullins had employees falsely assign personal expenses to a random client in his trust account computer software program. In the operating account, which he provided to his accountant, Mullins classified personal expenses as business expenses, which were deducted from his income.
Among other types of cases, he represented indigent clients in state criminal matters pending in Wyoming, Mercer and McDowell counties. As a normal practice, after a case was completed, Mullins submitted a payment voucher form to the Circuit Court Judge in the case for approval. The Circuit Court Judge reviewed the payment voucher and signed a court order authorizing payment. Mullins then submitted the court order to the West Virginia Public Defender Services (“WVPDS”) for payment.
Mullins entered into a cash-advance agreement with Daniels Capital Corporation (“DCC”), a corporation headquartered in Birmingham, Alabama, to expedite his payments. In exchange for prompt payments less a small percentage, Mullins assigned his right to full payment from WVPDS to DCC. In essence, Mr. Mullins would fax DCC a form listing the amount ordered by the circuit court, or the amount he expected that the circuit court would order. DCC would wire Mr. Mullins the reimbursement less a percentage that same day or the next day. When WVPDS eventually processed the same payment voucher, WVPDS would pay DCC directly the full amount.
Beginning in March 2005 and at least until June 2011, Mullins submitted false payment vouchers to the WVPDS. Mullins admitted that he inflated the amount of hours he worked on particular cases. Mullins then submitted the vouchers to the Circuit Court, which would in turn submit them to WVPDS by the Clerk of Court.
Mullins also admitted that he submitted false payment vouchers to DCC which represented that he had performed or would perform work on cases and that the court would order payment in a certain amount. Mullins knew that he did not perform such work.
Between March 2005 and June 2011, Mullins reported to WVPDS that he worked more than 24 hours in a single day on numerous occasions, and frequently overbilled WVPDS for work he performed.
Mullins admitted that he owes the WVPDS $223,605. Mullins also agreed he owed Daniels Capital $184,750.85.The court ordered the defendant to pay restitution in the amount of $780,146.51. The defendant owes $184,030.85 to Daniels Capital Corporation; $223,605 to the West Virginia Public Defenders Services; and $372,510.66 to the IRS.
In a similar matter, former attorney Christopher B. Bledsoe, 33, was sentenced in February 2012 to 18 months in federal prison for wire fraud. Bledsoe admitted to a similar scheme in which he falsified payment vouchers for court-appointed criminal defense work.
The Bledsoe case was brought as part of an investigation by the West Virginia Commission on Special Investigations into false and fraudulent billings submitted by attorneys for services performed in appointed criminal matters.
This case was handled by Assistant United States Attorney Meredith George Thomas and investigated by the Internal Revenue Service and the West Virginia Commission on Special Investigations. The sentence was imposed by United States District Judge Irene C. Berger.