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24 January 2013
Alleged Reno Pimp Indicted on Federal Charges of Transporting 15-year-old Girl from California to Reno for ProstitutionRead the Press Release
Las Vegas, Nev. – An alleged pimp from the Reno area has been indicted by the federal grand jury on a sex trafficking charge for transporting a 15-year-old girl from Bakersfield, Calif. to Reno, Nev. to work as a prostitute, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Vernon McCullum III, aka “Fifth,” 20, of Reno, was indicted on Wednesday, Jan. 23, 2013, and is charged with one count of illegal transportation of a minor for prostitution or other illegal sexual activity. If convicted, McCullum faces a minimum of 10 years to life in prison and up to a $250,000 fine. McCullum is scheduled to appear before a federal magistrate judge in Reno today at 3:00 p.m. for an arraignment and plea.
According to the indictment and criminal complaint, on Jan. 10, 2013, the Bakersfield, California Police Department received a report of a missing 15-year-old girl and opened an investigation. The investigation revealed that an advertisement had been posted on the internet website “Myredbook.com” stating that an individual using the name “Babyfaith” was available for prostitution services. The telephone number listed in the advertisement was that of the missing girl. The investigation further revealed that two days earlier, on Jan. 8, 2013, in Bakersfield, the 15-year-old girl was introduced to McCullum by a female acquaintance who had been working for McCullum as a prostitute. On Jan. 9, 2013, McCullum drove the 15-year-old and the other female to a hotel room in Reno and directed the female acquaintance to take nude pictures of the 15-year-old, which were then uploaded onto the Myredbook.com website. Following the posting of the advertisement on the website, the 15-year-old engaged in prostitution at McCullum’s direction, and was required to provide proceeds of the prostitution activity to the female acquaintance who provided it to McCullum.
The case is being investigated by the Bakersfield Police Department and the Reno Police Department Street Enforcement Team, which includes the Sparks Police Department and Washoe County Sheriff’s Office, and the FBI, as part of their Innocence Lost Task Force. It is being prosecuted by Assistant United States Attorney Carla B. Higginbotham.
An indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
23 January 2013
Winchester Man Found Guilty on Tax ChargesRead the Press Release
LYNCHBURG, VIRGINIA -- A Winchester, Va. man charged with a variety of tax charges, was found guilty last week in the United States District Court for the Western District of Virginia in Lynchburg following a four-day jury trial.
James Bowers Johnson was indicted in April 2012 on one count of embarking in a corrupt endeavor to obstruct the due administration of the Internal Revenue Code and three counts of willfully failing to file a tax return.
Following a four-day trial, a Federal jury sitting in U.S. District Court in Lynchburg found Johnson guilty last Friday afternoon, on all four counts. A sentencing date has yet to be set.
“Each and every American has a duty to pay his or her fair share of taxes,” United States Attorney Timothy J. Heaphy said today. “Mr. Johnson attempted to evade his tax obligation and took measures to hide his income. For that conduct, he has been held accountable.”
“There are numerous variations of abusive tax schemes used today in an attempt to conceal income from the IRS. The use of these abusive tax schemes isn't tax planning; it's criminal activity,” said Sheila Olander, Acting Special Agent in Charge, IRS Criminal Investigation Washington DC Field Office. “There is no secret formula that can eliminate a person's tax obligations and Mr. Johnson's guilty verdict reinforces IRS Criminal Investigation's commitment to the American taxpayer that individuals who engage in illegal financial transactions designed to evade the payment of taxes will be held accountable to the fullest extent of the law.”
Based on evidence presented at trial by Assistant United States Attorney C. Patrick Hogeboom III, the jury found that Johnson, who was self-employed, hid his gross income, derived from the sale of prepaid telephone cards, rental receipts and capital gains, from the Internal Revenue Service in a number of ways. He requested that customers place payments in a variety of nominee entities he controlled, used money orders or cash and concealed his owners of assets by placing assets, including his residence, and bank accounts in the names of limited liability companies, foundations, companies, corporations and domestic and foreign trusts. Between 1999 and 2007, Johnson attempted to conceal more than $1.4 million in income.
In addition, the jury found that Johnson, despite earning $160,000 in income in 2005, $385,000 in income in 2006 and $123,000 in income in 2007, willfully failed to file a tax return in any of those years.
The investigation of the case was conducted by Internal Revenue Service. Assistant United States Attorney C. Patrick Hogeboom III and Special Assistant United States Attorney Shannon Wright prosecuted the case for the United States.
Wanblee Man Sentenced for Drug DistributionRead the Press Release
United States Attorney Brendan V. Johnson announced that a Wanblee man convicted of Distribution of a Controlled Substance was sentenced on January 14, 2013 by Chief U.S. District Judge Jeffrey L. Viken. Royce Gone, age 32, was sentenced to time served, 2 years' supervised release, and a $100 special assessment to the Victims' Assistance Fund.
On April 3, 2012, Gone distributed more than 5 grams of marihuana at Wanblee, South Dakota. Gone pled guilty to the charge on October 11, 2012.
This case was investigated by the Bureau of Indian Affairs, Office of Justice Services, the Oglala Sioux Tribe Department of Public Safety, the Northern Plains Safe Trails Drug Enforcement Task Force, and the Federal Bureau of Investigation. Assistant U.S. Attorney Ted L. McBride prosecuted the case.
Victoria Man Sent to Prison for Distributing Child PornRead the Press Release
CORPUS CHRISTI, Texas - Joseph Fellhauer, 64, of Victoria, has been sentenced to federal prison for distribution of child pornography, United States Attorney Kenneth Magidson announced today. He pleaded guilty Oct. 29, 2012.
Today, U.S. District Judge Nelva Gonzales Ramos handed Fellhauer a sentence of 120 months to be followed by a lifetime term of supervised release. Additional information was also presented today, including the defendant’s age and health. In handing down the sentence, Judge Ramos stated that the sentence was sufficient but not greater than necessary to deter future criminal conduct and protect the public. Fellhauer will also be ordered to register as a sex offender.
At the time of his guilty plea, Fellhauer admitted to the government’s rendition of facts concerning the offense. Fellhauer came to the attention of law enforcement when a Homeland Security Investigations (HSI) undercover agent downloaded several items of child pornography from a computer that was linked to Fellhauer in October 2010 and April 2011. HSI contacted the Corpus Christi Police Department’s (CCPD) Internet Crimes Against Children Task Force and enlisted their assistance in a joint investigation of the unlawful activity.
On Oct. 6, 2010, an HSI agent downloaded several images of child pornography from an individual later identified as Fellhauer. A federal search warrant was executed by HSI agents and CCPD officers on Fellhauer’s residence in Victoria on April 12, 2011, at which time several electronic media storage devices were seized. Fellhauer, who lived alone and away from children, was not arrested at the time.
A subsequent forensic review of Fellhauer’s media devices by CCPD computer forensics experts revealed more than 12,000 images and 350 videos of child pornography, resulting in a protracted time consuming analysis. Fellhauer was arrested pursuant to a federal criminal indictment in January 2012. At the time of his arrest, Fellhauer was actively downloading child pornography. Fellhauer admitted to acquiring child pornography from the Internet and to having an interest in child pornography for more than 15 years.
Fellhauer has been in custody since his January 2012 arrest where he will remain pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
This case, prosecuted by Assistant United States Attorney Lance Duke, 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."
Valdez Couple sentenced for long running tax evasion schemeRead the Press Release
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced today that Gary and Marladeen Jokela of Valdez, Alaska, were sentenced for willfully evading Gary Jokela’s tax liabilities for more than a decade. U.S. District Court Judge H. Russel Holland sentenced Gary Jokela to one year in federal prison. Marladeen Jokela was sentenced to six months in federal prison, followed by six months of home confinement.
According to court filings, the Jokelas last filed a tax return in 1984. Meanwhile, Gary Jokela had outstanding tax liabilities that had not been paid since at least 1998. The Internal Revenue Service previously assessed taxes against Mr. Jokela and sent him numerous notices that the Service intended to levy his wages and bank accounts. When the Jokelas received these notices, both Gary and Marladeen began cashing Gary’s paychecks rather than depositing them to their joint bank account. In total, Gary cashed more than $170,000 of his paychecks.
Around the same time, Mrs. Jokela opened a separate bank account in her own name. Neither Gary Jokela's name nor his social security number were associated with this new account. During several of the years at issue in the case, Mrs. Jokela deposited more than $112,000 into her separate account.
The Jokelas also made sure that no taxes were withheld from Gary’s wages. In 2004, Gary submitted an IRS Form W-4 on which he claimed to be “exempt” from federal income tax withholding. When the IRS subsequently attempted to levy Gary’s wages directly from his employer, both of the Jokelas convinced the office’s bookkeeper not to honor the IRS notices.
The Jokelas admitted that they consistently failed to make any payments to the IRS between 1998 and 2008, they continually spent income on other personal items, including a motor home, a timeshare, and vacations. Between 2002 and 2008, the couple made more than $150,000 in credit card purchases, including vacations to Mexico and Hawaii; more than $30,000 on a motor home; and of more than $35,000 on other personal vehicles. Likewise, between 1998 and 2008, the Jokelas made $15,000 in payments on a timeshare in Florida.In addition to their prison sentences, the judge ordered the Jokelas to pay restitution in the amount of $51,889, with the express understanding that the IRS will seek interest and penalties on top of that amount. Judge Holland described the Jokelas’ conduct as “a blatant case of tax evasion” and said that their actions showed a “total lack of respect” for their obligations as citizens, despite their apparent willingness to accept both direct and indirect government benefits. The judge warned that tax evasion schemes that seem “too good to be true” almost always are.
The case was investigated by the Internal Revenue Service–Criminal Investigation, and is being jointly prosecuted by Assistant United States Attorneys Thomas C. Bradley and Stephanie C. Courter of the United States Attorney’s Office for the District of Alaska.
Utah Man and Nevada Woman Charged with Tax ConspiracyRead the Press Release
A federal grand jury in Salt Lake City returned an indictment Wednesday afternoon charging Gerrit Timmerman III, 70, of Midvale, Utah, and Carol Sing, 73, of Henderson, Nevada, with one count of conspiracy to defraud the United States. The indictment was announced by Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division and U.S. Attorney for the District of Utah David B. Barlow.
According to the indictment, from April 23, 2004, through March 5, 2007, Timmerman and Sing conspired to defraud the United States by marketing corporations sole as a part of a scheme to evade the assessment and payment of federal income taxes. Timmerman and Sing falsely told their clients that so-called “corporations sole” were exempt from United States income tax laws, had no obligation to file tax returns, and had no obligation to apply for tax exempt status. They further claimed that individuals could render their own income non-taxable by assigning it to the corporation sole, could draw a tax-free stipend from their corporation sole, and could render property immune from Internal Revenue Service (IRS) collection activity by transferring property to the corporation sole. During the life of the conspiracy, Timmerman and Sing were responsible for the creation of approximately 90 corporations sole; at the time their corporation soles were created, these clients had outstanding federal income tax assessments totaling at least $5,000,000.
An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Timmerman and Sing each face a maximum of five years in prison and a fine of up to $250,000.
The case is being investigated by IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Michael Romano and Dennis Kihm.
U.S. Attorney’S Office Reaches Settlement with Mills College over Compliance with Americans with Disabilities ActRead the Press Release
SAN FRANCISCO – Mills College, a liberal arts college for women in Oakland, Calif., entered an agreement with the United States to bring its campus into full compliance with Title III of the Americans with Disabilities Act, United States Attorney Melinda Haag announced.
The settlement agreement resolves an investigation and compliance review of barriers to access by individuals with disabilities in buildings throughout the campus. Mills College fully cooperated in the review. The College agreed to remove all architectural barriers in its existing facilities, and to undertake alterations and construct new facilities so that they are readily accessible to and usable by people with disabilities.
“The ADA requires that people with disabilities have full access to public and private institutions,” U.S. Attorney Haag said . “We commend Mills College for its cooperation and commitment to providing people with disabilities unfettered access to its facilities. This agreement guarantees students and visitors with disabilities such access for years to come.”
Under the settlement, Mills is required to remedy approximately 260 separate violations that were revealed in a campus-wide survey conducted in March 2010. Mills is required to complete the majority of the remedial work by the end of 2014, while it will have a longer time to complete others. Remedial measures required under the agreement include installing or moving grab bars, towel dispensers, and signs; adjusting the force required to open doors; installing or adjusting the slope of ramps; installing accessible toilet stalls, and adjusting the height and center lines of existing toilet seats; adjusting the height of equipment and lab counters; adjusting the height of drinking fountains; making lecture halls, auditoriums, and the gymnasium fully wheelchair accessible; installing handrails; and installing more van-accessible parking.
Assistant U.S. Attorney Steven J. Saltiel handled the matter on behalf of the U.S. Attorney’s Office, together with Program Architect Diane Perry from the U.S. Department of Justice, Civil Rights Division, Disability Rights Section.
(Mills College Signed Settlement Agreement )
Two Pecos, N.M., Men Plead Guilty to Unlawful Logging in the Santa Fe National ForestRead the Press Release
Both Sentenced to Probation and Ordered to Pay $1,495.20 in Restitution.
ALBUQUERQUE – This morning in federal court, Kevin J. Quintana, 27, and Kevin C. Vigil, 28, both of Pecos, N.M., each entered a guilty plea to the misdemeanor offense of unlawfully cutting and destroying trees growing on federal public lands. The guilty pleas were announced by U.S. Attorney Kenneth J. Gonzales and Aban Lucero, Regional Patrol Commander of Law Enforcement and Investigations of the Southwestern Region of the U.S. Forest Service.
According to court records, Quintana and Vigil were arrested on Nov. 3, 2012, after a U.S. Forest Service Officer observed them cutting and loading timber onto a truck that was parked on National Forest Systems Lands (NFS lands) in the Santa Fe National Forest in San Miguel County, N.M. At the time, both Quintana and Vigil claimed that the timber was harvested on private property with permission from the landowner. Shortly thereafter, Vigil admitted that a large amount of the timber that was already loaded on the truck was harvested on NFS lands.
During today’s plea hearings, Quintana and Vigil each pled guilty to cutting and harvesting 15 Engelmann Spruce pine trees from the Santa Fe National Forest on Nov. 3, 2012. Each admitted entering the Santa Fe National Forest in the Pecos/Las Vegas Ranger District and cutting down approximately 15 standing trees. They also admitted not having a proper permit for cutting and harvesting those trees.
Quintana and Vigil each was sentenced to a year of probation and ordered to pay $1,495.20 in restitution to the U.S. Forest Service which will be used for reforestation projects and community awareness to deter future timber crimes. Quintana and Vigil also were required to forfeit the chainsaws they used to unlawfully cut and harvest the trees.
The case was prosecuted by Assistant U.S. Attorney William J. Pflugrath, and was investigated by the U.S. Forest Service, Law Enforcement & Investigations. It is the mission of the U.S. Forest Service to sustain the health, diversity, and productivity of the nation’s forests and grasslands to meet the needs of present and future generations. The agency manages 193 million acres of public land, provides assistance to state and private landowners, and maintains the largest forestry research organization in the world.
Two Conspirators Each Sentenced to 32 Years in Prison for Six Armed Robberies of Dunbar Armored VehiclesRead the Press Release
Purchased “Throw Away” Cars and Used Shotguns, Rifles and Handguns to Steal $765,000 and Six Dunbar Employee HandgunsPurchased “Throw Away” Cars and Used Shotguns, Rifles and Handguns to Steal $765,000 and Six Dunbar Employee Handguns
Baltimore, Maryland - U.S. District Judge Marvin J. Garbis sentenced Erick Wilson, age 28, of Columbia, Maryland, today to 32 years and a day in prison, followed by five years of supervised release, for robbery and gun charges arising from a scheme to rob armored car employees who were transporting large amounts of cash. Judge Garbis sentenced David Marquise Howard, age 29, of Baltimore, yesterday also to 32 years and a day in prison, followed by five years of supervised release, for his participation in the scheme.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Chief J. Thomas Manger of the Montgomery County Police Department; Howard County Police Chief William McMahon; Howard County State’s Attorney Dario Broccolino; and Montgomery County State’s Attorney John McCarthy.
According to their guilty pleas, on six occasions Howard, Wilson and other co-conspirators robbed employees of Dunbar Armored at gunpoint, in each instance stealing cash and a handgun from a Dunbar employee. The first robbery occurred in Washington, D.C. on May 22, 2008, and another robbery took place on December 27, 2010, in Ellicott City, Maryland. Four of the robberies took place in Silver Spring, Maryland, on April 29 and December 23, 2009, May 17, 2010 and April 4, 2011.
Howard and Wilson wore disguises and purchased “throw-away” cars to commit the robberies.
Additionally, Howard, Wilson and their co-conspirators: used disposable cell phones to communicate during the robberies; arranged for vehicles and drivers, including Wilson’s mother Regina McCullom, and Howard’s girlfriend Gloria Martino, to be near the robberies in order to quickly flee and help transport the stolen guns and money; and on several occasions rented hotel rooms on the days of the robberies where they met and divided the stolen cash and arranged for the disposal of the stolen
guns.
Howard hid some of the stolen cash from the April 4, 2011 robbery in a storage unit in Pennsylvania. After his arrest for the Montgomery County robberies in May 2011, Howard removed $2,000 in stolen new $20 bills from his person and took law enforcement to the corner of Eldorado Avenue and Carleview Road in Baltimore where he had buried a bag containing $10,000 of stolen money, along with a disposable cell phone box.
In the six robberies, Howard and Wilson stole a total of approximately $765,000.
Regina McCullom, a/k/a Regina Wilson, age 49, of Laurel, Maryland, and Gloria Martino, a/k/a Netty, aged 29, of Silver Spring, previously pleaded guilty to their roles in the armored car robberies and are scheduled to be sentenced on January 25 and 30, 2013, respectively.
United States Attorney Rod J. Rosenstein praised the FBI, Montgomery County Police Department, Howard County Police Department; Howard County State’s Attorney’s Office and Montgomery County State’s Attorney’s Office for their work in the investigation and prosecution. Mr. Rosenstein thanked Assistant United States Attorneys Mark Crooks and Paul Budlow, who prosecuted the case.
Two Conneaut Residents Sentenced for Trafficking in Counterfeit MerchandiseRead the Press Release
U.S. District Judge James S. Gwin sentenced Trang Doan Hoang, 37, and Quoc-Thang Ngo Mai, 39, both of Conneaut, Ohio, in connection with their recent conviction for trafficking in counterfeit merchandise, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Hoang was sentenced to four months in the custody of the Bureau of Prisons, to be followed by two years of supervised release, the first four months of which must be served in home confinement with electronic monitoring.
Mai was sentenced to two years probation, the first six months of which must be served in home confinement with electronic monitoring. The counterfeit merchandise will be forfeited to the United States and destroyed.
On September 13, 2012, a federal grand jury in Cleveland returned an indictment charging Hoang and Mai with one count each of trafficking in counterfeit merchandise. Hoang and Mai each entered guilty pleas to the charge on November 6, 2012.
The indictment charged that between on or about December 21, 2011, and on or about February 14, 2012, Hoang and Mai intentionally trafficked and attempted to traffic in approximately 146 designer handbags, 47 designer wallets and 16 counterfeit Rolex watches which contained counterfeit marks, logos, labels, hang tags, patches, stickers, emblems, holograms and packaging. The marks on the merchandise were identical to and substantially indistinguishable from marks used on genuine merchandise, and were in use and registered for such goods on the principle register of the United States Patent and Trademark Office. Also, the indictment charged that the use of such counterfeit and spurious marks was likely to cause confusion, mistake or to deceive, according to the indictment.
This case was prosecuted by Assistant U.S. Attorney Robert W. Kern, Cybercrime Coordinator for the Cleveland U.S. Attorney’s Office, following an investigation by the Cleveland Office of the Department of Homeland Security, Office Immigration and Customs Enforcement.
Three Plead Guilty to Defrauding the Veterans AdministrationRead the Press Release
RONALD BELL, age 41, of Gretna; REGINA DAVIS, age 63, of New Orleans; and YODONNALISA EVANS, age 45, of New Orleans pled guilty today before the U. S. District Court Judge Martin L.C. Feldman to a one-count Bill of Information for conspiracy to commit health care fraud, announced U.S. Attorney Dana Boente.
According to court documents, the defendants were employed by the Veterans Health Administration at the New Orleans VA Medical Center. BELL was employed as a Program Manager. His duties included supervision of employees responsible for the authorization and coordination of payment of care provided to veterans in the community at VA expense as well as the coordination of consultations ordered by VA providers. DAVIS was employed as a Program Support Assistant. Her duties included entering authorizations in conjunction with case management referrals for inpatient and outpatient fee basis programs, and entering vendors’ activity for various health care programs. EVANS was employed as a Clerk/Secretary to the Supervisor of Medical Administration Service, a Fee Clerk, and a Payroll Clerk. As a Clerk/Secretary, she was responsible for preparing correspondence, tracking action items, time keeping and various other administrative duties. As a Fee Clerk, she was responsible for verifying days of care on invoice, ensuring funds were obligated to pay invoices, and various other duties. As a Payroll Clerk, she was responsible to verify payroll output and release payroll, handle garnishments, research pay information, and handle W-2 corrections and wage verifications.
Between January 2001 and December 2008, the defendants devised a scheme to defraud the VA by creating false companies and billing patient files for fraudulent services. Defendants DAVIS and BELL created false companies called Davis Health Care Consulting, LLC and Caring Hearts Healthcare. BELL then obtained the identities of veterans registered with the Veterans Administration and submitted fraudulent bills from Davis Health Care Consulting, LLC and Caring Hearts Healthcare for health care services falsely claimed to have been provided to the veterans whose identities he had obtained. BELL then arranged for the payments associated with the fraudulently submitted bills to be sent to the custody of defendant DAVIS. Once DAVIS received the payments, she split the money with BELL. In total, DAVIS and BELL fraudulently obtained approximately $203,007.91 from the Veterans Administration.
Defendants EVANS and BELL created a false company called C&E Rehabilitation Clinic. BELL then obtained the identities of veterans registered with the Veterans Administration and submitted fraudulent bills from C&E Rehabilitation Clinic for health care services falsely claimed to have been provided to the veterans whose identities he had obtained. BELL then arranged for the payments associated with the fraudulently submitted bills to be sent to the custody of EVANS. Once EVANS received the payments, she split the money with BELL. In total, EVANS and BELL fraudulently obtained approximately $360,978.56 from the Veterans Administration.
The defendants face a maximum term of imprisonment of five (5) years, a fine of $250,000 and two (2) years of supervised release following any term of imprisonment. Sentencing has been scheduled for May 15, 2013.
The case was investigated by Veterans Administration, Office of Inspector General and prosecuted by Assistant U.S. Attorney G. Dall Kammer.
(Download Factual Basis )
Three Chicago Men Indicted in Series of Violent Robberies of Retail Stores and Businesses Last Year in ChicagoRead the Press Release
CHICAGO — Three Chicago men were indicted on federal robbery conspiracy and other charges relating to series of a dozen armed hold-ups of retail stores and businesses last year in Chicago. In all, tens of thousands of dollars were taken in 12 robberies on the city’s northwest side between January and October 2012.
The defendants, ROBERT L. BERRIOS, 45; JULIO RODRIGUEZ, 31; and DAVID REVIS, 32, all of Chicago, were charged in a 19-count indictment that was returned yesterday by a federal grand jury. The charges were announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Chicago Police Department assisted in the investigation.
The defendants, ROBERT L. BERRIOS, 45; JULIO RODRIGUEZ, 31; and DAVID REVIS, 32, all of Chicago, were charged in a 19-count indictment that was returned yesterday by a federal grand jury. The charges were announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Chicago Police Department assisted in the investigation.
No date has been set yet for the defendants to be arraigned in U.S. District Court.
Berrios, also known as “Chazzo,” and Revis, aka “Red,” were arrested together on Nov. 6, 2012, as they were about to rob a currency exchange, according to court documents. Rodriguez, aka “Jelly,” was arrested on Dec. 17, 2012. All three were ordered detained in federal custody without bond.
As part of the conspiracy, the defendants allegedly identified commercial establishments as targets, obtained intelligence on the businesses before striking, and brandished firearms during the robberies. They allegedly agreed to, and did, physically restrain some employees of the victim businesses with zip ties, and concealed their identity by wearing masks and gloves.
The indictment seeks forfeiture of a .22 caliber semi-automatic handgun and 94 rounds of .22 caliber long rifle ammunition that were seized.
The indictment alleges the following robberies in which Berrios was charged alone or together with one of the co-defendants, as noted:
Jan 23, 2012 — Walgreens, 5140 W. Diversey; July 1, 2012 — Walgreens, 5935 W. Addison; July 28, 2012 — a currency exchange located at 2753 N. Ashland; Aug. 15, 2012 — a currency exchange located at 2814 N. Milwaukee; Berrios and Revis; Sept. 2, 2012 — a cellular telephone store located at 5355 W. Diversey; Sept. 19, 2012 — a cellular telephone store located at 1552 W. Chicago; Berriois and Rodriguez; Sept. 28, 2012 — a cellular telephone store located at 1958 W. Irving Park; Oct. 2, 2012 — a cellular telephone store located at 4000 W. Fullerton; Berrios and Revis; Oct. 13, 2012 — a cellular telephone store located at 3951 N. Kimball; Berrios and Rodriguez; Oct. 16, 2012 — a cellular telephone store located at 3200 W. Armitage; Berrios and Rodriguez; Oct. 22, 2012 — a cellular telephone store located at 3935 W. Belmont; Berrios and Rodriguez; and
Oct. 27, 2012 — a cellular telephone store located at 5355 W. Diversey.The robbery conspiracy count and each count of intestate robbery carry a maximum sentence of 20 years in prison. The felon-in-possession of a firearm or ammunition counts carry a maximum sentence of 10 years in prison, and brandishing a firearm during a violent crime carries a mandatory consecutive term of 7 years and a maximum of life in prison, and each count carries a maximum fine of $250,000. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The Government is being represented in court by Assistant U.S. Attorney Angel Krull.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Indictment
Three Charged with Operating Online Counterfeit Credit Card Retailer Responsible for Estimated $34.5 Million in FraudRead the Press Release
Fakeplastic.net Taken Over By Federal Law Enforcement, Ongoing Investigation Has Led to 11 Additional Arrests
NEWARK, N.J. – Three men who allegedly ran a one-stop online shop selling counterfeit credit cards and holographic overlays, to be used by criminals to make fake identifications, face federal charges in an ongoing investigation that has already resulted in 11 additional arrests, including a customer facing federal charges.
New Jersey U.S. Attorney Paul J. Fishman and U.S. Attorney Anne M. Tompkins for the Western District of North Carolina announced the charges today.
Sean Roberson, 39, of Palm Bay, Fla., who allegedly ran the site, is charged in an amended complaint, unsealed today in the District of New Jersey, with conspiracy to commit wire fraud; conspiracy to traffic in counterfeit goods or services; and conspiracy to commit fraud and related activity in connection with authentication features. A superseding indictment returned today in the Western District of North Carolina charges Roberson’s two conspirators, Vinicio Gonzalez, 30, of Melbourne, Fla., and Hugo Rebaza, 31, of Palm Bay, Fla. with conspiracy to traffic in counterfeit goods and conspiracy to commit mail fraud, wire fraud and bank fraud. The superseding indictment also charges a customer of the website, Nashancy Johnny Colbert, 27, of Charlotte, N.C., with one count of conspiracy to commit mail fraud, wire fraud and bank fraud. All four men are expected to appear this week in U.S. District Courts in Newark and Charlotte to face the charges. Roberson is expected to appear in Newark federal court this afternoon before U.S. Magistrate Judge Mark Falk. The North Carolina court dates have not yet been set.
The FBI and U.S. Postal Inspection Service (USPIS) assumed control of the website, fakeplastic.net, on Dec. 5, 2013, and made more than 30 controlled deliveries of ordered materials – not allowing those materials to leave law enforcement control. Those controlled deliveries have resulted in 11 additional arrests of alleged fakeplastic customers, including Colbert, being handled by federal, state and local prosecutors across the United States.
“According to the complaint, Sean Roberson and his conspirators ran a large-scale, online operation filling custom orders for counterfeit cards,” said U.S. Attorney Fishman. “This made-to-measure service provided the last link in the chain necessary for criminals to make money from stolen credit card numbers and identities.”
U.S. Attorney Tompkins stated, “This ring of computer criminals ran an online one-stop shop where counterfeit credit cards were a mouse click away. As consumer fraud becomes more sophisticated, law enforcement and prosecutors across the country are joining forces to pull aside the veil of cyberspace anonymity and take down criminal enterprises that pilfer the identities of innocent victims for personal gain.”
“This investigation is yet another example of the unrelenting pursuit of cyber criminals by federal law enforcement,” said Newark FBI Special Agent in Charge Aaron T. Ford. “The FBI and its law enforcement partners will continue to identify and investigate individuals that try to hide in the supposed anonymity of Internet crime organizations in order to steal from innocent parties.”
“The defendants in this alleged criminal enterprise used convenience, greed and their technical ability to commit a massive fraud,” USPIS Inspector in Charge Maria L. Kelokates. “Their undoing came when they underestimated the vigilance of Postal Inspectors and their law enforcement partners to bring to justice anyone who uses the U.S. Mail for illegal activities.”
According to the amended complaint unsealed today in Newark federal court and charging documents filed in the Western District of North Carolina:
The FBI and the USPIS have been investigating the online retail shop, fakeplastic.net, since January 2013. The site specialized in selling high-quality, custom-made counterfeit credit and debit cards (collectively, “payment cards”) as well as holographic overlays used to create fake driver’s licenses.
Roberson began selling counterfeit cards and related items as early as April 2011 and launched the fakeplastic website in June 2012. Roberson owned and operated the site with the assistance of Gonzalez and Rebaza. Since April 2011, Roberson and his conspirators fulfilled orders for approximately 69,000 counterfeit credit cards – both embossed and unembossed – more than 35,000 holographic stickers used to make counterfeit cards appear more legitimate and more than 30,000 state identification card holographic overlays. The orders – more than 3,600 parcels – were shipped through the U.S. mail.
Gonzalez was primarily responsible for manufacturing the counterfeit payment cards, packaging the contraband for mailing and placing U.S. Express Mail envelopes in the mail for delivery to the fakeplastic customers. The conspirators used a storage facility in Florida to store supplies and to manufacture the counterfeit payment cards and Gonzalez frequently visited the storage unit to create the custom-embossed cards and to prepare mail packages. Law enforcement arrested Gonzalez on Dec. 4, 2013, while he was in the storage space – seizing computers, printers, counterfeit cards, an embosser and other contraband.
Rebaza was a “runner” for the criminal operation, responsible for picking up packages containing criminal proceeds and supplies from a “mail drop” for the fakeplastic website.
Colbert was a members-only customer of the website, who placed and received orders of counterfeit payment cards delivered to him through the mail. Law enforcement executed a search warrant on Jan. 3, 2014, at Colbert’s Charlotte residence seizing, among other things, 41 counterfeit payment cards embossed with Colbert’s name or the names of other individuals. Law enforcement also recovered a discarded U.S. Express Mail envelope sent from the fakeplastic website.
Using a conservative estimate of loss of $500 associated with each counterfeit payment card (derived from the federal sentencing guidelines estimation of loss associated with stolen payment card information), law enforcement estimates the losses associated with just the counterfeit payment cards trafficked by Roberson and his conspirators at more than $34.5 million. Roberson personally made more than $1.7 million from the scheme.
The fakeplastic website was used by various groups of criminals across the country often referred to as “carding” or “cash out” crews. These crews buy stolen payment card numbers and related information – referred to as “track data” or “dumps” – which typically appear on the magnetic stripe on the back of legitimate payment cards. Illegal vendors of that information usually get it through hacking or skimming operations involving the installation of specialized equipment at ATM locations or point-of-sale terminals. The stolen data is ultimately put on a blank card and used to make unauthorized transactions.
More sophisticated cash out operations use custom-made counterfeit payment cards embossed with the same account numbers that have been encoded on the back of the card, and often acquire fake identification cards in order to reduce the likelihood of detection from law enforcement.
The criminal underground has evolved from fractured, regional operations to an Internet-based market where buyers and sellers across the globe can advertise, purchase and transmit stolen track data. The fakeplastic website brought the physical tools needed by cash out operations to the world of e-commerce, as it eliminated the need for crews to purchase expensive hardware.
By December 2013, the site had more than 400 members. Members with access to the fakeplastic website and seeking to purchase counterfeit payment cards could browse the website’s available counterfeit card templates. Members could then choose whether to input specific information to be embossed on the cards and whether they wanted additional authentication features – such as holographic stickers.
At one time the website accepted Liberty Reserve online currency, but shortly after federal charges against Liberty Reserve were made public in the Southern District of New York in May 2013, the fakeplastic website stopped accepting that currency and began accepting Bitcoin, a cryptographic-based digital currency. As set forth on the site’s “news” section, Bitcoin was viewed as a “safe” and “anonymous” method of payment for contraband.
The maximum potential penalties for each count are as follows:
DefendantCharge
Maximum Penalty
Conspiracy to commit wire fraud
30 years; $1 million fine or twice the gain or loss from the offense
Gonzalez
Rebaza
ColbertConspiracy to commit mail fraud, wire fraud and bank fraud
30 years; $1 million fine or twice the gain or loss from the offense
Roberson
Gonzalez
RebazaConspiracy to traffic in counterfeit goods or services
10 years; $2 million fine or twice the gain or loss from the offense
Roberson
Conspiracy to commit fraud and related activity in connection with authentication features
20 years; $250,000 fine or twice the gain or loss from the offense
U.S. Attorneys Fishman and Tompkins credited special agents of the FBI, under the direction of Special Agent in Charge Ford in Newark; and inspectors of the USPIS, under the direction of Inspector in Charge Maria L. Kelokates in Newark and Inspector in Charge Keith Fixel in Charlotte, for the ongoing investigation. The Computer Crimes and Intellectual Property Section (CCIPS) of the Justice Department’s Criminal Division is a partner in the prosecution. The U.S. Attorneys also thanked the Charlotte Division of the U.S. Secret Service and Rutherfordton, N.C., Police Department for their vital roles.
The government is represented in the District of New Jersey by Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section and Assistant U.S. Attorney Andrew Kogan, both of the office’s Economic Crimes Unit, and Barbara Ward of the office’s Asset Forfeiture and money laundering unit; in the Western District of North Carolina by Assistant U.S. Attorney Tom O’Malley and Ben Bain-Creed; and in Washington by CCIPs Trial Attorney Evan Williams.
The charges and allegations contained in the various charging instruments are merely accusations and the defendants are considered innocent unless and until proven guilty.
14-025Defense counsel: Sean Roberson: Assistant Federal Public Defender Patrick McMahon, Esq.
Hugo Rebaza: Jose Rodriguez Esq., Orlando, Fla.
Vinicio Gonzalez: Christopher C. Fialko Esq., Charlotte; Ernest Leo Chang Esq., Melbourne, Fla.
Nashancy Colbert: Laura M. Cobb, James Bradley Smith, Esqs., CharlotteRoberson, Sean Complaint
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
Exhibit I
Exhibit J
Exhibit K
Exhibit L
Exhibit M
Exhibit N
Exhibit OThree Charged with Operating Online Counterfeit Credit Card Retailer Responsible for Estimated $34.5 in FraudRead the Press Release
Fakeplastic.net Taken Over By Federal Law Enforcement, Ongoing Investigation Has Led To 11 Additional Arrests
CHARLOTTE, N.C. – Three men who allegedly ran a one-stop online shop selling counterfeit credit cards and holographic overlays, to be used by criminals to make fake identifications, face federal charges in an ongoing investigation that has already resulted in 11 additional arrests, including a customer facing federal charges.
U.S. Attorney Anne M. Tompkins for the Western District of North Carolina and New Jersey U.S. Attorney Paul J. Fishman announced the charges today.
Sean Roberson, 39, of Palm Bay, Fla., who allegedly ran the site, is charged in an amended complaint, unsealed today in the District of New Jersey, with conspiracy to commit wire fraud; conspiracy to traffic in counterfeit goods or services; and conspiracy to commit fraud and related activity in connection with authentication features. A superseding indictment returned today in the Western District of North Carolina charges Roberson’s two conspirators, Vinicio Gonzalez, 30, of Melbourne, Fla., and Hugo Rebaza, 31, of Palm Bay, Fla. with conspiracy to traffic in counterfeit goods and conspiracy to commit mail fraud, wire fraud and bank fraud. The superseding indictment also charges a customer of the website, Nashancy Johnny Colbert, 27, of Charlotte, N.C., with one count of conspiracy to commit mail fraud, wire fraud and bank fraud. All four men are expected to appear this week in U.S. District Courts in Newark and Charlotte to face the charges. Roberson is expected to appear in Newark federal court this afternoon before U.S. Magistrate Judge Mark Falk. The North Carolina court dates have not yet been set.
U.S. Postal Inspection Service (USPIS) and the FBI assumed control of the website, fakeplastic.net, on Dec. 5, 2013, and made more than 30 controlled deliveries of ordered materials – not allowing those materials to leave law enforcement control. Those controlled deliveries have resulted in 11 additional arrests of alleged fakeplastic customers, including Colbert, being handled by federal, state and local prosecutors across the United States.
U.S. Attorney Tompkins stated, “This ring of computer criminals ran an online one-stop shop where counterfeit credit cards were a mouse click away. As consumer fraud becomes more sophisticated, law enforcement and prosecutors across the country are joining forces to pull aside the veil of cyberspace anonymity and take down criminal enterprises that pilfer the identities of innocent victims for personal gain.”
“According to the complaint, Sean Roberson and his conspirators ran a large-scale, online operation filling custom orders for counterfeit cards,” said U.S. Attorney Fishman. “This made-to-measure service provided the last link in the chain necessary for criminals to make money from stolen credit card numbers and identities.”
Inspector in Charge Keith Fixel of USPIS in Charlotte stated, “Protecting the integrity of the nation’s mail system is a top priority for the Postal Inspection Service. Even though these defendants went to great lengths to avoid detection, their scheme was uncovered by Postal Inspectors committed to enforcing the laws that protect the mail from illegal use and bringing to justice those who attempt to compromise the public’s trust in the mail.
“This investigation is yet another example of the unrelenting pursuit of cyber criminals by federal law enforcement,” said Newark FBI Special Agent in Charge Aaron T. Ford. “The FBI and its law enforcement partners will continue to identify and investigate individuals that try to hide in the supposed anonymity of Internet crime organizations in order to steal from innocent parties.”
According to the amended complaint unsealed today in Newark federal court and charging documents filed in the Western District of North Carolina:
USPIS and the FBI, assisted by the U.S. Secret Service, have been investigating the online retail shop, fakeplastic.net, since January 2013. The site specialized in selling high-quality, custom-made counterfeit credit and debit cards (collectively, “payment cards”) as well as holographic overlays used to create fake driver’s licenses.
Roberson began selling counterfeit cards and related items as early as April 2011 and launched the fakeplastic website in June 2012. Roberson owned and operated the site with the assistance of Gonzalez and Rebaza. Since April 2011, Roberson and his conspirators fulfilled orders for approximately 69,000 counterfeit credit cards – both embossed and unembossed – more than 35,000 holographic stickers used to make counterfeit cards appear more legitimate and more than 30,000 state identification card holographic overlays. The orders – more than 3,600 parcels – were shipped through the U.S. mail.
Gonzalez was primarily responsible for manufacturing the counterfeit payment cards, packaging the contraband for mailing and placing U.S. Express Mail envelopes in the mail for delivery to the fakeplastic customers. The conspirators used a storage facility in Florida to store supplies and to manufacture the counterfeit payment cards and Gonzalez frequently visited the storage unit to create the custom-embossed cards and to prepare mail packages. Law enforcement arrested Gonzalez on Dec. 4, 2013, while he was in the storage space – seizing computers, printers, counterfeit cards, an embosser and other contraband.
Rebaza was a “runner” for the criminal operation, responsible for picking up packages containing criminal proceeds and supplies from a “mail drop” for the fakeplastic website.
Colbert was a members-only customer of the website, who placed and received orders of counterfeit payment cards delivered to him through the mail. Law enforcement executed a search warrant on Jan. 3, 2014, at Colbert’s Charlotte residence seizing, among other things, 41 counterfeit payment cards embossed with Colbert’s name or the names of other individuals. Law enforcement also recovered a discarded U.S. Express Mail envelope sent from the fakeplastic website.
Using a conservative estimate of loss of $500 associated with each counterfeit payment card (derived from the federal sentencing guidelines estimation of loss associated with stolen payment card information), law enforcement estimates the losses associated with just the counterfeit payment cards trafficked by Roberson and his conspirators at more than $34.5 million. Roberson personally made more than $1.7 million from the scheme.
The fakeplastic website was used by various groups of criminals across the country often referred to as “carding” or “cash out” crews. These crews buy stolen payment card numbers and related information – referred to as “track data” or “dumps” – which typically appear on the magnetic stripe on the back of legitimate payment cards. Illegal vendors of that information usually get it through hacking or skimming operations involving the installation of specialized equipment at ATM locations or point-of-sale terminals. The stolen data is ultimately put on a blank card and used to make unauthorized transactions.
More sophisticated cash out operations use custom-made counterfeit payment cards embossed with the same account numbers that have been encoded on the back of the card, and often acquire fake identification cards in order to reduce the likelihood of detection from law enforcement.
The criminal underground has evolved from fractured, regional operations to an Internet-based market where buyers and sellers across the globe can advertise, purchase and transmit stolen track data. The fakeplastic website brought the physical tools needed by cash out operations to the world of e-commerce, as it eliminated the need for crews to purchase expensive hardware.
By December 2013, the site had more than 400 members. Members with access to the fakeplastic website and seeking to purchase counterfeit payment cards could browse the website’s available counterfeit card templates. Members could then choose whether to input specific information to be embossed on the cards and whether they wanted additional authentication features – such as holographic stickers.
At one time the website accepted Liberty Reserve online currency, but shortly after federal charges against Liberty Reserve were made public in the Southern District of New York in May 2013, the fakeplastic website stopped accepting that currency and began accepting Bitcoin, a cryptographic-based digital currency. As set forth on the site’s “news” section, Bitcoin was viewed as a “safe” and “anonymous” method of payment for contraband.
The charges and maximum potential penalties for each count are as follows:
Roberson: charged with conspiracy to commit wire fraud; penalty: 30 years and $1 million fine or twice the gain or loss from the offense.
Gonzalez, Rebaza and Colbert: charged with conspiracy to commit mail fraud, wire fraud and bank fraud; penalty: 30 years and $1 million fine or twice the gain or loss from the offense.
Roberson, Gonzalez and Rebaza: charged with conspiracy to traffic in counterfeit goods or services; penalty: 10 years and $2 million fine or twice the gain or loss from the offense.
Roberson: charged with conspiracy to commit fraud and related activity in connection with authentication features; penalty: 20 years and $250,000 fine or twice the gain or loss from the offense
U.S. Attorneys Tompkins and Fishman credited inspectors of USPIS, under the direction of Inspector in Charge Keith Fixel in Charlotte and Maria L. Kelokates in Newark; special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and special agents of the Charlotte Division of the U.S. Secret Service under the direction of Special Agent in Charge Russell F. Nelson for the ongoing investigation. The Computer Crimes and Intellectual Property Section of the Justice Department’s Criminal Division is a partner in the prosecution.
U.S. Attorney Tompkins also thanked Chief Kevin Lovelace and the Rutherfordton, N.C. Police Department for the department’s vital role in this case. Chief Lovelace stated, “I would like to commend the efforts of all of our officers involved with this case in ensuring that the information they obtained was shared with the appropriate agencies. Communication between law enforcement agencies plays a vital role in resolving many cases.”
The government is represented in the Western District of North Carolina by Assistant U.S. Attorneys Tom O’Malley and Ben Bain-Creed and in the District of New Jersey by Assistant U.S. Attorney Andrew S. Pak of the Computer Hacking and Intellectual Property Section and Assistant U.S. Attorney Andrew Kogan, both of the office’s Economic Crimes Unit, and Barbara Ward of the office’s Asset Forfeiture and money laundering unit; and in Washington by CCIPs Trial Attorney Evan Williams.
The charges and allegations contained in the various charging instruments are merely accusations and the defendants are considered innocent unless and until proven guilty.
The charges and allegations contained in the various charging instruments are merely accusations and the defendants are considered innocent unless and until proven guilty.
Gonzalez et al Superseding Indictment
The Colbert Complaint
The Roberson Complaint
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
Exhibit I
Exhibit J
Exhibit K
Exhibit L
Exhibit M
Exhibit N
Exhibit O
Three Alleged International Cyber Criminals Responsible for Creating and Distributing Virus That Infected over One Million Computers and Caused Tens of Millions of Dollars in Losses Charged in Manhattan Federal CourtRead the Press Release
NASA Computers Among the 40,000 U.S. Computers Infected With Gozi Virus
Preet Bharara, the United States Attorney for the Southern District of New York, Lanny A. Breuer, the Assistant Attorney General of the U.S. Department of Justice’s Criminal Division, and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of Indictments against three individuals who played critical roles in creating and distributing the Gozi Virus, one of the most financially destructive computer viruses in history. The Gozi Virus infected over one million computers globally and caused tens of millions of dollars in losses. NIKITA KUZMIN, a Russian national who created the Gozi Virus, was arrested in the U.S. in November 2010 and pled guilty before U.S. District Judge Leonard B. Sand to various computer intrusion and fraud charges in May 2011. DENISS CALOVSKIS, a/k/a “Miami,” a Latvian national who allegedly wrote some of the computer code that made the Gozi Virus so effective, was arrested in Latvia in November 2012. MIHAI IONUT PAUNESCU, a/k/a “Virus,” a Romanian national who allegedly ran a “bulletproof hosting” service that enabled cyber criminals to distribute the Gozi Virus, the Zeus Trojan and other notorious malware, and conduct other sophisticated cyber crimes, was arrested in Romania in December 2012.
Manhattan U.S. Attorney Preet Bharara said: “In an information-age update on Willie Sutton, these men allegedly ran a modern-day bank robbery ring, and like Sutton, they targeted banks because that’s where the money still is. But as we have seen with increasing frequency, cyber criminals’ bank heists require neither a mask nor a gun, just a clever program and an Internet connection. This case should serve as a wake-up call to banks and consumers alike, because cybercrime remains one of the greatest threats we face, and it is not going away any time soon.”
FBI Assistant Director-in-Charge George Venizelos said: “This long-term investigation uncovered an alleged international cybercrime ring whose far-reaching schemes infected at least one million computers worldwide and 40,000 in the U.S., and resulted in the theft or loss of tens of millions of dollars. Banking Trojans are to cyber criminals what safe-cracking or acetylene torches are to traditional bank burglars – but far more effective and less detectable. The investigation put an end to the Gozi virus.”
According to the allegations in the Indictments and the Complaint unsealed today in Manhattan federal court:
The Gozi Virus
The Gozi Virus is malicious computer code or “malware” that steals personal bank account information, including usernames and passwords, from the users of affected computers. It was named by private sector information security experts in the U.S. who, in 2007, discovered that previously unrecognized malware was stealing personal bank account information from computers across Europe on a vast scale, while remaining virtually undetectable in the computers it infected. To date, the Gozi Virus has infected over one million victim computers worldwide, among them at least 40,000 computers in the U.S., including computers belonging to the National Aeronautics and Space Administration (“NASA”), as well as computers in Germany, Great Britain, Poland, France, Finland, Italy, Turkey and elsewhere, and it has caused tens of millions of dollars in losses to the individuals, businesses, and government entities whose computers were infected.
The Gozi Virus was distributed to victims’ computers in several different ways. In one method, the virus was disguised as an apparently benign .pdf document which, when opened, secretly installed the Gozi Virus on the victim’s computer. Once installed, the Gozi Virus – which was intentionally designed to be undetectable by anti-virus software – collected data from the infected computer in order to capture personal bank account information including usernames and passwords. That data was then transmitted to various computer servers controlled by the cyber criminals who used the Gozi Virus. These cyber criminals then used the personal bank account information to transfer funds out of the victims’ bank accounts and ultimately into their own personal possession.
The Creation of the Gozi Virus
KUZMIN conceived of the Gozi Virus in 2005 when he created a list of technical specifications for the virus and hired a sophisticated computer programmer (“CC-1”) to write its source code, which is the unique code that enabled the Gozi Virus to operate. Once the Gozi Virus had been coded, KUZMIN began providing it to co-conspirators in exchange for a weekly fee through a business he ran called “76 Service.” Through “76 Service,” KUZMIN made the Gozi Virus available to co-conspirators, allowed them to configure the virus to steal data of their choosing, and stored the stolen data for them. He advertised “76 Service” on one or more Internet forums devoted to cybercrime and other criminal activities. Beginning in 2009, KUZMIN began to sell the Gozi Virus outright to his co-conspirators.
The Refinement of the Gozi Virus
KUZMIN and his co-conspirators regularly paid others to refine, update, and improve the Gozi Virus. For example, CALOVSKIS, a co-conspirator, was hired to develop certain computer code, known as “web injects,” which altered how the webpages of particular banks appeared on infected computers. Specifically, CALOVSKIS’s web injects changed the webpages of banks so that, when a victim used an infected computer to access the webpage, the victim was tricked into divulging additional personal information that cyber criminals would need in order to successfully steal money from the victim’s bank account. One web inject CALOVSKIS designed altered the customer welcome page of a bank so that the victim was prompted to disclose additional personal information – mother’s maiden name, social security number, driver’s license information, and a PIN code – in order to continue accessing the website.
The Gozi Virus and Bulletproof Hosting Services
Bulletproof hosting” services helped cyber criminals distribute the Gozi Virus with little fear of detection by law enforcement. Bulletproof hosts provided cyber criminals using the Gozi Virus with the critical online infrastructure they needed, such as Internet Protocol (“IP”) addresses and computer servers, in a manner designed to enable them to preserve their anonymity.
PAUNESCU operated a “bulletproof host” that helped cyber criminals distribute the Gozi Virus and commit other cyber crimes, such as distributing malware including the “Zeus Trojan” and the “SpyEye Trojan,” initiating and executing distributed denial of service (“DDoS”) attacks, and transmitting spam. PAUNESCU rented servers and IP addresses from legitimate Internet service providers and then in turn rented them to cyber criminals; provided servers that cyber criminals used as command-and-control servers to conduct DDoS attacks; monitored the IP addresses that he controlled to determine if they appeared on a special list of suspicious or untrustworthy IP addresses; and relocated his customers’ data to different networks and IP addresses, including networks and IP addresses in other countries, to avoid being blocked as a result of private security or law enforcement scrutiny.
A chart setting forth the names, ages and residences of the defendants, the charges each defendant faces, and the statutory maximum penalty associated with these charges is attached. Extradition proceedings against CAVLOSKIS in Latvia and PAUNESCU in Romania are ongoing.
The case against PAUNESCU is being prosecuted jointly with the Department of Justice’s Computer Crime and Intellectual Property Section (“CCIPS”), which is overseen by Assistant Attorney General Lanny A. Breuer. Mr. Bharara thanked CCIPS for its important partnership in this matter, and he also thanked the Department of Justice’s Office of International Affairs. Mr. Bharara praised the FBI for its outstanding work in the investigation, which he noted is ongoing. He also specially thanked the National Aeronautics and Space Administration Office of Inspector General, the Central Criminal Police Department of the Latvian State Police, the Romanian Intelligence Service, the Romanian Directorate for Combating Organized Crime, the Romanian Directorate for Investigating Organized Crime and Terrorism, and the Romanian Ministry of Justice.
The cases are being handled by the Complex Frauds Unit of the United States Attorney's Office. Assistant United States Attorneys Sarah Lai, Nicole Friedlander, and Thomas G.A. Brown, along with Trial Attorney Carol Sipperly of the Computer Crime and Intellectual Property Section of the Department of Justice on the PAUNESCU case, are in charge of the prosecution.
The charges contained in the Indictments are merely accusations and the defendants are presumed innocent unless and until proven guilty.
Click here to view chart(s)
The U.S. Attorney's Office Filed 176 Firearms Indictments Last YearRead the Press Release
The United States Attorney’s Office for the Northern District of Ohio filed 176 illegal firearms indictments last year as part of Project Safe Neighborhood (PSN), U.S. Attorney Steven M. Dettelbach announced.
“This office places a high priority on keeping firearms out of the hands of those who are forbidden by law from obtaining them,” Dettelbach said. “Whether it is a person using a gun to commit a violent crime, a felon illegally obtaining a firearm or a straw purchaser trying to circumvent the law, we will aggressively pursue those who would violate our nation’s firearms laws.”
“Ensuring public safety and pursuing individuals who illegally use and possess firearms in furtherance of their activities is a top priority of the ATF,” said ATF Special Agent in Charge Robin Shoemaker, Columbus Field Division. “We will continue to perfect criminal cases against these types of individuals and hold them accountable for their actions.”
Broken down by geography in the district, the most indictments filed came out of the Cleveland office, with 86. That was followed by the Toledo office (31), Akron office (30) and Youngstown office (29).
There were 146 defendants sentenced last year for firearms crimes and the average sentence was more than six years in prison (73.9 months).
Details of selected cases:
U.S. v. Stafford
Akeem Stafford, 25, of Elyria, was sentenced last year to more than 20 years in prison for being a felon in possession of a firearm and ammunition. Stafford fired several rounds from a .45-caliber pistol into a crowd of people outside Uncle Vic’s nightclub in Elyria.U.S. v. Katrenick
David Katrenick was sentenced to more than nine years in prison in June after pleading guilty to two counts of being a felon in possession of a firearm. Katrenick owned and operated Lazy Dave’s Tattoo Shop on Lorain Road in North Olmsted. He possessed three rifles, two shotguns and ammunition, despite previous convictions for rape, aggravated assault, burglary and other crimes.U.S. v. Atwal
Amarjit S. Atwal, 65, of Maple Heights, was indicted last month on charges of using a false identity to purchase a firearm. Atwal used the identity of another person to purchase a Glock 9 mm and Smith and Wesson .357-caliber revolver and intentionally failed to disclose his true name and identity when attempting to purchase firearms at the Berea Gun Show.U.S. v. Gilbert and Moses
Tyrone Gilbert and Rodney Moses, both of Youngstown, were charged with being felons in possession of firearms and ammunition in June as part of a broader investigation into a criminal enterprise that dealt heroin in the Youngstown area.U.S. v. Taylor
Isiah Taylor III, of Youngstown, was sentenced to seven years in prison last year after being convicted of brandishing a firearm during a crime. That sentence is being served concurrent to a sentence of more than 10 years related to more than 40 armed robberies he committed in Akron, Warren, Boardman, Alliance, Youngstown and other locations.Project Safe Neighborhoods (PSN) is a nationwide commitment to reduce gun and gang crime in America by networking existing local programs that target gun and gun crime and providing these programs with additional tools necessary to be successful. Since its inception in 2001, approximately $2 billion has been committed to this initiative. This funding is being used to hire new federal and state prosecutors, support investigators, provide training, distribute gun lock safety kits, deter juvenile gun crime, and develop and promote community outreach efforts as well as to support other gun and gang violence reduction strategies.
As a point of reference, PSN prosecution statistics for calendar year 2002 through 2011 are as follows:
2002: 117 indictments
2003: 155 indictments
2004: 184 indictments
2005: 220 indictments
2006: 187 indictments
2007: 191 indictments
2008: 157 indictments
2009: 156 indictments
2010: 166 indictments
2011: 218 indictments
2012: 176 indictments
Tax Charges Filed Against Women from Toledo and TexasRead the Press Release
Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, today announced an indictment was filed against Beverly Burns, age 26, of Arlington, Texas, Lajuana Batey, age 35, of Toledo, Ohio, Latoya Batey, age 24, of Arlington, Texas, and Shereece Coffey, age 30, of Toledo, Ohio.
The indictment charges defendants with conspiracy and making false, fictitious, or fraudulent claims. The defendants devised a scheme to enrich themselves through the submission of false, fictitious and fraudulent tax returns filed with the Internal Revenue Service during the years 2009 to 2011. The defendants, and others, shared the proceeds obtained from the false return scheme, by converting the refund checks to their own use.
If convicted, the defendants’ sentence will be determined by the Court after reviewing factors unique to this case, including the defendants’ prior criminal record, if any, the defendants’ role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The investigating agency in this case is the Internal Revenue Service, Toledo, Ohio. The case is being handled by Assistant United States Attorney Joseph R. Wilson.
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.
Tarrant County Man Sentenced to 10 Years in Federal Prison in Murder-for-Hire CaseRead the Press Release
Ryan Walker Grant Operated Sexually-Oriented Business in Arlington, Texas
FORT WORTH, Texas — Ryan Walker Grant, 34, Kennedale, Texas, was sentenced yesterday by U.S. District Judge Terry Means to 120 months in federal prison following his guilty plea in September 2012 to one count of murder-for-hire, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. Grant has been in custody since his arrest on April 9, 2012, on a related charge outlined in a criminal complaint filed the previous day.
Grant is a co-owner of Flashdancer, a sexually-oriented business in Arlington, Texas, that had been the subject of a nuisance lawsuit filed by the Texas Attorney General’s Office and the City of Arlington, which resulted in the club’s closing. According to the criminal complaint filed in the case and testimony at Grant’s preliminary and detention hearing, Grant tried to hire individuals from Mexico, through an intermediary, to kill Arlington Mayor Robert Cluck and Tom Brandt, a Dallas attorney who represents the City of Arlington in cases involving sexually-oriented businesses. Grant was angry at the men because he felt that they were costing him money by trying to prevent him from re-opening Flashdancer.
On April 3, 2012, according to the factual resume filed in the case, Grant sent a text message from his cell phone to a confidential informant (CI) requesting a return call. When the CI called Grant, Grant requested a personal meeting with him and discussed, using coded language, Grant’s desire that a murder be committed. The CI traveled to Grant’s home in Kennedale where Grant provided the CI with pictures of two individuals, Robert Cluck and Tom Brandt, whom he wanted killed. Grant asked if the CI was able to direct individuals from Mexico to travel to the U.S. and murder them. Grant offered to pay $10,000 per victim.
Shortly thereafter, when law enforcement executed a search warrant at Grant’s residence, they seized 22 firearms and nearly $150,000 in cash.
The investigation was conducted by the FBI and the Drug Enforcement Administration. Assistant U.S. Attorney Chris Wolfe prosecuted.
Settlement Announced Resolving Federal Civil Complaint Against Chambersburg Skydiving Center, Inc.Read the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced today the settlement of a federal lawsuit against Chambersburg Skydiving Center, Inc., Chambersburg, Pennsylvania filed as a result of an inquiry by the Federal Aviation Administration (FAA).
According to United States Attorney Peter J. Smith, the civil Complaint, filed on November 7, 2012, claimed that Chambersburg Skydiving Center Inc. operated an aircraft in violation of the federal aviation regulations by failing to have the aircraft inspected, by failing to have annual inspections and operating the aircraft when it was not in an airworthy condition.
Under the terms of the settlement agreement, Chambersburg Skydiving Center, Inc. will pay $10,000 in satisfaction of all alleged violations. Additionally, Chambersburg Skydiving Center, Inc. agreed to fully cooperate with the FAA for the purpose of conducting inspections and investigations concerning compliance with federal aviation regulations.
The U.S. Attorney’s Office and Chambersburg Skydiving Center, Inc. agreed that the terms of the settlement agreement were appropriate in light of the Chambersburg Skydiving Center’s status as a small business with limited financial resources and its record of no prior violations. Additionally, Chambersburg Skydiving Center, Inc. took measures to ensure the airworthiness of the aircraft once it became aware of any alleged violation including the timely repairs and inspections. The company is currently compliant with the FAA’s requirements and has agreed to cooperate with any future inspection or investigation by the FAA.
The settlement agreement is subject to the approval of U.S. District Court Judge John E. Jones, III, the judge to whom the case is assigned.
This matter was litigated by Assistant U.S. Attorney Timothy Judge, of the U.S. Attorney’s Office Civil Division in collaboration with the FAA’s Eastern Regional Counsel’s Office.
Rexburg Man Charged with Improper Storage and Disposal of Hazardous WasteRead the Press Release
POCATELLO – Max Spatig, 71, of Rexburg, Idaho, the owner of MS Enterprises, pleaded not guilty in federal court today to charges that he knowingly stored and disposed of hazardous waste on his property, a violation of the Resource Conservation and Recovery Act, U.S. Attorney Wendy J. Olson announced. Spatig was charged in a one count indictment filed in United States District Court in Pocatello on December 11, 2012.
According to the indictment, on July 8, 2010, a total of 3,478 containers of waste materials were found on Spatig’s property in Rexburg. The indictment alleges that samples taken from the containers showed the contents were hazardous waste due to ignitability and corrosivity characteristics. According to the indictment, the contents of the containers were shipped to a hazardous waste disposal facility, incurring a cost to the federal government of $498,652. Neither MS Enterprises nor Spatig had a permit from the Environmental Protection Agency (EPA) for the storage, treatment or disposal of hazardous waste.
A trial is set for March 4, 2013, before Chief U.S. District Judge B. Lynn Winmill at the federal courthouse in Pocatello.
The case is being investigated by the U.S. Environmental Protection Agency-Criminal Investigation Division and the Idaho Department of Environmental Quality.
An indictment is a means of charging a person with criminal activity. It is not evidence. The person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Prior Felons from San Juan County Sentenced to Prison for Unlawful Possession of FirearmsRead the Press Release
ALBUQUERQUE – Two prior felons from San Juan County, N.M., were sentenced to prison time by federal judges today for being felons in possession of firearms. The sentences were announced by U.S. Attorney Kenneth J. Gonzales and Thomas G. Atteberry, Special Agent in Charge of the Phoenix Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
Nickolas Neil Anaya, 28, of Farmington, N.M., was sentenced to 63 months in prison followed by three years of supervised release. In a separate case, Walter White, 32, of Bloomfield, N.M., was sentenced to 42 months in prison followed by three years of supervised release.
Anaya was indicted on Dec. 14, 2011, and was charged with unlawfully possessing a Ruger, Vaquero model, .45 caliber revolver and ammunition in San Juan County on June 23, 2011. Anaya was prohibited from possessing firearms or ammunition because he previously had been convicted of (1) possession of a controlled substance; (2) aggravated assault; and (3) aggravated battery in the Eleventh Judicial District Court for the State of New Mexico. Anaya was arrested on April 4, 2012, and has been in federal custody since that time. On Oct. 4, 2012,
Anaya pled guilty to the indictment. As part of his plea deal, Anaya was required to forfeit the firearm and ammunition that were in his possession on Dec. 14, 2011.
White was indicted on July 10, 2012, and charged with unlawfully possessing a Ruger, Model GP 100, .357 caliber revolver in San Juan County on Oct. 11, 2011. White was prohibited from possessing firearms because he previously had been convicted of (1) the unlawful taking of a vehicle; (2) burglary; (3) being a felon in possession of a firearm; (4) larceny; and (5) larceny of a firearm. White was arrested on Sept. 13, 2012, and has been in federal custody since that time. On Nov. 5, 2012, White pled guilty to the indictment and admitted possessing a firearm that he sold at the Farmer’s Market in Bloomfield on Oct. 11, 2011. As part of his plea deal, White was required to forfeit the firearms.
The Bureau of Alcohol Tobacco, Explosives and Firearms investigated both cases. It was assisted by the Farmington Police Department on the Anaya case and by the Region II Narcotics Task Force on the White case. Assistant U.S. Attorney Louis E. Valencia prosecuted the Anaya case and Assistant U.S. Attorney David M. Walsh prosecuted the White case.
Portsmouth Brothers Convicted of RobberiesRead the Press Release
NORFOLK, Va. - Laquan Draper, 21, and Angelo Draper, 20, both of Portsmouth, Va., were convicted today by a federal jury on charges stemming from a series of convenience store and fast food restaurant robberies over an eight week period in the summer of 2011.
Neil H. McBride, United States Attorney for the Eastern District of Virginia, made the announcement after the verdicts were accepted by Senior United States District Judge Robert G. Doumar.
The Draper brothers were convicted of conspiracy to commit robbery, 12 counts of commercial robbery, and discharging a firearm during a robbery. Also, Laquan Draper was convicted of the robbery of the ABC Store on Little Creek Road in Norfolk and possession of a firearm by a felon. They were found not guilty of four related counts in the indictment.
They are facing a minimum mandatory sentence of ten (10) years and a maximum life sentence in prison when they are sentenced on May 6, 2013.
According to court records and evidence at trial, the Drapers started an eight-week robbery spree in July, 2011, spanning Norfolk to Roanoke, Va. The brothers, concealing their identities with shirts tied around their faces, entered 7-11 convenience stores with either firearms or replica firearms, jumped over the counter and took money from store employees. The men also convicted of conspiring to rob employees of twenty establishments, including numerous 7-Eleven stores, two McDonald's, a Wendy's, an ABC Store, and a Fast Auto Loans location. At one of the locations, the Got It Video in Norfolk, the Drapers and a co-conspirator shot out the locked front door, shattering the glass and entered the store to commit the robbery, holding customers and clerks at gun-point.
After a twenty-minute, multi-vehicle high speed police pursuit, the brothers were arrested in Chesapeake on August 25, 2011 after they crashed the stolen Saturn Vue they were driving into a police vehicle, injuring two Chesapeake detectives. A .22 caliber hand-gun was found in the passenger floor board of the stolen vehicle when the men were removed. Additional evidence recovered from the car was linked forensically to several of the crime scenes.
This case was investigated by the Chesapeake, Norfolk, Portsmouth and Virginia Beach Police Departments; the Appomattox County Sheriff’s Department; the Roanoke County Police and the Roanoke City Police. Assistant United States Attorney Sherrie S. Capotosto and Special Assistant United States Attorney Amy E. Cross are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.Pinellas County Man Sentenced to Nine Years in Federal Prison for Student Loan FraudRead the Press Release
Tampa, FL - United States District Judge Susan Bucklew today sentenced James Isaac Boyd (40, St. Petersburg) to 9 years in federal prison for conspiring to commit student loan fraud, committing student loan fraud, and aggravated identity theft. In addition, he was ordered to pay restitution to the Department of Education in the amount of $464,269.00, and to forfeit computers and cellphones used in the commission of the offenses.
According to court documents and information presented in court, in January 2006, James I. Boyd and Shaneva Boyd formed a Florida corporation called "Graduate Assistance and Consolidations (GAC)," located in St. Petersburg Florida. James Boyd was the sole director, president and treasurer of GAC. He and co-conspirator Shaneva Boyd used GAC to carry out a student loan fraud scheme by assisting individuals who had neither a high school diploma nor a General Equivalency Degree (GED) with fraudulently enrolling for admission at St. Petersburg College (SPC), and then fraudulently applying for federal student financial aid. During the course of this scheme, James Boyd caused false statements to be made on student financial aid forms. He also directed dozens of financial aid checks for various individuals to be mailed to addresses associated with GAC. On some occasions, when the individuals named on the checks negotiated the checks, they paid James Boyd a significant percentage of the proceeds. On other occasions, James Boyd falsely and fraudulently endorsed and negotiated financial aid checks made out to putative students, without those individuals' knowledge, often depositing the checks into bank accounts he controlled. James Boyd assisted individuals with applying for fraudulent federal student financial aid (loans and grants) totaling $464,269.00.
Boyd pleaded guilty on October 23, 2012. During the hearing today, details about Boyd’s previous criminal history were discussed. His criminal history includes a prior state conviction for murder in the third degree and a prior federal conviction for being a felon in possession of a firearm.
This case was investigated by United States Department of Education, Office of Inspector General. It was prosecuted by Assistant United States Attorney Cherie L. Krigsman.
Pine Ridge Man SentencedRead the Press Release
United States Attorney Brendan V. Johnson announced that a Pine Ridge man convicted of Conspiracy to Distribute a Controlled Substance was sentenced on January 4, 2013, by Chief U.S. District Judge Jeffrey L. Viken. Louis Michael Pacer, a/k/a Mike Pacer, age 35, was sentenced to 23 months' custody, 3 years' supervised release, and a $100 special assessment to the victims' assistance fund.
Pacer conspired with others to distribute cocaine in South Dakota and elsewhere between 2007 and 2009. Pacer pled guilty to the charge on October 2, 2012.
This case was investigated by the Drug Enforcement Administration, the Unified Narcotics Enforcement Team, the Bureau of Indian Affairs, Office of Justice Services, and the Oglala Sioux Tribe Department of Public Safety. Special Assistant U.S. Attorney Laura Shattuck prosecuted the case.
Louis Michael Pacer, a/k/a Mike Pacer, was immediately turned over to the custody of the U.S. Marshal.
Pennsylvania Man Sentenced to Prison for Tax EvasionRead the Press Release
Stephen Thomas of York, Penn., was sentenced today in U.S. District Court for the District of Columbia for tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Judge Amy Berman Jackson sentenced Thomas to 18 months in prison and ordered him to pay $154,362 in restitution to the IRS.
On Sept. 11, 2012, Thomas pleaded guilty to attempting to evade his 2006 federal income taxes. According to court records, between 2002 and 2004, in the District of Columbia, Thomas formed multiple entities whose names contained the initials ECG, which stood for ESOP Capital Group. ECG purported to provide financial, business and other management services to companies that were interested in creating ESOPs, which are employee stock ownership plans. In or about 2005 and 2006, Thomas, through ECG, contracted to provide such services to two companies in Maine.
As part of his guilty plea, Thomas admitted that he failed to file his 2005 through 2007 individual income tax returns and failed to file 2005 through 2007 corporate income tax returns for ECG. Thomas further admitted that he engaged in a series of affirmative acts of evasion during 2005 through 2007, including concealing his income by moving earnings from the Maine companies into bank accounts in the name of his wife, withdrawing cash on a weekly basis which totaled more than $400,000, using cashier’s checks, and titling his primary residence in the name of his wife. Thomas further admitted that he failed to report at least $573,785 of income and that his tax evasion during 2005 through 2007 resulted in a tax loss to the IRS of at least $154,362.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of a special agent of IRS-Criminal Investigation and an investigator from Department of Labor, Employee Benefits Security Administration, who investigated the case, and Trial Attorneys Jessica Moran and Jeffrey Bender of the Justice Department’s Tax Division, who prosecuted the case.
Orthofix Vice President Sentenced for Paying Medicare KickbacksRead the Press Release
BOSTON – The former vice president of sales of Orthofix, Inc. was sentenced yesterday for paying kickbacks to health care professionals.
Thomas P. Guerrieri, 52, was sentenced by U.S. District Judge Rya W. Zobel to eight months in prison and ordered to pay a fine of $20,000 and to forfeit $30,000. In April 2012, Guerrieri pleaded guilty to paying kickbacks.
Guerrieri, the former Vice President of Sales of Orthofix, Inc., admitted that he paid kickbacks to two separate health care professionals, in violation of the Medicare AntiKickback Law. Between 2001 and 2010, Guerrieri worked at Orthofix, first as a regional sales director, then area vice president, and, ultimately, the vice president of sales. Orthofix manufactured and distributed bone growth stimulator medical devices. Bone growth stimulators are used to assist spinal fusions and to help heal bone fractures that did not heal properly.
Guerrieri authorized kickbacks in two separate transactions in order to induce bone growth stimulator orders from two of Orthofix’s highest-prescribing physicians. First, Guerrieri facilitated a bogus “consulting” agreement with a surgeon in New York. The surgeon was paid tens of thousands of dollars but provided little or no consulting services in return. This surgeon failed to document his services in time sheets provided to the company, even though he was paid every month. During a meeting in August 2007, the surgeon, Guerrieri, and another Orthofix employee hatched a scheme to create and backdate time sheets going back to 2006, making it appear as though the surgeon filled out these forms contemporaneously and performed legitimate consulting services. In addition, Guerrieri obtained a letter from the company’s general counsel indicating that the surgeon was compliant under his consulting agreement, which was not true.
Second, Guerrieri authorized kickbacks to pay a physician’s assistant in Rhode Island, Michael Cobb, for each bone growth stimulator he ordered. Cobb was responsible for ordering bone growth stimulators for the surgeon who employed him. For years, Orthofix paid Cobb $50-$100 for each stimulator that he ordered. In September 2008, Orthofix issued a policy expressly prohibiting any payments to anyone who works for a surgeon that prescribes Orthofix products. Guerrieri was concerned that Orthofix would lose business if it could no longer pay Cobb. Thus, Guerrieri executed a scheme where Cobb continued to be paid for each order, but the payments were made by an Orthofix vendor, making it more difficult to trace the paper trail back to Orthofix. In July 2012, Cobb was sentenced to six months in prison and six months home confinement for accepting these kickbacks in addition to forfeiture of $40,000 and a $4,000 fine.
Guerrieri also obstructed justice in connection with the government’s investigation. In the midst of the investigation, Guerrieri instructed the sales force that, if they were asked by government investigators if they manipulated Medicare Certificates of Medical Necessity (CMNs), they should lie and state that they had not done so. Manipulation of CMNs was the conduct at issue in the recent Orthofix conviction, as described below.In addition to the Guerrieri 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;
- In January 2013, Derrick Field, a former Orthofix territory manager, was sentenced to five months of home confinement as part of a two-year probation sentence,
- In December 2011, Mitchell Salzman pleaded guilty while he was a regional manager for Orthofix;
- In May 2012, Michael McKay pleaded guilty to health care fraud while he was a territory manager for Orthofix; and
- In September 2012, Brian Racey pleaded guilty to health care fraud while he was a territory manager for Orthofix.
“Kickbacks corrupt medical decision-making and drive up health care costs for everyone,” said U.S. Attorney Carmen M. Ortiz. “Corporate executives have a responsibility to ensure that profits are not prioritized over patients’ health. This prosecution sends a message that, in the District of Massachusetts, we will investigate and prosecute those who commit health care fraud.”
“Company executives know that kickback payoffs have no place in healthcare,” said Susan J. Waddell, Special Agent in Charge, U.S. Department of Health and Human Services, Office of the Inspector General, New England Region. “So while Orthofix has already settled with taxpayers for more than $34 million, law enforcement will also pursue the corporate officials behind these schemes and make them pay a heavy price.”
“Orthofix corporation and its employees have recently pled guilty to a litany of felony criminal and civil charges related to illegal schemes that were purposefully designed to increase their profit,” said Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation Boston Field Division. “Like Orthofix, other health care corporations and their employees should know now that no one is immune from being held accountable for criminal and civil misconduct.”
“It is priority for DCIS to ensure the integrity of TRICARE, the Defense Department’s health care system for military members and their dependents,” said Leigh-Alistair Barzey, Resident Agent in Chage of the U.S. Department of Defense, Defense Criminal Investigative Service. “DCIS is committed to working with the U.S. Attorney’s Office, the FBI, HHS-OIG and our other partner agencies, to combat health care fraud, and this successful joint investigation is a result of that collaborative effort.”
This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations; the Federal Bureau of Investigation Boston Field Division; and the Department of Defense, Defense Criminal Investigative Service – Boston Resident Agency. It was being prosecuted by Assistant U.S. Attorneys David Schumacher and Jeremy Sternberg of Ortiz's Health Care Fraud Unit.
Operator of Illegal Alien Employment Business in Scranton Pleads GuiltyRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that an operator of an illegal alien employment business in Scranton pleaded guilty today in federal court before U.S. District Court Judge A. Richard Caputo.
According to United States Attorney Peter J. Smith, Rama Putra, age 32, residing in Scranton, pleaded guilty to Count I of an indictment returned in October 2012 by a grand jury in Scranton. Count I charges Putra with conspiracy to commit money laundering, and the employment and transportation of illegal aliens. Putra was charged for committing the offenses from January 2007 through September 2012.
The indictment stemmed from a continuing joint investigation by the U.S. Department of Homeland Security - Immigration and Customs Enforcement and the Pennsylvania State Police.
The indictment alleged that Putra engaged in a conspiracy to promote and conceal the profits of a temporary employment agency known as “H&Y Staffing, Inc.” operating out of a Scranton address which recruited, employed, and transported an illegal work force. “H&Y Staffing, Inc.” provided dozens of illegal temporary employees to businesses in the Scranton area over a period of several years. Putra, in furtherance of the conspiracy, allegedly provided transportation for the illegal workers, paid the illegal work force in cash on a weekly basis, and cashed checks from local businesses at check cashing services located in Philadelphia as part of the scheme to conceal and promote the underlying criminal activity.
In this particular case, the maximum penalty under the federal statute is five years’ imprisonment, a term of supervised release following imprisonment, and a fine. 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.
Sentencing is scheduled for April 25, 2013.
Prosecution is assigned to Assistant United States Attorney Michelle Olshefski.
Old Forge Man Pleads Guilty to Online EnticementRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that an Old Forge man pleaded guilty today in Scranton before U.S. District Court Judge A. Richard Caputo to online enticement.
According to United States Attorney Peter J. Smith, Jeffrey Pettinato, age 51, was charged in a felony Information in November 2012 for committing the offenses at various times between July 2012 through August 2012. Pettinato used a computer and attempted to persuade, induce, entice, and coerce a minor to engage in sexual activity.
In this particular case, the maximum penalty under the federal statute is life imprisonment and a minimum of 10 years’ imprisonment, a term of supervised release following imprisonment, and a fine. 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.
Pettinato will also be required to follow sexual offender registration requirements pursuant to the Adam Walsh Act. A sentencing date has been scheduled for April 30, 2013.
Smith noted that this case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."
Prosecution is assigned to Assistant United States Attorney Michelle Olshefski.
****North Braddock Man Pleads Guilty to Possession of Child PornographyRead the Press Release
PITTSBURGH - A resident of Allegheny County pleaded guilty in federal court to a charge of possession of material depicting the sexual exploitation of a minor, United States Attorney David J. Hickton announced today.
Charles R. Gladish, 41, of North Braddock, Pa., pleaded guilty yesterday to one count before United States District Judge Joy Flowers Conti.
In connection with the guilty plea, the court was advised that on Oct. 26, 2011, Gladish possessed visual depictions, namely, photographs and videos in computer graphics files, the production of which involved the use of minors engaging in sexually explicit conduct.
Judge Conti scheduled sentencing for May 24, 2013, at 10 a.m. The law provides for a total sentence of 10 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.
Assistant United States Attorney Carolyn J. Bloch is prosecuting this case on behalf of the government.
The Pennsylvania State Police conducted the investigation that led to the prosecution of Gladish.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
New Jersey Woman Sentenced to 42 Months in Prison for Trafficking the Identities of Puerto Rican U.S. CitizensRead the Press Release
WASHINGTON – A former resident of New Jersey was sentenced today to serve 42 months in prison for her role in trafficking the identities of Puerto Rican U.S. citizens and corresponding identity documents, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez of the District of Puerto Rico; Director John Morton of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI); Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS); Gentry Smith, Acting Director of the U.S. State Department’s Diplomatic Security Service (DSS); and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.
Martina Montero-de-Ortiz, 52, formerly of Elizabeth, N.J., was sentenced by U.S. District Judge Gustavo A. Gelpí in the District of Puerto Rico. In addition to Montero-de-Ortiz’s prison term, Judge Gelpí ordered her to forfeit $33,250 in illegal proceeds and ordered the removal of Montero-de-Ortiz from the United States to the Dominican Republic after the completion of her sentence.
On Aug. 15, 2012, Montero-de-Ortiz pleaded guilty in Puerto Rico to one count of conspiracy to commit identification fraud and one count of conspiracy to commit alien smuggling for financial gain.
Montero-de-Ortiz was charged in a superseding indictment returned by a federal grand jury in Puerto Rico on March 22, 2012. To date, a total of 53 individuals have been charged for their roles in the identity trafficking scheme, and 25 defendants have pleaded guilty.
Court documents allege that individuals located in the Savarona area of Caguas, Puerto Rico (Savarona suppliers), obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States (identity brokers) allegedly solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The superseding indictment alleges that identity brokers ordered the identity documents from Savarona suppliers, on behalf of the customers, by making coded telephone calls. The conspirators are charged with using text messages, money transfer services and express, priority or regular U.S. mail to complete their illicit transactions.
Court documents allege that some of the conspirators assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers allegedly generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.
According to court documents, various identity brokers were operating in Rockford, Ill.; DeKalb, Ill.; Aurora, Ill.; Seymour, Ind.; Columbus, Ind.; Indianapolis; Hartford, Conn.; Clewiston, Fla.; Lilburn, Ga.; Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; Abingdon, Va.; Albertville, Ala.; and Providence, R.I.
Montero-de-Ortiz admitted that she trafficked the identities of Puerto Rican U.S. citizens and corresponding identity documents in New Jersey. Montero-de-Ortiz is the 11th defendant to be sentenced in this case.
Another defendant involved in the scheme, Vidal Contreras-Galicia, 30, formerly of Ft. Wayne, Ind., pleaded guilty yesterday before U.S. District Judge Gelpi to one count of conspiracy to commit identification fraud. As part of his plea agreement, Contreras-Galicia agreed to forfeit $3,000 in illegal proceeds as well as deportation to Mexico after serving his sentence. According to court documents, Contreras-Galicia admitted that he trafficked the identities of Puerto Rican U.S. citizens and corresponding identity documents in Indiana and that he used a Puerto Rican identity himself to commit financial fraud. At sentencing, Contreras-Galicia faces a maximum sentence of 15 years in prison and a maximum fine of $250,000.
The charges are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE-HSI Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office and the DSS Resident Office in Puerto Rico. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable assistance.
The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Courtney B. Schaefer and Christina Giffin of the Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of Acting Assistant Deputy Chief Jeannette Gunderson of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Middle District of North Carolina, Southern District of Ohio, District of Rhode Island, Southern District of Texas and Western District of Virginia provided substantial assistance.
Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html. Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline. Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.
Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website, www.ftc.gov/idtheft. Additional resources regarding identity theft can be found at www.ojp.usdoj.gov/ovc/pubs/ID_theft/idtheft.html; www.ssa.gov/pubs/10064.html; www.fbi.gov/about-us/investigate/cyber/identity_theft; and www.irs.gov/privacy/article/0,,id=186436,00.html.
Monmouth County, N.J., Man Sentenced to 78 Months in Prison for Possession of Child PornographyRead the Press Release
TRENTON, N.J. - A Monmouth County, N.J., man was sentenced today to 78 months in prison for possessing child pornography on his computer, including violent video images, U.S. Attorney Paul J. Fishman announced.
Danial Hillman, 28, of Atlantic Highlands, N.J., previously pleaded guilty before U.S. District Judge Joel A. Pisano to one count of an Indictment charging him with possession of child pornography. Judge Pisano imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:As early as Dec. 6, 2010, undercover law enforcement officers downloaded videos and images of child pornography from Hillman on the Internet via peer-to-peer file sharing software. The images downloaded by federal investigators from Hillman’s shared directories included three videos of three children, all under the age of 12, being sexually abused. Law enforcement officers from the Monmouth County Prosecutor’s Office and the Atlantic Highlands Police Department, who executed a search warrant at Hillman’s home on April 12, 2011, seized multiple computers, one of which contained images depicting child pornography, including sadistic conduct and other violent images involving minors.
U.S. Attorney Fishman praised special agents of the Department of Homeland Security's Immigration and Customs Enforcement, Homeland Security Investigations, in New Jersey under the direction of Special Agent in Charge Andrew M. McLees; the Monmouth County Prosecutor's Office, under the direction of Acting Prosecutor Christopher Gramiccioni; and the Atlantic Highlands Police Department, under the direction of Chief Jerry Vasto, with the investigation leading to today's sentence.
In addition to the prison term, Judge Pisano sentenced Hillman to five years of supervised release, with computer-use monitoring. He must register as a sex offender.
The government is represented by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney's Office Criminal Division in Trenton.
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Defense counsel: Charles F. Clark Esq., Freehold, N.J.Milford Woman Pleads Guilty to Health Care FraudRead the Press Release
The United States Attorney's Office for the Middle District of Pennsylvania announced that Patricia Delorenzo, age 59, of Milford, Pennsylvania, pleaded guilty today in Scranton to Health Care Fraud charges before U.S. District Court Judge A. Richard Caputo.
According to United States Attorney Peter J. Smith, a criminal Information was filed in November 2012 charging Delorenzo with engaging in a scheme to defraud Blue Cross of Northeastern Pennsylvania for the period beginning May 2009 through December 2011.
The charges stem from an investigation initiated in July of 2009 by the Federal Bureau of Investigation (FBI).
Under the terms of the plea agreement, Delorenzo=s intended loss is approximately $20,000. Actual loss is $10,188.88. Delorenzo will pay restitution for the actual loss amount and forfeit her professional counseling license.
In this particular case, the maximum penalty under the federal statute is 10 years’ imprisonment, a term of supervised release following imprisonment, and a fine. 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.
Sentencing is scheduled for April 26, 2013.
Prosecution is assigned to Assistant United States Attorney Michelle Olshefski.
Middlebury Man Admits Role in Bribery and Illegal Campaign Finance SchemeRead the Press Release
January 23, 2013David B. Fein, United States Attorney for the District of Connecticut announced that PAUL ROGERS, 40, of Middlebury, pleaded guilty today before United States Magistrate Judge Joan G. Margolis in New Haven to one count of devising a scheme to bribe a public official, and one count of conspiring to make false statements to the Federal Election Commission (“FEC”) and to impede the FEC’s enforcement of federal campaign finance laws. The charges stem from a scheme to direct illegal campaign contributions into the campaign of a candidate for the U.S. House of Representatives.
According to court documents and statements made in court, in August 2011, the State of Connecticut applied for a court order enjoining Roll Your Own (“RYO”) smoke shops from continuing to operate without complying with state law governing tobacco manufacturers. RYO smoke shops are retail businesses that sell loose smoking tobacco and cigarette-rolling materials and offer customers the option of paying a “rental” fee to insert the loose tobacco and the rolling materials into a RYO machine, which is capable of rapidly rolling large quantities of cigarettes. Customers did not pay a tax on the RYO cigarettes when rolled by the RYO machines, in contrast to cigarettes purchased over-the-counter.
ROGERS owned a RYO smoke shop with two locations in Waterbury. Fearing that the Connecticut General Assembly would enact legislation harmful to RYO smoke shop owners’ business interests during the 2012 legislative session, ROGERS and others engaged in scheme to direct $27,500 in conduit campaign contributions into the campaign of a candidate for the U.S. House of Representatives. The candidate was also a member of the Connecticut General Assembly. ROGERS and his co-conspirators recruited multiple individuals to serve as conduit contributors to the campaign. These individuals wrote checks to the campaign in their own names, and ROGERS and his co-conspirators reimbursed them with cash, thereby concealing the fact that RYO smoke shop owners were contributing to the campaign.
On approximately January 31, 2012, the Campaign Committee submitted to the Federal Election Commission (“FEC”) a report of the Campaign Committee’s receipts and disbursements for the period October 1, 2011 through December 31, 2011. The report falsely stated the source and amount of four $2,500 contributions that were received and deposited by the Campaign Committee during that time period.
ROGERS is scheduled to be sentenced by United States District Judge Janet Bond Arterton on March 20, 2013, at which time ROGERS faces a maximum term of a maximum term of imprisonment of 20 years for devising a scheme to bribe a public official, and a maximum term of imprisonment of five years for conspiring to make false statements to the FEC and to impede the FEC’s enforcement of federal campaign finance laws.
ROGERS is the third defendant to plead guilty to charges related to this scheme. On July 24, 2012, Harry Raymond “Ray” Soucy pleaded guilty to one count of devising a scheme to bribe a public official, and one count of conspiring to make false statements to the FEC and to impede the FEC’s enforcement of federal campaign finance laws. On November 2, 2012, David Moffa pleaded guilty to one count of conspiring to make false statements to the FEC and to impede the FEC’s enforcement of federal campaign finance laws. Soucy and Moffa also await sentencing.
Five other individuals have been charged as a result of this investigation. As to these defendants, U.S. Attorney Fein stressed that an indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorneys Christopher M. Mattei and Eric J. Glover.
PUBLIC AFFAIRS CONTACT:
U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722 [email protected]Middle District of Georgia Grant Funds AvailableRead the Press Release
Michael J. Moore, United States Attorney for the Middle District of Georgia, announced today that grant funds are available to Middle District agencies through a Department of Justice solicitation.
The U.S. Department of Justice, Office of Justice Programs’ Bureau of Justice Assistance is seeking applications for funding under the FY 2013 Violent Gang and Gun Crime Reduction Program, also known as Project Safe Neighborhoods. In FY 2013, the Middle District is eligible to apply for up to $150,000 in grant funds to be used for enforcement, deterrence and prevention of gang and gun violence.
Applications are sought from state agencies, units of local government and non-profit organizations. Interested agencies are asked to submit a detailed budget, a narrative of the strategy, and purpose to the U.S. Attorney’s Office by February 19, 2013. A Selection Committee will review the applications, meet with the applicants and choose the agencies for which the Steering Committee will solicit funding in the grant application.“In this time of ever limited resources, we are very pleased to be able to assist Middle District agencies in locating funding opportunities such as this grant,” U.S. Attorney Michael Moore stated.
Interested organizations and agencies may contact Pamela Lightsey, Law Enforcement Coordinator, at 478-621-2603 for information regarding the application process and deadline.
The Grant Announcement can be viewed at: www.bja.gov/Funding/13PSNsol.pdf
Michigan Man Indicted on Charges of Cyberstalking and Production of Child PornographyRead the Press Release
BUFFALO, N.Y.– U.S. Attorney William J. Hochul, Jr. announced today that a federal grand jury has indicted James S. Allen, 36, of New Baltimore, MI, on 18 counts of cyberstalking and five counts of production of child pornography. The production of child pornography charges carry a mandatory minimum sentence of 15 years in prison, a maximum penalty of 30 years, and a $250,000 fine for each count. The cyberstalking charge carries a maximum penalty of 10 years in prison.
Assistant U.S. Attorney Aaron J. Mango, who is handling the case, stated that according to indictment, between April and August of 2012, the defendant utilized the internet and text messages to stalk, communicate with, and threaten 18 female victims in the Western District of New York, many of them minors, in an effort to obtain pornographic pictures of the minors. The complaint filed earlier in the case alleges that Allen contacted the victims and told them that he found naked pictures of them on the internet. The defendant then directed the victims to a specific website to view the pictures. In reality, the website was a front – or “phishing site” - by which the defendant sought to surreptitiously obtain the victim’s private e-mail address and password.
Once the targeted victim input the requested information, the victim’s personal e-mail addresses and passwords went straight to the defendant via the internet. The defendant thereafter seized control of the victim’s e-mail accounts, contacted the victims, and threatened that if they did not engage in a Skype video chat with him, he would distribute naked photos of the victims over the internet. Once a victim and the defendant logged onto Skype (the defendant utilized the screen name “shhh.shhh”), Allen demanded that the victims take their clothes off and engage in sexual conduct, with the further threat that naked pictures of them would be sent out to all of Western New York if the girl did not comply. As a result of the defendant's repeated and sustained harassment of the victims, many victims suffered substantial emotional distress.
U.S. Attorney Hochul stated that “It is appropriate that the grand jury returned this case in January, which is National Stalking Awareness Month. According to the National Intimate Partner and Sexual Violence Survey released by the Centers for Disease Control and Prevention in late 2011, 6.6 million people were stalked in a 12-month period and 1 in 6 women and 1 in 19 men were stalked at some point in their lifetime. These statistics certainly demonstrate that anyone can be a victim of stalking, but that women and girls are three times more likely to be stalked than men. As shown by the present case, statistics also indicate that young adults have the highest rate of stalking victimization.”
U.S. Attorney Hochul continued “another message that the public needs to recognize is that most stalking cases involve some form of technology. According to available reports, more than three-quarters of stalking victims received unwanted phone calls, voice and text messages, and one-third of victims were watched, followed, or tracked with a listening or other device. These findings underscore the critical need for the public to understand how stalkers and other criminals use technology.”
U.S. Attorney Hochul concluded “The public, in particular parents, need to continue to be vigilant is the use of both computers and cellular telephones. While modern communication and technology provide benefits to many, in the hands of criminals, the same instruments sometimes lead to potentially dangerous, even deadly situations. Keep these simple tips in mind: beware of strangers or individuals you don’t know who approach you online; do not post personal or identifying information online; and carefully monitor your accounts to prevent hacking or other related issues.”
The indictment is the culmination of an investigation on the part of Special Agents of the Federal Bureau of Investigation, under the direction of Christopher M. Piehota, Special Agent in Charge and the Kenmore Police Department, under the direction of Chief Peter Breitnauer.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
Mexican Citizen Encountered in Franklin County Indicted for Illegal ReentryRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania and the U.S. Department of Homeland Security, Immigrations and Customs Enforcement, announced today that a
30-year-old native and citizen of Mexico has been charged with illegal reentry into the United States.According to United States Attorney Peter J. Smith, Miguel Angel Bautista-Valdez, age 30, a native and citizen of Mexico, in the United States illegally was charged in a one-count indictment by a federal grand jury in Harrisburg today.
The indictment alleges that Bautista-Valdez, an alien who has previously been arrested, and deported from the United States on January 9, 2008, did knowingly and unlawfully reenter the United States and was apprehended in Franklin County, Pennsylvania.
This investigation was conducted by the U.S. Department of Homeland Security, Immigration and Customs Enforcement and is being prosecuted by Special Assistant United States Attorney Alice Song Hartye.
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 two years’ imprisonment, a term of supervised release following imprisonment, and a fine. 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.
Mendon Resident Sentenced for Filing False Tax ReturnsRead the Press Release
Boston – A Mendon man received a six month sentence of community confinement for filing a false income tax return.
David Altavilla, 45, was sentenced by U.S. District Judge Timothy S. Hillman to six months of community confinement to be followed by six months of home confinement, a $10,000 fine, and $141,710 in restitution to the IRS. In October 2012, Altavilla pleaded guilty to filing a false income tax return. He has already paid the restitution in full.
Altavilla operated a blog called “HOTHARDWARE.COM,” which contained contributor articles reviewing computers, computer components, and other related items. Altavilla sold advertising space on the site. For the calendar years 2006, 2007, and 2008, he under reported the total amount of gross receipts he took in from advertisers, resulting in an under reporting of his tax liability.
U.S. Attorney Carmen M. Ortiz, Assistant Attorney General Kathryn Keneally of the Department of Justice Tax Division and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement today. The case was prosecuted by Department of Justice Trial Attorney Sean R. Delaney.
Marvin Elcid Montes-cerrato Pleads Guilty to False Representation of A Social Security NumberRead the Press Release
MARVIN ELCID MONTES-CERRATO, age 36, a citizen of Honduras, pled guilty in federal court today before U.S. District Judge Stanwood R. Duval, Jr. to a one-count indictment charging him with illegal use of a Social Security number, announced U. S. Attorney Dana Boente.
According to court documents, on July 23, 2009, MONTES-CERRATO falsely represented that a Social Security number had been assigned to him by the Commissioner of Social Security with intent to deceive, for the purpose of obtaining a Louisiana driver’s license at a Louisiana Office of Motor Vehicles located in Jefferson Parish. MONTES-CERRATO is an illegal alien who is subject to an outstanding order of removal.
MONTES-CERRATO faces a maximum term of imprisonment of five years, a fine of $250,000 and three years of supervised release following any term of imprisonment. Sentencing is scheduled for May 1, 2013.The case was investigated by U. S. Immigration and Customs Enforcement (ICE) - Enforcement and Removal Operations and the Jefferson Parish Sheriff’s Office as part of the Criminal Alien Removal Initiative. The case is being prosecuted by Special Assistant U. S. Attorney Robert Weir.
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Martin Man SentencedRead the Press Release
United States Attorney Brendan V. Johnson announced that a Martin man convicted of Distribution a Controlled Substance was sentenced on January 3, 2013, by Chief U.S. District Judge Jeffrey L. Viken. David Alan Gotheridge, age 55, was sentenced to 2 years' probation and a $100 special assessment to the victims' assistance fund.
On April 17, 2012, Gotheridge distributed hydrocodone with acetaminophen at Martin. Gotheridge pled guilty to the charge on October 2, 2012.
This case was investigated by the Northern Plains Safe Trails Drug Enforcement Task Force, whose member agencies include the Federal Bureau of Investigation, the Bureau of Indian Affairs, the South Dakota Division of Criminal Investigation, the South Dakota Highway Patrol, the Martin Police Department, the Pierre Police Department, and the Oglala Sioux Tribe Department of Public Safety. Special Assistant U.S. Attorney Laura Shattuck prosecuted the case.
Man Sentenced to 41 Months in Prison for Firing Shots at a Louisiana National Guard HelicopterRead the Press Release
Alexandria, La.: United States Attorney Stephanie A. Finley announced that James Lamar Kelly, age 62, of Sikes, La., was sentenced today to a total of 41 months in prison for his convictions on four felony counts related to his firing shots at a Louisiana Army National Guard helicopter. U. S. District Judge Dee D. Drell also sentenced Kelly to three years supervised release at the completion of his prison term and forfeiture of the firearm.
Kelly was convicted by a jury in September 2012 of three counts of endangering the safety of the pilot of a Louisiana Army National Guard helicopter in flight, committing an act of violence against the pilot, and using a deadly and dangerous weapon to forcibly assault, resist, oppose, impede, intimidate and interfere with the pilot. Kelly was also sentenced for his conviction of theft of United States mail.
Testimony at trial showed that on August 2, 2010, the Louisiana State Police and the Winn Parish Sheriff’s Office were conducting a marijuana eradication program detail in Winn Parish. Louisiana Army National Guard (LANG) Counter-Drug Task Force helicopters based at Camp Beauregard in Pineville were assisting in this program by providing pilots and helicopters for the Louisiana State Police to conduct aerial surveillance. The LANG Counter Drug Task Force is funded and staffed by the U.S. Department of Defense. A Louisiana State Trooper was in each helicopter to make observations of areas where it was suspected marijuana was being cultivated. At about 3:00 p.m., on Shell Road near Sikes, La., one of these helicopters was fired upon by a person on the ground. The pilot took evasive action and immediately left the area. He landed at the airport in Natchitoches and inspected the helicopter for damage. No bullet holes were noted. Neither the pilot nor the Trooper on board was injured. Soon thereafter, Louisiana State Police Troopers, Winn Parish Sheriff’s Deputies, and a Louisiana Wildlife and Fisheries Agent located and arrested James Lamar Kelly without incident. They also recovered the 9 mm semi-automatic handgun that Kelly used to shoot at the helicopter.
While at Kelly’s house, Troopers noted a large amount of undelivered mail in various vehicles parked in Kelly’s yard. Kelly was working for a private contractor who had a contract to deliver mail to more than 160 U.S. Postal Service customers on a rural route in Winn Parish. Kelly admitted to U.S. Postal Service, Office of Inspector General Special Agents that instead of delivering this and other mail on his route, he brought it back to his house where he kept it until he either placed it in a dumpster or burned it. Kelly admitted that he had been doing this for approximately four years. Kelly entered a guilty plea to the theft of mail charge on August 23, 2012, but went to trial on September 11, 2012 for the charges of firing shots at the helicopter.
U.S. Attorney Finley stated, “Firing shots at any aircraft are not actions to be taken lightly. Kelly’s acts endangered both those on the aircraft and those on the ground. This Army National Guard helicopter pilot was performing an important mission in assisting the State Trooper on board and State Police Troopers and Winn Parish Sheriff’s Deputies on the ground in their drug eradication program. Luckily, no one was hurt by the defendant’s dangerous and illegal conduct. Kelly’s prison sentence reflects the seriousness of his offense.”
This case was investigated by the Louisiana State Police, Region II in Alexandria, the United States Postal Service, Office of Inspector General Office, and the FBI. It was prosecuted by Assistant United States Attorney Robert W. Gillespie Jr.
Man Sentenced to Forty Months in Federal Prison for Bank Robbery and Attempted Bank Robbery of Two Banks in Coffee CountyRead the Press Release
Montgomery, Alabama - Benjamin Michael Smith, a resident of Coffee County, Alabama, was sentenced to forty months in federal prison for federal felony charges for bank robbery and attempted bank robbery, United States Attorney George L. Beck, Jr., announced today.
In October 2012, the United States Attorney filed a felony information against Smith alleging the federal charges. During Smith’s guilty plea hearing, he admitted that on February 16, 2010, he attempted to rob Citizen’s Bank located in Coffee County. Smith also admitted that on December 5, 2011, he robbed CB&T Bank located in Coffee County.
United States District Judge Mark E. Fuller sentenced Smith to a total term of forty months in federal prison and three years of supervised release following his release from prison. Smith remains in the custody of the United States Marshals Service pending placement by the Bureau of Prisons.
This case was investigated by the Federal Bureau of Investigation with the assistance of the Enterprise Police Department. Assistant United States Attorney Jerusha T. Adams prosecuted the case.
PRESS CONTACT: Clark Morris
Email: [email protected]
Telephone: (334) 551-1755
Fax: (334) 223-7617Lincoln County Man Sentenced to 3 Years in Federal Prison for Illegal Firearm PossessionRead the Press Release
CHARLESTON, W.Va. – U.S. Attorney Booth Goodwin announced today that a Lincoln County man was sentenced to three years in federal prison followed by three years of supervised release for being a felon in possession of a firearm. George Wayne Taylor, 56, of Hamlin, W.Va., admitted that on August 7, 2007, he was observed holding a shotgun at a relative’s residence located in Alkol, Lincoln County, W.Va. Taylor further admitted that at the time he possessed the firearm, he stole metal roofing from the Lincoln County residence. An individual present during the incident photographed the defendant in possession of the firearm. Taylor also admitted firing the shotgun after being photographed.
Law enforcement officers later recovered four stolen firearms and the stolen metal roofing from the defendant’s residence in Hamlin, W.Va.
Taylor was previously convicted in March 1997 in Pike County Court in the Commonwealth of Kentucky, of theft by unlawful taking of $300 or more. Taylor’s right to possess a firearm by August 8, 2007 had not been restored.
The investigation was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Assistant United States Attorney William King handled the prosecution. The sentence was imposed by United States District Judge Thomas E. Johnston.
This case was brought as part of Project Safe Neighborhoods. Project Safe Neighborhoods is a nationwide commitment to reduce gun crime in the United States by networking existing local programs targeting gun crime.
Lawyer Pleads Guilty to Stealing Money Intended for His Clients-Scheme Cost Victims More Than $100,000-Read the Press Release
WASHINGTON – Deairich R. Hunter, 47, an attorney from Washington, D.C., pled guilty today to a federal charge stemming from his theft of $109,830 in payments from insurance companies that were intended to settle some of his clients’ disability and personal injury claims.
The plea took place in the U.S. District Court for the District of Columbia and was announced by U.S. Attorney Ronald C. Machen Jr., Debra Evans Smith, Acting Assistant Director in Charge of the FBI’s Washington Field Office, and William P. White, Commissioner of the District of Columbia Department of Insurance, Securities, and Banking.
Hunter pled guilty to a charge of theft or embezzlement in connection with health care. He is to be sentenced April 26, 2013 by the Honorable Beryl A. Howell. The charge carries a maximum statutory sentence of 10 years in prison and a fine of up to $250,000. As part of his plea agreement, Hunter agreed to pay $109,830 in restitution to his clients and a medical provider whose bills were to be paid out of the settlement funds.
According to a statement of offense, signed by the defendant as well as the government, from August 1998 until April 2009, Hunter was a member of the Bar of the District of Columbia Court of Appeals and practiced law in the District of Columbia. Also during that time period, he was a member of the bar of the state of Maryland.
Between 2003 and 2009, Hunter was retained by various individuals in disability and personal injury claim disputes. Those clients generally agreed that Hunter was entitled to one-third of any recoveries regarding their settled claims. Hunter generally agreed to notify these clients of any offers of settlement and to inform clients of significant developments, among other things. In some cases, he agreed to pay his clients’ health care expenses directly from the proceeds of the recovery in their cases. However, on a number of occasions, Hunter settled such claims without notifying his clients and without authority to do so and then the defendant stole the settlement proceeds, resulting in a total loss amount from this scheme of $109,830.
In announcing the plea, U.S. Attorney Machen, Acting Assistant Director in Charge Smith, and Commissioner White commended the efforts of those who investigated the case from the FBI’s Washington Field Office and the District of Columbia Department of Insurance, Securities and Banking. They also praised those who worked on the case from the U.S. Attorney’s Office, including Legal Assistant Donna Galindo, former Assistant U.S. Attorney Courtney G. Saleski, and Assistant U.S. Attorney Matt Graves, who is prosecuting the matter.
13-022
La Jolla Oncologist and Medical Practice Plead Guilty to Dispensing Unapproved DrugsRead the Press Release
SAN DIEGO - A prominent La Jolla oncologist and his corporate medical practice have pleaded guilty in connection with a scheme to import unapproved foreign cancer drugs at a deep discount, dispense them to unwitting patients, bill Medicare as if the drugs were legitimate, and pocket the profits.
In a hearing before U.S. Magistrate Judge Bernard Skomal on January 15, Dr. Joel I. Bernstein entered a guilty plea to a single count of introducing an unapproved drug into interstate commerce – in this case, a cancer drug called “Mabthera” intended for market in Turkey - and administering it to patients. The approved U.S. drug with the same active ingredient is Rituxan, which is used to treat lymphomas and leukemias such as non-Hodgkin lymphoma and chronic lymphocytic leukemia. Bernstein was released pending sentencing, which is scheduled for April 16 at 1:30 p.m. before Judge Skomal.
In addition, his medical practice, Dr. Joel I. Bernstein, M.D., Inc., also pleaded guilty at a hearing today before U.S. District Judge Cathy Ann Bencivengo to one count of Health Care fraud. According to the plea agreement with the corporation, employees of Dr. Joel I. Bernstein, M.D., Inc. purchased $3.4 million of foreign cancer drugs, knowing they had not been approved by the U.S. Food and Drug Administration for use in the United States. From 2007 to 2011, Bernstein’s office purchased these drugs for significantly less than market value in the U.S., and then submitted claims to Medicare at the full reimbursement price. To conceal the scheme, the office fraudulently used Medicare reimbursement codes for approved cancer drugs, as Medicare does not pay for unapproved drugs.
The plea agreement for the corporation also calls for $1.7 million in restitution to Medicare, plus forfeiture of $1.2 million in profits. The corporate medical practice is scheduled to be sentenced on May 17, 2013, before Unites States District Judge Cathy Ann Bencivengo.
In addition, the government has also filed a False Claims Act lawsuit in District Court against Dr. Bernstein and his medical corporation for submitting false claims to the Medicare Program for these unapproved drugs. According to this civil complaint, the Medicare Program was defrauded of over $1.7 million, and under the False Claims Act, the United States can recover triple the amount of damages plus monetary penalties.
The cases involving Dr. Bernstein and his practice are the latest example of an alarming nationwide trend that potentially puts patients at risk by exposing them to foreign drugs – particularly injectable chemotherapy drugs - that are not vetted by the FDA. Agency officials have described the trend as an “epidemic of unapproved and counterfeit drugs.”
The FDA’s Office of Criminal Investigations (OCI) currently has over 200 investigations nationwide involving schemes in which medical practices purchase foreign, unapproved drugs and dispense them to unsuspecting patients for personal financial gain.
This practice is particularly disturbing because, unlike traditional prescription drugs which are dispensed to the patient by a pharmacy, oncology drugs are typically infused into a patient without the patient ever seeing the box it came in, or any of the related labeling.
“This isn’t just about the greed of one doctor, but about the welfare of many patients,” said U.S. Attorney Laura Duffy. “In a worst-case scenario, chemotherapy drugs that have not been approved by the FDA may be fake, ineffective, unsafe and dangerous. This is what motivates the Department of Justice and the FDA to be more aggressive in stopping those who would corrupt the integrity of the pharmaceutical supply chain with no regard for the well-being of patients.”
John Roth, director of the FDA’s Office of Criminal Investigations, the lead agency on the case, said, "When medical professionals decide that patient safety is less important than finding a great deal on pharmaceutical products from foreign countries and unknown suppliers our nation’s pharmaceutical supply chain is at risk and patients are vulnerable. FDA’s Office of Criminal Investigations will continue to investigate these cases and work closely with our regulatory counterparts in FDA and our law enforcement partners who share the same commitment to address this problem. We hope this message is heard loud and clear within the medical community-you will face criminal prosecution if you engage in this type of illegal activity."
Daphne Hearn, Special Agent in Charge of the San Diego FBI, said, “Health care fraud costs the country billions of dollars each year and undermines the security of the Medicare program. The FBI will continue to work with our law enforcement partners and prosecutors to ensure the safety of the public and ensure the Medicare program will be there for those who need it most.”
Derek Benner, Special Agent in Charge of Immigration and Customs Enforcement’s Homeland Security Investigations, said, “As part of this case, HSI agents and our law enforcement partners uncovered an intricate network involved in the illicit distribution and importation of unapproved drugs that were sold to doctors in the U.S. It’s disturbing to see licensed, trusted medical professionals who are willing to put their own financial gain over public health and safety. We owe it to consumers to aggressively pursue pharmaceutical fraud given the significant risk to public health.”
According to the corporation’s plea agreement, Bernstein’s employees knowingly purchased foreign drugs containing the same active ingredient as drugs sold in the United States as Abraxane, Alimta, Aloxi, Boniva, Eloxatin, Gemzar, Neulasta, Rituxan, Taxotere, Venofer and Zometa, but were intended for use in markets outside the United States and had not been approved for sale in the United States.
The medical practice, in pleading guilty, admitted that it was aware that the drugs were not approved by the FDA in part because the practice had received a Notice from the FDA in October, 2008, that a shipment of drugs had been detained because the drugs were not approved for use in the United States by the FDA. Despite this warning, Bernstein’s medical practice continued to purchase unapproved cancer drugs and inject them into patients.
The FDA regulates the introduction of pharmaceuticals into commerce. This regulation helps ensure that drugs are safely manufactured, made from appropriate ingredients and properly labeled. The approval process addresses the chemical composition of the drug, the drug’s safety and effectiveness, and the elements of the drug’s distribution, such as the methods used in the manufacture, processing and packing of the drug, as well as the labeling to be used for the drug.
Only drugs that comply with vigorous U.S. standards should be given to patients in this country. Drugs manufactured outside the United States which are not intended for use in the United States do not go through this approval process and are considered unapproved, and therefore potentially unsafe.
In the Bernstein case, investigators found no evidence the illegal drugs involved were counterfeit. The unapproved foreign medications that were seized during the investigation were tested and found to contain the appropriate level of active ingredients. Although it’s difficult to determine whether a decline in a patient’s health should be attributed to unapproved drugs or to cancer, the investigation uncovered no evidence to indicate that Bernstein’s patients were harmed by the foreign drugs he administered.
There have been numerous similar cases of illegal importation and distribution of foreign unapproved drugs in San Diego and around the United States in recent years.
In cases related to Bernstein, a Florida-based cancer-drug supplier, Martin Paul Bean III, was indicted by a federal grand jury in San Diego in September 2012 for allegedly selling more than $7 million of misbranded and unapproved prescription oncology drugs to U.S. doctors. Please see 12-cr-03734-WQH USA.
The indictment alleged that from 2005 to 2011, Bean, doing business as GlobalRxStore, ordered the misbranded and unapproved drugs from foreign countries, including Turkey, India and Pakistan, and sold them to the doctors throughout the U.S. at substantially discounted prices via a wholesale pharmacy in San Diego.
That pharmacy - Oberlin Medical Supply and Service Corp. - was owned and operated by Maher Idriss, who pleaded guilty March 8, 2012, to conspiring with Bean to supply the unapproved drugs. Idriss acknowledged that U.S. doctors paid him over $7 million for foreign-sourced unapproved oncology drugs from May 2006 to May 2011. Idriss faces up to five years in prison and restitution and has already forfeited approximately $54,000 of profits. He is scheduled for sentencing May 20, 2013. Please see 12- cr-01775-WQH.
According to the plea agreement for the Bernstein medical practice, employees ordered drugs from Oberlin, among other suppliers.
Idriss admitted that after receiving payments from the doctors, he transferred the funds to the foreign suppliers and to the GlobalRXStore owner's bank account in Canada, keeping a portion for himself.
In another related case with a San Diego connection, James Newcomb of La Jolla was sentenced in August 2012 to 24 months in prison for conspiring to distribute adulterated prescription drugs to physicians in the United States.
Newcomb admitted that he distributed unapproved prescription drugs from foreign countries to physicians located in the United States, with the assistance of persons in Canada and the United Kingdom. Please see 12-cr-00009-RWS-1. Newcomb and others marketed these illegal drugs to U.S. doctors by offering them at up to 60% off the average wholesale price of the legitimate drugs in the United States.
According to the plea agreement of Bernstein’s medical practice, employees of his office purchased unapproved oncology drugs from Newcomb’s businesses, which included Medication Brokers, Pricing Logix, Richard’s Services, Ban Dune Marketing and Warwick Healthcare Solutions. Newcomb based his operations in offices in La Jolla. La Jolla resident Sandra Behe and Dr. Abid Nisar of St. Louis, Missouri, were also convicted in the same investigation.
Elsewhere in the country, doctors, office staff and drug suppliers in Maryland, Missouri, Tennessee and California were indicted in similar schemes in 2011 and 2012. They were accused of importing misbranded cancer drugs at significantly cheaper prices, providing them to patients without disclosing the source of the drugs, and then submitting claims for reimbursement from healthcare programs.
It was the FDA’s discovery of two counterfeit drugs - Avastin, the approved blockbuster cancer drug for treatment of colorectal, lung, kidney and brain cancer, and Altuzan, the unapproved Turkish version of Avastin - that brought national media attention to the problem. The Altuzan was found to contain no active ingredient at all, and thus would provide no benefit whatsoever to patients.
The FDA, recognizing the seriousness of this illegal activity and the discovery of the counterfeit Avastin and Altuzan, took the unprecedented regulatory action of issuing letters to numerous medical practices and physicians around the country, including many that purchased unapproved cancer drugs. To date over 500 letters have been issued.
Dr. Bernstein was among those who received a letter from the FDA prior to being charged with federal crimes.
The letter to Bernstein said, in part: “Purchasing prescription drug products, such as injectable cancer medications, from foreign or unlicensed suppliers puts patients at risk of exposure to drugs that may be fake, contaminated, improperly stored and transported, ineffective, and dangerous. In virtually all cases, purchasing unapproved prescription drugs from foreign sources violates the Federal Food, Drug, and Cosmetic Act and is illegal.”
The letter warned of the risks of purchasing medications from foreign, unfamiliar or unlicensed suppliers and selling unapproved versions of injectable cancer medications, noting that “patients were unknowingly placed at risk when they received medications of uncertain purity, storage, handling, identity and sourcing.”
The letter also noted that importing these medications from foreign sources is a violation of the Federal Food, Drug and Cosmetic Act.
“In an effort to protect the health of patients, health care providers should use only FDA-approved versions of these cancer medications,” the letter said. “Health care providers should be aware that purchasing medications from direct-to-clinic promotions that are from non-verified sources might increase the risk of receiving a potentially unsafe and ineffective product, since the products offered for sale may be unapproved, not manufactured with the quality attributes of FDA-approved products, or counterfeit.”
DEFENDANT Criminal Case No. 13cr0120-BGS Joel I. Bernstein SUMMARY OF CHARGESTitle 21, United States Code, Section 331(d), 333(a) (1) and 355(a), a misdemeanor – Introducing or causing to be introduced into interstate commerce an unapproved new drug
MAXIMUM PENALTIESOne year in prison; $100,000 fine, one year supervised release; restitution.
DEFENDANT Criminal Case No. 13cr0119-CAB Dr. Joel I. Bernstein, M.D., Inc. SUMMARY OF CHARGESTitle 18, United States Code, Section 1347 – Medicare Fraud
MAXIMUM PENALTIESFive years’ supervised release; $500,000 fine; mandatory restitution.
INVESTIGATING AGENCIESThe U.S. Food and Drug Administration’s Office of Criminal Investigations was the lead investigative agency in this case. Other agencies involved were the Federal Bureau of Investigation and Immigration and Customs Enforcement’s Homeland Security Investigations. The lead prosecutor is Melanie Pierson.
Kenneth Jones Sentenced for Federal Firearms ConvictionsRead the Press Release
KENNETH JONES, age 23, a resident of New Orleans, Louisiana, was sentenced to 38 months of incarceration by U.S. District Court Judge Sarah S. Vance after he pleaded guilty to two counts of being a previously convicted felon in possession of a firearm, announced U.S. Attorney Dana J. Boente. In addition to incarceration, JONES received three (3) years of supervised release and a $200.00 special assessment
According to court documents, on August 24, 2011, JONES was a passenger in a vehicle stopped by New Orleans Police Officers for a routine traffic violation. During the police encounter, JONES was found to be in possession of a Glock, model 36, .45 caliber pistol.
Later, on December 9, 2011, when the New Orleans Police Department was executing an arrest warrant, JONES was found with a second firearm, a Beretta, model PX4Storm, .40 caliber pistol.
Court records revealed that JONES was convicted on or about January 22, 2008, for the possession with intent to distribute cocaine in Texas, a felony punishable by more than one year of incarceration. As such, JONES was prohibited from possession a firearm by both state and federal law.
The case was investigated by the FBI Violent Crime Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives, with assistance of NOPD and was prosecuted by Assistant
U.S. Attorney Edward J. Rivera.Kansas Man Sentenced for Williston Bank RobberyRead the Press Release
BISMARCK – U.S. Attorney Timothy Q. Purdon announced that on Jan. 23, 2013, Kent A. Clemens, 53, Topeka, Kan., was sentenced by U.S. District Judge Daniel L. Hovland on a charge of bank robbery. Clemens pleaded guilty to the charge on Oct. 22, 2012.
Judge Hovland sentenced Clemens to serve three years and one month in federal prison, to be followed by two years of supervised release. Clemens was ordered to pay restitution of $500 and to pay a $100 special assessment to the Crime Victim’s Fund.
On July 18, 2012, Clemens entered the Gate City Bank in Williston and demanded money from a teller. After receiving money, Clemens fled on foot from the bank. Clemens then traveled to Topeka. On July 21, 2012, Clemens contacted the Topeka Police Department and reported the he was the person who robbed the Gate City Bank in Williston. Investigators recovered some of the money from Clemens’s sister, who advised Clemens had given the money to her after returning from North Dakota.
The case was investigated by the Federal Bureau of Investigation, the Williston Police Department and the Topeka Police Department.
Assistant U.S. Attorney Rick Volk prosecuted the case.
KC Man Sentenced to 10 Years for Illegal FirearmRead the Press Release
Project Ceasefire
KANSAS 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.
Thomas D. Clegg, 29, of Kansas City, was sentenced by U.S. District Judge Beth Phillips to 10 years in federal prison without parole, the statutory maximum sentence.
Clegg, who pleaded guilty on Sept. 26, 2012 to being a felon in possession of a firearm, was arrested on May 4, 2012. According to court documents, Kansas City, Mo., police officers responded to the area of I-70 and Sterling to locate a suspect and a Yellow Cab that had been taken in an earlier carjacking. The cab driver reported that his cell phone had been taken and police officers were able to ping the phone to determine its location. The officers located the victim’s cab and went into the IHOP restaurant, where they located Clegg sitting alone in a booth.
The officers asked Clegg to step out of the booth and he attempted to push past the officers and flee. Clegg struggled violently and the officers had to deploy a taser to take him into custody. Officers searched Clegg and found a loaded 9mm Taurus semi-automatic handgun in his left front pants pocket. The victim’s cell phone was recovered from Clegg and returned to the victim.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Clegg has two prior felony convictions for possession of a controlled substance and prior felony convictions for unlawful use of a weapon, trafficking drugs, voluntary manslaughter, firing a weapon from a motor vehicle causing injury or death, armed criminal action and assault.
This case was prosecuted by Assistant U.S. Attorney D. Michael Green. It was investigated by the Kansas City, Mo., Police Department.
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.Joseph Pretty on Top 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 23, 2013, before Senior U.S. District Judge Jack D. Shanstrom, JOSEPH PRETTY ON TOP, a 49-year-old resident of Lodge Grass, appeared for sentencing. PRETTY ON TOP was sentenced to a term of:
Probation: 3 years
Special Assessment: $300
Restitution: $3,324
PRETTY ON TOP was sentenced in connection with his guilty plea to theft by an employee of an Indian gaming establishment and theft by employee of an Indian casino.
In an Offer of Proof filed by Assistant U.S. Attorney E. Vincent Carroll, the government stated it would have proved at trial the following:
On April 11, 2012, an investigation was opened after allegations that approximately $3,000 was stolen from the gaming machines at the Absaalooka Nights Casino at Crow Agency. The investigation revealed that PRETTY ON TOP, a security guard for the Absaalooka Nights Casino, had turned off the surveillance cameras to an area of the casino and, without authorization, took money out of the gaming machines in that area. PRETTY ON TOP took $681 on 3/18/2012; $1,132 on 3/20/2012; and $1,511 on 3/22/2012, for a total of $3,324. When interviewed by law enforcement, PRETTY ON TOP admitted to taking the money. Also, part of the thefts were caught on other surveillance videos.
The Absaalooka Nights Casino is a gaming establishment operated by and for, and licensed by, the Crow Tribe pursuant to an ordinance approved by the National Indian Gaming Commission.
Because there is no parole in the federal system, the "truth in sentencing" guidelines mandate that PRETTY ON TOP will likely serve all of the time imposed by the court. In the federal system, PRETTY ON TOP 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 Bureau of Indian Affairs.
Joplin Man Pleads Guilty to Child PornRead the Press Release
Project Safe Childhood
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a sex offender from Joplin, Mo., pleaded guilty in federal court today to possessing child pornography.
David Wayne Morgan, 56, of Joplin, pleaded guilty before U.S. Magistrate Judge David P. Rush to possessing child pornography. Morgan, a registered sex offender, was convicted of statutory sodomy with a 4-year-old victim in 1997.
Under the terms of today’s plea agreement, Morgan will be sentenced to 10 years in federal prison without parole.
On May 1, 2012, members of the Southwest Missouri Cybercrimes Task Force, in conjunction with other state and federal law enforcement agencies, conducted a sexual offender registration compliance check. Law enforcement officers contacted Morgan at his residence. Morgan led the investigators into his home and immediately began disconnecting various devices from his computer system. Morgan allowed officers to search his computer and storage devices. Investigators found multiple images of child pornography on the computer.
A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the Southwest Missouri Cybercrimes Task Force.
Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc . For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources."Inmate Who Bribed Correctional Officer to Smuggle Contraband to Him Sentenced to 15 Months’ ImprisonmentRead the Press Release
The United States Attorney’s Office for the Middle District of Pennsylvania announced that today in Scranton Senior United States District Court Judge James M. Munley sentenced Anthony Orlando Gibbs, age 37, formerly of Michigan, to 15 months’ imprisonment for bribing a correctional officer at the United States Penitentiary at Canaan to smuggle contraband into the prison.
The sentencing follows Gibbs’ guilty plea to a Criminal Information charging him with bribery of a public official. The Criminal Information noted that during the Spring and Summer of 2011, Gibbs was an inmate at USP-Canaan. The United States Penitentiary-Canaan is a high security institution housing male inmates. High security institutions, also known as United States Penitentiaries, have highly-secured perimeters featuring walls or reinforced fences, multiple- and single-occupant cell housing, the highest staff-to-inmate ratio, and close control of inmate movement.
The Criminal Information further noted that under federal law, inmates are prohibited from possessing cellular telephones. USP-Canaan is also a smoke-free environment; inmates are not allowed to purchase or possess any kind of tobacco product which is considered contraband within the institution.
The Criminal Information alleged that Gibbs paid more than $5,000 to correctional officer Donald E. Lykon to induce him to smuggle to the defendant cellular phones, marijuana, tobacco and related items within the United States Penitentiary at Canaan.
There was a plea agreement in the case which was accepted by Senior Judge Munley.
Judge Munley previously sentenced correctional officer Donald E. Lykon to 18 months’ imprisonment and his wife, Kimberly Lykon, to 5 months’ imprisonment for their roles in the scheme.
The investigation was conducted by the United States Department of Justice Office of Inspector General.Assistant U.S. Attorney John Gurganus prosecuted the case.