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31 January 2013
Mission Man Convicted on Child Pornography ChargesRead the Press Release
McALLEN, Texas – Mission resident Jose Alaniz-Allen, 22, has entered a plea of guilty to one count of receipt of child pornography, United States Attorney Kenneth Magidson announced today.
Alaniz-Allen came to the attention of law enforcement following an investigation which began Sept. 14, 2012, into persons using the Internet to traffic in child pornography. A Homeland Security Investigations (HSI) agent was able to locate and identify Alaniz-Allen as the owner of a computer as offering to participate in the distribution of child pornography movies through a peer-to-peer network .
On Nov. 29, 2012, a search warrant was executed at his Mission residence and a computer and various external storage media devices were seized. The forensic examination revealed 23 movies of clearly young children engaged in sexually explicit conduct. The images included children under the age of 12 engaged in bondage and acts of violence. Some of the images are of known victims as identified through the National Center for Missing and Exploited Children.
Alaniz-Allen admitted he downloaded child pornography from the Internet thereby receiving and possessing the child pornography found on his computer.
U.S. District Judge Micaela Alvarez, who accepted the guilty plea, has set sentencing for May 16, 2013. At that time, Alaniz-Allen faces up to 20 years in federal prison and a possible $250,000 fine. He will remain in custody pending that hearing.
This case, prosecuted by Assistant United States Attorney Kimberly Leo and Juan Villescas and investigated by Homeland Security Investigations, 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."Maryland Man Sentenced for Car Jacking A Sears Delivery TruckRead the Press Release
NEWPORT NEWS, Va. – Antonio Daniel McGhee of Essex, Md. was sentenced today to a total of 244 months in prison. McGhee was convicted by a federal jury on June 22, 2012, on charges of conspiracy to commit robbery, robbery, carjacking, and brandishing a firearm during a crime of violence.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, James D. Newman, Acting Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) Washington Field Division, made the announcement after sentencing by United States District Judge Mark S. Davis.
On January 10, 2012, McGhee and co-defendant Gabriel D. M. Mitchell carjacked a Sears delivery truck while it was delivering appliances in Hampton, Virginia. They were given information as to the property on the truck and the delivery schedule by an employee of a Sears sub-contractor, Travis Williams, who posed as one of the two victims. The actual victim was handcuffed, duct taped, and blind folded while the Williams was barely restrained. McGhee and Mitchell used a U-Haul truck to off load the appliances. The Sears appliances were recovered.
During the sentencing hearing the Judge found that McGhee testified falsely during the trial in an effort to frame the actual victim of the robbery. McGhee was sentenced to 160 months in prison for his participation in the conspiracy to commit robbery, robbery and carjacking, with a consecutive 84 month sentence for brandishing a firearm during the robbery. Mitchell is awaiting sentencing.
This case was investigated by Bureau of Alcohol, Tobacco, Firearms and Explosives and assisted by Hampton Police Department. Assistant United States Attorney Howard J. Zlotnick and Brian J. Samuels prosecuted this 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.Man Sent to Prison for Unlawful Possession of Gun Used in MurderRead the Press Release
A man who hid a gun that his brother used in a murder was sentenced January 30, 2013, to 8 years in federal prison.
Winsdell Nowelin Lamb, age 25, from Mason City, Iowa, received the prison term after a September 12, 2012, guilty plea to one count of possession of a firearm by a felon.
On August 9, 2011, Lamb’s half-brother Jamaal Leslie shot and killed a man in Mason City. As Leslie fled the scene, he discarded the handgun which Lamb picked up. Lamb was later found hiding in the attic of a residence with the handgun. Lamb had previously been convicted of possession of marijuana with intent to deliver in 2008 and possession of marijuana in 2011, both felonies. At the time of the offense, Lamb was on escape status from the Beje Clark Residential Facility on these drug convictions.
Lamb was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Lamb was sentenced to 96 months’ imprisonment. A special assessment of $100 was imposed. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Lamb will be returned to state prison in Iowa to complete his state drug sentences before being transferred to federal prison to serve his federal gun sentence.
This case was prosecuted as part of Project Safe Neighborhoods, a cooperative local, state and federal program aimed at the enhanced prosecution of gun crimes. The case was prosecuted by Assistant United States Attorney Daniel C. Tvedt and was investigated by the Mason City Police Department, the Cerro Gordo Sheriff’s Office, the Iowa Division of Criminal Investigation, and the Bureau of Alcohol, Tobacco, and Firearms.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is CR 12-3032.
Laguna Pueblo Man Pleads Guilty to Federal Assault ChargeRead the Press Release
ALBUQUERQUE – This morning Laurence Kasero, 38, a member and resident of Laguna Pueblo, N.M., pled guilty to a federal assault charge under a plea agreement with the U.S. Attorney’s Office.
Kasero was indicted on Sept. 25, 2012, and charged with assault resulting in serious bodily injury. The indictment charged Kasero with assaulting a woman on March 20, 2011, in Indian Country within Bernalillo County.
During this morning’s proceedings, Kasero pled guilty to the indictment. In entering his guilty plea, Kasero admitted assaulting his wife, a member of Acoma Pueblo, at the Route 66 Casino parking lot on Laguna Pueblo on March 20, 2011. Kasero admitted that, after he caused the victim to fall to the ground, he stomped on her ankles causing her to sustain serious bodily injury.
Kasero has been in federal custody since his arrest on Sept. 28, 2012, and remains detained pending his sentencing hearing, which has yet to be scheduled. At sentencing, Kasero faces a maximum penalty of ten years of imprisonment.
The case was investigated by the Bureau of Indian Affairs, Office of Justice Services, Southern Pueblos Agency, and the Pueblo of Laguna Police Department, and is being prosecuted by Special Assistant U.S. Attorney David M. Adams.
Kewa Pueblo Woman Sentenced to Fifteen Months in Prison for Aggravated Assault ConvictionRead the Press Release
ALBUQUERQUE – Lolita Nieto, 36, a member and resident of Kewa Pueblo, was sentenced this afternoon to 15 months in prison followed by a year of supervised release for her aggravated assault conviction. Nieto also was ordered to pay $3,745.20 in restitution to the victim of her attack.
Nieto was indicted on March 1, 2012, and charged with assault resulting in serious bodily injury. She has been in federal custody since her arrest on March 9, 2012.
On July 26, 2012, Nieto pled guilty to an Information charging her with aggravated assault. In entering her guilty plea, Nieto admitted that, on July 23, 2011, she assaulted another woman in Indian country within Sandoval County, N.M. More specifically, Nieto admitted striking and kicking the victim of her assault.
As required by Nieto’s plea agreement, the indictment against Nieto was dismissed after sentence was imposed.
The case was investigated by the Santa Fe office of the FBI and the Bureau of Indian Affairs, Office of Justice Services, Southern Pueblos Agency, and was prosecuted by Assistant U.S. Attorney Kyle T. Nayback.
KC Man Sentenced to 26 Years in Prison for Illegal FirearmRead the Press Release
Project CeasefireKANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was sentenced in federal court today for illegally possessing a firearm.
Damon L. Collier, 40, of Kansas City, was sentenced by U.S. District Judge Greg Kays to 26 years and eight months in federal prison without parole. Collier was sentenced as an armed career offender due to his prior felony convictions for serious drug offenses.
Collier was found guilty on Aug. 14, 2012, of being a felon in possession of a firearm. Evidence introduced during the trial indicated that Collier was in possession of a loaded AMT .380-caliber, 9mm Kurz pistol on July 23, 2011. At about 11 p.m. that day, Kansas City police officers responded to a report of a disturbance. Collier was inside an apartment in the 3500 block of Gillham Road, highly intoxicated, waving a gun around and yelling threats against two other people. When officers entered the residence, Collier immediately placed the gun on a table and was taken into custody.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Collier has eight prior felony convictions, including three prior felony convictions for possession of a controlled substance, two prior felony convictions for sale of a controlled substance, and prior felony convictions for distributing a controlled substance, trafficking drugs and attempted property damage. According to court documents, Collier was arrested for the federal offense while he was on parole for selling a controlled substance.
This case was prosecuted by Assistant U.S. Attorney Bruce Clark and Special Assistant U.S. Attorney Shalanda Smith. It was investigated by the Kansas City, Mo., Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Project Ceasefire
Project Ceasefire, launched in October 1999, is a cooperative initiative by federal and local law enforcement and the Kansas City Crime Commission that targets for federal prosecution persons who unlawfully use or possess firearms.Justin Lane Flor Sentenced in U.S. District CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Billings, on January 31, 2013, before Chief U.S. District Judge Richard F. Cebull, JUSTIN LANE FLOR, a 35-year-old resident of Miles City, appeared for sentencing. FLOR was sentenced to a term of:
Prison: 120 months
Special Assessment: $100
Forfeiture: cell phone
Supervised Release: 10 years
FLOR was sentenced in connection with his guilty plea to possession of child pornography.
In an Offer of Proof filed by Assistant U.S. Attorney Marcia K. Hurd, the government stated it would have proved at trial the following:
In January 2012, law enforcement personnel in Miles City received a report that FLOR (then age 35) was believed to be involved in a sexual relationship with a 14-year-old girl. The investigation revealed that FLOR had provided the girl with drug paraphernalia and the two had smoked marijuana together and had repeatedly engaged in sexual activities at FLOR's residence in Miles City. FLOR's cellular telephone was seized as part of the investigation, and forensic examination revealed the presence of three child pornography movies that were saved in a directory on the phone. The movies had been downloaded from the Internet and saved. The movies depicted children engaged in sexually explicit conduct and their nature was readily apparent. FLOR possessed the three movies on his cell phone and they were mailed, shipped or transported in interstate commerce or produced using material that traveled in interstate commerce.
Because there is no parole in the federal system, the "truth in sentencing" guidelines mandate that FLOR will likely serve all of the time imposed by the court. In the federal system, FLOR does have the opportunity to earn a sentence reduction for "good behavior." However, this reduction will not exceed 15% of the overall sentence.
The investigation was a cooperative effort between the Miles City Police Department and the Federal Bureau of Investigation.
Justice Department Settles with Fayetteville Pain Center 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 the Fayetteville Pain Center under the Americans with Disabilities Act (ADA). The settlement resolves allegations that the Fayetteville Pain Center violated the ADA by refusing to treat a woman because she has HIV.
The complainant, a woman with HIV who was suffering from back pain as a result of a car accident, visited the Fayetteville Pain Center in Fayetteville, N.C., seeking treatment. According to the complaint, the woman was unable to obtain medical treatment because the doctor at the Fayetteville Pain Center refused to treat a person with HIV. The ADA requires public accommodations such as doctors’ offices, medical clinics, hospitals, and other health care providers, to provide people with disabilities, including those with HIV, equal access to goods, services, and facilities.
Under the settlement, the Fayetteville Pain Center must pay $10,000 to the complainant and $5,000 to the United States in civil penalties, train its staff on the ADA, and develop and implement an anti-discrimination policy.
“All people deserve equal access to medical treatment. People with HIV and other disabilities must not be denied health care because of their disabilities. Medical professionals, perhaps more than anyone, should understand that the universal precautions they use when treating all patients mean no one should be excluded from treatment based on HIV,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This type of discrimination will not be tolerated.”
The U.S. Attorney in Eastern North Carolina, Thomas G. Walker, emphasized that “this settlement should also send a message to all health care providers in Eastern North Carolina that a disability cannot be a factor in determining accessibility to care and treatment.”
This settlement is part of the Department of Justice’s Barrier-Free Health Care Initiative, a partnership of the Civil Rights Division and U.S. Attorneys’ offices across the nation, to target enforcement efforts on a critical area for individuals with disabilities. The initiative was announced on the anniversary of the ADA in July 2012 and 40 U.S. Attorneys’ offices are participating. The division expects the initiative to address access to health care for people with HIV and hearing disabilities, as well as physical access to medical facilities. In 2012, the division and U.S. Attorneys 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 ADA and HIV visit www.ada.gov/aids. Those interested in finding out more information about these settlements or the obligations of public accommodations under the ADA, including how it protects people with HIV in accessing medical care, 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].
Justice Department Reaches Settlement with Houston Community College to Resolve Immigration-Related Unfair Employment PracticesRead the Press Release
The Justice Department announced today that it has reached an agreement with Houston Community College (HCC) resolving allegations that the college violated the anti-discrimination provision of the Immigration and Nationality Act (INA). HCC employs approximately 6,000 employees across 20 campuses and is one of the largest community colleges in the country.
The Justice Department’s investigation began after an individual filed a charge alleging that she was discriminated against in the hiring process. The department’s investigation revealed that for at least the last two years, HCC has engaged in a pattern or practice of discrimination by requiring non-U.S. citizens to provide specific documentation establishing their work authority, while not making similar demands from U.S. citizens. The department did not find that the individual that filed the charge was herself a victim of the discriminatory practice.
Under the terms of the agreement, HCC will pay $83,600 in civil penalties and agreed to abandon its prior department-based employment eligibility verification process in favor of a centralized verification process. HCC also agreed to create a $20,000 back pay fund to compensate potential victims who lost wages as a result of the discriminatory practices, to undergo Justice Department training on the anti-discrimination provision of the INA and to be subject to monitoring of its employment eligibility verification practices for a period of two years. The case was handled by Trial Attorney Liza Zamd and settled prior to the Justice Department filing a complaint in this matter.
“Employers cannot create higher hurdles for non-U.S. citizens in the employment process, including the employment eligibility verification process, than those required of U.S. citizens or those required by law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We commend HCC for restructuring its hiring processes to ensure that it will no longer be treating new-hires differently based on their citizenship status.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/about/osc/webinars.php, email [email protected] or visit the website at www.justice.gov/crt/about/osc.Related Materials:
HCC Settlement Agreement
Justice Department Files Antitrust Lawsuit Challenging <br /> Anheuser-Busch Inbev’s Proposed Acquisition of Grupo ModeloRead the Press Release
WASHINGTON – The Department of Justice filed a civil antitrust lawsuit today challenging Anheuser-Busch InBev’s (ABI) proposed acquisition of total ownership and control of Grupo Modelo. The department said that the $20.1 billion transaction would substantially lessen competition in the market for beer in the United States as a whole and in 26 metropolitan areas across the United States, resulting in consumers paying more for beer and having fewer new products from which to choose.Americans spent at least $80 billion on beer last year. According to the department, ABI’s Bud Light is the best selling beer in the United States and Modelo’s Corona Extra is the best-selling import. Because of the size of the beer market in the United States, even a small increase in the price of beer could result in billions of dollars of harm to American consumers, the department said.
The department’s lawsuit, filed in the U.S. District Court for the District of Columbia, seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate.
“ The department is taking this action to stop a merger between major beer brewers because it would result in less competition and higher beer prices for American consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers. This lawsuit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry.”
ABI and Modelo–the largest and third largest beer firms, respectively–together control about 46 percent of annual sales in the United States. MillerCoors, the second largest beer firm, accounts for about 29 percent of nationwide sales. Beer is generally grouped into four distinct segments by industry participants–sub-premium, premium, premium plus and high-end. The sub-premium segment includes: Busch (owned by ABI); and Keystone (owned by MillerCoors). The premium segment includes: Bud Light; Coors Light; and MillerLite. The premium plus segment includes: Michelob (owned by ABI); and Modelo Especial (owned by Modelo). The high-end segment includes: imports such as Corona (owned by Modelo) and Heineken; and a variety of craft beers.
According to the department’s complaint, the U.S. beer market is already highly concentrated, and prices are increased by strategic interactions among the largest brewers, including ABI and MillerCoors. ABI generally acts as the price leader, implementing annual price increases in the sub-premium, premium and premium plus segments of the U.S. beer industry. MillerCoors and other brewers have typically joined the ABI price increases, while Modelo has not. By pricing aggressively, Modelo–through its importer, Crown Imports–puts pressure on ABI to maintain or lower prices, especially in certain parts of the country. As a result, Modelo has become a particularly important competitor in the U.S. market.
The complaint quotes internal company documents demonstrating both ABI’s determination to maintain its upward price leadership in the U.S. beer industry and Modelo’s present-day position as a significant competitive threat to ABI:- ABI has implemented a “conduct plan,” whereby ABI hopes to establish “the highest level of [price] followership” by its large rivals by being as “consistent,” “simple” and “transparent” as possible;
- ABI believes that its conduct plan provides the highest possibility of “sustaining a price increase” and “ensuring competition does not believe they can take share through pricing”;
- By contrast, Modelo’s pricing strategy in the United States is known as the “momentum plan” and aims to narrow the “price gap” between Modelo’s imports and domestic premium beers, such as ABI’s Bud Light, stealing market share from ABI by enticing consumers to “trade up” to Modelo beer; and
- ABI executives acknowledge that Modelo has “put increasing pressure” on ABI competitively, and that Modelo’s strategy is at odds with ABI’s well-established practice of leading prices upward with the expectation that its competitors will follow.
The complaint also discusses ABI’s efforts to target Corona. ABI considered Corona to be a significant threat, and launched Bud Light Lime in 2008 to compete with Corona. ABI went as far as to mimic Corona’s distinctive clear bottle. Ultimately, instead of trying to compete head-to-head with its own product, Bud Light Lime, ABI is thwarting competition by buying Modelo.
The department alleges that ABI’s acquisition of total ownership and control of Modelo would eliminate the existing competition between ABI and Modelo, further concentrating the beer industry, enhancing ABI’s market power and facilitating coordinated pricing between ABI and the remaining large players. Consumers would, as a result, see higher prices and less innovation.
The department’s complaint also alleges that ABI and Modelo efforts to remedy the anticompetitive aspects of their transaction are inadequate. The complaint states that ABI has agreed to sell Modelo’s existing 50 percent interest in Crown to its Crown joint venture partner, Constellation. ABI would also enter into an exclusive agreement to supply Constellation with Modelo beer to import into the United States, although ABI can terminate this supply agreement after 10 years and would retain the Modelo brands and its brewing and bottling facilities.
“The companies’ attempt to fix this anticompetitive deal through t he sale of Modelo’s existing interest in Crown and a temporary supply agreement is not sufficient to prevent consumer harm from ABI’s acquisition of its competitor, Modelo,” said Baer.
The complaint states that the combined effect of the proposed acquisition of Modelo and the proposed fix is to eliminate from the marketplace a sophisticated brewing firm with a long history of success and replace it with an importer which will own no brands or brewing facilities and be totally dependent on ABI for its supply of Corona and other Modelo brands. The documents in the case show that as Crown’s CEO wrote to his employees after the acquisition was announced: “our #1 competitor will now be our supplier…it is not currently or will not, going forward, be ‘business as usual.’” The department’s complaint said that not only will competition be harmed by the loss of Modelo as a competitor, but by removing an independent brewer–Modelo–from the market, strategically coordinated pricing will become easier in the future.
ABI is a Belgian corporation with its principal place of business in Leuven, Belgium. In 2011, ABI had revenues of approximately $39 billion. ABI currently has a 43 percent voting interest and a 50.35 percent economic interest in Modelo. ABI has stated in its annual reports filed with the Securities and Exchange Commission that it does not have voting or other effective control of Modelo. Through the proposed acquisition, ABI would acquire control of, and the remaining economic interest in Modelo.
Modelo is a Mexican corporation with its principal place of business in Mexico City. In 2011, Modelo had revenues of approximately $7 billion.
Joseph W. Jordan Sentenced to PrisonRead the Press Release
Michael J. Moore, United States Attorney for the Middle District of Georgia, announces the sentencing of Joseph Wiley Jordan, age 64, a resident of Dougherty County, Georgia, on January 30, 2013, in Albany, Georgia by the Honorable W. Louis Sands, United States District Judge for the Middle District of Georgia.
On June 4, 2012, Jordan was found guilty by a jury of four felony counts: Count One, Conspiracy to Make Bribes or Kickbacks to a Bank Officer, and Counts Three, Four and Five, Substantive Acts of Bribes and Kickbacks to a Bank Officer.
Defendant Jordan was sentenced to fifteen (15) months in the custody of the Bureau of Prisons and two years of supervised release after serving his sentence. Defendant Jordan was allowed to remain on bond pending his surrender to the Bureau of Prisons.
The case was jointly investigated by Agents of the Federal Bureau of Investigation and the United States Secret Service. The case was prosecuted by Assistant United States Attorney Jim Crane for the Middle District of Georgia.
“This prosecution was successful because of the cooperation of our law enforcement partners and the hard work of the agents and the prosecutor assigned to the case,” said U.S. Attorney Michael Moore.
Inquiries regarding the case should be directed to Sue McKinney, Public Affairs Specialist, United States Attorney’s Office at (478) 621-2601.
Jalen Jeremy Larance Sentenced in U.S. District CourtRead the Press Release
The United States Attorney's Office announced that during a federal court session in Billings, on January 31, 2013, before Chief U.S. District Judge Richard F. Cebull, JALEN JEREMY LARANCE, a 21-year-old resident of Lame Deer and an enrolled member of the Northern Cheyenne Tribe, appeared for sentencing. LARANCE was sentenced to a term of:
Prison: 84 months
Special Assessment: $100
Supervised Release: 10 years
LARANCE was sentenced in connection with his guilty plea to aggravated sexual abuse.
In an Offer of Proof filed by Assistant U.S. Attorney Lori Harper Suek, the government stated it would have proved at trial the following:
In late August or early September of 2011, LARANCE came to the house where the victim was staying, located in a housing area in Lame Deer, to check his Facebook account on her computer. LARANCE was drunk. While at the house, LARANCE pushed his body against the victim trying to hold her. She told LARANCE to leave and then she went into the bathroom. LARANCE followed her into the bathroom, pushed her against the sink, and forced her to engage in sexual intercourse. The victim repeatedly told LARANCE no.
The victim did not report the rape to law enforcement immediately, but she did tell her school counselor. There were also Facebook postings by LARANCE about the rape in which he apologized to the victim.
LARANCE was interviewed and provided a recorded statement admitting that he raped the victim.
Because there is no parole in the federal system, the "truth in sentencing" guidelines mandate that LARANCE will likely serve all of the time imposed by the court. In the federal system, LARANCE does have the opportunity to earn a sentence reduction for "good behavior." However, this reduction will not exceed 15% of the overall sentence.
The investigation was conducted by the Federal Bureau of Investigation.
Interstate Identity-theft Ringleader Sentenced to Almost Ten Years in Federal PrisonRead the Press Release
GRAND RAPIDS, MICHIGAN – Marcus Montell Thames, 32, of Ft. Lauderdale, Florida, was sentenced to serve nine years and seven months in Federal prison for his leading role in an interstate identity-theft conspiracy that was based out of Florida, but whose members traveled throughout the Southeast and Upper Midwest committing bank fraud and identity theft during 2010 and 2011. The scheme involved eight charged defendants, all of whom have since been convicted of felonies including conspiracy to commit identity theft and bank fraud; bank fraud; and aggravated identity theft.The scheme involved the defendants, travelling in teams controlled by Thames, going to locations such as gyms, day-care centers, and other places where they hoped to find purses that had been left in vehicles. After breaking into the vehicles and stealing purses to obtain check books, driver licenses, and other means of identification, the defendants would then forge high face-value checks from one victim’s bank account made payable to another victim, and then travel to branches of the payee victim’s bank that had drive-through teller lanes. There, female fraud-team members wearing basic disguises would cash the forged checks from the lane farthest from the teller window, presenting that victim’s stolen means of identification as proof of identity. The fast-moving and wide-ranging scheme, dubbed “Felony Lane” by the lawenforcement agencies that investigated it, victimized significant numbers of private citizens and federally-insured financial institutions in states that included Georgia, Ohio, Indiana, Illinois and Michigan.
The investigation of Thames and his accomplices began with a February 2011 arrest by the Blackmon Township Police Department of defendant Wendy S. Bailey, 44, of Saginaw, Michigan, after she attempted to cash a forged check while on a trip with Thames and others. After initial investigation by Blackmon Township developed evidence that Bailey was part of an interstate fraud ring, the Lansing office of the FBI joined the investigation. From there, the investigation grew to include participation by the Meridian Township Police Department, the Michigan State Police, and numerous other law-enforcement agencies in communities outside of Michigan through which the fraud teams had passed.
The sentence was imposed by U.S. District Judge Janet T. Neff, who commented on the seriousness of identity theft in general, and on the aggravated character of this scheme in particular given its geographic reach, the number of victims over time, and the financial and psychic harms it caused.
Other defendants received the following sentences: Peter P. Simone, 50, of Davie, Florida, who was convicted following a jury trial in October 2011, received a sentence of six years in prison; Jarod L. Jackson, 29, of Ft. Lauderdale, Florida, was sentenced to 41 months in prison; Lucious L. Felder, 23, of Ft. Lauderdale, was sentenced to 30 months in prison; Carlton L. Brown, 24, of Ft. Lauderdale, was sentenced to 18 months in prison; Kimberly L, Kirkby, 52, of Florence, Alabama, was sentenced to 12 months in prison; and Wendy S. Bailey, 44, of Saginaw, Michigan, received a sentence of time-served, or approximately three months. Erica S. Robinson, 29, of Smyrna, Georgia, is pending sentencing on February 19, 2013. She is presently in the custody of the U.S. Marshals Service. All of the sentences were imposed by U.S. District Judge Neff, who also presided over the Simone trial.
Commenting on the sentences, U.S. Attorney Patrick A. Miles Jr. stated, “identity theft is a particularly pernicious form of property crime because it involves more than simply stealing money, it involves stealing the peace of mind of victims and, sometimes, harming their reputations and their credit-worthiness. For that reason, my Office will continue to aggressively pursue identity thieves – particularly those who mistakenly believe that they can escape accountability if they just keep moving quickly enough from county to county or from state to state.”
Robert D. Foley III, Special Agent in Charge, FBI Detroit Division stated, “Those individuals who engage in identity theft and other crimes as part of a ring, are robbing citizens of their money and their piece of mind. The FBI is committed to pursuing and prosecuting these criminals for these illegal acts.”
The Lansing office of the FBI was the lead investigating agency in the case. It was prosecuted by Assistant U.S. Attorney Hagen W. Frank, who serves as the principal of the Identity Theft and Cybercrime Task-Force of the U.S. Attorney’s Office..
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Internet Scammer Indicted for FraudRead the Press Release
SYRACUSE, NEW YORK —United States Attorney Richard S. Hartunian announced that a Syracuse Federal Grand Jury has returned an indictment charging Alexandru Turcan, 29, with wire fraud, false use of a passport, and aggravated identity theft in violation of 18 U.S.C. § 1343, 1543 and 1028A. Turcan, originally from Chisinau, Moldova, is a lawful permanent resident of the United States. He was apprehended while entering the United States through Orlando, Florida.
The indictment alleges that Turcan conducted a scheme to defraud individuals who responded to advertisements listing vehicles on http://www.autotrader.com/, a website that displays automobiles for sale. Two victims, in responding to an advertisement posted by Turcan, believed they were purchasing a 2007 Chevrolet Silverado and a 1968 Ford Shelby Mustang. The victims, citizens of Connecticut and Georgia, wired $17,900 and $21,000 respectively to purchase the vehicles to a bank account established by Turcan in Syracuse, New York. Turcan opened the account under a false name using a counterfeited passport. After transferring the funds to Turcan’s bank account, the victims never received the vehicles they believed they had purchased.
If convicted of aggravated identity theft, Turcan faces a mandatory two year term of imprisonment that would run concurrently with any term of imprisonment imposed for conviction of wire fraud and false use of a passport. If convicted of wire fraud, Turcan faces a 20 year maximum term of imprisonment, a fine of up to $250,000, and an order of restitution compensating the victims for their losses. If convicted of false use of a passport, Turcan faces a 10 year maximum term of imprisonment, a fine of up to $250,000 and an order of restitution.
The indictment is merely an allegation and the defendant is presumed innocent unless and until proven guilty in a court of law.
This case was investigated by the Upstate Electronic Crimes Task Force including the Syracuse Police Department and the United States Secret Service, the Office of the Ohio Attorney General, the Federal Bureau of Investigation, Diplomatic Security Services, and the Department of Homeland Security, Connecticut State Police Computer Crimes Unit. The case is being prosecuted by Assistant U.S. Attorney Gwen Carroll. For further information, contact Executive Assistant U.S. Attorney John G. Duncan at 315-448-0672
Informational: Federal Court ArraignmentRead the Press Release
The United States Attorney's Office announced that during a federal court session in Billings, on January 31, 2013, before U.S. Magistrate Judge Carolyn S. Ostby, the following individual was arraigned:
JOSEPH MATTHEW BALLANTYNE, a 54-year-old resident of Billings, appeared on a charge of failure to register as a sexual offender. He is currently detained. If convicted of this charge, BALLANTYNE faces possible penalties of 10 years in prison, a $250,000 fine, and lifetime supervision. Assistant U.S. Attorney Marcia K. Hurd is the prosecutor for the United States. The investigation was conducted by the United States Marshals Service.
The defendant pled not guilty to the charge.
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.
Houston Jury Convicts Woman of Alien Smuggling Resulting in DeathRead the Press Release
HOUSTON – Demi Mishel Muniz, of Los Angeles, Calif., has been convicted of conspiracy to transport and harbor aliens resulting in the death of a 38-year-old illegal alien from Mexico, U.S. Attorney Kenneth Magidson announced today. The Houston federal jury returned its verdict just a short time ago following a three-day trial before U.S. District Judge Lee H. Rosenthal.
During trial, testimony revealed that on Aug. 18, 2010, the Oldham County Sheriff’s Office was notified there was a body on the side of Interstate 40 outside of Vega, approximately 20 miles west of Amarillo. The identity of the deceased was discovered following receipt of an inquiry from the alien’s son.
The deceased was in the process of being smuggled from Mexico into the United States, being transported from Houston to Los Angeles, Calif. During the course of the journey, Muniz contacted the wife of the deceased and provided a bank account number for the deposit of $650 in smuggling fees. Subsequently, Muniz contacted the wife again and informed her he was ill. The wife told Muniz her husband was a diabetic and required insulin and requested he be taken to a hospital. Muniz refused and stated she had other people in the van and had to keep moving. A few hours later, the wife was called and told not to deposit the money into the bank account because her husband had been “left behind.”
An autopsy on the body of the deceased determined he had died of a combination of pneumonia and diabetes. Testimony also revealed that had the deceased received proper and timely medical care, he likely would have survived.
The bank accounts of Muniz were extensively reviewed and it was determined that approximately $84,000 in the account was derived from unknown sources. Agents determined many of the deposits were from various other states and that this was a characteristic consistent with alien smuggling operations.
A co-defendant testified Muniz and others were heavily involved in alien smuggling and that during the course of the trip Muniz refused to provide help to the deceased.
Although Muniz previously said she was not involved in the smuggling venture and was not in the van with the deceased, Muniz elected to testify in the trial and admitted to being in the van, but said she did not know the aliens were illegal. She further denied having talked to the widow and also denied being told the deceased was diabetic and required insulin. The jury disagreed and found her guilty.
Sentencing is scheduled for May 14, 2013, at which time she faces up to life in prison and a maximum fine of $250,000.
The case was investigated by the Oldham County Sheriff’s Office, Texas Rangers, Texas Department of Public Safety and Homeland Security Investigations. Assistant United States Attorneys Julie Searle and Douglas Davis prosecuted the case.
Holden Man Convicted for Tax EvasionRead the Press Release
BOSTON - A Holden man was convicted today of tax evasion.
David L. Toppin, 47, was convicted by a jury sitting in Worcester before U.S. District Judge Timothy Hillman on a charge of tax evasion.
Toppin, the sole owner and operator of Pelletizer Group, Inc., did not file federal income tax returns for 1997-1999 until 2006. In the returns, Toppin reported earning a total adjusted gross income of $727,701 and owing $227,199 in federal income taxes for 1997-1999. The evidence at trial showed that Toppin evaded payment of his taxes and tried to impede the IRS’s collection of his income tax by, among other things, placing real estate and checking accounts in his wife’s name and by misleading the IRS about the extent of his assets and income.
Sentencing is scheduled for May 2, 2013.
The maximum sentence under the statute is five years in prison, followed by three years of supervised release and a $250,000 fine.
United States Attorney Carmen M. Ortiz and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Christine J. Wichers and Sandra Bower of Ortiz’s Economic Crimes Unit.High-Ranking Member of Mexican “Los Zetas” Cartel Pleads Guilty to Drug Conspiracy ChargesRead the Press Release
Jesus Enrique Rejon Aguilar, aka “Mamito” and “Caballero,” a high ranking member of the “Los Zetas” drug cartel, pleaded guilty today to conspiracy to import multi-ton quantities of cocaine and marijuana into the United States, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA).
Rejon Aguilar, 36, pleaded guilty before U.S. District Judge Barbara J. Rothstein in the District of Columbia. Rejon Aguilar was extradited to the United States in September 2012 and was ordered detained in federal custody pending trial.
On Nov. 4, 2010, Rejon Aguilar and 19 co-defendants were charged in a superseding indictment with conspiracy to manufacture and distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana for importation into the United States. The indictment charges that between 2000 and 2010, members of Los Zetas, including Rejon Aguilar, engaged in a conspiracy with members of the Gulf Cartel in an arrangement referred to as the “Company” to import drugs into the United States. Rejon Aguilar was an original member of Los Zetas and held a high ranking position with the Company.
“As a leader of the Company’s drug trafficking operation, Rejon Aguilar ensured that mass quantities of cocaine and marijuana were brought into the United States for distribution,” said Assistant Attorney General Breuer. “The Justice Department is committed to working with its law enforcement partners to bring cartel members and associates to justice for their crimes.”
“As an original and high-ranking member of the Los Zetas cartel, Jesus Enrique Rejon Aguilar was responsible for funneling massive amounts of marijuana and cocaine into the United States while using violence to intimidate anyone that stood in his way,” said DEA Administrator Leonhart. “Rejon Aguilar’s plea today was possible only with the strength and power of international law enforcement cooperation. DEA, along with our Mexican counterparts, are committed to bringing violent criminals like Rejon Aguilar, to justice.”
According to the indictment, the Company transported shipments of cocaine and marijuana by motor vehicles from Mexico to cities in Texas for distribution to other cities within the United States. The indictment alleges that Rejon Aguilar, his co-defendants and others organized, directed and carried out various acts of violence to retaliate against and to intimidate anyone who interfered with, or who were perceived to potentially interfere with, the cocaine and marijuana trafficking activities of the Company.
On April 15, 2009, under the Foreign Narcotics Kingpin Designation Act, the President identified Los Zetas as a Significant Foreign Narcotics Trafficker. On March 24, 2010, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) named Rejon Aguilar as a Significant Foreign Narcotics Trafficker. On July 25, 2011, an executive order was issued that blocks the transfer, payment or export of property belonging to certain transnational criminal organizations, including Los Zetas.
The department expressed its gratitude and appreciation to the government of Mexico for its assistance in this matter.
At sentencing, Rejon Aguilar faces a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.
The case is being prosecuted by trial attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section. The Criminal Division’s Office of International Affairs provided significant assistance in the extradition. The investigation in this case was led by the DEA’s Houston Field Division and the DEA Bilateral Investigation Unit.Hedge Fund Analyst Sentenced in Manhattan Federal Court for Insider Trading SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JASON PFLAUM, a former research analyst with the hedge fund Barai Capital Management (“BCM”), was sentenced today to time served followed by two years of supervised release for his participation in an insider trading scheme in which PFLAUM obtained material, nonpublic information (“Inside Information”) about various publicly-traded companies, and provided it to the head of BCM, Samir Barai. PFLAUM pled guilty in December 2010 to one count of conspiracy to commit securities fraud and one count of securities fraud pursuant to a cooperation agreement with the Government. He was sentenced today in Manhattan federal court by U.S. District Judge Jed S. Rakoff.
According to the Information to which PFLAUM pled guilty, statements made during his guilty plea proceeding, PFLAUM’s testimony during the criminal trial of Winifred Jiau, and the Government’s sentencing submission in his case:
From mid-2008 through October 2010, while working as an analyst for Barai, PFLAUM obtained Inside Information about publicly traded technology companies and provided it to Barai, who then traded on it. In one example, PFLAUM obtained Inside Information from company insiders who worked as “experts” or “consultants” for the expert network firm Primary Global Research (“PGR”), and provided it to Barai. BCM paid PGR a fee, and PGR in turn paid the experts to talk to PFLAUM. PFLAUM also facilitated the passing of Inside Information to Barai from Barai’s own network of company insiders and consultants, including Winifred Jiau, who provided details of the quarterly earnings announcement of NVIDIA Corporation and Marvell Technology Group, Ltd.
PFLAUM, 39, of New York, New York, was ordered to pay a $200 special assessment fee and forfeiture in the amount of $500,000 for which he and his coconspirators are jointly and severally liable.
Jiau was convicted following a June 2011 jury trial of one count of conspiracy to commit securities fraud and wire fraud, and one count of securities fraud. She was sentenced in September 2011 to four years in prison.
Barai pled guilty in May 2011 to one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, one count of wire fraud, and one count of obstruction of justice. He awaits sentencing.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Securities and Exchange Commission.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. 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.
The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Antonia M. Apps and David Miller are in charge of the prosecution.
Health Care Practitioner Sentenced to Six Months in Prison, Six Months Home Detention, for Accepting Cash Kickbacks for Patient ReferralsRead the Press Release
NEWARK, N.J. – Daisy Deguzman, a New Jersey doctor who practiced in Newark, today was sentenced to six months in prison and six months of home detention for her role in a cash-for-patients scheme with a diagnostic facility in Orange, N.J., U.S. Attorney Paul J. Fishman announced.
Deguzman, 70, of Livingston, N.J., pleaded guilty June 4, 2012, before U.S. District Judge Claire C. Cecchi in Newark federal court to an Information charging her with one count of violating the federal healthcare program anti-kickback statute.
“Patients have every right to expect their doctors will recommend medical service providers because they do the best job, not because they provide the best bribes,” said U.S. Attorney Fishman. “The sentence handed down today shows the federal healthcare system cannot be abused by those practitioners who see a person in need of care as an opportunity to illegally make an extra buck.”“Buying patient referrals has absolutely no place in a modern health care system,” said Tom O’Donnell, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General’s region including New Jersey. “The country's taxpayers are fed up with footing the bill for health care fraud, so these criminals can expect to pay the price.”
According to documents filed in this case and statements made in court:On Dec. 13, 2011, Deguzman was arrested and charged with accepting cash kickback payments from Orange Community MRI (“Orange MRI”), a diagnostic facility, in exchange for her referral of Medicare and Medicaid patients. Twelve other New Jersey doctors and one nurse practitioner were arrested that day and charged in separate Complaints with accepting similar cash kickback payments from Orange MRI. Each defendant was recorded taking envelopes of cash in exchange for their patient referrals. On Dec. 8, 2011, an Orange MRI executive was arrested and charged in a separate Complaint in connection with his participation in the scheme. Deguzman is the first of the defendants to be sentenced.
Starting in at least 2010, Orange MRI began making monthly cash kickback payments to Deguzman in exchange for her referral of patients for diagnostic tests. At the end of each calendar month, individuals at Orange MRI printed Orange MRI patient reports that detailed how many magnetic resonance imagings (“MRIs”) and computed axial tomographies (“CAT Scans”) were referred by Deguzman. These patient reports were used to calculate the kickback payment owed to Deguzman. Pursuant to Deguzman’s agreement with Orange MRI, she was paid kickbacks for each Medicare or Medicaid beneficiary MRI or CAT Scan referred.
Deguzman received three separate payments from a cooperating government witness during the course of the investigation. On Oct. 11, 2011, Deguzman accepted $1,700 in cash for her September 2011 referrals to Orange MRI; she accepted another $1,130 on Nov. 17, 2011 for her October 2011 referrals to Orange MRI, and another $1,000 on Dec. 6, 2011 for her November 2011 referrals to Orange MRI.
In addition to the prison term, Judge Cecchi sentenced Deguzman to two years of supervised release, fined her $20,000 and ordered her to forfeit $23,595.
With respect to the other defendants charged in the investigation: • Jose Castaneda, a nurse practitioner formerly practicing in Newark, pleaded guilty before Judge Cecchi on April 3, 2012, and is scheduled to be sentenced on June 18, 2013.• Yash Khanna, M.D., a doctor practicing in East Orange, was indicted on May 4, 2012, by a federal grand jury on one count of accepting kickbacks; Judge Cecchi has not yet set a trial date.
• Dov Rand, M.D., a doctor practicing in West Orange, pleaded guilty before Judge Cecchi on May 18, 2012, and is scheduled to be sentenced on Feb. 13, 2013.
• William Lagrada, M.D., another Newark doctor, pleaded guilty before Judge Cecchi on July 11, 2012, and is scheduled to be sentenced on June 4, 2013.
• Maryam Jafari, M.D., another Newark doctor, was indicted on July 13, 2012, by a federal grand jury on one count of accepting kickbacks. On Sept. 14, 2012, the same grand jury handed up a superseding indictment against Dr. Jafari, charging her with one count of conspiracy and two counts of accepting kickbacks. The trial of Dr. Jafari ended with a hung jury and mistrial on Dec. 6, 2012. Judge Cecchi has set the retrial date for March 1, 2013.
• Chikezie Onyenso, M.D., an Irvington doctor, was indicted on Sept. 7, 2012, by a federal grand jury on one count of accepting kickbacks; Judge Cecchi has not yet set a trial date. • Dinesh Patel, M.D., another Newark doctor, pleaded guilty before Judge Cecchi on Sept. 19, 2012, and is scheduled to be sentenced on Feb. 26, 2013.
• Ashokkumar Babaria, M.D., a Moorestown radiologist and Orange MRI’s former medical director and owner-in-fact, pleaded guilty before Judge Cecchi on Sept. 27, 2012, and is scheduled to be sentenced on March 21, 2013.
• Lucio Cardoso, M.D., a North Arlington physician, pleaded guilty before Judge Cecchi on Oct. 10, 2012, and is scheduled to be sentenced on March 27, 2013.
• Rameshcha Kania, M.D., an East Orange doctor, pleaded guilty before Judge Cecchi on Oct. 12, 2012, and is scheduled to be sentenced Feb. 14, 2013.
• Chirag Patel, Orange MRI’s former executive director, pleaded guilty before Judge Cecchi on Oct. 16, 2012, and is scheduled to be sentenced on July 15, 2013.
U.S. Attorney Fishman credited special agents with the Department of Health and Human Services, Office of the Inspector General, under the direction of Special Agent in Charge O’Donnell, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorneys Joseph Mack and Scott B. McBride of the Office’s Healthcare and Government Fraud Unit.
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Defense counsel: Daniel A. Giaquinto Esq., Bridgewater, N.J.
Harrisburg Man Sentenced to 36 Months’ in PrisonRead the Press Release
For Bank Fraud
The United States Attorney’s Office for the Middle District of Pennsylvania announced that Humphrey Holmes was sentenced today by United States District Court Judge Sylvia H. Rambo to a 36-month term of imprisonment and four years of supervised release for bank fraud.
According to United States Attorney Peter J. Smith, from 2010 through September 2011, Holmes, age 28, used fraudulent social security numbers, employment records, and other materials in an effort to obtain loans and cash checks from several Central Pennsylvania banks and credit unions, including, the Pennsylvania State Employees Credit Union, Belco Credit Union, American General Financial Services, Susquehanna Valley Credit Union, Hershey Federal Credit Union, New Cumberland Federal Credit Union and the Patriot Federal Credit Union. Holmes also engaged in a check kiting scheme while attempting to cash a $20,000 check that he fraudulently obtained.
Holmes was indicted in October 2011 and pleaded guilty in August 2012.
The investigation was conducted by the United States Secret Service. The case was prosecuted by Assistant U.S. Attorney Michael A. Consiglio.
Gambling Business Owner Pleads Guilty in Federal CourtRead the Press Release
James Lynn Jones Operated Lot-O-Games in Jones County, Texas
LUBBOCK, Texas — James Lynn Jones, 69 , of Abilene, Texas, pleaded guilty this morning in federal court, before U.S. District Judge Sam R. Cummings, to an Information charging one count of operating an illegal gambling business, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. Jones operated the illegal gambling business, Lot-O-Games, on Highway 277 in Jones, County, Texas.
The maximum statutory penalty for the offense is five years in federal prison and a $250,000 fine. However, according to the plea agreement filed in the case, the government will make a non-binding recommendation to the Court that the appropriate sentence is eight months imprisonment, to be satisfied by two months imprisonment and a term of supervised release with a condition that substitutes six months of home detention for the remaining term of imprisonment. Judge Cummings ordered a presentence investigation report with a sentencing date to be set after the completion of that report.
In addition, according to the plea agreement, Jones agrees to forfeit property that was seized by law enforcement officers last summer, pursuant to federal search and seizure warrants. That property includes $414,163 in cash; $12,337 in cashier’s checks; gold coins; two vehicles; jewelry; firearms; ammunition; numerous gaming machines; surveillance equipment and computer equipment.
According to the factual resume filed in the case, after U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) received information that Jones was operating the business, HSI agents, acting in an undercover capacity, entered the business and observed 25-30 customers playing on various gaming terminals. The agents approached a Lot-O-Games employee and told her they wanted to play on terminals 21 and 22, a slot-machine-type game and a video poker game. One agent handed the Lot-O-Games employee $50 in cash and the employee credited terminal 21 with 5000 credits. The other agent applied $65 worth of credits (6500 credits) from a prior undercover operation to terminal 22.
Soon thereafter, the agents observed James Lynn Jones, carrying a brown paper bag, enter the business and walk to a bar area across from the cashier’s counter where he pulled out two stacks of cash. Immediately after Jones arrived, several patrons exchanged certificates for small pieces of paper at the Lot-O-Games cashier’s counter. The patrons then took that piece of paper to Jones who, in turn, exchanged the small piece of paper for cash. About 20-25 minutes after the agents arrived, they observed the Lot-O-Games employee approach a patron who had won a 120,000 point jackpot. The employee told the patron that she would remove the 120,000 point credit from the machine and allow the patron to cash out the $1,200 in cash with Jones. The agents then saw the patron go to Jones to receive the cash.
One agent concluded playing the video poker game with 4900 credits, approached the Lot-O-Games employee and handed her a $1 bill. The employee, in return, gave the agent five, $10 “Playback Certificates.” The employee told the agent that he/she could get cash because the owner was present and that Sundays were the only days that the business paid out in cash. The Lot-O-Games employee took back the Playback Certificates and gave the agent a small piece of paper with the number “5” and her initials on it. The agent handed the piece of paper to Jones, who, in turn, gave the agent $50 in cash. The other agent followed a similar procedure to obtain $50 in cash from Jones.
The investigation revealed that this was standard practice at Lot-O-Games. During the week, customers would receive Playback Certificates for the points that were remaining after playing at various gambling-type video game consoles. On Sunday, Jones would come to Lot-O-Games and customers could exchange these Playback Certificates for cash. This practice began sometime around late 2010. The investigation further revealed that during a 12-hour shift, the business took in approximately $3,500 - $5,000.
The investigation is being conducted by ICE HSI, the Abilene Police Department, the Jones County District Attorney’s Office, the Office of the Texas Attorney General and the Texas Department of Public Safety. Assistant U.S. Attorney Jeffrey Haag, of the U.S. Attorney’s Office in Lubbock, Texas, is in charge of the prosecution, and Assistant U.S. Attorney Diane Kozub, is handling the forfeiture.
Four Charged in $15 Million Mortgage Fraud SchemeRead the Press Release
CAMDEN, N.J. – Four individuals from New Jersey were taken into custody today for their alleged roles in a $15 million mortgage fraud scheme on an Indictment returned by a federal grand jury on Jan. 30, 2013, U.S. Attorney Paul J. Fishman announced.
The four defendants are: Fredric M. Diantonio, 40, of Wildwood, N.J.; Louis V. Catarro, 60, of Runnemede, N.J.; Kathryn W. Lockwood, 43, of Wildwood Crest, N.J.; and Thomas E. Morello, 55, of Mt. Laurel, N.J. All defendants were charged with conspiracy to commit wire fraud. Diantonio, Catarro, and Lockwood were also charged with conspiracy to commit money laundering. In addition, Diantonio and Catarro were charged with making false statements to the U.S. Department of Housing and Urban Development. The defendants are expected to appear today before U.S. Magistrate Judge Karen M. Williams in Camden federal court.
According to the Indictment:
Real estate agents Diantonio, Catarro, and Lockwood located properties in Wildwood and North Wildwood, N.J., for sale by real estate developers such as Morello. Diantonio, Catarro, and Lockwood caused real estate sales contracts to be created, which listed deposit monies from buyers that often were not collected. The conspirators also agreed that sellers such as Morello would pay kickbacks to the buyers of the properties without disclosing the kickbacks to the lending institutions funding mortgages used by the buyers to purchase the properties. The conspirators caused fraudulent documents to be signed at real estate closings, including U.S. Department of Housing and Urban Development Settlement Statements, which failed to disclose the kickbacks paid to the buyers or which falsely stated that a deposit toward the purchase of the property had been collected. Diantonio, Catarro, and Lockwood received real estate sales commissions for putting the transactions together.
The wire fraud conspiracy charge is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. The money laundering conspiracy charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine. The false statements charge carries a maximum potential penalty of two years in prison and a $250,000 fine.
U.S. Attorney Fishman credited special agents from the FBI’s Atlantic City Resident
Agency, under the direction of Acting Special Agent in Charge David Velasquez in Newark; special agents from the FBI’s Newtown Square Resident Agency, under the direction of Acting Special Agent in Charge John J. Brosnan in Philadelphia; special agents from IRS – Criminal Investigation in Philadelphia, under the direction of Special Agent in Charge Akeia Conner; and special agents from the Department of Housing and Urban Development Office of Inspector General, under the direction of Special Agent in Charge Joseph Clarke in Philadelphia for the investigation leading to the Indictment and arrests.The government is represented by R. Stephen Stigall, Attorney in Charge of the U.S. Attorney’s Office in Camden.
The charges and allegations contained in the Indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.
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Diantonio, Fredric, et al. Indictment
Foun Men Sentenced to Prison for Roles in Chop-Shop RingRead the Press Release
Four men were sentenced to prison for their roles in a conspiracy that trafficked in stolen vehicles, backhoes, steel, scrap metal and other objects through a chop shop and a scrap-metal yard in Cleveland, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office.
Lindsey Blackmon, 48, of Cleveland, was sentenced to nearly five years (57 months) in prison by U.S. District Judge John Adams.
Nayyir Mahdi, aka “Willie Jones,” 42, of Shaker Heights, was sentenced to four years in prison and ordered to pay $22,184 in restitution.
Curtis Wilder, 43, of Bedford Heights, was sentenced to three years in prison and ordered to pay $346,845 in restitution.
Gilbert Evans, 48, of Cleveland, was sentenced to 16 months in prison.
Mark Brown, 46, of Cleveland, was sentenced to one day in jail followed by eight months of home confinement.
Davies Pierce, of Cleveland, is scheduled to be sentenced next month.
“These defendants ended up with semi-trucks or pickups that were stolen from parking lots and other places,” Dettelbach said. “This conspiracy included thefts in Warrensville Heights, Willoughby, Mentor, Euclid, Elyria and a slew of other locations.”
“Stealing and selling stolen vehicles and cargo comes with a price of incarceration,” Anthony said. “The FBI and our Organized Crime Task Force partners will continue our efforts to detect and dismantle these illegal enterprises which negatively impact our economy and our citizens.”
Mahdi operated Express Metals on East 152nd Street and, before that, at 14915 Woodworth Ave., both in Cleveland, and was in the business of selling scrapped metal. Blackmon obtained a location at 19210 Miles Road, Warrensville Heights, Ohio, to be used as a chop shop. Pierce owned and operated Duffy’s Towing at 7810 Colfax Road and salvaged autos for scrap metal, according to court documents.
Wilder, John Jones and others broke into and stole motor vehicles throughout Northeast Ohio. Between June 2011 and March 2012, they brought the stolen vehicles to Brown, Pierce and Mahdi. The Vehicle Identification Numbers (VIN) were then removed from the vehicles, parts were stripped from the vehicle and sold, and the rest of the vehicles were crushed and sold for scrap, according to court documents.
Some of the co-conspirators brought stolen vehicles to Brown, who stripped the autos of parts, including rims and catalytic converters, before towing the vehicles to Pierce’s shop on Colfax Road, where they were destroyed and scrapped, according to court documents.Blackmon and others would spot and steal loads of cargo after truck drivers parked their rigs. The tractor, trailer and loads of cargo were then brought to Express Metals, operated by Mahdi, and to Pierce’s scrap yard, where the stolen cargo was broken down, according to court documents.
On March 4, 2012, Blackmon, Evans, Brown and others possessed a shipment of steel coils worth about $120,000 that were stolen from a Ramada Inn in Elyria. The steel was being shipped to Michigan from Twinsburg, Ohio, according to court documents.
One month earlier, Blackmon, Pierce, Brown and others, possessed steel beams worth $18,700, a 2007 Kenworth semi-truck and a 2005 Eagle flatbed which had been stolen in the vicinity of Streetsboro, Ohio, while being used in interstate commerce between Twinsburg, Ohio and Virginia, according to court documents.
Nine others were indicted on related charges in state court.
This case is being handled by Assistant United States Attorney Robert E. Bulford following an investigation by the FBI’s Organized Crime Task Force, which includes the FBI, Ohio State Highway Patrol, U.S. Customs and Border Protection and the Cleveland Division of Police.
Former Twin Lakes, Wisconsin Man Sentenced to Prison for Role in Mortgage Fraud SchemeRead the Press Release
The Office of the United States Attorney announced that on January 29, 2013 Federal District Judge Lynn Adelman sentenced Paul Zaleski, (age: 64), formerly of Twin Lakes, Wisconsin, now living in Ojai, California, to fourteen months in federal prison for his part in a mortgage fraud scheme that spanned 2004 to 2006. Zaleski, who pled guilty to one count of wire fraud and one count of money laundering, faced a total of 30 years in prison for these offenses.
According to the indictment, Zaleski, acting as a mortgage broker, orchestrated a scheme which involved straw buyers, fraudulent loan applications, and inflated appraisals. At the result, he was able to arrange in excess of $14 million in loans for the purchase of approximately 51 properties located in southeastern Wisconsin and northern Illinois. More than $2 million of the loan proceeds wired by the various lenders were funneled to shell companies that Zalesk established.
In connection with the scheme, Zaleski represented himself as a person involved in the purchase and improvement of real estate for profit and the coordinator of a group of investors engaged in that activity. All but a few of the properties ultimately went into foreclosure resulting in a loss of more than $5 million.
The money laundering counts alleged that ill-gotten loan proceeds were used, in part, for the purchase of additional properties, and for personal expenses, including Zaleski’s purchase of a new Chevrolet Corvette.
Adelman previously sentenced Zaleski’s co-conspirators for their roles in the fraud scheme. Appraiser John Hochrek, 51, of Ingleside, Illinois, was sentenced to one year in prison for wire fraud. Remodeling contractor Michael Pembroke, 48, of Twin Lakes, Wisconsin, was sentenced to one year in prison for wire fraud and money laundering. Investor Patricia Kay, 60, of Kenosha, Wisconsin, was sentenced to three years probation for misprision of a felony. Loan processor, Robert Farrell, 33, of Mundelein, Illinois, was sentenced to three years probation for conspiracy. Restitution has yet to be determined.
According to First Assistant United States Attorney Gregory Haanstad “This prosecution reflects the Department of Justice’s commitment to protecting homeowners, lenders, and the economy from the serious damage that flows from mortgage fraud. As was the case in this prosecution, our office will continue to work collaboratively with the FBI, the IRS, and our other law enforcement partners to hold accountable those who engage in these frauds and who, by doing so, undermine the integrity of our housing and credit markets.”
"Mortgage fraud has had a devastating impact on our society" said Teresa L. Carlson, Special Agent in Charge of the FBI Milwaukee Division. "However, through the great collaboration of our law enforcement partnerships we will continue to dedicate resources to combat the threat of mortgage fraud here in Wisconsin and across the nation."
“Mr. Zaleski held a position of trust not only in First Security Financial, but also in the eyes of the public and the Kenosha community as a whole, and unfortunately chose to violate that trust and abuse his position” said Kelly Jackson, Special Agent in Charge of the IRS Criminal Investigation office who investigated Zaleski. Jackson added that federal authorities will continue their efforts to diligently investigate and prosecute crimes which financially victimize others.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation.
Former Police Officer Pleads Guilty to Gun ChargesRead the Press Release
BROWNSVILLE, Texas – Armando Duenez has entered a plea of guilty to conspiracy to export firearms and failure to appear, United States Attorney Kenneth Magidson announced today. Duenez, 31, who entered the plea late yesterday afternoon, was employed as a police officer with the Rio Hondo Police Department during the offense.
The former officer entered into an agreement with others to export weapons from the United States to Mexico. Duenez admitted to working with Raymond Martinez, formerly a member of the Palm Valley Police Department, to buy firearms and sell them for a profit to individuals who intended to smuggle them to Mexico. Duenez admitted to purchasing more than 15 semi-automatic rifles that were later sold in Mexico. The rifles were all capable of accepting high capacity magazines. The investigation began when weapons recovered in Mexico were traced back to him. Martinez was also convicted of dealing in firearms without a license and later sentenced to federal prison.
Duenez was arrested for the firearms offense in July 2008. After being release on bond, Duenez failed to appear for his arraignment having fled to Mexico. Duenez remained in Mexico until he surrendered to United States Marshals Service in December 2012.
U.S. District Judge Hilda G. Tagle, who accepted the guilty plea today, has set sentencing for May 1, 2013. At that time he faces up to five years in federal prison on each of the charges as well as a possible $250,000 fine. He will remain in custody pending that hearing.
This case was investigated by Bureau of Alcohol, Tobacco, Firearms and Explosives Homeland Security Investigations. The case is being prosecuted by Assistant United States Attorney Bill Hagen.Former Owner of Metro Pool Company Pleads Guilty to Tax FraudRead the Press Release
Oklahoma City, Oklahoma – Today, THEODORE MICHAEL ZACHRITZ, of Nichols Hills, Oklahoma, pled guilty to willfully failing to pay over to the Internal Revenue Service federal taxes that he withheld from his employees’ wages, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.
For many years, Zachritz and his wife owned and operated Lifestyle Pools, LLC in Oklahoma City. As owner of the company, Zachritz deducted and withheld federal income taxes, Social Security taxes, and Medicare taxes (commonly called “payroll taxes”) from wages of Lifestyle Pools employees. Under federal law, an employer must deduct and withhold payroll taxes from employees’ wages, and then pay over those withheld taxes to the IRS at the end of each quarter.
On January 22, 2013, the United States charged Zachritz with willfully failing to collect and pay over to the IRS the federal income taxes, Social Security taxes, and Medicare taxes withheld from wages of Lifestyle Pools employees for the third quarter of 2006 through the end of 2009. At today’s plea hearing, Zachritz admitted that he deducted and withheld more than $290,000 in payroll taxes from his employees’ wages during that period. He also admitted that he knew he was required by law to turn over to the IRS the withheld federal payroll taxes each quarter, but he did not do so. Zachritz admitted that he still has not paid over to the IRS any of the payroll taxes that he withheld from 2006 to 2009.
At sentencing, Zachritz faces a potential penalty of up to five years in prison, a fine up to $250,000, and restitution to the IRS. In a plea agreement, Zachritz agreed to pay restitution to the IRS in the amount of his criminal conduct. The court will determine the specific amount of restitution due to the IRS at sentencing, which will take place in approximately ninety days.
This case is the result of an investigation conducted by the IRS Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Chris M. Stephens.
Former Orthofix Regional Director Sentenced for PerjuryRead the Press Release
BOSTON – A former Orthofix regional sales director was sentenced today for making a false declaration to a grand jury.
Mitchell Salzman, 47, was sentenced by U.S. District Court Judge Rya W. Zobel to one year of probation including three months of home detention and a $2,000 fine. In December 2011, Salzman pleaded guilty to making a false declaration to a grand jury.Salzman admitted that he had lied to a grand jury about his role in doing business with a former Orthofix representative who had been terminated for falsifying medical records. Salzman was a regional sales director in the spine division at Orthofix, Inc. Orthofix manufactures bone growth stimulators that are used to help regenerate bone cells in connection with spinal fusions. In the summer of 2009, Orthofix fired a territory manager in Salzman’s region after discovering that the territory manager was falsifying medical records to induce Medicare to pay for stimulators that were outside of Medicare’s guidelines. Salzman and others were concerned that this termination would result in lost business. Therefore, Salzman and others executed a scheme whereby the territory manager continued to obtain stimulator orders in the territory, and Orthofix continued to pay commissions to the territory manager, through a front company established by the territory manager. Salzman was involved with these negotiations, including facilitating the agreement between Orthofix and the front company.
In 2011, Salzman testified before the grand jury related to Orthofix business practices pursuant to a grant of judicial immunity. Salzman was asked a number of questions about the arrangement between Orthofix and the territory manager and Salzman repeatedly lied to the grand jury concerning this arrangement. Salzman denied knowing that the territory manager had any role with the front company, stating that he only learned of the connection within a month before his grand jury appearance. Salzman also testified that he had recently contacted an employee of the front company and asked if the territory manager was involved with the company, and only then did he realize that the territory manager was still involved. None of this was true because Salzman knew from the beginning that the territory manager had established the front company. Indeed, the only reason that Salzman and others hired the front company was to continue to pay the territory manager.
In addition to the Salzman sentence, the Orthofix investigation has to date resulted in a number of felony charges against employees and contractors of Orthofix, including the following:
- In December 2012, Orthofix was convicted of obstruction of a federal audit, and ordered to pay $42 million in criminal fines and civil payments, and was sentenced to probation for five years;
- On January 22, 2013, Tom Guerrieri, the former vice president of sales for Orthofix, was sentenced to eight months in prison and ordered to pay $50,000 in fines and forfeiture for paying kickbacks;
- In July 2012, Michael Cobb, a physician’s assistant, was sentenced to six months in prison and six months home detention, and ordered to forfeit $10,000 and pay a $3,000 fine for accepting kickbacks from Orthofix;
- On January 9, 2013, Derrick Field, a former Orthofix territory manager, was sentenced to five months of home detention as part of a two year probation sentence, forfeiture of $40,000 and a $4,000 fine;
- On January 23, 2013, Michael McKay, a former Orthofix territory manager, was sentenced to three months of home detention as part of a one year probation sentence, forfeiture of $10,000 and a $3,000 fine;
- In September 2012, Brian Racey pleaded guilty to health care while he was a territory manager for Orthofix and is scheduled to be sentenced on Feb. 20, 2013 in the U.S. District Court for the Eastern District of Pennsylvania.
- On January 24, 2013, the United States filed a plea agreement and criminal Information related to Ilene Terrell, MD, charging her with making a false declaration to a grand jury. A plea hearing is scheduled for Feb. 21, 2013.
The case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations and the Department of Defense, Defense Criminal Investigative Service Boston Field Division. It was prosecuted by Assistant U.S. Attorneys David Schumacher and Jeremy Sternberg of Ortiz's Health Care Fraud Unit.
Former NFL Player Sentenced to Seven Months in Prison for Failure to File Tax ReturnRead the Press Release
CAMDEN, N.J. – A former National Football League player who formerly resided in Passaic County was sentenced today to seven months in prison for failing to file a federal income tax return, U.S. Attorney Paul J. Fishman announced.
William James, 33, of Brownsville, Pa., formerly known as William J. Peterson, pleaded guilty on May 23, 2012, before U.S. District Court Judge Jerome B Simandle to Count One of a five-count Information. Count One charged James, who formerly resided in Woodland Park, N.J., with having willfully failed to file a tax return for the tax year 2005.
According to documents filed in this case:
James was a professional football player from 2001 to 2010, having played for teams that included the New York Giants and the Philadelphia Eagles. While playing professionally, James earned a substantial income from the NFL teams for which he played. In 2005 his salary was $5.5 million. James was required to file an individual income tax return because his gross income exceeded the sum of the personal and standard deductions available to him that year.
Although he had repeatedly been advised by the IRS and by his personal accountant that he was obligated to file a tax return, James ignored their notices and failed to file a return.
In addition to the prison term, Judge Simandle sentenced James to one year of supervised release. As part of the plea agreement, James has agreed to file back returns and to pay back taxes and penalties, which total $470,254. He has already served four months in custody.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation under the direction of Acting Special Agent in Charge Shantelle P. Kitchen for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Bohdan Vitvitsky of the U.S. Attorney’s Economic Crimes Unit in Newark.
13-054
Defense Counsel: Lori Koch Esq., Assistant Federal Public Defender, CamdenFormer Law School Student Sentenced to Four Years in Prison for Conspiring to Distribute Methamphetamine-Two Others Awaiting Sentencing in Case-Read the Press Release
WASHINGTON – Marc A. Gersen, 31, a former law school student, was sentenced today to a four-year prison term for conspiring to distribute methamphetamine in the Washington, D.C. area, announced U.S. Attorney Ronald C. Machen Jr. and Cathy L. Lanier, Chief of the Metropolitan Police Department (MPD).
Gersen, of Washington, D.C., pled guilty in November 2012 in the U.S. District Court for the District of Columbia to one count of conspiracy to distribute and possess with intent to distribute methamphetamine. He was sentenced by the Honorable Reggie B. Walton. Upon completion of his prison term, Gersen will be placed on three years of supervised release. He also must comply with a forfeiture order calling for the payment of a $120,000 money judgment, pay a fine of $2,500, and perform 400 hours of community service.
According to the facts presented at the plea hearing, between the summer of 2011 and December of 2011, Gersen and others, including Michael Talon and Lee Hylton, conspired and agreed to obtain and distribute wholesale quantities of methamphetamine in the Washington, D.C., area. During the period of the conspiracy, Gersen, then a student at Georgetown Law School, traveled to California to buy the methamphetamine, which he then would ship to Washington D.C. and sell on a regular basis, in quantities ranging from an ounce to half a pound. The wholesale price of a pound of methamphetamine is approximately $26,000.
As part of an investigation, officers with the Metropolitan Police Department executed a search warrant on Nov. 28, 2011 at an apartment shared by Gersen and Talon in the 1600 block of 18th Street NW. They recovered about three grams of methamphetamine, chemicals used for drug manufacturing, and $3,000 in cash. No one was present during the search; at the time, Gersen was visiting his family in Florida, and Talon was away.
Gersen was arrested by the MPD on Dec. 1, 2011. The arrest took place outside of a hotel in the District of Columbia where others involved in the conspiracy were packaging and storing a large a quantity of crystal methamphetamine. Talon and Hylton were arrested at the hotel.
Talon, 30, of Washington, D.C., pled guilty to conspiracy to distribute and possess with intent to distribute methamphetamine and is to be sentenced March 15, 2013. Hylton, 51, of Arlington, Va., pled guilty to the same charge and is to be sentenced March 1, 2013.
In announcing the sentence, U.S. Attorney Machen and Chief Lanier commended the work of the MPD officers and the agents and personnel from the U.S. Drug Enforcement Administration and Naval Criminal Investigative Service, who worked on the investigation. They also thanked those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Crystal Seldon; Criminal Investigator Duncan Templeton, and Assistant U.S. Attorneys Patricia Stewart, Magdalena Acevedo, and Zia Faruqui, who investigated and prosecuted the case.
13-035Former Investment Advisor to Serve 12 ½ Years in Prison for $16 Million Mail Fraud, Money Laundering SchemeRead the Press Release
Peoria, Ill. – A former Urbana, Ill., investment advisor, Timothy J. Roth, 57, currently of Stonington, Ill., was sentenced this afternoon in federal court in Peoria, to serve 151 months (12 years, 7 months) in prison and ordered to pay restitution in the amount of $16,151,964 to victims of his fraud scheme. Senior U.S. District Judge Michael M. Mihm ordered that Roth report on Apr. 2, 2013, to the federal Bureau of Prisons to begin serving his prison term. Following completion of his prison sentence, Roth was ordered to remain on supervised release for a period of three years.
On Oct. 25, 2011, Roth waived indictment and entered guilty pleas to one count each of mail fraud and money laundering. Roth admitted that from May 2004 through March 2011, he defrauded eleven victims, including companies and individual victims, of approximately $16 million.
According to court documents and statements, Roth admitted that he fraudulently transferred, liquidated and removed mutual fund shares from clients’ accounts for his own personal and business use. Since June 2002, Roth had worked as a federally registered investment advisor for a capital management company in Champaign, Ill., and had also formed and operated several personal consulting companies. These companies provided software and tracking and management programs to various outside third party administrators for mutual fund option plans.
The investigation was conducted by the Internal Revenue Service, Criminal Investigations Division; the Federal Bureau of Investigation; the U.S. Postal Inspection Service; the Securities Department of the Illinois Secretary of State; and the Champaign Police Department. The case was prosecuted by Assistant U.S. Attorneys David H. Hoff and Eric I. Long.
Former Houston Businessman Sent to Prison for Bankruptcy FraudRead the Press Release
HOUSTON - Jimmy Wayne Sissom, 46, has been ordered to federal prison following his conviction on one count of bankruptcy fraud, United States Attorney Kenneth Magidson announced today. Sissom, of Bastrop, was the owner of Dealers Management Group Inc., a used car company located in Houston and a partner in F&S Storage Company in Katy. He pleaded guilty to the charge, Sept. 27, 2012.
Today, U.S. District Judge Sim Lake, who accepted the guilty plea, handed Sissom a 15-month sentence to be followed by three years of supervised release.
Sissom filed a Chapter 7 bankruptcy petition in May 2006. During the course of the bankruptcy proceeding, Sissom stated to the trustee that he had listed all of his assets in his estate. However, he failed to disclose that approximately two weeks prior to the bankruptcy filing, his wife had purchased a home valued in excess of $300,000 which was located in Bastrop.
Sissom admitted at the time of his plea that he made a false statement to the trustee about his assets.
Previously released on bond, Sissom was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.
FBI investigated and Assistant United States Attorney Quincy L. Ollison prosecuted the case with the assistance of the United States Trustee’s Office.
Former Gray Bear Construction Company Owner Sentenced for Lying to Obtain Service Disabled Veteran Owned Small Business Program (SDVOSB) ContractsRead the Press Release
PORTLAND, Ore. - U.S. District Judge Michael W. Mosman today sentenced John Witty, 67, of Portland, to pay a $206,844 fine and serve five years probation, for lying to the Department of Veteran Affairs (VA) about being a service-disabled veteran. Witty will also be required to perform 100 hours of community service at a veterans' organization.
"The defendant's crime victimized the service-disabled veteran small business owners who deserved to be awarded these government contracts," said U.S. Attorney S. Amanda Marshall. "We will continue to investigate and aggressively prosecute federal procurement fraud."
Witty is the former owner and operator of Gray Bear Construction Company ("Gray Bear"). In November 2012, Witty pleaded guilty to one count of false statements. He admitted he falsely represented to the VA that Gray Bear was a Service Disabled Veteran Owned Small Business (SDVOSB), even though Witty had never been certified as a service-disabled veteran. Witty admitted that as a result of his false representations, the VA awarded Gray Bear approximately $5,849,372 in SDVOSB set-aside contracts from August 2009 through May 2011, and that Gray Bear was not eligible to receive those contracts.
Inspector General George Opfer, Department of Veterans Affairs, stated that, "Mr. Witty is the 15th individual prosecuted during the past year for defrauding a VA program intended to provide preference to service-disabled entrepreneurs whose sacrifices on behalf of our Nation have earned them the right to compete for Federal set-aside contracts. We are diligently investigating others elsewhere who have similarly defrauded this program and expect additional prosecutions. We are committed to ensuring the integrity of all VA programs and will continue to diligently pursue those individuals who, by fraud and deceit, abuse these programs."
This case stemmed from an investigation by the Department of Veteran Affairs, Office of Inspector General. The case was prosecuted by Assistant U.S. Attorney Stacie Beckerman.
Former Employee of Bon-Ton Stores FoundationRead the Press Release
Charged With $1.2 Million Mail Fraud And Money LaunderingThe United States Attorney’s Office for the Middle District of Pennsylvania, announced the indictment of a former employee of the Bon-Ton Stores Foundation for mail fraud and money laundering that robbed the Foundation of more than $1.2 million. Christine S. DeJuliis, age 51, of Felton, PA, was charged in a six-count indictment handed up by the Grand Jury sitting in Harrisburg Wednesday.
According to United States Attorney Peter J. Smith, DeJuliis is charged with five counts of mail fraud and one count of money laundering covering a period from as early as January 2003 until July 2009. The charges stem from an investigation conducted by the U.S. Secret Service and Internal Revenue Service–Criminal Investigation based on information received from the Bon-Ton Stores, Inc.
The investigation revealed that DeJuliis, hired by the Bon-Ton Stores, Inc., in 1999, worked in an administrative capacity for the head of the Bon-Ton Stores Foundation, a charitable organization established by the Bon-Ton Stores, Inc.
DeJuliis’s duties involved much of the day-to-day operation of the Foundation. DeJuliis allegedly created fictitious businesses with bank accounts and then devised a scheme to have the Foundation appear to award grants to the businesses. The grant money was put into the fictitious accounts controlled by DeJuliis and she allegedly caused the money to be taken out of those accounts and placed into her personal accounts. Over the period charged in the Indictment, DeJuliis allegedly defrauded the Foundation of more than $1.2 million.
The Indictment also contains a forfeiture allegation stating the Government’s intent to forfeit at least $1,282,885 traceable to the crime.
Officials at the Bon-Ton Stores, Inc., and the Bon-Ton Stores Foundation were cooperative with the investigation. DeJuliis was fired from the Foundation as soon as her conduct was discovered by the company in July 2009.
The case is being prosecuted by Assistant United States Attorney James T. Clancy.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this particular case, the maximum penalty under the federal statute is 20 years’ imprisonment on each mail fraud charge, a term of supervised release following imprisonment, and a fine. The money laundering charge also subjects DeJuliis to a term of imprisonment of up to 20 years and a fine of the greater of $500,000 or twice the value of the property involved in the money laundering transactions. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
Former Detroit Public Library Contractor Indictedfor Bribery of A Public OfficialRead the Press Release
James Henley, a former contractor with the Detroit Public Library (“DPL”), was charged in an Indictment for Bribery of a Public Official, United States Attorney Barbara L. McQuade announced today.
Joining McQuade in the announcement were Robert D. Foley, III, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation and Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation
According to the six count Indictment, James Henley bribed a public official of the DPL from about January 2007 until about July 28, 2008. Henley owned a company called Core Consulting & Professional Services. The DPL official approved a proposal submitted by Core Consulting to provide information technology work, and approved various extensions and change orders to the contract. Ultimately, DPL paid Core Consulting $1.5 million under the contract, and Henley secretly paid kickbacks to the DPL official totaling at least $600,000.
Henley is also charged with failing to file individual and corporate tax returns for years 2007 and 2008.
If convicted, Henley faces a maximum of ten years in prison and a fine of up to $250,000. The Indictment also seeks forfeiture of proceeds and payments associated with the bribery scheme.United States Attorney McQuade said, “The citizens lose when public contracts are awarded on the basis of bribery instead of on the merits of the bids. We will do all we can to root out corruption in public contracting in hopes of deterring officials from using public funds for self-enrichment.”
FBI Special Agent in Charge Robert D. Foley III said, "Those individuals who engage in bribery and kickbacks rob citizens of the honest government they deserve. The FBI Led Detroit Area Public Corruption Task Force is committed to stopping these illegal acts."
"Kickbacks will not be tolerated as a way to do business in Detroit," said Special Agent in Charge Erick Martinez, IRS Criminal Investigation.
The case was investigated by agents of the FBI. This case is being prosecuted by Assistant United States Attorneys Elizabeth A. Stafford and Julie Beck.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
Former Consultant, Roomy Khan, Sentenced in Manhattan Federal Court to One Year in Prison for Insider Trading and Obstruction of JusticeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that ROOMY KHAN was sentenced today to one year in prison for her participation in insider trading schemes in which KHAN provided material, nonpublic information (“Inside Information”) about various publicly-traded companies to a number of individuals, including Raj Rajaratnam, the founder and former head of the Galleon Group, and Doug Whitman, the president and founder of Whitman Capital. KHAN pled guilty in October 2009 to securities fraud, conspiracy to commit securities fraud, and obstruction of justice pursuant to a cooperation agreement with the Government. She was sentenced in Manhattan federal court by U.S. District Judge Jed S. Rakoff.
According to the Information, statements made during KHAN’s guilty plea proceeding, KHAN’s testimony during the criminal trial of Doug Whitman, and the Government’s sentencing submission in KHAN’s case:
From approximately 2004 through 2007, KHAN provided Rajaratnam, Whitman, and others with Inside Information relating to several companies, including Polycom and Google, with the understanding that these individuals would use the information to trade securities. KHAN also used some of the Inside Information to make personal trades. In exchange for the information she provided to her co-conspirators, KHAN received Inside Information about numerous other companies. In addition, KHAN obstructed the Government’s investigation of her co-conspirators by, among other things, deleting an incriminating email she received from a co-conspirator and alerting others to a pending investigation by the U.S. Securities and Exchange Commission.
In addition to the prison term, Judge Rakoff sentenced KHAN, 54, to three years of supervised release. KHAN was also ordered to pay $1,525,000 in forfeiture and a $300 special assessment fee.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Securities and Exchange Commission.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. 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.
The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Christopher L. LaVigne and Jillian Berman are in charge of the prosecution.
Former Camden Police Officer Sentenced to 46 Months in Prison for Conspiracy to Deprive Others of Civil RightsRead the Press Release
CAMDEN, N.J. – A former Camden police officer was sentenced today to 46 months in prison for conspiring with fellow officers to deprive others of their civil rights, U.S. Attorney Paul J. Fishman announced.
Jason Stetser, 34, of Waterford Township, N.J., previously pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court. He admitted he conspired with Antonio Figueroa, 36, of Camden; Dan Morris, 49, of Mount Laurel, N.J.; and Kevin Parry, 32, of Brooklawn, N.J., to deprive others of their due process rights and their right to be free from unreasonable searches and seizures.“The punishment handed down today is a just response to Jason Stetser’s betrayal of his oath of office,” U.S. Attorney Fishman said. “He also betrayed the trust of those whose rights he violated, the public he was sworn to protect, and all of the honest police officers who risk everything to keep us safe.”
According to documents filed in this case and statements made in court:
From May 2007 to October 2009, while on duty as a uniformed police officer with the Camden Police Department, Stetser engaged in a conspiracy with other Camden Police officers to deprive individuals of their due process rights by charging them with planted evidence; threatening certain individuals with arrest using planted evidence if they did not cooperate with law enforcement; conducting illegal searches without a search warrant or consent; stealing money during illegal searches and arrests; paying for cooperation and information with illegal drugs; failing to report found drugs and stashing them to use as planted evidence; and preparing false police reports or testifying falsely in court to conceal his actions.
In addition to the prison term, Judge Kugler sentenced Stetser to two years of supervised release.Morris previously pleaded guilty to conspiracy to deprive others of civil rights and was sentenced Dec. 11, 2012, to eight months in prison. Parry was sentenced Oct. 10, 2012, to 20 months in prison. Figueroa was convicted following a three-and-a-half week trial before Judge Kugler and was sentenced on Sept. 7, 2012, to 120 months in prison.
U.S. Attorney Fishman credited special agents of the FBI’s Resident Agency in Cherry Hill, N.J., under the direction of Acting Special Agent in Charge John J. Brosnan; investigators and prosecutors of the Camden County Prosecutor’s Office, under the direction of Prosecutor Warren W. Faulk; deputy attorney generals from the N.J. Attorney General’s Office, Division of Criminal Justice, under the direction of Attorney General Jeffrey Chiesa; and the Camden Police Department, under the direction of Chief John S. Thomson, with the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorneys William E. Fitzpatrick and Matthew J. Skahill of the U.S. Attorney’s Office in Camden.
13-051Defense counsel: Frederick W. Klepp Esq., Cherry Hill, N.J.
Former Bank Tellers Charged with Falsifying Bank RecordsRead the Press Release
McALLEN, Texas – Eduardo Alaniz, 24, and Sebastian Mendez, 30, have been charged with conspiring to falsify records at Bank of America in Mission, where they were formerly employed as tellers, U.S. Attorney Kenneth Magidson announced today.
Both Alaniz and Mendez turned themselves in to federal authorities today.
The criminal complaint alleges that more than $94,000 was discovered missing from the bank. The ensuing investigation revealed Alaniz and Mendez allegedly conspired together to repeatedly falsify bank records over the course of several days in April of last year, effectively concealing the missing money from auditors. On one occasion, records showed $36,953.26 in the teller drawer, when the actual amount was $2,526.60.
At a hearing today, U.S. Magistrate Judge Peter Ormsby formally advised both defendants of the charges and released them on bond pending trial with the one of the conditions they not work at a financial institution during the pendency of the case.
If convicted, each defendant could face a term of imprisonment of up to five years in federal prison and a possible $250,000 fine.
This case was investigated by the Secret Service with the assistance of Bank of America. Assistant U.S. Attorney Christopher Sully is prosecuting the case.
Florida Man Sentenced on Money Laundering and Tax ChargesRead the Press Release
Rochester, N.Y.-- U.S. Attorney William J. Hochul, Jr. announced today that Gary Shapoff, 62, of Boynton Beach, Florida, who was convicted of money laundering and making a false tax return, was sentenced to 60 months in prison and ordered to pay restitution in the amount of $2,228,605.84 by U.S. District Judge Charles J. Siragusa.
Assistant U.S. Attorney Bradley E. Tyler, who handled the case, stated that between January 2004 and July 2008, the defendant participated in a scheme to defraud investors who had invested approximately $2.5 million in international currency trading investments through the company Atwood & James S.A. During the course of the scheme, Shapoff used the mail and wire communications to facilitate the execution of the fraud. He also used illegally obtained investor proceeds to promote the scheme, in violation of the federal money laundering provisions, and did not report the gains that he made from the fraud on his individual tax returns. Shapoff offered the opportunity for “huge profits” in foreign currency, trades that were never made in investors names.
This law enforcement action is part of 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.
The sentencing is the culmination of an investigation on the part of Special Agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Christopher M. Piehota, the United States Postal Inspection Service, under the direction of Inspector in Charge Kevin M. Niland, and the Internal Revenue Service, Criminal Investigation Division, under the direction of Special Agent in Charge Toni Weirauch.
Federal Jury Finds Consultants to Former New Mexico Secretary of State Guilty to Theft, Obstruction of Justice, and Money Laundering ChargesRead the Press Release
Armando C. Gutierrez and Joseph C. Kupfer Found Guilty of Stealing $2,500,993 in Federal "Help America Vote Act" Funds
ALBUQUERQUE – This evening, a federal jury sitting in Albuquerque, N.M., found Armando C. Gutierrez, 65, of Corpus Christi, Texas, and Joseph C. Kupfer, 49, of Rio Rancho, N.M., guilty of conspiracy and theft of government property charges after an eight-day trial. The jury also convicted Gutierrez on obstruction of justice and money laundering charges. The jury’s guilty verdict was announced by U.S. Attorney Kenneth J. Gonzales, Acting Special Agent in Charge Gabriel L. Grchan of the Phoenix Division of the IRS Criminal Investigation, and Special Agent in Charge Carol K.O. Lee of the Albuquerque Division of the FBI.
Kupfer and his wife, Elizabeth D. Kupfer, 50, were charged with federal tax evasion offenses on Dec. 15, 2010. The three-count indictment charged the couple with willfully failing to report at least $768,333 in taxable income during tax years 2004 through 2006, and evading $286,175 in federal taxes.
On July 27, 2011, the indictment was superseded by an eleven-count superseding indictment which added Gutierrez as a co-defendant. Counts 1 through 5 of the superseding indictment included a conspiracy charge and theft of government property charges against Gutierrez and Kupfer relating to federal “Help America Vote Act” (HAVA) funds administered by former New Mexico Secretary of State (NMSOS) Rebecca Vigil-Giron. Counts 6 and 7 added obstruction of justice charges against Gutierrez relating to a federal audit and investigation into the misuse of federal HAVA funds, and Count 8 charged Gutierrez with laundering $630,000 in unlawfully obtained proceeds. Counts 9 through 11 included the three original tax evasion charges against the Kupfers. The superseding indictment also included provisions seeking forfeiture of any property constituting proceeds traceable to the offenses charged, and a money judgment in the amount of $2,500,993, the amount involved in the offenses charged.
At the time of the events described in the superseding indictment, Gutierrez and Kupfer were providing consulting services to the NMSOS under HAVA contracts, and Mrs. Kupfer was an employee of the New Mexico Attorney General’s Office (NMAGO) who had been detailed to work for the NMSOS.
In April 2012, the federal judge presiding over the case severed the three tax evasion counts from the other eight counts in the superseding indictment for purposes of trial. The Judge then scheduled separate trials for the Kupfers on the three tax evasion charges (the tax trial), and for Gutierrez and Kupfer on the conspiracy, theft, obstruction of justice and money laundering charges (the HAVA trial).
The tax trial against the Kupfers commenced on Aug. 13, 2012, and concluded on Aug. 17, 2012, when the jury returned a guilty verdict against the Kupfers on all three tax evasion charges. The evidence at the tax trial established that, during the years 2004 through 2006, Kupfer received income from Kupfer Consulting (KC), a business owned and operated by Kupfer, including federal HAVA funds, and the Kupfers reported income from KC in their joint personal tax returns. During those three years, the Kupfers received $1,304,421 in revenue from KC but reported only $502,541 in their tax returns. The Kupfers concealed approximately $768,333 in income by providing incomplete information to their tax preparer, thus avoided paying taxes on that money, and signed false and fraudulent tax returns and submitting those returns to the IRS.
The HAVA trial commenced on Jan. 22, 2012, and the evidence established that, following the passage of HAVA in 2002, States received federal funding to educate voters about the electoral process, increase voter registration, and meet new standards for election administration and voting systems. Between April 2003 and Dec. 2006, the NMSOS administered almost $20 million of federal HAVA funds through a number of contracts, including a multi-million dollar contract for voting-related advertising that was awarded to A. Gutierrez and Associates, Inc. (AGA), a company solely-owned and operated by Gutierrez, and three small contracts for increasing voting accessibility for the disabled that were awarded to KC, Kupfer’s business.
In summary, the evidence established Gutierrez and Kupfer conspired together to defraud the United States by stealing federal HAVA funds and converting the funds for their own use. Specifically, the two men unlawfully obtained federal HAVA funds for work they did not perform and services they did not provide by: (1) submitting false invoices for services that AGA and KC never provided; (2) attempting to obstruct an audit by the Election Assistance Commission (EAC); and (3) attempting to conceal the federal HAVA funds that they stole.
In April 2004, the NMSOS awarded a voting-related advertising contract to AGA. By its terms, the AGA contract was to terminate on Dec. 30, 2006, could not exceed $4 million, and required the written approval of the NMSOS before AGA could retain subcontractors. The AGA contract was amended in May 2006 to include an additional $1,762,000 in federal HAVA funds, and again in Oct. 2006 to add another $186,750 in federal HAVA funds. Between Sept. 2004 and Oct. 2006, AGA received a total of $6,271,810 in federal HAVA funds from the State of New Mexico but Gutierrez submitted documentation supporting only $3,385,151 in services and costs, resulting in an overpayment of $2,500,993 to which AGA was not entitled.
In addition to the three small contracts ($20,000 in 2003; $20,000 in 2004; and $30,000 in 2005) awarded to KC by the NM SOS, AGA made a series of nine payments totaling $746,375 in federal HAVA funds to Kupfer between Oct. 2004 and Nov. 2006. The payments far exceeded the value of any work that Kupfer ever actually performed for AGA under the HAVA contract, and Gutierrez and AGA never submitted any documentation to the NMSOS’s reflecting that AGA had retained Kupfer and/or KC as a subcontractor.
In early 2007, the EAC, an independent bipartisan commission established by HAVA to assist states with HAVA compliance and distribution of federal HAVA funds, began an audit into the use of federal HAVA funds by the NMSOS. The AGA HAVA contract immediately became the primary focus of the EAC’s audit because AGA could not provide documentation to the EAC auditors to support the federal HAVA funds AGA received for services allegedly provided to the State of New Mexico. In an effort to provide documentation for the federal HAVA funds AGA received, AGA provided 187 fraudulent invoices totaling $1,137,000 that purported to represent payment to media vendors when in fact AGA never paid any vendors based on these invoices. AGA also submitted documents that purported to modify the AGA contract by (1) changing it from a fixed hourly rate contract to a cost-plus-percentage-of cost contract, and (2) permitting AGA to hire subcontractors without written approval of the NMSOS. These documents, signed only by Gutierrez and AGA, were not in the files of the NMSOS, the New Mexico Department of Finance and Administration (NM DFA) or the NMAGO, and were not approved by the NM DFA as required by New Mexico law.
Subsequent to the EAC audit and in response to federal grand jury subpoenas, AGA and KC submitted fraudulent invoices that purported to support the nine payments totaling $746,375 that KC received from AGA between Oct. 2004 and Nov. 2006. Three of these invoices sought payments in the aggregate amount of $236,605 for production of a poll worker training video that was actually produced by another subcontractor at the cost of $75,000. These invoices had not been submitted to the EAC during its audit and were not in the files of the NMSOS, the NM DFA or the NMAGO.
The jury deliberated approximately three hours before returning a guilty verdict on Counts 1 through 8 of the superseding indictment.
At sentencing, the defendants face a maximum penalty of five years in prison on each of Counts 1 and 6, and a maximum penalty of ten years in prison on each of the remaining counts in the superseding indictment. The defendants also may be fined up to $250,000 on each count of conviction with the exception of Count 8, the money laundering charge against Gutierrez, which provides for a fine up to twice the value of the funds at issue, or $1,260,000. All three defendants remain on conditions of release pending their sentencing hearings. Mrs. Kupfer is scheduled to be sentenced on March 25, 2013. Sentencing hearings have yet to be set for Gutierrez and Kupfer.
In announcing the jury’s guilty verdict, U.S. Attorney Gonzales said, “The message behind the jury’s guilty verdict is that those who do business with government agencies will be held to the same high standards as government officials. By entering into contracts to provide services paid for with taxpayers’ monies, private citizens become duty bound to provide honest services for the monies they received. Mr. Gutierrez and Mr. Kupfer violated that duty by stealing more than $2,500,000 in taxpayers’ monies and failing to provide any services for that money. When anyone, including public official and government contractors, abuses the public’s trust in this way, they corrupt the system and erode the public’s confidence in their government. I want to thank the New Mexico Attorney General's Office for initiating the investigation that led to today’s guilty verdict, and commend the IRS and FBI for undertaking the painstaking, comprehensive and complex investigation that permits us to hold these men responsible for stealing from the public they contracted to serve.”
“The Federal government provided voter education funds to the State of New Mexico to ensure all citizens have the opportunity to have their voices heard. Gutierrez and Kupfer instead used a significant portion of these funds to support their lavish lifestyles. IRS Criminal Investigation, along with our law enforcement partners, will continue to aggressively pursue the blatant waste of taxpayer dollars,” stated IRS Criminal Investigation Acting Special Agent in Charge Gabriel Grchan.
“The FBI has zero tolerance for those who would steal from U.S. taxpayers, especially when it involves taking advantage of a program created to increase access to one of our nation’s most cherished rights,” said FBI Special Agent in Charge Carol Lee. “Thanks to the efforts of FBI Special Agents working with the IRS Criminal Investigation and the New Mexico Attorney General’s Office, we have held accountable individuals who lined their pockets with money that should have been used to help Americans vote.”
The case was investigated by the IRS Criminal Investigation and the Albuquerque office of the FBI, with assistance from the New Mexico Attorney General’s Office. The case was prosecuted by Assistant U.S. Attorneys Tara C. Neda, Jeremy Peña and Cynthia L. Weisman.
Fayetteville Pain Center Settles HIV Discrimination CaseRead the Press Release
Raleigh – United States Attorney Thomas G. Walker, along with the United States Justice Department, announced today that as part of its Barrier-Free Health Care Initiative, it has reached a settlement with the Fayetteville Pain Center under the Americans with Disabilities Act (ADA). The settlement resolves allegations that the Fayetteville Pain Center violated the ADA by refusing to treat a woman because she has HIV.
The complainant, a woman with HIV who was suffering from back pain as a result of a car accident, visited the Fayetteville Pain Center in Fayetteville, North Carolina, seeking treatment. According to the complaint, the woman was unable to obtain medical treatment because the doctor at the Fayetteville Pain Center refused to treat a person with HIV. The ADA requires public accommodations such as doctors’ offices, medical clinics, hospitals, and other health care providers, to provide people with disabilities, including those with HIV, equal access to goods, services, and facilities.
Under the settlement, the Fayetteville Pain Center must pay $10,000 to the complainant and $5,000 to the United States in civil penalties, train its staff on the ADA, and develop and implement an anti-discrimination policy.
“All people deserve equal access to medical treatment. People with HIV and other disabilities must not be denied health care because of their disabilities. Medical professionals, perhaps more than anyone, should understand that the universal precautions they use when treating all patients mean no one should be excluded from treatment based on HIV,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This type of discrimination will not be tolerated.”
Mr. Walker emphasized that “this settlement should also send a message to all health care providers in Eastern North Carolina that a disability cannot be a factor in determining accessibility to care and treatment.“
This settlement is part of the Department of Justice’s Barrier-Free Health Care Initiative, a partnership of the Civil Rights Division and U.S. Attorneys’ offices across the nation, to target enforcement efforts on a critical area for individuals with disabilities. The initiative was announced on the anniversary of the ADA in July 2012 and 40 U.S. Attorneys’ offices are participating. The division expects the initiative to address access to health care for people with HIV and hearing disabilities, as well as physical access to medical facilities. In 2012, the division and U.S. Attorneys 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 ADA and HIV visit www.ada.gov/aids. Those interested in finding out more information about these settlements or the obligations of public accommodations under the ADA, including how it protects people with HIV in accessing medical care, 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].
Donald Carl Salois Found Guilty in U.S. Federal CourtRead the Press Release
The United States Attorney's Office announced that on January 30, 2013, in Great Falls, after a federal district court trial before U.S. District Judge Sam E. Haddon, DONALD CARL SALOIS, a 49-year-old resident of Browning, was found guilty of aggravated sexual abuse. Sentencing is set for May 20, 2013. He is currently detained.
At trial, the following evidence and testimony was presented to the jury. SALOIS picked up his victim in a 2000 Ford Ranger along Highway 2, south of Browning. SALOIS said that he would take the victim home, but that never occurred. Instead, SALOIS passed the victim's residence, stopped at a sufficiently secluded place, exited his vehicle, and brutally raped the victim.
When questioned by law enforcement, SALOIS admitted that he had sex with the victim, but claimed the encounter was consensual and occurred in his residence, not on the side of the road. SALOIS also claimed that he never left his residence the night of the rape. The FBI investigated and discovered that neighbors, on the night of the rape, did not see the 2000 Ford Ranger owned by SALOIS at the residence.
After the government presented testimony of 12 witnesses over the course of a day and a half, which included medical professionals, law enforcement, lay witnesses, and a DNA expert, the jury convicted SALOIS.
Assistant U.S. Attorneys Ryan G. Weldon and Laura B. Weiss prosecuted the case for the United States.
SALOIS faces possible penalties of life imprisonment, a $250,000 fine, and lifetime supervised release.
The investigation was conducted by the Federal Bureau of Investigation.
Doctor and Owner of Medical Supply Company Plead Guilty in Million-Dollar Power Wheelchair ScamRead the Press Release
United States Attorney Laura E. Duffy announced that a California medical doctor and the owner of the Oceanside Medical Supply in Long Beach, CA have both pled guilty to participating in a conspiracy to defraud the Medicare trust fund by submitting more than $1 million in fraudulent power wheelchair claims. Dr. Irving Schwartz and Jose Melendez entered their guilty pleas before Magistrate Judge Nita L. Stormes in federal court in San Diego, and pursuant to their plea agreements, the defendants are obligated to pay restitution to the Medicare trust fund for the losses caused by their scheme.
According to court papers and admissions by the defendants, the fraudulent conspiracy focused on the sale of bogus prescriptions, with the ultimate goal being to obtain reimbursements from Medicare for expensive power wheelchairs that patients did not need and, in some cases, did not want. Dr. Irving Schwartz admitted today during his guilty plea that in 2007-2008, he would travel to El Centro, California, in search of elderly Medicare patients. Dr. Schwartz would write prescriptions for power wheelchairs, even though the patients did not need the equipment and could walk without assistance. In exchange, Schwartz collected a $300 cash kickback for each fraudulent power wheelchair prescription. One of Schwartz’s co-conspirators would then sell the power wheelchair prescriptions to Melendez, a medical supply company owner, charging him $1,000 per fraudulent prescription.
According to court papers and admissions at today’s hearing, Melendez sold some of the power wheelchair prescriptions to other co-conspirators, charging them an additional mark-up on each fraudulent prescription. As the last step in the scheme, Melendez and other co-conspirators would submit the fraudulent prescriptions to Medicare for reimbursement, billing the government thousands more per wheelchair than it had cost them to purchase and deliver the equipment. Often the unneeded equipment would sit unused in patients’ homes for years.
Dr. Schwartz admitted today in open court that he wrote at least 186 fraudulent power wheelchair prescriptions for Medicare beneficiaries in exchange for more than $55,000 in bribes and kickbacks. Melendez, the owner and operator of Oceanside Medical Services, admitted that he purchased these 186 fraudulent prescriptions and used them to submit over $830,000 in false claims to Medicare.
In a related case, co-conspirators Aristeo and Laura Tavares have pled guilty and admitted to submitting more than $250,000 in false claims based on Dr. Schwartz’s fraudulent prescriptions. In total, the scheme resulted in more than $1 million in false claims to the Medicare trust fund.
United States Attorney Duffy said, “Combating health care fraud is a top priority of the Department of Justice. When Medicare dollars are wasted on expensive and unnecessary equipment, senior citizens run the risk of not being able to obtain the legitimate medical treatment they need. In this time of fiscal austerity, we must aggressively prosecute those who pilfer Medicare dollars to line their own pockets.”
“Health care fraud schemes involving false claims of durable medical equipment, cost U.S. taxpayers billions of dollars each year,” said Daphne Hearn, Special Agent in Charge of the San Diego FBI Office. “This prosecution should serve notice, that the FBI will aggressively pursue those individuals and criminal enterprises who would line their own pockets at the expense of U.S. taxpayers.”
“There can be no doubt that the federal government will crack down on physicians and other individuals defrauding the Medicare program," said Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s Los Angeles region. “When business owners conspire with doctors to pay kickbacks and write phony prescriptions, they both should expect to be brought to justice."
The pleas are subject to final acceptance by United States District Judge Marilyn L. Huff. The defendants are scheduled to be sentenced by Judge Huff on May 6, 2013 at 9:00 a.m.
DEFENDANTS CRIMINAL CASE NO. 12cr2599-H Irving J. Schwartz
Jose Melendez SUMMARY OF CHARGESCount 1: Conspiracy to Pay and Receive Health Care Kickbacks and Defraud -Title 18, United States Code, Section 371; Maximum Penalties: Five years in custody; $250,000 fine; 3 year of supervised release; and mandatory restitution
INVESTIGATING AGENCYFederal Bureau of Investigation
Department of Health and Human Services, Office of Inspector GeneralDistrict Court Enters Permanent Injunction Against Ohio-Based Drug Manufacturer and Company’s Senior ExecutivesRead the Press Release
U.S. District Court Judge Lesley Wells entered a consent decree of permanent injunction against Ben Venue Laboratories Inc., a Bedford, Ohio-based drug manufacturer, the Justice Department announced today. The permanent injunction was also entered against George P. Doyle, president and chief executive officer, Kimberly A. Kellermann, vice president of operations, and Douglas A. Rich, vice president of quality operations, for Ben Venue. The department, at the request of the Food and Drug Administration (FDA), asked the court to enter the consent decree.
Ben Venue manufactures numerous generic sterile injectable drug products, including cancer medications. As set forth in the complaint filed by the United States on January 22, FDA conducted an inspection of defendants’ facility from Nov. 7 to Dec. 2, 2011, and documented 10 deviations from current good manufacturing practices. According to the complaint, the FDA found, among other things, that the company failed to create and follow appropriate procedures to prevent contamination of drugs which were purported to be sterile. The FDA also found that the company failed to properly clean and maintain its equipment to ensure the safety and quality of the drugs it manufactured. In addition, the FDA determined that the company failed to conduct adequate investigations of drugs that did not meet their specifications.
Compliance with current good manufacturing practices requirements assures that drugs meet the safety requirements of the law and have the identity and strength and meet the quality and purity characteristics that they purport to or are represented to possess. FDA regulations, which establish minimum current good manufacturing practices applicable to human drugs, require manufacturers to control all aspects of the processes and procedures by which drugs are manufactured in order to prevent the production of unsafe and ineffective products.
According to the complaint, t he deviations observed by FDA during the November - December 2011 inspection were similar to deviations observed by FDA during its many previous inspections of Ben Venue’s facility. During FDA’s May 2011 inspection, FDA documented 48 deviations from current good manufacturing practices including an inadequate quality control unit, inadequate and untimely investigations, inadequately designed aseptic processing areas, poor employee aseptic practices, failure to prevent microbial contamination of drug products purporting to be sterile and failure to determine the root cause for microbial contaminants.
As described in the complaint, FDA’s long inspection and regulatory history of Ben Venue, including 35 inspections since 1997, and approximately 40 recalls since February 2002 associated with drugs manufactured at the Ben Venue facility (including 10 recalls in 2011 and 10 recalls in 2012), reflects a continuing pattern of significant deviations from current good manufacturing practices with its drugs. Some recalls involved drugs contaminated with glass and other particulates. Additional recalls were based on the company’s inability to assure the drug’s sterility. Of the roughly 40 recalls, nine were classified by FDA as “Class I,” meaning that FDA determined that there was “a reasonable probability that the use of . . . a violative product will cause serious adverse health consequences or death.”
The consent decree entered resolves the complaint by requiring Ben Venue to take a wide range of actions to correct its violations and ensure that they do not happen again. The injunction establishes a series of steps which must occur before Ben Venue can fully resume operations, including the retention of an expert to inspect the company’s facility, the development and then implementation of a remediation plan, and an inspection by FDA to confirm that the company’s manufacturing processes are fully compliant with the law.
“This consent decree restricts Ben Venue from manufacturing and distributing certain drugs until the company fully complies with the law,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “As this case demonstrates, the Department of Justice and FDA will work together to protect the health and safety of Americans by making sure that those who produce and distribute prescription drugs follow the law.”
“This resolution comes following nearly three dozen inspections which revealed inadequate quality control, including contaminated drugs, and led to approximately 40 recalls on products from this facility alone,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “The Justice Department and the Food and Drug Administration will continue to place its highest priority on protecting consumers.”
Under the decree, Ben Venue may continue to manufacture and distribute a subset of their drugs (listed on Attachment A to the decree), which FDA has determined are currently in shortage (domestically or abroad) or are vulnerable to shortage. However, prior to distribution of each batch of these drugs, the company’s expert must conduct a batch-by-batch review and certify that no deviations occurred during the manufacture of the drug that would adversely affect the safety or quality of the batch.
Principal Deputy Assistant Attorney General Delery thanked the FDA for referring this matter to the Department of Justice. Jeffrey Steger, Assistant Director of the Consumer Protection Branch of the Justice Department and Michele Svonkin, Counsel at FDA’s Office of the Chief Counsel, brought this case on behalf of the United States.
Deported Alien Sentenced to Time-Served for Illegally Re-entering U.S.Read the Press Release
PITTSBURGH, Pa. - An individual found by the New Castle Police has been sentenced in federal court to time-served on his conviction of re-entry into the United States after deportation, United States Attorney David J. Hickton announced today.
United States District Judge R. Mark Hornak imposed the sentence on Alex Omar Colindres-Ortiz, 33, formerly from Choluteca, Honduras.
According to indictment, Colindres-Ortiz, an alien, was removed from the United States on Sept. 3, 2010. Colindres-Ortiz was found in New Castle, Lawrence County, on Dec. 5, 2012, without having been given permission to re-enter the United States.
Assistant United States Attorney Shardul S. Desai prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the U.S. Immigration and Custom Enforcement and the Pennsylvania State Police for the investigation leading to the successful prosecution of Alex Omar Colindres-Ortiz.
Defense Contractor Pleads Guilty to Theft of Employee Payroll TaxesRead the Press Release
United States Attorney Laura E. Duffy announced that Ildiko Pinero, an owner and the Chief Financial Officer of Alpha Machining Products & Development Inc. (“Alpha”), pled guilty today before United States Magistrate Judge Nita L. Stormes to failing to pay over to the United States payroll taxes that she withheld from the paychecks of Alpha employees. At the time of the offense, Alpha was a San Diego defense contractor engaged in the machining of weapons parts and other products for the U.S. Department of Defense.
As an employer, Alpha was required to withhold employment taxes from the wages it paid to its workers, including federal income taxes and the employees’ share of Federal Insurance Contributions Act taxes (Social Security and Medicare taxes). These withheld employment taxes are commonly referred to as “trust fund taxes,” because an employer holds these funds in trust for its employees. After collecting these trust fund taxed, Alpha was required to pay them over to the Internal Revenue Service (“IRS”). In addition, Alpha was required to account for and pay over its own “employer’s share” of the Social Security and Medicare taxes resulting from employing these workers.
As Pinero admitted during her guilty plea this morning, from January 2006 through September 2008, she withheld payroll taxes from the paychecks of Alpha’s employees. These taxes included over $110,000 in withholdings for federal income tax, plus the employees’ share of Medicare and Social Security taxes. Despite withholding these sums from the employees’ paychecks, Pinero refused to pay the taxes to the Internal Revenue Service. Similarly, Pinero also failed to pay over Alpha’s share of Social Security and Medicare taxes, in the amount of approximately $57,000.
United States Attorney Duffy emphasized that, “When an employer withholds federal taxes from the paychecks of its hard-working employees, that money isn’t the employer’s to spend. Failing to pass along those withheld funds to the IRS amounts to stealing. This applies to defense contractors like Alpha, just like any other employer.” U.S. Attorney Duffy praised the efforts of agents from the IRS Criminal Investigation, the Defense Criminal Investigative Service, Immigration and Customs Enforcement, and Army Criminal Investigation Division for their collaborative work in this multi-agency investigation.
“Corporate executives have a continuing responsibility to collect and turn over all IRS payroll taxes,” said N. Dawn Mertz, IRS Criminal Investigation (CI) Acting Special Agent in Charge for the Los Angeles Field Office. “The failure to pay over withheld payroll taxes is a very serious offense. IRS CI intends to vigorously pursue those who fraudulently collect payroll taxes and fail to timely remit those taxes.”
The guilty plea is subject to final acceptance by United States District Judge Dana M. Sabraw. Sentencing in this case is currently scheduled for April 19, 2013, at 9:00 a.m., before Judge Sabraw.
DEFENDANT Case Number: 12cr3125DMS Ildiko Pinero SUMMARY OF CHARGESCount 2: Willful failure to pay over tax, in violation of Title 26, United States Code, Section 7202 - Maximum penalties: 5 years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment.
INVESTIGATING AGENCYInternal Revenue Service - Criminal Investigation
Defense Criminal Investigative Service
Immigration and Customs Enforcement’s Homeland Security Investigations
Army Criminal Investigation DivisionCharleston Man Sentenced to 6 Years in Federal Prison as Part of Yearlong Drug Crackdown on Charleston’s West SideRead the Press Release
Saunders is the second defendant to be sentenced recently as part of Charleston’s West Side DMI initiative
CHARLESTON, W.Va. – U.S. Attorney Booth Goodwin today announced that a Charleston man was sentenced to six years in federal prison for distributing crack cocaine. Matthew Saunders, 20, of Charleston, previously pleaded guilty in October 2012.
Saunders admitted that on June 30, 2011, he sold a quantity of crack cocaine to a confidential informant working with the Metropolitan Drug Enforcement Network Team (MDENT) in exchange for $1,200. Saunders further admitted that on July 7 and July 14, 2011, he sold a quantity of crack cocaine to an informant. All of the illegal transactions occurred near Grant and Russell Streets in Charleston.
On July 18, 2011, law enforcement officers seized crack cocaine from a residence in Charleston. Saunders admitted that he had arranged to sell two ounces of the crack cocaine that was seized by law enforcement. Saunders was apprehended prior to arriving at the residence to obtain the crack cocaine.The suspected crack cocaine base from the three controlled buys and the quantity of crack cocaine seized from the search of the residence was submitted to the West Virginia State Police Laboratory for analysis and proved to be crack cocaine weighing 23.2 grams, 22.9 grams, and 27.2 grams, respectively. Saunders admitted that he was responsible for selling a total of 142.23 grams of crack cocaine.
Last Friday, Fred Taylor, 23, of Charleston, was sentenced to five years in prison for distributing crack cocaine. Taylor was prosecuted as part of the Charleston area’s Drug Market Intervention (DMI) initiative.
The Saunders case was also prosecuted as part of the Charleston area’s Drug Market Intervention (DMI) initiative. The DMI initiative was launched in February 2012 by Charleston Police Chief Brent Webster and U.S. Attorney Booth Goodwin, in collaboration with Kanawha County Prosecuting Attorney Mark Plants, other federal, state, local law enforcement agencies and leaders representing several West Side community development organizations. The DMI initiative was initiated in Charleston as a strategic problem-solving effort aimed at closing down open-air drug markets that breed crimes of violence and disorder.
The Metropolitan Drug Enforcement Network Team (MDENT) conducted the investigations. Assistant United States Attorney John Frail handled the prosecution.
Canadian Man Sentenced for Bank FraudRead the Press Release
BUFFALO, N.Y. - U.S. Attorney William J. Hochul, Jr. announced today that Mohammed Yassin, 42, of Hamilton, Ontario, who was convicted of bank fraud, was sentenced to 26 months in prison and ordered to pay $36,100 in restitution by U.S. District Court Judge Richard J. Arcara.
Assistant U.S. Attorney Russell T. Ippolito, Jr., who handled the case, stated that Yassin, a citizen and resident of Canada, opened a business bank account at a Key Bank branch located in Niagara Falls, N.Y. in the name of Montsaida, Inc. Between April 2, 2009 and May 8, 2009, the defendant deposited fraudulent pre-authorized debits (“PADS”) into Montsaida’s account. The false PADS deposited to the account purportedly represented money owed to Montsaida by the payers listed on the PADS. Key Bank relied upon the deposited PADS to calculate the daily cash balance of funds in the Montsaida business checking account.
On May 8, 2009, the defendant withdrew money from the Montsaida account by electronically transmitting funds from the account by means of wire communication to bank accounts in Canada. Yassin caused three separate wire transactions to transmit funds from the Montsaida account in the amounts of $8,500, $10,300 and $11,000, totaling $29,800. This money represented funds from the deposit of the false and fraudulent PADS.
Between February 26, 2009, and March 28, 2009, the defendant committed similar fraudulent acts against Bank of America. The total loss to Key Bank and Bank of America was $36,100.
The plea is the culmination of an investigation by the United States Secret Service, under the direction of Special Agent in Charge Tracy Gast.
Camp Pendleton Contractors Indicted for Pilfering over $3 Million in Medical EquipmentRead the Press Release
United States Attorney Laura E. Duffy announced that three civilian contractors who worked at Camp Pendleton were arraigned today on an indictment charging them with stealing millions of dollars’ worth of medical equipment that was to have been shipped to combat commands throughout the world. Defendants Henry Bonilla, Richard Navarro and Michael Tuisee made their first court appearance today before Magistrate Judge William McCurine, Jr. The three were arraigned on a six-count indictment charging the Department of Defense contractors with Conspiracy, Theft of Government Property and Criminal Forfeiture.
According to the indictment, the three defendants worked in warehouses run by 1st Medical Logistics Company (“1st MEDLOG”) aboard Camp Pendleton (the United States Marine Corps’ largest West Coast expeditionary force training facility). 1st MEDLOG is the unit responsible for maintaining medical equipment and shipping necessary medical items to combat forces. By virtue of their employment as defense contractors, the defendants had access to sophisticated, expensive medical equipment stored at 1st MEDLOG warehouses. Throughout 2012, the defendants repeatedly stole expensive medical equipment from 1st MEDLOG, transported it using their personal vehicles to other locations in Southern California, and sold the stolen items to medical equipment resellers. According to the indictment, exchanges with resellers often took place at night, in parking lots near commercial businesses. All told, the defendants are alleged to have stolen over $3 million worth of medical equipment needed by United States Marines.
At today’s hearing, Magistrate Judge McCurine set bond for the defendants, and ordered them to appear before District Judge Cathy A. Bencivengo on March 8, 2013. Each defendant faces a maximum penalty of 10 years in prison – as well as mandatory restitution to the U.S. military – if convicted of stealing government property.
United States Attorney Duffy advised that these charges are the result of an ongoing investigation into theft of valuable property aboard Camp Pendleton, and asked the public to contact the Naval Criminal Investigative Service (NCIS) at 1-800-264-6485 or www.ncis.navy.mil if they have any information relevant to that investigation.
The public is reminded that an indictment itself is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.
DEFENDANT Case Number: 13cr0338-CAB Henry Bonilla
Richard Navarro
Michael Tuisee SUMMARY OF CHARGESCount 1: Conspiracy to Engage in Theft of Government Property, Title 18, United States Code, Section 371 (all defendants)
Maximum penalties: 5 years in prison, $250,000 fine, term of supervised release of 3 years, restitution, and $100 special assessment.
Count 2: Theft of Government Property, Title 18, United States Code, Section 641 (Navarro)
Maximum penalties: 10 years in prison, $250,000 fine, term of supervised release of 3 years, restitution, and $100 special assessment.Count 3: Theft of Government Property, Title 18, United States Code, Section 641 (Tuisee)
Maximum penalties: 10 years in prison, $250,000 fine, term of supervised release of 3 years, restitution, and $100 special assessment.Count 4: Theft of Government Property, Title 18, United States Code, Section 641 (Bonilla)
Maximum penalties: 10 years in prison, $250,000 fine, term of supervised release of 3 years, restitution, and $100 special assessment.Count 5: Theft of Government Property, Title 18, United States Code, Section 641 (Bonilla)
Maximum penalties: 10 years in prison, $250,000 fine, term of supervised release of 3 years, restitution, and $100 special assessment.Count 6: Theft of Government Property, Title 18, United States Code, Section 641 (Bonilla)
INVESTIGATING AGENCY
Maximum penalties: 10 years in prison, $250,000 fine, term of supervised release of 3 years, restitution, and $100 special assessment.Naval Criminal Investigative Service
Business Owner Admits Orchestrating $3 Million Bank FraudRead the Press Release
NEWARK, N.J. – The owner of a Phillipsburg, N.J., luggage manufacturing company admitted today that he defrauded the Lakeland Bank of Oak Ridge, N.J., of $3 million, U. S. Attorney Paul J. Fishman announced.
Richard Rekuc, 59, of Asbury, N. J., pleaded guilty before U. S. District Judge William J. Martini in Newark federal court to an Information charging him with one count of bank fraud.According to the documents filed in this case and statements made in court:
Rekuc operated a luggage manufacturing company called Royalox International Inc, based in Phillipsburg. Rekuc arranged with Lakeland Bank to obtain a line of credit for Royalox that was based on Royalox’s accounts receivable: the higher Royalox’s sales, the more money it could borrow from the line of credit.
An investigation led by the Federal Deposit Insurance Corporation revealed that between 2004 and December 2009, Rekuc was submitting false invoices and copies of payments to Lakeland so that he could draw on his line of credit. Rekuc first opened fake bank accounts in names very similar to some of the clients with whom Royalox did business. Rekuc moved money from bank accounts he controlled to the fake accounts. He then created fictitious invoices, billed the fictitious “companies,” and made payments from the fake company accounts to Royalox. Rekuc submitted the false invoices and the copies of the payments from the fake company accounts to the Royalox accounts.
These false documents gave Lakeland the impression that Royalox was doing a substantial amount of business and was entitled to draw off the accounts receivable line of credit to cover payments for materials and other expenses. In fact, Rekuc was pocketing the money. Rekuc’s actions caused Lakeland Bank to lose $3 million.
The bank fraud charge to which Rekuc pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1 million fine. Sentencing is set for May 6, 2013.
U.S. Attorney Fishman credited special agents of the Federal Deposit Insurance Corporation under the direction of FDIC-Office of Inspector General, Inspector General Jon. T. Rymer, with the investigation which led to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
This case was brought in coordination with President Barack Obama’s interagency Financial Fraud Enforcement Task Force, which was established 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.
13-056Defense counsel: Donald McCauley Esq., Newark, N.J.
Rekuc, Richard Information