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6 February 2013
Tax Preparer Sentenced to 36 Months for Preparing False Tax Returns and Making False StatementsRead the Press Release
NEWPORT NEWS, Va. – Robert E. Herring, 69, of Newport News, Va., has been sentenced to 36months in prison, followed by one year of supervised release, for preparing false federal income tax returns for clients to submit to the IRS or to mortgage lenders.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Sheila Olander, Acting Special Agent in Charge, IRS Criminal Investigation, Washington, D.C., Field Office, made the announcement after sentencing by United States District Judge Robert E. Doumar on Feb. 5, 2013.
“Return preparer fraud is a priority for IRS Criminal Investigation, said IRS Acting SAC Olander. “We have committed to working with our law enforcement partners to investigate and prosecute cases just like these. Fraud schemes, such as Mr. Herring’s, cause tremendous financial damage to everyone, especially those which defraud the IRS and other financial institutions. This sentence demonstrates our collective efforts to enforce the law and ensure public trust.”
Herring pled guilty on May 5, 2012, to aiding in the preparation of false tax returns and making a false statement to HUD/FHA. According to court documents, Herring operated Have Taxes Financial Service and GL&JS Tax Service, both of which performed tax preparation services. From 2006 through 2009, Herring would file returns – in many instances without the client’s knowledge or consent – that understated income and overstated expenses for a client’s federal tax return, and then file an amended return reporting increased income for certain clients who needed to obtain real estate financing. He prepared at least 19 false returns with a resulting tax loss of $174,845, and he deposited certain tax refunds into his own account without providing them to the taxpayer to whom the refund was owed. His mortgage fraud resulted in losses to the mortgage lender of $917,287.
This case was investigated by IRS Criminal Investigation. Assistant United States Attorney Brian Samuelsprosecuted 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.Tax Charges Filed Against Man Who Operated Toledo-Area Gas Stations and Convenience StoresRead the Press Release
A Holland, Ohio, man was indicted on four tax counts related to his failure to claim more than $460,000 in taxable income, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Mohamed Tawfik, 41, was the president of several companies that operated gas stations and convenience stores in the Toledo area. Those companies included Moe’s of Ohio, Inc., MKSA South Inc., M. Khalid, Inc., M. Adla Sylvania, Inc. and Rocket Fuel of Toledo, Inc., according to the indictment.
Tawfik is charged is one count of failure to file a corporate tax return and three counts of tax evasion.
He failed to file a tax return for one of his businesses in 2006, according to the indictment.
For tax years 2007, 2008 and 2009, Tawfik underreported his income by approximately $460,000, resulting in unpaid taxes of approximately $150,000, according to the indictment.
This case is being prosecuted by Assistant United States Attorney Justin J. Roberts following an investigation by the Internal Revenue Service – Criminal Investigations.
An indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial in which it will be the government’s burden to prove guilty beyond a reasonable doubt.
Synthetic Drug Supplier SentencedRead the Press Release
HARRISONBURG, VIRGINIA -- A Baltimore man, who pleaded guilty to supplying synthetic drugs to drug dealers in Central Virginia, was sentenced this afternoon in the United States District Court for the Western District of Virginia in Harrisonburg to related drug charges.
Carlo Ernesto D’Addario, 43, of Baltimore, Maryland, previously pled guilty to one count of conspiracy to possess with the intent to distribute and distribute a controlled substance analogue. Today in District Court, D’Addario was sentenced to one-year in federal prison to be followed by five years of supervised release with the first six months being served as home detention.
“By bringing synthetic drugs into our communities, Mr. D’Addario endangered the health and safety of Virginians,” United States Attorney Timothy J. Heaphy said today. “These substances are volatile and dangerous, as reflected in a recent surge in emergency room visits and violent outbursts by users. Cases like this one demonstrate our commitment to prosecuting those who seek to profit on the sale of these dangerous illegal drugs. We will also continue to provide information about the dangers of these synthetic drugs and warn users and others about the potential for unanticipated health effects that often result from the use of these substances.”
D’Addario previously admitted to supplying synthetic drugs, also known as bath salts, to drug dealers in and around Augusta County. He has admitted that he transported the synthetic drugs from the Baltimore to Augusta County where he then sold the drugs to Holly Sprouse, a resident of Augusta County. Sprouse has previously pled guilty to a federal charge of conspiracy to possess with the intent to distribute and distribute a controlled substance analogue.The investigation of the case was conducted by the Drug Enforcement Administration, Jefferson Area Drug Enforcement Task Force and the Augusta County Sheriff’s Office. Assistant United States Attorney Ronald Huber is prosecuting the case for the United States.
Statement of Manhattan U.S. Attorney Preet Bharara on the Conviction of Nicole ZobkiwRead the Press Release
“The jury spoke clearly today through its verdict: lying to a federal grand jury and thereby obstructing its ability to seek the truth is against the law, and those who do so will be punished.”
St. Mary’s County Man Pleads Guilty to Sexually Exploiting Two Minor Girls to Produce Child PornographyRead the Press Release
Baltimore, Maryland - Cary Anderson, age 32, of Dameron, Maryland, pleaded guilty today to sexually exploiting minors to produce child pornography.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; St. Mary’s County Sheriff Tim Cameron; and St. Mary’s County State’s Attorney Richard Fritz.
According to that statement of facts that was part of his guilty plea, Anderson began sexually molesting a young girl when she was 11 years old. From February 17 to February 24, 2012, Anderson sexually exploited the girl, who was then 13 years old, and produced images documenting the abuse. Further, on February 24, 2012, Anderson also sexually exploited a 15 year old girl he met on the internet and brought to his home, and produced visual depictions documenting the abuse.
Anderson and the government have agreed that if the Court accepts his plea, a sentence of between 23 and 27 years in prison is the appropriate disposition of the case. U.S. District Judge J. Frederick Motz has scheduled sentencing for April 11, 2013.
As part of his plea, Anderson will also be required to register as a sex offender in the place where he resides, where he is an employee, and where he is a student, under the Sex Offender Registration and Notification Act (SORNA).
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc For more information about internet safety education, please visit www.usdoj.gov/psc and click on the "resources" tab on the left of the page.
United States Attorney Rod J. Rosenstein commended the FBI, St. Mary’s County Bureau of Criminal Investigations and the St. Mary’s County State’s Attorney’s Office for their work in the investigation and prosecution. Mr. Rosenstein thanked Special Assistant U.S. Attorney LisaMarie Freitas, assigned from the U.S. Department of Justice, Child Exploitation and Obscenity Section, who is prosecuting the case.
St. Francis Woman Pleads Guilty to Abusive Sexual ContactRead the Press Release
United States Attorney Brendan V. Johnson announced that Rita Runs Above, age 35, of St. Francis, South Dakota appeared before U.S. District Judge Roberto A. Lange on February 5, 2013 and pled guilty to Abusive Sexual Contact. The maximum penalty upon conviction is 3 years in custody, a $250,000 fine, or both; life of supervised release; and a $100 special assessment.
The conviction stems from an incident that took place on August 22, 2012 when Runs Above had sexual contact with the victim who was incapable of consenting.
The investigation was conducted by the Rosebud Sioux Tribe Law Enforcement Services. The case is being prosecuted by Assistant U.S. Attorney Marie H. Ruettgers.
A presentence investigation was ordered and a sentencing date was set for May 1, 2013. The defendant was remanded to the custody of the U.S. Marshal pending sentencing.
Southlake, Texas, Man Convicted in Bank Fraud ConspiracyRead the Press Release
Defendant Conspired With Former Vice-President of Pavillion Bank in Richardson, Texas
DALLAS — Late yesterday, following a two-day trial before U.S. District Judge Reed C. O’Connor, a federal jury convicted Jason Dvorin, 45, of Southlake, Texas, on a superseding indictment charging one count of conspiracy to commit bank fraud, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. Dvorin will remain on bond pending sentencing, which is set for July 11, 2013 before Judge O’Connor. Dvorin faces a maximum penalty of 30 years in federal prison, a $1 million fine and restitution.
The government presented evidence at trial that Dvorin entered into an agreement with Chris Derrington, the vice president of Pavillion Bank, located on West Campbell Road in Richardson, Texas, to deposit worthless checks in return for immediate access to the bank’s funds. Dvorin would bring in worthless credit card checks, or checks drawn on a closed account, and present them to Derrington for deposit. Knowing the checks were worthless, Derrington gave Dvorin immediate access to the bank’s funds. As soon as one worthless check was returned, Dvorin would deposit another worthless check. This pattern continued over the course of five years and resulted in 224 fraudulent deposits by Dvorin and the Derrington. By the time the scheme was uncovered, Pavillion bank sustained a loss in excess of $300,000.
Derrington, 61 of Dallas, was charged in a separate case with the same offense and pleaded guilty to that charge in May 2012. His sentencing date is presently set for February 28, 2013.
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 http://www.stopfraud.gov/.
The cases were investigated by the FBI and the FDIC Office of Inspector General. Assistant U.S. Attorneys Mindy Sauter and Michael Elliott are in charge of the prosecutions.
Sioux Falls Man Sentenced for Failure to Register as A Sex OffenderRead the Press Release
United States Attorney Brendan V. Johnson announced that Royce Loudner, age 46, of Sioux Falls, South Dakota appeared before U.S. District Judge Roberto A. Lange and pled guilty to the Indictment that charged him with Failure to Register as a Sex Offender. Following his plea of guilty, and with the consent of all the parties, Loudner agreed to be sentenced immediately following his guilty plea. Loudner was sentenced to 18 months of imprisonment to be served concurrently to the sentence imposed in a prior matter. He was also sentenced to 5 years of supervised release and $100 to the Victim Assistance Fund.
Loudner was previously convicted of sexual abuse and is required to register as a sex offender. Loudner was discharged from Glory House on April 8, 2011. On April 18, 2011 he returned to Glory House. During this period, Loudner failed to update his sex offender registration status or register a new address as required by conditions of his supervised release and federal law.
The investigation was conducted by the U.S. Marshal’s Office and Assistant U.S. Attorney Meghan N. Dilges prosecuted the case. Loudner was immediately turned over to the custody of the U.S. Marshal.
Shiprock, N.M., Man Pleads Guilty to Federal Sexual Abuse ChargeRead the Press Release
ALBUQUERQUE – Jack Belin, Jr., 59, an enrolled member of the Navajo Nation who resides in Shiprock, N.M., pled guilty this morning to an abusive sexual contact charge under a plea agreement with the U.S. Attorney’s Office.
Belin was arrested on Oct. 11, 2012, based on an indictment charging him with two counts of abusive sexual contact. According to the indictment, Belin committed the offenses on July 18, 2012, in Indian Country (the Navajo Indian Reservation), in San Juan County, N.M.
During this morning’s proceedings, Belin pled guilty to Count 2 of the indictment. In his plea agreement, Belin admitted that on July 18, 2012, he intentionally touched the genitals and buttocks of his victim without the victim’s consent.
Belin was remanded into the custody of the U.S. Marshals Service after entering his guilty plea. He will be detained pending his sentencing hearing, which has not yet been scheduled. At sentencing, Belin faces a maximum penalty of ten years in prison, and will be required to register as a sex offender after he completes his prison sentence.
This case was investigated by the Shiprock Division of the Navajo Nation Department of Public Safety and is being prosecuted by Assistant U.S. Attorney Novaline D. Wilson.
Rochester Woman Sentenced for Role in an Armed RobberyRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 30-year-old Rochester woman was sentenced for her role during an armed robbery at a McDonald’s in Byron, Minnesota. United States District Court Judge Donovan W. Frank sentenced Quiana Shaneea Evans to 130 months in federal prison on one count of interference with commerce by robbery and one count of aiding and abetting the use, carrying, possessing, and discharging of a firearm during and in relation to a crime of violence. Evans was indicted on May 21, 2012, and pleaded guilty on October 2, 2012.
In her plea agreement, Evans admitted that on June 15, 2011, she entered the McDonald’s in Byron, Minnesota, with Christian Aaron Alexander, who was armed with a Colt, .45-caliber pistol. While Alexander brandished the firearm, Evans and Alexander both demanded money from the restaurant employees. They stole approximately $1,851.68, including personal property belonging to the restaurant employees, who were present when Alexander’s firearm discharged. Evans and Alexander ultimately restrained the employees by locking them in a cold storage room.
On December 3, 2012, Alexander, was sentenced to 168 months in federal prison on three counts of interference with commerce by robbery, in violation of the Hobbs Act, and one count of brandishing and discharging a firearm in relation to a crime of violence. The Hobbs Act, passed by Congress in 1946, allows federal prosecutors to prosecute violent, habitual criminals who commit armed robbery in places of business involved in interstate commerce. Federal prosecution of those cases is sometimes beneficial since the penalties are often tougher than under state law. Furthermore, because the federal system has no parole, those who receive federal sentences serve virtually the entire time imposed.
This case was the result of an investigation by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and the Olmsted County Sheriff’s Office. It was prosecuted by Assistant U.S. Attorney Thomas M. Hollenhorst.Redby Man Pleads Guilty to Harboring A FugitiveRead the Press Release
MINNEAPOLIS—Earlier today in federal court, a 23-year-old Redby man pleaded guilty to harboring a fugitive last spring. Andrew Oakgrove pleaded guilty to one count of harboring and concealing a fugitive. Oakgrove, who was indicted on December 10, 2012, entered his plea before United States District Court Judge John R. Tunheim.
In his plea agreement, Oakgrove admitted that on April 30, 2012, he concealed Jason King from federal authorities. King was wanted on a federal arrest warrant for his indictment in connection to the December 30, 2011, armed robbery of Newby’s Market in Bemidji. Oakgrove also admitted leading police on a high-speed pursuit over several miles. Both men were arrested following the pursuit.
For his crime, Oakgrove faces a potential maximum penalty of five years in prison. Judge Tunheim will determine his sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by the Red Lake Tribal Police Department and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Jeffrey S. Paulsen.Ravenna Man Sentenced to 20 Years in Prison for Drug and Firearms ConvictionsRead the Press Release
A Ravenna man was sentenced to 20 years in federal prison for being a felon in possession of firearms and ammunition and possessing with intent to distribute crack cocaine, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Darnell C. Butcher, 50, was previously found guilty of those crimes following a jury trail before U.S. District Judge Christopher Boyko.
"This defendant was a longtime scourge to the residents of Ravenna," Dettelbach said. "This sentence will make it easier for them to live, work and play in peace."
Butcher possessed a Tanfoglio Giuseppe, model GT32, .32 caliber pistol; a Ruger, model Mark II, .22 caliber pistol; an RG Industries, model RGI, .22 caliber pistol; and ammunition, on or about April 8, 2011, despite previous convictions for possession of cocaine and trafficking in cocaine, in the Court of Common Pleas of Portage County, Ohio.
On the same day, Butcher possessed with the intent to distribute approximately 12.1 grams of crack cocaine, according to court documents and testimony.
The investigation of this case was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives - Youngstown Field Office, the Ravenna Police Department and the Metro SWAT Team. The matter was prosecuted by Assistant United States Attorneys Kelly Galvin and Chelsea Rice.
RBS Securities Japan Limited Agrees to Plead Guilty in Connection with Long-Running Manipulation of Libor Benchmark Interest RatesRead the Press Release
RBS Securities Japan Limited, a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS), has agreed to plead guilty to felony wire fraud and admit its role in manipulating the Japanese Yen London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world, Assistant Attorney General Lanny Breuer of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Scott D. Hammond of the Justice Department’s Antitrust Division and Special Agent in Charge Timothy A. Gallagher of the FBI’s Washington Field Office Criminal Division announced today.
A criminal information, being filed in U.S. District Court for the District of Connecticut, charges RBS Securities Japan with one count of wire fraud for engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating Yen LIBOR benchmark interest rates. RBS Securities Japan has signed a plea agreement with the government admitting its criminal conduct, and has agreed to pay a $50 million fine.
In addition, the government is filing a criminal information in the District of Connecticut which charges parent company RBS as part of a deferred prosecution agreement (DPA). The information charges RBS with wire fraud for its role in manipulating LIBOR benchmark interest rates, and with participation in a price-fixing conspiracy in violation of the Sherman Act by rigging the Yen LIBOR benchmark interest rate with other banks. The DPA requires the bank to admit and accept responsibility for its misconduct as described in an extensive statement of facts, to continue cooperating with the Justice Department in its ongoing investigation and to pay a $100 million penalty beyond the fine imposed upon RBS Securities Japan.
Together with approximately $462 million in regulatory penalties and disgorgement – $325 million as a result of a Commodity Futures Trading Commission (CFTC) action and approximately $137 million as a result of a U.K. Financial Services Authority (FSA) action – the Justice Department’s criminal penalties bring the total amount of the resolution with RBS and RBS Securities Japan to approximately $612 million.
“As we have done with Barclays and UBS, we are today holding RBS accountable for a stunning abuse of trust,” said Assistant Attorney General Breuer. “The bank has admitted to manipulating one of the cornerstone benchmark interest rates in our global financial system, and its Japanese subsidiary has agreed to plead guilty to felony wire fraud. The department’s ongoing investigation has now yielded two guilty pleas by significant financial institutions. These are extraordinary results, and our investigation is far from finished. Our message is clear: no financial institution is above the law.”
“RBS secretly rigged the benchmark interest rates upon which many transactions and consumer financial products are based,” said Deputy Assistant Attorney General Hammond. “RBS’ conduct not only harmed its unsuspecting counterparties, it undermined the integrity and the competitiveness of financial markets everywhere.”
“The manipulation of LIBOR by RBS and its subsidiary directly affected the rates referenced by financial products held by and on behalf of American companies and investors. The FBI works to uncover wrongdoing such as this in order to protect American consumers and the integrity of financial markets,” said Special Agent in Charge Gallagher. “Today’s announcement is the result of the hard work of the FBI special agents, financial analysts, and forensic accountants as well as the prosecutors who dedicated significant time and resources to investigating this case.”
According to court documents, LIBOR is an average interest rate, calculated based upon submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks. LIBOR serves as the primary benchmark for short-term interest rates globally, and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products. The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were valued at approximately $450 trillion.
LIBOR, published by the British Bankers’ Association (BBA), a trade association based in London, is calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year. The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks for that currency (the Contributor Panel) selected by the BBA. From at least 2006 through 2010, RBS has been a member of the Contributor Panel for a number of currencies, including Yen LIBOR and Swiss Franc LIBOR, which are the focus of the plea agreement and DPA.
According to the DPA, at various times from at least 2006 through 2010, certain RBS Yen and Swiss Franc derivatives traders – whose compensation was directly connected to their success in trading financial products tied to LIBOR – engaged in efforts to move LIBOR in a direction favorable to their trading positions. Through these schemes, RBS allegedly defrauded counterparties who were unaware of the manipulation affecting financial products referencing Yen and Swiss Franc LIBOR. The alleged schemes included hundreds of instances in which RBS employees sought to influence LIBOR submissions in a manner favorable to their trading positions in two principal ways: internally at RBS through requests by derivatives traders for Yen and Swiss Franc LIBOR submissions, and externally through an agreement with a separately charged derivatives trader to request Yen LIBOR submissions. The trader, Tom Alexander William Hayes, was formerly employed by a Japanese subsidiary of another Contributor Panel bank, UBS AG (UBS).
According to the DPA, RBS employees engaged in this conduct through electronic communications, which included both emails and electronic chats. For example, in an electronic chat on March 16, 2009, an RBS Swiss Franc derivatives trader, (Trader-7), sought to benefit his trading book by asking the RBS LIBOR submitter (Submitter-1), “can we pls get a very very very low 3m [3 month] and 6m [6 month] fix today [please]” because “we have rather large fixings!” Submitter-1 responded, “perfect, if that’s what u want.” After thanking Submitter-1, Trader-7 informed Submitter-1 that “from tomorrow . . . we need them thru the roof!!!!!”
In another electronic chat on May 20, 2009, involving an RBS Yen derivatives trader, (“Trader-2”), Submitter-1, and others, the following exchange occurred:
Trader-2: high 3s and low 6s pls [Submitter-1]
Submitter-1: no problems
Trader-2: grazias amigo . . . where will you lower 6s to?
Submitter-1: 70
That day, RBS’s 6-month Yen LIBOR submission dropped two basis points from .72 to .70, before reverting to .72 the following two days.
RBS employees also allegedly furthered their collusive scheme with Hayes to fix the price of derivative instruments tied to Yen LIBOR through electronic communications. For instance, in an electronic chat on April 20, 2007, Hayes requested that an RBS derivatives trader, (“Trader-3”), ask Submitter-1 for a low 3 month Yen LIBOR submission:Hayes: . . . if you could ask your guys to keep 3m low wd be massive help as long as it doesn’t interfere with your stuff . . . tx in adavance.
Approximately 30 minutes later, Hayes and Trader-3 had the following exchange:
Hayes: mate did you manage to spk to your cash boys?
Trader-3: yes u owe me they are going 65 and 71
Hayes: thx mate yes i do . . . in fact i owe you big time
Approximately 45 minutes later, Hayes sent the following message to Trader-3:
Hayes: mater they set 64! . . . thats beyond the call of duty!
* * * *
Trader-3: no worriesBy entering into a DPA with RBS, the Justice Department credits RBS’ cooperation in disclosing LIBOR misconduct within the financial institution, recognizes the significant remedial measures undertaken by RBS’ management to enhance internal controls, and acknowledges the additional reporting, disclosure and cooperation requirements undertaken by the bank. The DPA does not prevent the Justice Department from prosecuting individuals for related conduct.
The pending charges against Hayes are merely accusations and he is considered innocent unless and until proven guilty.
The prosecution of RBS is being handled by Deputy Chief Patrick Stokes and Trial Attorney Gary Winters of the Criminal Division’s Fraud Section, and New York Field Office Assistant Chief Elizabeth Prewitt and Trial Attorneys Eric Schleef and Richard Powers of the Antitrust Division. Deputy Chiefs Daniel Braun and William Stellmach, Assistant Chief Rebecca Rohr and Trial Attorneys Luke Marsh and Alex Berlin of the Criminal Division’s Fraud Section, Trial Attorneys Daniel Tracer and Kristina Srica of the Antitrust Division, Jeremy Verlinda of the Antitrust Division’s Economic Analysis Group, Assistant U.S. Attorneys Eric Glover and Liam Brennan of the U.S. Attorney’s Office for the District of Connecticut and the Criminal Division’s Office of International Affairs have also provided valuable assistance in this matter. The investigation is being conducted by special agents, forensic accountants and intelligence analysts of the FBI’s Washington Field Office.
The investigation leading to these cases has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad. The Justice Department acknowledges and expresses its deep appreciation for this assistance. In particular, the CFTC’s Division of Enforcement referred this matter to the department and, along with the FSA, has played a major role in the investigation. The Securities and Exchange Commission has also played a significant role in the LIBOR series of investigations. Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.Related Materials:
Deferred Prosecution Agreement
Plea Agreement and Statement of FactsPittsburgh Man Pleads Guilty in Cocaine Trafficking ConspiracyRead the Press Release
PITTSBURGH, Pa. - A resident of Pittsburgh pleaded guilty in federal court to a charge of violating federal narcotics trafficking laws, United States Attorney David J. Hickton announced today.
Donald Goodwine, 23, pleaded guilty to one count before United States District Judge Maurice B. Cohill.
In connection with the guilty plea, the court was advised that from May 2, 2012, to May 9, 2012, Goodwine conspired to distribute and possess with intent to distribute cocaine.
Judge Cohill scheduled sentencing for June 5, 2013, at 11 a.m. The law provides for a total sentence of up to 20 years in prison, a fine of up to $1,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.
Assistant United States Attorney Craig W. Haller is prosecuting this case on behalf of the United States.
The Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Pennsylvania State Police, and the Pittsburgh Bureau of Police conducted the investigation leading to the conviction in this case.
Philadelphia Teen Charged with String of Armed HoldupsRead the Press Release
Abdullah Sirleaf, 19, of Philadelphia, PA, was charged today by indictment with robbery and gun charges for holdups at six different business, in Philadelphia and Lansdowne, PA, in June and July of 2013, announced United States Attorney Zane David Memeger. Sirleaf is charged with the armed robberies of: Metro Self Storage, 2240 Island Ave., Philadelphia, on June 15, 2013; Gulla’s Auto Tag & Insurance, at 6301 Buist Avenue, Philadelphia, on June 17, 2013; the Sunoco gas station/convenience store, 2500 Island Avenue, Philadelphia, on June 21, 2013; Kerrs Building Materials, Inc., 1528 Washington Avenue, Philadelphia, on June 22, 2013; the 7-Eleven store, 1337 S. 58th Street, Philadelphia, on June 28, 2013; and the Papa John’s Pizza, 7 N. Lansdowne Avenue, Lansdowne, PA, on July 3, 2013.
If convicted of all charges,thedefendant faces a mandatory minimum term of 107 years in prison with a maximum of life. He would also face up to five years of supervised release, a possible fine, a $1,100 special assessment, and restitution.This case was investigated by the Federal Bureau of Investigation, Philadelphia Police Department, Lansdowne Police Department, the Philadelphia District Attorney=s Office, and the Delaware County District Attorney’s Office. It is being prosecuted by Assistant United States Attorney Ewald Zittlau.
Click here to view the indictment
An Indictment or an Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Philadelphia Businessman and New Jersey Lawyer Convicted in Manhattan Federal Court in Connection with Multiple Investment Fraud SchemesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that a jury found TYRONE L. GILLIAMS, JR., a Philadelphia businessman, and EVERETTE L. SCOTT, JR., a New Jersey attorney, guilty yesterday afternoon on fraud charges stemming from two separate schemes. In the larger of the two schemes, the defendants solicited and misappropriated $5 million in investments in a bogus United States Treasury Strips investment program. In the other scheme, the defendants solicited and misappropriated a $450,000 investment in a Utah coal mine. In addition to buying luxury cars, jewelry, and other items, GILLIAMS spent hundreds of thousands of dollars of investor money organizing and promoting a multi-day festival in Philadelphia that headlined Sean “Diddy” Combs. GILLIAMS and SCOTT were convicted after a two-week trial before U.S. District Judge Deborah A. Batts.
Manhattan U.S. Attorney Preet Bharara stated: “Tyrone Gilliams may have had his 15 minutes of fame as a result of his flagrant, multi-million dollar deception, but now he and his partner in crime face a significantly longer time to pay the price of their fraud.”
According to the Indictment and the evidence presented at trial:
In 2009 and 2010, GILLIAMS was the owner of TL Gilliams, LLC, which purported to engage in transactions in commodities like oil and gold. SCOTT was an attorney at a small law firm in New Jersey and acted as TL Gilliams’s general counsel.
In the summer of 2010, GILLIAMS solicited $5 million dollars from two investors for purposes of trading in U.S. Treasury Strips, which are a derivative of U.S. Treasury Bonds. GILLIAMS and SCOTT arranged for the investors to make their investments by wiring them into an attorney trust account maintained by SCOTT’s law firm. Upon receiving the money, SCOTT – at GILLIAMS’ direction – misappropriated more than $700,000 to satisfy expenses stemming from an unrelated and failed venture to buy a coal mine in Utah. SCOTT also claimed $50,000 of the investment money for himself as purported fees. At GILLIAMS’ direction, SCOTT transferred most of the remainder to bank and brokerage accounts that he controlled.
At most, GILLIAMS purchased $250,000 worth of Treasury Strips with the more than $4 million in investment money transferred by SCOTT. Over a span of less than six months, GILLIAMS spent more than $1.6 million on an unrelated gold investment; more than $200,000 to purchase a commercial warehouse in Denver; at least $100,000 to buy or lease luxury cars; at least $50,000 for construction work on his home; at least $100,000 on luxury hotel and travel expenses; and more than $500,000 promoting both a festival called “Joy to the World” involving an album release party with Jamie Foxx at the Vault nightclub in Philadelphia, and culminating in a red carpet, black tie gala at the Philadelphia Ritz-Carlton, headlined for a $120,000 fee by Sean “Diddy” Combs, and a December 2010 December 2010 comedy performance in Nassau, Bahamas called the “Gatta Be Jokin’ Comedy Jam.”
GILLIAMS did not engage in any trading of Treasury Strips and, as a result, did not derive any profits. Nonetheless, during the period when he was spending investor money, GILLIAMS provided them with false reports of trades and profits, and made occasional, nominal payments that he falsely claimed represented profits from Treasury Strips trading. Other than these purported profit payments, which totaled approximately $100,000, neither investor received any of their combined $5 million investment back.
In a separate scheme, GILLIAMS and SCOTT arranged in late 2009 for an investor to transfer $450,000 to SCOTT’s attorney trust account, to be held in escrow until used in connection with a venture to purchase the assets of a bankrupt Utah coal mine. Once the money was in SCOTT’s account, he secretly misappropriated approximately $112,000 by claiming it as purported fees, and transferred the rest to GILLIAMS or other individuals and entities at GILLIAMS’direction. Until August 2010, GILLIAMS and SCOTT falsely assured the victim that his $450,000 remained safely in escrow, long after SCOTT’s escrow account had been emptied. Although the victim repeatedly demanded the return of his funds, GILLIAMS and SCOTT pacified him by producing forged bank documents and a false attorney attestation letter written by SCOTT purporting to show that GILLIAMS was in possession of the millions of dollars necessary to purchase and operate the Utah coal mine. In August 2010, after an attorney for the victim threatened SCOTT with professional discipline for his failure to return the escrowed funds, GILLIAMS and SCOTT paid the victim $450,000 using funds they raised for investment in Treasury Strips.
GILLIAMS, 45, of Philadelphia, Pennsylvania, and SCOTT, 51, of Sewell, New Jersey, were each convicted of one count of securities fraud and two counts of wire fraud. Each count carries a maximum potential penalty of 20 years in prison. They also each face a maximum fine of $5 million or twice the gross gain or loss from the offense on the securities fraud count, and of $250,000 or twice the gross gain or gross loss from the offense on each wire fraud count. GILLIAMS and SCOTT are scheduled to be sentenced on September 17, 2013, at 10:30 a.m., and September 24, 2013, at 10:30 a.m., respectively, before Judge Batts.
Mr. Bharara praised the work of the Criminal Investigators of the United States Attorney's Office and the Federal Bureau of Investigation, which jointly investigated this case. He also thanked the U.S. Securities and Exchange Commission.
This case was brought in coordination with President Barack Obama's Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This case is being handled by the Office's Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Michael A. Levy and David B. Massey are in charge of the prosecution.
Parkville Woman Pleads Guilty to Conspiracy to Produce Child PornographyRead the Press Release
Baltimore Maryland - Margaret Ellen Jones, age 37, of Parkville, Maryland, pleaded guilty today to conspiracy to produce child pornography.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); and Chief James W. Johnson of the Baltimore County Police Department.
According to the plea agreement, at some time prior to March 2010, Jones met John Andrew Blaes online and became involved in a sexual relationship involving bondage, discipline, sadism, and masochism (BDSM). Jones subsequently moved into Blaes’ home in Parkville. During this time, including in July 2011, Blaes used the Internet to contact other women and girls to recruit them into the BDSM lifestyle.
On July 5, 2011, Blaes contacted the victim, a minor female who was 15 years old at the time, and solicited her to engage in sexual conduct with him and Jones. Blaes and Jones knew that the victim was a vulnerable minor. As part of the solicitation process, Blaes and Jones sent pornographic pictures of themselves to the victim using the computer.
On July 22, 2011, Blaes and Jones traveled from Maryland to the victim’s home in North Carolina to bring her to live with them in Parkville. After picking the victim up in North Carolina, Blaes and Jones sexually abused the victim in the back of their vehicle. The next day, Blaes and Jones rented a hotel room in North Carolina for the purpose of engaging in sexually explicit conduct with the victim. Blaes and Jones used a camera to document the sexual abuse of the victim in the van and the hotel. The images captured by Blaes and Jones include sadistic and masochistic conduct.
From approximately July 22, 2011 to November 20, 2011, Blaes and Jones engaged in sex acts with the victim multiple times a week. Blaes also cut the victim and held lemons to her injuries. The victim was instructed to call Blaes “master” or “sir,” and to call Jones “mistress.” Blaes and Jones referred to the victim as their “slave.” Blaes and Jones instructed the victim to keep the sexual conduct and her age a secret and the victim was kept in their residence or in their control at all times and was not enrolled in school.
Blaes and Jones used a camera and cell phones to document their sexual abuse of the victim and to photograph her in sexually explicit poses. Blaes distributed the sexually explicit images of the victim online for the purpose of recruiting other individuals into his BDSM lifestyle with Jones.
As part of her plea agreement, Jones must register as a sex offender in the place where she resides, where she is an employee, and where she is a student, under the Sex Offender Registration and Notification Act (SORNA).
Jones faces a minimum mandatory sentence of 15 years and a maximum of 30 years in prison for conspiracy to produce child pornography, followed by up to lifetime of supervised release. U.S. District Judge James K. Bredar has scheduled sentencing for June 11, 2013 at 4:00 p.m.
John Andrew Blaes, age 49, also of Parkville, Maryland, previously pleaded guilty to the conspiracy and to transporting a minor to engage in sexually explicit conduct. Blaes is scheduled to be sentenced on February 19, 2013, at 2:00 p.m.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc For more information about internet safety education, please visit www.usdoj.gov/psc and click on the "resources" tab on the left of the page.
United States Attorney Rod J. Rosenstein commended the FBI, HSI Baltimore, and the Baltimore County Police Department for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorneys Rachel M. Yasser and Judson T. Mihok, who are prosecuting the case.
Oxycodone Trafficker Sentenced to 10 YearsRead the Press Release
SAN FRANCISCO - Ella Mae Simpson, 55, of Hayward, Calif., was sentenced yesterday to 10 years in prison for conspiracy to possess with intent to distribute and distribution of oxycodone, possession with intent to distribute and distribution of oxycodone, and possession with intent to distribute oxycodone, United States Attorney Melinda Haag announced.
On May 18, 2012, before U.S. District Court Judge Susan Illston, Simpson pled guilty to one count of conspiracy to possess with intent to distribute and to distribute oxycodone in violation of Title 21, U.S.C. § 846; three counts of possession with intent to distribute and distribution of oxycodone in violation of Title 21, U.S.C. §§ 841(a)(1), (b)(1)(C); and one count of possession with intent to distribute oxycodone in violation of Title 21, U.S.C. §§ 841(a)(1), (b)(1)(C). Simpson admitted that, between April 5, 2011, and June 9, 2011, she conspired with others to possess with intent to distribute and she conspired to distribute oxycodone. Simpson further admitted that on three separate dates between April 5, 2011, and June 8, 2011, she distributed oxycodone and that on June 9, 2011, she possessed oxycodone with the intent to distribute it, all in the Northern District of California. On June 9, 2011, law enforcement officers seized $235,524 along with a firearm from Simpson’s residence. There was no plea agreement.
At the sentencing hearing, Judge Illston also ordered the forfeiture of the $235,524 and imposed a three-year period of supervised release. Simpson was ordered to surrender to the Bureau of Prisons on March 22, 2013.
Denise Marie Barton and Katherine Dowling are the Assistant U.S. Attorneys who prosecuted the case with the assistance of AUSAs Patty Kenney, Dave Countrymen, Arvon Perteet and Alicia Jusey of the Asset Forfeiture Unit; and Maryam Beros and Rawaty Yim. The prosecution is the result of a lengthy investigation by the Federal Bureau of Investigation, Drug Enforcement Agency, and the Department of Health and Human Services.
(Simpson Superseding Indictment )
Overland Park Man Pleads Guilty in $16.9 Million Drug ConspiracyRead the Press Release
KANSAS CITY, KAN. – A man from Overland Park, Kan., has pleaded guilty to helping a drug trafficking organization distribute more than $16.9 million worth of marijuana and cocaine in Kansas, the U.S. Attorney's Office for the District of Kansas announced today.
Samuel Villeareal, III, 33, Overland Park, Kan., pleaded guilty to one count of conspiracy to possess with intent to distribute cocaine and marijuana and to maintain a residence in furtherance of drug trafficking. Villeareal was one of 43 defendants charged in a superseding indictment filed Oct. 31, 2011, in U.S. District Court in Kansas City, Kan. An earlier indictment in the case had been announced July 12, 2012.
In his plea, Villeareal admitted that he bought pound quantities of marijuana from co-defendant Los Rovell Dahda and others, who were operating a marijuana and cocaine distribution ring in Lawrence, Kan. During the course of the conspiracy, the traffickers made more than $16.9 million dollars selling marijuana and cocaine. In 2007, the conspirators shifted away from buying drugs from Mexico and Canada and began obtaining high grade marijuana from indoor and outdoor grow operations in California. The marijuana would be purchased on the front end from California for between $1,800 and $2,800 a pound and then sold to others for between $3,500 to $4,800 a pound.
On May 16, 2011, investigators executed a search warrant at Villeareal's residence at 816 Crestline Drive in Lawrence, Kan. They seized $11,340 cash, four cellular phones and 44 grams of marijuana. Villeareal's residence was located within 1,000 feet of West Middle School. Investigators learned that Villeareal had removed 10 pounds of marijuana from the residence before the search warrant was served. A search of Villeareal's phones revealed text messages with numerous customers in Lawrence who Villearaeal was supplying with marijuana.
Sentencing will be set for a later date. Villeareal faces a penalty of not less than 10 years and not more than life and a fine up to $10 million.
Agencies involved in the investigation and the arrest of defendants include the Douglas County Sheriff’s Office, the Johnson County Sheriff’s Office, the Lawrence Police Department, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Internal Revenue Service, the U.S. Postal Service, the Alameda County, Calif., Sheriff’s Drug Task Force, the Kansas Bureau of Investigation, the Lenexa Police Department, the Overland Park Police Department, the Kansas City, Mo., Police Department, the Kansas City, Kan., Police Department and the Hayward, Calif., Police Department. Assistant U.S. Attorney Terra Morehead is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.Oklahoma Couple Sentenced to Fifteen Years in Prison for Conviction on Methamhetamine Trafficking, Firearms and Immagration ChargesRead the Press Release
ALBUQUERQUE – Rafael Goxcon-Chagal, 52, and Maria Vianey Medina-Copete, 36, both residents of Tulsa, Okla., each was sentenced today to a 15-year term of imprisonment for their narcotics trafficking and firearms convictions. Goxcon-Chagal will be on supervised release for five years after completing his prison sentence. Medina-Copete, a Mexican national who also was convicted of re-entering the United States without authorization after having previously been deported, will be deported after completing her prison sentence.
The sentences were announced by U.S. Attorney Kenneth J. Gonzales and Special Agent in Charge Joseph M. Arabit of the El Paso Field Division of the DEA.
A federal jury convicted Goxcon-Chagal and Medina-Copete on Aug. 10, 2012, of all counts in an indictment that charged the couple with (1) conspiracy to violate the federal narcotics trafficking laws; (2) with possession of methamphetamine with intent to distribute; and (3) using a firearm during a drug trafficking offense. The indictment also charged MedinaCopete with (4) the unlawful possession of a firearm by an illegal alien; and (5) illegal re-entry by a removed alien.
According to the evidence at trial, on June 28, 2011, a New Mexico State Police officer executed a routine traffic stop on Interstate 40 of a vehicle driven by Goxcon-Chagal with Medina-Copete as a passenger. When the officer made contact with Goxcon-Chagal, he observed that Goxcon-Chagal was unusually nervous. Goxcon-Chagal proffered an Oklahoma driver's license but could not locate the registration and insurance information for the vehicle. When Medina-Copete managed to locate the vehicle information, the officer noted that the owner of the vehicle was another person with a Las Vegas, Nev., address and that the vehicle had only recently been insured. The officer also noted a strong chemical odor in the vehicle and observed multiple air fresheners in the vehicle.
After getting conflicting information regarding their travel and the identity of the owner of the vehicle from Goxcon-Chagal and Medina-Copete, the officer asked Goxcon-Chagal if the couple were transporting drugs, weapons or other contraband in the vehicle. Goxcon-Chagal denied that he was transporting contraband. The then officer requested and obtained consent from Goxcon-Chagal and Medina-Copete to search the vehicle. After a narcotics canine alerted to the front passenger side of the vehicle, the officer located a false compartment behind the passenger side airbag which contained two packages of white glass-like substances which appeared to be methamphetamine. Chemical analysis later revealed that the packages contained more than a kilogram of methamphetamine.
Later, when a DEA agent searched a duffle bag that Medina-Copete identified as her property, he uncovered a Walther P99 pistol wrapped in a towel. When the agent asked about the pistol, Medina-Copete said that the pistol belonged to Goxcon-Chagal.
Medina-Copete previously had been deported from the United States to Mexico at Otay Mesa, Calif., on Oct. 24, 2007, and re-entered the United States without authorization.
Goxcon-Chagal and Medina-Copete have been in federal custody since they were arrested on June 28, 2011.
The case was investigated by the DEA and the New Mexico State Police, and was prosecuted by Assistant U.S. Attorneys Jon K. Stanford and Raul Torrez.
Oklahoma City Man Indicted for Threat to Commit Violence in WyomingRead the Press Release
Oklahoma City, Oklahoma – GLENN ALLEN KIRKHAM, 34, of Oklahoma City, Oklahoma, has been indicted by a federal grand jury for making a threat to commit violence in Casper, Wyoming, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.
The indictment alleges that on January 14, 2013, public officials in and around Casper, Wyoming, received numerous reports from various sources of a potential imminent attack in the city that had been posted on 4chan.org, an internet-based bulletin board service. Among other precautions, officials placed several dozen public schools in Casper, Wyoming, and Natrona County, Wyoming, on lockdown.
If convicted, Kirkham faces up to five years in prison and a $250,000 fine, plus mandatory restitution. The public is reminded that the indictment is merely an accusation and that the defendant is presumed innocent unless and until proven guilty. Reference is made to the indictment and other public filings for further information.
This case is the result of an investigation by the Federal Bureau of Investigation and the Casper Police Department in Wyoming. The case is being prosecuted by Assistant U.S. Attorneys Mark A. Yancey and Scott E. Williams.
Officer of Now Defunct New Frontier Bank Pleads Guilty to Charges Related to the Bank's CollapseRead the Press Release
DENVER – Gregory William Bell, age 54, of Weld County, Colorado, pled guilty yesterday before Senior U.S. District Court Judge Lewis T. Babcock to one count of false bank entries, one count of bank misapplication, one count of bank fraud and one count of money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation and the FDIC-Office of the Inspector General announced. Bell, who appeared at the hearing free on bond, is scheduled to return on April 30, 2013 for sentencing. The judge continued Bell’s bond.
Bell was originally charged by Information on December 5, 2012. According to the facts contained in the Information as well as the stipulated facts contained in the plea agreement, Gregory Bell was an officer of New Frontier Bank, which was insured by the Federal Deposit Insurance Corporation. On October 31, 2005, Bell made a false entry in a bank book, report or statement with intent to defraud the bank and deceive one or more of the bank’s officers. Specifically, the defendant allegedly prepared a form entitled “Credit Presentation and Committee Approval” for a $5,583,500 loan to two individuals on which he failed to disclose that a certificate of deposit, the value of which was $106,759.00, which the two individuals pledged as collateral, in fact belonged to another individual and that Bell would benefit personally as a result of the loan. On March 14, 2008, Bell willfully misapplied approximately $662,045.79 of New Frontier’s funds.
On June 17, 2008, and continuing until September 9, 2008, Bell devised and participated in a scheme to defraud the bank and to obtain moneys owned by and under the custody and control of the bank by means of materially false and fraudulent pretenses. As part of the scheme, Bell, knowing that state and federal regulators had directed New Frontier Bank to raise capital, arranged for eight bank customers to borrow money from the bank and use the proceeds of those loans to purchase shares of bank stock so New Frontier could inject some of the money paid for the stock into the bank. As part of the scheme, Bell failed to disclose the deteriorating condition of the bank to its customers. He also prepared and caused others to prepare bank forms entitled “Credit Presentation and Committee Approval” for the eight loans described above. Bell failed to disclose on the credit presentation forms that proceeds of the loans would be used to purchase shares of stock in New Frontier Bancorp.
Bell also allegedly caused false and misleading statements to be included on the credit presentation forms. He presented the credit presentation forms to bank loan committees and caused other persons to present them to bank loan committees. As part of the scheme, Bell caused the bank to loan approximately $20,145,979.23 to the eight borrowers mentioned above, and caused those borrowers to use approximately $4,310,215.00 of those proceeds to purchase shares of stock in the bank. On August 29, 2008, Bell executed a scheme by causing the bank to transfer approximately $260,000.00 of the proceeds of one of the bank loans to an account of one of the borrowers of that loan.
On June 27, 2008, Bell conducted a financial transaction affecting interstate commerce. Specifically, he deposited a check in the amount of $160,000.00 into his account at the bank. The transaction involved the proceeds of a specified unlawful activity, knowing that the transaction was designed in whole or in part to conceal and disguise the source and the ownership of the proceeds of the unlawful activity.
Finally, the Information includes an asset forfeiture allegation, which states that Bell shall forfeit any real or personal property that was involved in the offenses, or any property constituting or derived from the proceeds obtained from the offenses, and any property traceable to any property involved in said offenses.
Bell faces one count of false bank entries, one count of misapplication, and one bank fraud. Each of those counts carry a penalty of not more than 30 years in federal prison and a fine of up to $1,000,000. He also faces one count of money laundering. If convicted of money laundering Bell faces not more than 20 years in federal prison and a fine of up to $500,000, or twice the value of the property involved in the transaction, whichever is greater.
“With this guilty plea, we are one step closer to addressing the fraud and abuse at New Frontier Bank that helped lead to its failure,” said U.S. Attorney John Walsh.
“The FBI will continue to aggressively investigate bank officers and directors when their criminal actions contribute to the failure of financial institutions,” said FBI Denver Special Agent in Charge James Yacone.
“These failures can have a significant impact on the stability of our banking system, and it is the FBI’s duty to investigate bank personnel who violate their fiduciary obligations to the institution and depositors.”
“The IRS, along with our law enforcement partners, will vigorously pursue bank officers and others who defraud banks,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.“The Federal Deposit Insurance Corporation Office of the Inspector General is pleased to join our law enforcement colleagues in announcing this guilty plea. We are particularly concerned when officers of a bank abuse their positions of trust and engage in schemes to deceive the regulators. We will continue to pursue such offenders in the interest of maintaining the integrity of our nation’s banks and protecting the Deposit Insurance Fund,” said FDIC Inspector General Jon T. Rymer.
This case was investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service – Criminal Investigations (IRS-CI), and the Federal Deposit Insurance Corporation – Office of the Inspector General (FDIC-OIG).
The defendant is being prosecuted by Assistant U.S. Attorneys Suneeta Hazra.
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New Albany, Indiana Man Sentenced to 10 Years in Prison for Online Enticement of A Minor Female and Transporting the Female Across State Lines to Engage in Illegal Sexual ActivityRead the Press Release
– Met the 14-year-old Louisville minor on the Internet
– Minor was picked up from her home and later found at a bowling alleyLOUISVILLE, Ky. – A New Albany, Indiana, man who used the Internet to induce a minor female to engage in sexual activity and transported her across state lines for illegal sexual purposes was sentenced today in U. S. District Court by U. S. District Judge John G. Heyburn, II, to 10 years in prison followed by a life term of Supervised Release, announced David J. Hale, United States Attorney for the Western District of Kentucky. The defendant, Robert L. Real, III, pleaded guilty to the charges on November 1, 2012. There is no parole in the federal system.
“The significant sentence handed down today should send a message to anyone with similar criminal intentions. If you seek to victimize a child, you will face a determined and coordinated law enforcement effort dedicated to the protection of our children,” stated U.S. Attorney David J. Hale. “We are grateful for the good work of the Louisville Metro Police Department, the Louisville Division of the FBI and the Kentucky Internet Crimes Against Children Task Force. My office will continue to work closely with our federal, state and local law enforcement partners to bring those who would prey upon and victimize children to justice.”
Real, age 21, admitted that he had communicated with a 14-year-old female on Badoo.com, picked her up from her home in Jefferson County, Kentucky, and transported her across state lines to his residence in Indiana. He further admitted that at his residence in Indiana, he engaged in sexual activity with the minor, including intercourse. The next day, he left the girl at a bowling alley in Jefferson County, Kentucky. The two began their online communications in early May 2012.
The 14-year-old had been reported missing to the Louisville Metro Police Department by her parents on June 8, 2012. The minor’s parents learned that she had been communicating with an adult, “Robert” who lived in Indiana, on a social networking website called BADOO.com. The FBI Cyber Crimes Task Force was notified of the incident and initiated an investigation. More than 2,500 messages between “Robert” and the minor were recovered by law enforcement officials on the family’s computer and minor’s laptop.
Assistant United States Attorney Jo E. Lawless prosecuted the case. The Louisville Metro Police Department and the Federal Bureau of Investigation as part of Kentucky’s Internet Crimes Against Children Task Force conducted the investigation.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Mike Yassine Enters Guilty Plea in Tax CaseRead the Press Release
In Austin this afternoon, Hussein Ali “Mike” Yassine, age 40, pleaded guilty to engaging in a tax fraud scheme using his Austin nightclubs.
Appearing before United States District Judge Sam Sparks, Yassine pleaded guilty to one count of procuring the preparation of a false Income Tax Return. By pleading guilty, Yassine admitted that in October 2010, he provided a professional tax preparer with false information to be included in Yassine’s 2009 federal Income Tax Return. According to court documents, figures provided by Yassine understated by hundreds of thousands of dollars the actual gross receipts generated by his downtown Austin night clubs--Spill, Qua, Kiss & Fly, Pure and Malaia—in 2009. As a result of his guilty plea, Yassine faces up to three years in federal prison and a maximum $250,000 fine. Sentencing has yet to be scheduled.
Yassine is currently in federal custody. Last month, Yassine was sentenced to 151 months in federal prison after a jury convicted him on money laundering charges. The jury found that in 2008 and 2009, Yassine used several business establishments, including the above mentioned night clubs, to launder over $200,000 in cash, which he believed to be the proceeds of narcotics trafficking.
This investigation was conducted by agents and investigators with the Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigation and the Austin Police Department together with the Drug Enforcement Administration, Texas Attorney General’s Office, Texas Alcoholic Beverage Commission and the Texas Comptroller’s Office. Assistant United States Attorneys Gregg Sofer and Alan Buie are prosecuting this case on behalf of the Government.
Manhattan U.S. Attorney Announces Arrest of Former Accounting Firm Partner for Stealing Nearly $4 Million in Client PaymentsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Keith Milke, the Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), today announced the arrest of CRAIG B. HABER, a former partner of a global accounting firm, for stealing nearly $4 million in client payments intended for the firm. HABER was arrested by Postal Inspectors this morning at his residence in New York, New York, and will be presented this afternoon before U.S. Magistrate Judge Debra Freeman in Manhattan federal court.
Manhattan U.S. Attorney Preet Bharara said: “From his perch at a prestigious accounting firm, Craig Haber allegedly betrayed his partners, by deceiving the firm’s clients in order to rob the firm blind – diverting millions of dollars of client payments into his own pocket. Fraud is always serious, but it is especially alarming when, as alleged here, it is committed by professionals who are supposed to be gatekeepers responsible for ensuring financial rectitude.”
USPIS Inspector-in-Charge Keith Milke said: “Mr. Haber's alleged abuse of the trust given to him by his clients and employer is a classic example of greed overcoming honest business practices. His arrest should serve as a reminder that whenever someone uses the US Mail for illegal activities Postal Inspectors will bring them to justice.”
According to the allegations in the Complaint unsealed today in Manhattan federal court:
From 1993 through July 2012, HABER was a partner at a global accounting firm headquartered in Chicago, Illinois, that provided a variety of auditing, accounting, and tax preparation services to businesses and individuals in the U.S. and abroad (the “Accounting Firm”). HABER worked at the Accounting Firm’s office in New York, New York, and provided tax preparation and advisory services to investment partnerships and other clients of the firm.
The Accounting Firm’s bills to clients ordinarily included payment instructions directing clients to pay the firm by wire transfer or by sending checks to its headquarters in Chicago. However, on multiple occasions from 2004 through July 2012, HABER sent bills to clients containing payment instructions directing them to send checks to him at the Accounting Firm’s New York, New York, office instead of the Chicago headquarters.
Upon receiving those checks, HABER deposited a number of them into a bank account that he had opened in the name of a sham business that was very similar to the name of the Accounting Firm. HABER opened the bank account specifically to receive checks from clients that were intended for the Accounting Firm. After depositing the clients’ checks into that account, HABER then transferred the money from that account to two personal bank accounts which he used to pay various personal expenses, including mortgage payments for his residence in New York, New York.
HABER stole a total of nearly $4 million in client payments.
HABER, 59, is charged with one count of mail fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or gross loss from the offense.
Mr. Bharara praised the outstanding investigative work of the USPIS.
The prosecution of this case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorney Joseph Facciponti is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
U.S. v. Craig Haber Complaint
Man Who Sent Obscene Photo to 14-Year-Old Girls via Facebook and Text Messaging Is Sentenced to 87 Months in Federal PrisonRead the Press Release
DALLAS — Andrew Dale McKee, 36, formerly of Oklahoma City, was sentenced this afternoon by U.S. District Judge Barbara M. G. Lynn to 87 months in federal prison, following his guilty plea in October 2012 to one count of transferring obscene material to a minor, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
McKee admitted that in April 2012, he sent a friend request to Jane Doe, a 14-year-old girl, via Facebook. Jane Doe’s Facebook page was public, listing her name, true birth date, middle school and her cell phone number. After Jane Doe accepted his friend request, McKee text messaged her, engaging in sexually explicit messaging and sending her an obscene photograph.
McKee indicated to Jane Doe that he wanted to engage in sexual activity with her and another friend, “Britany,” who McKee also believed was a 14-year-old girl. Via his cell phone, McKee ultimately persuaded “Britany” to meet him in Garland, Texas, to engage in illegal sexual activity with him. McKee also admits that he sent “Britany” the same obscene image he sent to Jane Doe.
On April 26, 2012, McKee used public transportation to meet “Britany” in Garland, at a prearranged time and place, intending to engage in sexual activity with her. Instead, when he arrived, he was arrested by officers with the Garland Police Department.
This matter was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/ For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab "resources."
The case was investigated by the Garland Police Department and U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant U.S. Attorney Lisa J. Miller was in charge of the prosecution.
Lower Brule Man Sentenced for Assaulting, Resisting and Impeding A Federal OfficerRead the Press Release
United States Attorney Brendan V. Johnson announced that a Lower Brule, South Dakota man convicted of Assaulting, Resisting and Impeding a Federal Officer was sentenced on February 4, 2013 by U.S. Magistrate Judge Mark A. Moreno. James Ewing, Jr., age 30, was sentenced to 12 months custody and $25 to the Victim Assistance Fund.
Ewing was indicted for the above offense by a federal grand jury on September 19, 2012. The charges stem from an incident on April 3, 2012 at Lower Brule, wherein Ewing assaulted, resisted, opposed, impeded, intimidated and interfered with an officer from the Bureau of Indian Affairs. Ewing pled guilty to an Amended Superseding Information on November 29, 2012.
The investigation was conducted by the Bureau of Indian Affairs and Assistant U.S. Attorney Meghan N. Dilges prosecuted the case. Ewing was immediately turned over to the custody of the U.S. Marshal.
Lower Brule Man Pleads Guilty to AssaultRead the Press Release
United States Attorney Brendan V. Johnson announced that Leonard Edwards, age 22, of Lower Brule, South Dakota appeared before U.S. District Judge Roberto A. Lange on February 5, 2013 and pled guilty to Count II of the Indictment that charged him with Assault Resulting in Serious Bodily Injury. The maximum penalty upon conviction is 10 years of imprisonment, a $250,000 fine, or both; 3 years of supervised release and 2 additional years of supervised release upon revocation.
The charge stems from an incident on August 25, 2012 where Edwards, the victim, and others were at a house party in Lower Brule. The victim had brought some alcohol to the party and took one of his bottles of alcohol with him when he left. Edwards followed the victim outside and struck him in the face with a closed fist, knocking the victim unconscious. As a result of the assault, the victim suffered multiple fractures to the jaw that required surgery to repair.
The investigation was conducted by the Federal Bureau of Investigation and Assistant U.S. Attorney Meghan N. Dilges is prosecuting the case. Edwards was remanded to the custody of the U.S. Marshal pending sentencing. A sentencing date has been set for April 29, 2013.
Longmont Man Sentenced to over 6 Years in Federal Prison for Possession of A Firearm by A Previously Convicted FelonRead the Press Release
DENVER – Shawn Stephen Russell, age 30, of Longmont, Colorado, was sentenced late last week by U.S. District Court Judge Philip A. Brimmer to serve 75 months (over 6 years) in federal prison for possession of a firearm by a convicted felon, United States Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Denver Special Agent in Charge Andrew Traver announced. After serving his prison term, Judge Brimmer ordered Russell to serve 3 years on supervised release. Russell appeared at the sentencing hearing in custody, and was immediately remanded at the hearing’s conclusion.
Russell was indicted by a federal grand jury on April 6, 2011. He pled guilty before Judge Brimmer on September 6, 2011. He was sentenced on February 1, 2013.
According to the stipulated facts contained in the plea agreement, at approximately 2:00 p.m. on November 4, 2010, the renter of a home in Longmont, Colorado reported to police that Russell was at her residence, and that there was a warrant out for his arrest. The renter stated that she decided to come forward because earlier that day, Russell had come to her residence, entered her bedroom, laid down and placed a firearm between his legs while he went to sleep. After the police received the report, the Longmont Police Department and the Boulder County SWAT teams were deployed to the renter’s residence. Police lawfully obtained a state search warrant to look for the firearm the renter saw. SWAT officers then surrounded the renter’s residence, and began making announcements for all individuals in the residence to exit.
Soon after the announcement, a man and woman exited the residence. The man stated that he was upstairs in a bedroom with Russell, and that Russell had an old .41 caliber revolver with a six-inch barrel. The man also stated that after he heard the announcement he saw Russell run down the stairs with the revolver, and heard the defendant say he was going into the crawl space. The defendant also said he was not going back to prison and was going to go out with a bang.
Russell proceeded to engage in an approximately 12-hour standoff with police. During the standoff, the SWAT team repeatedly ordered Russell to exit the residence, using loudspeakers to communicate with him. Police also fired a substantial amount of chemical munitions of various types into the residence in an attempt to force Russell to exit. Eventually the SWAT team entered the residence. At approximately 5:13 a.m. on November 5, 2010, Russell was taken into custody by SWAT team members in the attic of the residence.
Thereafter, police began searching the residence for the firearm. At approximately 7:30 a.m. police located a firearm matching the description given by the various witnesses who had exited the residence. The firearm, a Smith & Wesson Model 58, .41 caliber revolver, was in the crawl space. It was loaded with four rounds of .41 caliber ammunition.
Russell, who was a convicted felon who possessed the revolver, had nine separate convictions. The convictions were:
1. Second degree burglary in Larimer County
2. Identity theft in Larimer County
3. Check fraud in Larimer County
4. Aggravated motor vehicle theft in Boulder County
5. Identity theft in Boulder County
6. Identity theft in Boulder County
7. Attempted first degree trespass of an automobile in Boulder County
8. Menacing with a deadly weapon in Boulder County
9. Attempted stalking in Boulder County“Shawn Stephen Russell showed bad judgment 9 different times before this case – and was convicted of 9 different felonies,” said U.S. Attorney John Walsh. “His 10th felony came after an armed standoff. Longmont is a safer place today because this 10 time felon is behind bars.”
“ATF is committed to protecting the citizens of Colorado,” said Special Agent in Charge, Andrew Traver. “We will continue to offer our resources and expertise in making sure violent offenders are taken off our streets and put behind bars.”
“The great but dangerous work performed by our police officers in removing Russell from our community will make this neighborhood and our City safer,” said Longmont Public Safety Chief Mike Butler.
This case was investigated by the Longmont Police Department and ATF with support from the Boulder County SWAT team.
Russell was prosecuted by Assistant U.S. Attorney Ryan Bergsieker.
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Klux Klan Leader Found Guilty on Explosives and Gun ChargesRead the Press Release
RALEIGH - United States Attorney Thomas G. Walker announced today that in Federal Court Judge Terrence W. Boyle, sentenced CHARLES ROBERT BAREFOOT, JR., 50, of Benson, North Carolina, to 180 months imprisonment followed by 3 years supervised release.
BAREFOOT was convicted by a federal jury on September 25, 2012 of (1) Conspiracy to Possess Stolen Firearms; (2) Possession of Stolen Firearms; (3) Solicitation to Commit a Crime of Violence; (4) Receipt of Explosives With Intent to Kill; (5) Illegal Storage of Explosive Materials; and (6) Distribution of Explosive Materials to an Individual Under the Age of 21. United States District Judge Terrence W. Boyle presided over the trial.
According to evidence presented at trial, BAREFOOT was the leader of the North Carolina chapter of the National Knights of the Ku Klux Klan. In October, 2001, three members of BAREFOOT’S Klan group, including BAREFOOT’S son Daniel, then 17 years old, stole over 30 firearms from an out-building at a residence in Benson. They brought the guns to BAREFOOT’S residence, and BAREFOOT proceeded to dispose of them. He and another member of his Klan group, Marvin Glen Gautier, gave approximately ten of the guns to Michael Brewer, the leader of an affiliated Klan group in Lumberton, North Carolina. Brewer proceeded to sell the guns and share the proceeds with BAREFOOT.
Evidence at trial also revealed that BAREFOOT wanted to kill Johnston County Sheriff Steve Bizzell. BAREFOOT blamed Bizzell for the failure of a nightclub he operated, the Enchanted Barn. BAREFOOT also blamed Bizzell for the Klan group not being able to march in the September, 2001 Mule Days parade in Benson. BAREFOOT began building and experimenting with pipe bombs, and in the fall of 2001 he acquired a binary explosive which he hid in a freezer at his home. Sometime after that, BAREFOOT told Gautier that he had a plan to float down the Neuse River on a boat, get out in Smithfield, plant a bomb at the Sheriff’s Office, and then get back on the boat. BAREFOOT told Gautier that he needed someone to drop him off upriver and then pick him up at a bridge downriver. Gautier did not agree to participate, and there is no evidence that the plot was ever attempted. However, this evidence, along with additional evidence of BAREFOOT’S intent, formed the basis for BAREFOOT’S conviction on the charge of Solicitation to Commit a Crime of Violence.
Investigation of this case was conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Federal Bureau of Investigation, and the Johnston and Sampson County Sheriffs’ Offices. Assistant United States Attorney Eric Goulian prosecuted the case.
Kansas City Woman Sentenced for Not Paying Income Taxes on Embezzled FundsRead the Press Release
KANSAS CITY, KAN. – A Kansas City woman has been sentenced for not paying federal income taxes on part of nearly $2 million she embezzled from an employer, U.S. Attorney Barry Grissom said today.
Teresa Joyce Moore, 65, Kansas City, Mo., was sentenced to 33 months in federal prison. She pleaded guilty to one count of filing false income tax returns. In her plea, she admitted the crime occurred while she was working for Big W of Kansas City, Kan., a family run business specializing in manufacturing expandable polystyrene molding, processing and cutting equipment. She was a bookkeeper and officer manager with duties that included invoicing, tracking payroll and general bookkeeping.
In late 2007, the owners of Big W realized that Moore had defrauded the company. She created false invoices from legitimate vendors and prepared checks payable to the vendors. Then she created checks for the same amount payable to herself or her credit card company. When the checks with the forged signature cleared the bank and was returned to Big W., Moore hid them and put the checks payable to the legitimate vendor in Big W’s records.
Moore used embezzled funds to purchase homes, furniture, appliances and other items. On her 2006 federal tax return she reported income of $31,990. In fact, she had received income of more than $451,000 through her embezzlement scheme. On her 2007 federal tax return, she reported an income of $30,881. She did not report more than $507,000 she received from her embezzlement in 2007. Moore embezzled a total of nearly $2 million while working for Big W.
Grissom commended IRS - Criminal Investigation and Assistant U.S. Attorney Jabari Wamble for their work on the case.
Justice Department Settles with Missouri Eating Disorder Clinic over HIV DiscriminationRead the Press Release
The Justice Department announced today that, as part of its Barrier-Free Health Care Initiative, it has reached a settlement with Castlewood Treatment Center LLC, of St. Louis, Mo., under the Americans with Disabilities Act (ADA). The settlement resolves allegations that Castlewood Treatment Center violated the ADA by refusing to treat a woman for a serious eating disorder because she has HIV. This is the second settlement addressing HIV discrimination by a medical provider reached by the Justice Department in two weeks.
The Justice Department found that Castlewood refused to treat Susan Gibson because of her HIV, despite Castlewood’s determination that she was qualified to receive counseling treatment for her eating disorder, and despite advice from its own medical staff that they were able to treat someone with HIV at Castlewood. The department also determined that for months Castlewood staff told Gibson that she was on a waiting list for the program, even though they had no intention to admit her into the program. In the meantime, Gibson’s condition worsened and her health declined. Castlewood’s actions delayed Gibson from receiving appropriate medical treatment for up to seven months. Gibson’s complaint was brought to the Justice Department’s attention by the American Civil Liberties Union, LGBT & AIDS Project.
“Excluding a person from necessary medical treatment solely because of HIV is unconscionable,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division takes HIV discrimination in any form seriously, and will not allow for the marginalization of those living with HIV.”
Under the settlement, the Castlewood Treatment Center must pay $115,000 to Gibson and $25,000 in civil penalties. In addition, Castlewood must train its staff on the ADA and develop and implement an anti-discrimination policy. The department will monitor Castlewood’s compliance for four years.
Last week the department announced a similar agreement with the Fayetteville Pain Center to address HIV discrimination. Both settlements are part of the Department of Justice’s Barrier-Free Health Care Initiative, a partnership of the Civil Rights Division and U.S. Attorney’s offices across the nation, to target enforcement efforts on a critical area for individuals with disabilities. The initiative, launched on the 22nd anniversary of the ADA in July 2012, includes the participation of 40 U.S. Attorney’s offices. The division expects the initiative to address access to health care for people with HIV and those with hearing disabilities, as well as physical access to medical facilities. In 2012, the division and U.S. Attorneys offices reached two settlement agreements regarding access to medical care for people with HIV and four settlements regarding access to medical care for people with hearing disabilities. For more information on the Barrier Free Health Care Initiative visit http://www.ada.gov/usao-agreements.htm.
For more information on the ADA and HIV visit www.ada.gov/aids. Those interested in finding out more about these settlements or the obligations of public accommodations under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov. ADA complaints may be filed by email to [email protected].
Related Materials:
Castlewood Settlement Agreement
Jury Convicts East Columbus Heroin TraffickerRead the Press Release
CONTACT: Fred Alverson
Public Affairs Officer
COLUMBUS – A U.S. District Court jury here today convicted Sontay T. Smotherman, 36, of Columbus of operating a drug house in east Columbus.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Robert Corso, Special Agent in Charge, Drug Enforcement Administration (DEA), Stephanie R. Shoemaker, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Columbus Police Chief Kimberley Jacobs and Franklin County Sheriff Zach Scott announced the verdict returned following a two-day trial before U.S. District Judge Gregory L. Frost.
Testimony presented during the trial included that of a Columbus Police narcotics detective who said they seized approximately $10,000 in cash and more than $10,000 worth of heroin when task force officers executed a search warrant at the house. Testimony presented also showed that over three months in 2011 the conspiracy involved more than $100,000 in heroin distributed in Columbus. Four firearms were seized during the investigation.
Smotherman was one of five Columbus men charged in the case with conspiring to distribute heroin out of Smotherman’s residence at 401 Taylor Avenue. The jury convicted him of possession with intent to distribute heroin and one count of conspiracy. Each crime is punishable by at least five years and up to 40 years in prison.
The others charged have pleaded guilty to conspiracy and firearms charges. Bryan N. Johnson, 27, Arnett C. Smotherman, 35, and Waymon Price, 40, pleaded guilty and are awaiting sentencing. Frederick L. Carter pleaded guilty in September 2012 to conspiracy and a firearms charge. He was sentenced on January 7, 2013 to ten years in prison.
Smotherman was remanded to the custody of the U.S. Marshals Service where he will be held until he is sentenced.
Stewart commended the cooperative investigation conducted by the agencies, as well as Assistant U.S. Attorneys Michael Hunter and Doug Squires, who are representing the United States in the case.
Informational: Federal Court Initial AppearanceRead the Press Release
The United States Attorney's Office announced that during a federal court session in Billings, on February 6, 2013, before U.S. Magistrate Judge Carolyn S. Ostby, the following individual appeared:
MARY AGNES LEIDER, a 24-year-old resident of St. Xavier, made an initial appearance on a complaint alleging second degree murder. She is currently detained. If charged with this offense, LEIDER faces possible penalties of life in prison, a $250,000 fine and 5 years supervised release. Assistant U.S. Attorney Marcia K. Hurd is the prosecutor for the United States. The investigation was a cooperative effort between the Federal Bureau of Investigation, the Bureau of Indian Affairs, and the Big Horn County Sheriff's Office.
A complaint is merely a written statement of the essential facts constituting the offense charged.
Informational: Federal Court ArraignmentRead the Press Release
The United States Attorney's Office announced that during a federal court session in Great Falls, on February 5, 2013, before U.S. Magistrate Judge Keith Strong, the following individual was arraigned:
HIRAM EVANS, a resident of Browning, appeared on charges of aggravated sexual abuse and sexual abuse. He is currently detained. If convicted of these charges, EVANS faces possible penalties of life in prison, a $250,000 fine, and lifetime supervision. Assistant U.S. Attorney Ryan G. Weldon is the prosecutor for the United States. The investigation was a cooperative effort between the Federal Bureau of Investigation and the Bureau of Indian Affairs.
The defendant pled not guilty to the charges.
The charge, an indictment, information or complaint, is merely an accusation and all persons named as defendants are presumed innocent until proven guilty. A pre-trial conference and a trial date will be set and the United States will be required to prove the allegations set forth in the indictment beyond a reasonable doubt.
Indictments Returned in Hammond Federal CourtRead the Press Release
FOR IMMEDIATE RELEASECONTACT: Mary Hatton
www.usdoj.gov/usao/inn/ FAX (219) 852-2770
Hammond, Indiana- The United States Attorney’s Office announced that the following Indictments were returned on February 7, 2013:
Monta Oliver, 35, of Gary, Indiana, was charged in an Indictment with distribution of crack cocaine.These charges were filed as the result of an investigation by the Federal Bureau of Investigation and the Gary Police Department.This case has been assigned to and will be prosecuted by Special Assistant United States Attorney Armando Salinas.
Leonardo Torres-Flores, 22, of Valparaiso, Indiana, was charged in an Indictment with being found in the United States without permission after having been previously removed.These charges were filed as the result of an investigation by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.This case has been assigned to and will be prosecuted by Assistant United States Attorney Dean Lanter.
The United States Attorney's Office emphasized that an Indictment is merely an allegation and that all persons charged are presumed innocent until and unless proven guilty in court.
Indictment: Manhattan Accountant Embezzled More Than $500,000Read the Press Release
TOPEKA, KAN. – An accountant in Manhattan, Kan., has been charged with embezzling more than $500,000 from the commercial construction company where he worked, U.S. Attorney Barry Grissom said today.
Larry D. Lord, 63, Manhattan, Kan., is charged with 10 counts of mail fraud. The indictment alleges that from 2005 to 2012 he used his access to the bank accounts of Cheney Construction Incorporated in Manhattan to steal $536,179. Lord was responsible for paying the company’s bills and for issuing payroll checks to company employees. The indictment alleges he wrote checks on the company’s accounts and mailed them to pay personal credit card debts belonging to him and his wife.
If convicted, he faces a maximum penalty of 20 years in federal prison and a fine up to $250,000 on each count. The FBI, the Pottawatomie County Sheriff's Office and the Internal Revenue Service investigated. Assistant U.S. Attorney Christine Kenney is prosecuting.
OTHER INDICTMENTS
Shawn Lee Smith, 41, Salina, Kan., is charged with one count of possession with intent to distribute methamphetamine within 1,000 feet of Cottonwood Elementary School in Salina, one count of unlawful possession of a firearm in furtherance of drug trafficking, and one count of unlawful possession of a firearm after a felony conviction. The crimes are alleged to have occurred Dec. 3, 2012, in Saline County, Kan.
If convicted, he faces a penalty of not less than one year and not more than 40 years and a fine up to $2 million on the drug charge; a penalty of not less than five years and not more than life and a fine up to $250,000 on the charge of unlawful possession of a firearm in furtherance of drug trafficking; and a maximum penalty of 10 years and a fine up to $250,000 on the charge of unlawful possession of a firearm after a felony conviction.
The Salina Drug Task Force investigated. Assistant U.S. Attorney Randy Hendershot is prosecuting.
Robert Benjamin Isaac Ewing, 27, Topeka, Kan., is charged with unlawful possession of a firearm after a felony conviction. The crime is alleged to have occurred Sept. 24, 2012, in Shawnee County, Kan.
If convicted, he faces a maximum penalty of 10 years in federal prison and a fine up to $250,000. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Assistant U.S. Attorney Randy Hendershot is prosecuting.
Camona Javaughn Crowder, 28, Topeka, Kan., is charged with one count of unlawful possession of a firearm after a felony conviction. The crime is alleged to have occurred Sept. 30, 2011, in Shawnee County, Kan.
If convicted, he faces a maximum penalty of 10 years in federal prison and a fine up to $250,000. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Assistant U.S. Attorney Randy Hendershot is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
Houston, Texas Resident Charged in Five State Conspiracy to Defraud Home DepotRead the Press Release
– Switched UPC Labels On Purchases Then Sold Merchandise At A Profit On Ebay
LOUISVILLE, Ky. – A Houston, Texas resident has been charged with mail fraud by a federal grand jury meeting in Louisville, Kentucky this week, for his role in a five state conspiracy to defraud Home Depot announced David J. Hale, United States Attorney for the Western District of Kentucky.
Larry Lyndsey and other unnamed co-conspirators devised a scheme, between January 2006 through December 2012, to defraud Home Depot by allegedly switching UPC labels on similar items to reflect a lower purchase price, then selling the products on Ebay, to purchasers across the United States, and, according to the indictment, received approximately $645,000 from the fraudulently purchased items sold over the internet.
Specifically, according to the one-count federal indictment, Lyndsey and other unnamed co-conspirators would purchase items form Home Depot stores in Kentucky, Tennessee, Texas, Alabama, Georgia, and Louisiana. In particular, on May 9, 2009, Lyndsey is alleged to have sold, on Ebay for $525., a Lincoln Electric Weld Pak 180HD and caused it to be shipped to Shepherdsville, Kentucky, and on October 3, 2010, sold a Petsafe Wireless Dog Containment System, PIF-300, and caused it to be shipped to Paducah, Kentucky. It was further part of the conspiracy that following the sale of the fraudulently purchased items, Lyndsey and other unnamed co-conspirators would divide the profits from the fraudulent purchases and sales.
At sentencing, Lyndsey faces not more than 20 years in prison, a fine of $250,000 and a period of supervised release for three years. A first appearance/arraignment on the charge has not been scheduled by the court.
This case is being prosecuted by Assistant United States Attorney Bryan R. Calhoun and is being investigated by the United States Secret Service.
The indictment of a person by a Grand Jury is an accusation only and that person is presumed innocent until and unless proven guilty.
Heroin and Firearms Charges Filed Against Akron ManRead the Press Release
A federal grand jury returned an indictment charging Ernest Gaines, of Akron, with four counts related to the distribution of heroin and illegally having a firearm, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Gaines, 45, was charged with with one count of possession with intent to distribute 100 grams or more of heroin, one count of using and maintaining a premises for the purpose of manufacturing and distributing heroin, one count of being a felon in possession of firearms and ammunition, and one count of conspiracy to distribute and to possess with the intent to distribute heroin.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The investigation was conducted under the U.S. Attorney’s Organized Crime Drug Enforcement Task Force, which is part of a national program that seeks to identify, investigate and prosecute significant drug trafficking enterprises by utilizing multiple investigative and prosecuted resources.
The investigation preceding the indictment was conducted by the Drug Enforcement Administration, the Akron Police Department Street Narcotics Uniformed Detail, and the Summit County High Intensity Drug Trafficking Area initiative. The case is being prosecuted by Assistant United States Attorney Samuel A. Yannucci.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Hermosa Man Pleads Guilty to EscapeRead the Press Release
United States Attorney Brendan V. Johnson announced that Barry Allman, age 22, of Hermosa, South Dakota appeared before U.S. District Judge Roberto A. Lange on February 5, 2013 and pled guilty to Escape. The maximum penalty upon conviction is 5 years in custody, a $250,000 fine, or both; 3 years of supervised release; and a $100 special assessment.
The conviction stems from an incident that took place on November 26, 2012 when Allman was released on a furlough from federal custody to attend a funeral. Allman failed to return as ordered and was on the run until he was apprehended on December 18, 2012.
The investigation was conducted by the U.S. Marshal Service. The case is being prosecuted by Assistant U.S. Attorney Marie H. Ruettgers.
A presentence investigation was ordered and a sentencing date was set for April 1, 2013. The defendant was remanded to the custody of the U.S. Marshal pending sentencing.
Herkimer County Man Sentenced for Operating A Massive Marijuana Grow OperationRead the Press Release
SYRACUSE, NY – Richard S. Hartunian, United States Attorney for the Northern District of New York, announces that COREY LEITZ, age 42, of Frankfort, New York, was sentenced today in U.S. District Court in Syracuse to 151 months, followed by 5 years supervised release and a $100 special assessment. Leitz had previously pled guilty to a onecount information charging him with knowingly manufacturing over one thousand (1000) marijuana plants.
As part of the plea LEITZ admitted the following:
From August 2011 until December 14, 2011, LEITZ did knowingly manufacture marijuana plants at 162 McIntyre Road, Frankfort, New York. LEITZ set up and maintained a marijuana manufacturing operation inside a barn at this location. By December 14, 2011, LEITZ had successfully grown 3200 marijuana plants. LEITZ then sold the marijuana he manufactured to numerous customers in Herkimer County and elsewhere.
This marks the second felony drug conviction for Leitz who has a prior felony drug conviction in 1998 in Herkimer County.
This prosecution resulted from a joint investigation undertaken by the Drug Enforcement Administration, the New York State Police, and the New York National Guard Counterdrug Task Force. The case is being prosecuted by Assistant U.S. Attorney Geoffrey Brown. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315) 448-0672.
Harrison County Man Sentenced for Bank FraudRead the Press Release
Department of Justice
Office of Public AffairsTYLER, Texas – A 45-year-old Marshall, Texas, man has been sentenced to federal prison for bank fraud violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Mark Alan McCullars pleaded guilty on Nov. 6, 2012 to conspiracy to commit bank fraud and was sentenced to 51 months in federal prison today by U.S. District Judge Michael H. Schneider.
According to information presented in court, beginning in May 2011, McCullars and co-defendant, Amanda Henderson, created counterfeit checks which appeared to be payroll checks from businesses in East Texas. They also created fraudulent drivers’ licenses so that they could cash the counterfeit checks at check-cashing businesses. McCullars and Henderson cashed over 100 fraudulent checks resulting in over $55,000 in loss to check cashing businesses in East Texas. They were indicted by a federal grand jury on May 11, 2012. Henderson is awaiting sentencing.
This case was investigated by the United States Secret Service and prosecuted by Assistant U.S. Attorney Mary Ann Cozby.
####Gregg County Man Guilty of Methamphetamine ViolationsRead the Press Release
Department of Justice
Office of Public AffairsTYLER, Texas – A 26-year-old Longview, Texas man has pleaded guilty to federal drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Jason Ray Ragan pleaded guilty to possession with intent to distribute methamphetamine today before U.S. Magistrate Judge John D. Love.
According to information presented in court, on Aug. 2, 2012, Ragan was found in possession of approximately 8 grams of methamphetamine. A federal indictment was returned on Sep. 12, 2012 charging Ragan and a co-defendant with federal drug crimes.
Ragan faces up to 40 years in federal prison at sentencing. A sentencing date has not been set.
This case is being investigated by the Drug Enforcement Administration and the Texas Department of Public Safety prosecuted by Assistant U.S. Attorney Mary Ann Cozby.
####Fridley Man Indicted in Connection with the Armed Robbery of Two Twin Cities-area Shoe StoresRead the Press Release
MINNEAPOLIS—Yesterday in federal court, a 41-year-old Fridley man was indicted in connection with the armed robbery of two Twin Cities-area shoe stores in early January. Peter Christopher Nunn was charged with two counts of interference with commerce by robbery, pursuant to the Hobbs Act.
The indictment alleges that on January 5, 2013, Nunn stole approximately $300 from the Payless ShoeSource store, located at 8510 Springbrook Drive in Coon Rapids while threatening employees with a weapon, later determined to be a BB gun. It also alleges that on January 7, 2013, Nunn stole approximately $700 from the Famous Footwear store located at 1593 E. 17th Avenue in Shakopee in the same manner.
As stated, Nunn was charged in federal court under the Hobbs Act, which was passed by Congress in1946. The Act allows federal prosecutors to prosecute violent habitual criminals who commit armed robberies in places of business that involve interstate commerce. Federal prosecution of these cases is sometimes beneficial since federal penalties are often tougher than those imposed under state law. Moreover, because the federal system has no parole, those who receive federal sentences serve virtually their entire prison terms behind bars.If convicted, Nunn faces a potential maximum penalty of 20 years in prison on each count. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the police departments of Coon Rapids and Shakopee, and the United States Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant U.S. Attorney Thomas M. Hollenhorst.
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.Fourteen Individuals Indicted in Marijuana Distribution ConspiracyRead the Press Release
Tampa, FL - United States Attorney Robert E. O'Neill announces today the unsealing of a federal indictment charging 14 individuals with conspiring to distribute 1,000 kilograms or more of marijuana. Law enforcement teams in Florida, Texas, Arkansas, and Mississippi made the arrests earlier today in this joint law enforcement investigation, dubbed Operation Wooly Swamp. If convicted, each individual faces a maximum penalty of 10 years, up to life in federal prison.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by the Federal Bureau of Investigation, Drug Enforcement Administration (High Intensity Drug Trafficking Area Task Force 2), U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), Hillsborough County Sheriff's Office, and the Clearwater Police Department. It will be prosecuted by Assistant United States Attorney James C. Preston, Jr.
OPERATION WOOLY SWAMP Name Age Residence 26 Wimauma, FloridaArmando Martinez-Hernandez a/k/a Choco, a/k/a Mando, a/k/a Juan
45 Weslaco, Texas Luis Alberto Garcia,
a/k/a Louie, a/k/a Chuey 32 Weslaco, Texas Herman Martinez 23 Wimauma, Florida Ismael Martinez, a/k/a Jose 24 Wimauma, Florida Charles Daniel Law 52 Riverview, Florida Anthony Edward Peters, a/k/a Tony
36 Clearwater, Florida Joseph Fairweather, a/k/a Joey 28 Holiday, Florida Christopher Hart, a/k/a Chris 39 New Port Richey, Florida Paul Jason Pless 37 Gibsonton, Florida Charles Francis Martin, III, a/k/a Chuck 42 Riverview, Florida Cynthia Ford Rico, a/k/a Cindy 56 West Memphis, Arkansas Pamela Ford Walker 54 Oxford, Mississippi David Ray Hobbs 63 Memphis, TennesseeFour Charged with Internet Sales of Industrial Bleach as Miracle CureRead the Press Release
Louis Daniel Smith, 42, and Karis Delong, 38, both of Ashland, Ore., were charged with defrauding regulators and suppliers in a scheme to manufacture and sell industrial bleach as a cure for numerous illnesses, including arthritis, cancer, and the seasonal flu. Also charged were Chris Olson, 49, and Tammy Olson, 50, of Nine Mile Falls, Wash. A federal grand jury returned an indictment, unsealed yesterday, charging Smith, Delong and Tammy Olson with one count of conspiracy, four counts of interstate sales of misbranded drugs, and one count of smuggling. The grand jury charged Chris Olson with one count of conspiracy, one count of the interstate sale of a misbranded drug and one count of smuggling.
The indictment alleges that Smith and Delong operated a business called “Project GreenLife” (PGL) from 2004 to 2011. PGL provided various health products for sale over the internet. According to the indictment, Smith and Delong arranged the manufacture and sale of the “Miracle Mineral Supplement” (MMS), a mixture of Sodium Chlorite and water. Sodium chlorite is not meant for human consumption. Suppliers of the chemical include a warning sheet with the chemical that states that it is harmful if swallowed.
According to the indictment, PGL provided consumers directions to combine MMS with citric acid to create Chlorine Dioxide, and the instructions told consumers to drink this mixture to cure numerous illnesses. Chlorine Dioxide is a potent agent used to bleach textiles, among other industrial applications. In humans, Chlorine Dioxide is a severe respiratory and eye irritant that can cause nausea, diarrhea and dehydration.
As part of the scheme to manufacture MMS, the indictment alleges that Smith, Delong, and others smuggled sodium chlorite into the United States from Canada using fraudulent invoices to hide the true end use of the product. In these invoices, according to the indictment, they falsely claimed that the ingredients they were purchasing for MMS were to be used in wastewater treatment facilities.
According to the charging documents, Smith and Delong were the managing members of PGL Smith co-founded the company, and Delong frequently handled financial transactions for the company and recruited friends and family to participate in the business. The indictment alleges that Smith and Delong paid Tammy Olson to handle all customer inquiries regarding the product. It is alleged that Tammy Olson continued selling MMS on her own website after federal agents shut down the Project GreenLife website and production facilities.
The indictment also alleges that Smith and Delong paid Chris Olson to clandestinely manufacture MMS in a building on his property after regulators from the Food and Drug Administration (FDA) inspected PGL’s original manufacture and shipping locations.
“The Department of Justice is committed to protecting the health and safety of people with cancer and other serious medical conditions,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “Our most vulnerable citizens need real medicine – not dangerous chemicals peddled by modern-day snake oil salesmen.”
Charges contained in the indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty it is to determine guilt or innocence.
The case was investigated by agents of the FDA’s Office of Criminal Investigations and the U.S. Postal Inspection Service. The case is being prosecuted by Christopher E. Parisi, a Trial Attorney at the Department of Justice’s Consumer Protection Branch in Washington, D.C.
Founders of Mcginn, Smith & Co., Inc. Convicted of Conspiracy, Mail Fraud, Wire Fraud, Securities Fraud, and Filing False Tax ReturnsRead the Press Release
Albany, New York — A federal jury in Utica returned its verdict following the four-week trial of Timothy M. McGinn and David L. Smith, former owners of the Albany broker-dealer McGinn, Smith & Co., Inc., announced United States Attorney Richard S. Hartunian, Toni M. Weirauch, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York Field Office, and Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division. After 4 days of deliberation, the jury convicted McGinn of 27 of 29 counts and Smith of 15 of 29 counts. Both defendants were convicted of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, securities fraud, and filing false tax returns.
U.S. Attorney Hartunian commented, “With today's guilty verdicts against Timothy McGinn and David Smith, a measure of justice has been achieved for the many investors who placed their trust - and in some cases, their life savings - in these two men and their brokerage firm. While the harm they have caused may never be fully undone, this verdict sends the strong message that fraudulent business practices and tax cheating will not be tolerated. Law enforcement will do everything possible to bring to justice those whose greed and self- interest make them lose sight of their responsibilities to investors and regulators.”
U.S. Attorney Hartunian also thanked the many agents, investigators, and analysts from the Internal Revenue Service and the Federal Bureau of Investigation for their tireless efforts and dedication to seeing that justice was served. He also congratulated the trial team from the United States Attorney's Office, including Deputy Criminal Chief Elizabeth C. Coombe, Assistant United States Attorneys Richard D. Belliss and Wayne Myers, and Information Technology Specialist Ron Kittelson, all of whom spent long hours preparing and presenting this complex case.
Special Agent-in-Charge Weirauch stated, "The guilty verdicts against Timothy M. McGinn and David L. Smith are a victory for the people of the Capital Region of New York and beyond. People must be able to trust those who invest money on their behalf. They must also trust that all Americans are paying their fair share of taxes. When that trust is violated, people suffer, and our economy as a whole suffers. IRS Criminal Investigation, along with our law enforcement partners, remains committed to ensuring that people who violate the law are held accountable for their actions."
Special Agent-in-Charge Vale stated, "The actions of Timothy M. McGinn and David L. Smith destroyed dreams and ruined lives, and although today's verdict will not erase the financial and emotional harm they caused, we hope their victims will find solace in knowing that they will now face consequences for their damaging actions. Today's verdict supports the commitment of the FBI and our law enforcement partners to bring to justice those individuals who engage in such fraudulent schemes."
According to the superseding indictment, the purpose of the conspiracy was to mislead investors and the Financial Industry Regulatory Authority, Inc. (“FINRA”) regarding the safekeeping and use of investor money raised by 17 trusts, one corporation, and other entities; the risks of the trust offerings; the performance of the underlying income streams; the source of investor payments; and the improper diversion of investor money in order to obtain money from investors and enrich themselves. As a result of the defendant’s conduct, the investors were not aware that the defendants had diverted approximately $4.1 million in connection with transactions related to the trusts for their own benefit and the benefit of another person.
The superseding indictment also alleged that, as part of the conspiracy, the defendants improperly diverted nearly $1 million; directed false accounting entries regarding those transactions in response to a document request from the broker-dealer’s regulator, FINRA; and caused the false accounting entries to be submitted to FINRA. The alleged improper diversions fell into two categories: (a) the improper diversion of more than $473,000 of investor money from an escrow account to pay preferred clients who had unrelated investments (between May 15, 2008 and July 8, 2009); and (b) the improper diversion of $525,000 from bank accounts for three unrelated investments to pay the broker-dealer’s employees (between November 14, 2008 and April 15, 2009). The superseding indictment also alleged that the defendants improperly used a corporation to conceal and disguise the true nature of the payroll diversions by passing the money from the three unrelated investments through that corporation and then to the broker-dealer. Finally, the superseding indictment alleged that the defendants misled FINRA about the preferred client diversions and the payroll diversions by (a) directing the creation of false accounting entries to conceal the true nature of these transactions in response to a document request from FINRA; and (b) causing the submission of these false accounting entries to FINRA. The maximum potential penalties for count 1 include imprisonment for 30 years, to be followed by supervised release for 5 years, and a fine of the greater of $1,000,000 or twice the gross pecuniary gain or loss.
Both McGinn and Smith were convicted on Counts 21 through 26 (securities fraud), which relate to the failure to disclose improperly diverted fees to investors in violation of federal securities laws. Counts 21 and 22 relate to $100,000 in fees paid in connection with TDM Verifier Trust 08, and Counts 23 through 26 relate to approximately $855,000 in fees paid in connection with Fortress Trust 08. All of these transaction fees were paid with investor money. The maximum potential penalty for each of Counts 21 through 26 is imprisonment for 20 years, supervised release for 3 years, and a fine of $5,000,000.
McGinn and Smith were also both convicted on the tax charges arising from their failure to declare the improperly diverted money on their personal tax returns for tax years 2006 through 2008 (Counts 27-29 for McGinn and Counts 30-32 for Smith). McGinn and Smith later described the money as “loans,” but did not list them as such on personal financial statements. When FINRA discovered the false loan accounting entries for the diverted money, the defendants misled FINRA by directing the creation of backdated promissory notes. The maximum potential penalty for each of Counts 27 through 32 is imprisonment for 3 years, supervised release for 1 year, and a fine of $100,000.
Both McGinn and Smith were convicted on Count 10, and McGinn was convicted of Counts 4 through 6 and 11 through 13.1 Those mail and wire fraud counts relate to the Firstline Series B Trusts, which raised money from investors in connection with a loan of $2.4 million to Firstline Security, Inc., a company that generated alarm contracts. The superseding indictment alleged that the defendants did not tell investors when Firstline filed for bankruptcy and defaulted on loans. In addition, their firm sold approximately $600,000 of one of the Firstline investments without any disclosure of the bankruptcy or defaults. McGinn directed that investors receive $2 million of lulling payments by transferring money from other entities controlled by McGinn and Smith.
McGinn and Smith were both convicted on Count 14, and McGinn was convicted on Count 7. Those mail and wire fraud counts relate to the Integrated Excellence Trusts, for which the defendants raised about $1.2 million from investors in connection with a loan to benefit Integrated Excellence, Inc., which generated alarm contracts. The superseding indictment alleged that the defendants knew that the payments received from the loan were not sufficient to pay investors, but McGinn directed that investors receive lulling payments by transferring money from other entities controlled by McGinn and Smith.
McGinn and Smith were both convicted of Counts 8 and 9. Those mail fraud counts related to the improper diversion of investor money from an escrow account to pay preferred clients who had unrelated investments.
McGinn was also convicted on Counts 15 and 16. Those counts involved the diversion of approximately $142,000 of investor money from an escrow account to make payments to investors in other trusts.
Both McGinn and Smith were convicted on Count 17, which involved $35,000 Smith took directly from an escrow account holding investor funds for Integrated Excellence Sr. Trust 08. McGinn was convicted on Counts 18, 19, 20 which involved approximately $310,000 that McGinn took directly from escrow accounts holding investor funds.
This case was investigated by the Internal Revenue Service, Criminal Investigation and the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorneys Elizabeth C. Coombe, Richard D. Belliss, and Wayne Myers.
The sentencings are set for June 28, 2013 at 10:00 am for McGinn and 11:00 am for Smith.
LOCAL CONTACT:
Elizabeth C. Coombe
Assistant U.S. Attorney
Tel: (518) 431-0247____________________________
1The maximum potential penalty for each of Counts 4 through 20 is imprisonment for 30 years, supervised release for 5 years, and a fine of the greater of $1,000,000 or twice the gross pecuniary gain or loss.
Former Owner of Bolton Flooring Business Pleads Guilty to Federal Tax ChargeRead the Press Release
February 6, 2013David B. Fein, United States Attorney for the District of Connecticut, announced that ALAN MISKUNAS, 51, of Hebron, waived his right to indictment and pleaded guilty today before United States District Judge Michael P. Shea in Hartford to one count of filing a false tax return. MISKUNAS formerly owned Bolton Flooring Center in Bolton.
According to court documents and statements made in court, during the 2003 and 2004 tax years, MISKUNAS filed income tax returns with the Internal Revenue Service that under-reported Bolton Flooring Center’s gross business receipts by approximately one-half, resulting in his failure to pay more than $64,000 in personal income taxes due on that unreported income. MISKUNAS also did not file tax returns for the 2005 and 2006 tax years and failed to pay more than $88,000 in taxes owed for those years.
Judge Shea has scheduled sentencing for May 2, 2013, at which time MISKUNAS faces a maximum term of imprisonment of three years and a fine of up to $250,000. MISKUNAS also must make restitution to the IRS totaling more than $152,000, plus applicable interest and penalties.
This matter was investigated by the Internal Revenue Service – Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Henry K. Kopel.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]Former Mortgage Broker and Bank Officer Charged with Conspiring to Commit Bank FraudRead the Press Release
NEWARK, N.J. – A former mortgage broker and bank officer from Bergen County, N.J., was arrested this morning for allegedly conspiring to commit bank fraud to secure a $1.5 million residential loan, U.S. Attorney Paul J. Fishman announced.
James Cockinos, 58, a resident of Englewood Cliffs, is charged by Complaint with one count of conspiracy to commit bank fraud. The defendant allegedly defrauded Washington Mutual Bank (later acquired by JPMorgan Chase) in New York, to secure the loan. He is expected to make his initial court appearance before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court this afternoon.
According to the criminal Complaint:
Cockinos was the owner and president of Federated Mortgage Company of America (FMCA) as well as on the Board of Directors at Mariner’s Bank. Through FMCA, Cockinos served as the mortgage broker on a $1.5 million residential loan with Washington Mutual Bank in an application dated April 19, 2007. The borrower, identified as “Individual Two” in the Complaint, applied for the loan at the request of a spouse, identified as “Individual One” in the Complaint. There was no co-borrower on the loan.
The loan application indicated it was for the purchase of a $1.9 million home located in Englewood Cliffs, N.J. Cockinos fraudulently indicated in the application that he had obtained the information through a face-to-face interview with Individual Two, when no such interview took place. The application, in fact, falsely represented the employment, income and assets of the applicant.
The application indicated that there was $400,000 in a joint account held by Individuals One and Two at Mariner’s Bank in New Jersey. Cockinos and Individual One had temporarily deposited $350,000 into the joint account for the purpose of misrepresenting Individual Two’s assets. Cockinos also directed a Mariner’s Bank employee to falsely verify that the account held $350,000 during the prior two months, when there was significantly less in the account during that time.
Washington Mutual ultimately approved a loan of $1.5 million. On Sept. 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual Bank. In 2010, Individual Two defaulted on the loan and the home went into foreclosure. It was sold March 16, 2012, leaving JPMorgan Chase with a loss of more than $500,000.
The bank fraud conspiracy charge carries a maximum potential penalty of 30 years in prison and a fine of $1 million.U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent In Charge David Velazquez in Newark, and criminal investigators from the U.S. Attorney’s Office in Newark, with the investigation leading to the charges and today’s arrest.
The government is represented by Assistant U.S. Attorney Zahid N. Quraishi of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
The charge and allegations in the Complaint are merely accusations and the defendant is considered innocent unless and until proven guilty.
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Defense counsel: Edward J. Plaza Esq., Red Bank, N.J.Cockinos Complaint
Former International Longshoreman’s Union Official Admits Stealing Union FundsRead the Press Release
TRENTON, N.J. – The former secretary-treasurer of a Newark union today admitted embezzling $71,000 from Local 1233 of the International Longshoreman’s Association, U.S. Attorney Paul J. Fishman announced.
Gregory Taylor, 57, of Edison, N.J., pleaded guilty to Count 26 of an Indictment that charged him with issuing a vacation check for $7,852 to himself without authorization. Taylor also admitted to embezzling an additional $63,148 in union funds while he was in control of the union’s finances. Taylor entered his guilty plea before U.S. District Judge Joel A. Pisano in Trenton federal court.
According to documents in this case and statements made in court: Taylor admitted he had been removed from his elected position as secretary-treasurer in April 2010, yet continued to write himself checks, including a $7,852 vacation check to which he was not entitled. Taylor admitted that between 2007 and 2010, while secretary-treasurer, he embezzled a total of $71,000 by improperly cashing duplicate paychecks, as well as other checks from the union’s operating account, including for unauthorized credit card expenditures.
The charge to which Taylor pleaded carries a maximum potential penalty of five years in prison and a $250,000 fine. Taylor is scheduled to be sentenced on May 6, 2013.U.S. Attorney Fishman credited special agents of the Department of Labor-Office of Inspector General, under the direction of Special Agent in Charge Robert Panella and detectives and auditors from the Waterfront Commission, under the supervision of Assistant Counsel Michelle Demeri, with the investigation leading to today’s guilty plea.
The government is represented by V. Grady O’Malley, Senior Litigation Counsel of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.
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Defense counsel: Lorraine Gauli-Rufo Esq., Federal Public Defender’s Office, Trenton
Taylor Indictment