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26 September 2024
United States Seizes More than $6 Million in Alleged Proceeds of a Crypto-Confidence SchemeRead the Press Release
WASHINGTON – The United States seized over $6 million worth of cryptocurrency from perpetrators overseas, announced U.S. Attorney for the District of Columbia Matthew M. Graves, U.S. Attorney for the Eastern District of Tennessee Francis M. Hamilton III, Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Criminal Division, and FBI Special Agent in Charge Joseph E. Carrico of the Knoxville Division.
The perpetrators in Southeast Asia targeted one or more individuals in the United States and fraudulently obtained millions of dollars’ worth of cryptocurrency through a cryptocurrency confidence investment scheme.
The FBI was able to trace victim funds on the blockchain and located multiple cryptocurrency wallet addresses which still held victim funds totaling more than $6 million.
Cryptocurrency confidence investment schemes begin by criminals contacting potential victims through seemingly misdirected text messages, dating applications, or professional meetup or investment groups. Next, using various means of manipulation, the criminal gains the victim’s affection and trust. The perpetrator then recommends cryptocurrency investment by touting their own, or an associate’s, success in the field. Means of carrying out the scheme vary, but a common tactic is to direct a victim to a fake investment platform hosted on a website. These websites, and the investment platforms hosted there, are created by criminals to mimic legitimate platforms. The subject assists the victim with opening a cryptocurrency account, often on a U.S.- based exchange, and then walks the victim through transferring money from a bank account to that cryptocurrency account. Next, the victim will receive instructions on how to transfer their cryptocurrency assets to the fake investment platform.
On its surface, the fraudulent platforms often show lucrative returns, encouraging further investment; however, all deposited funds are actually routed to a cryptocurrency wallet address controlled completely by the perpetrators. The perpetrators frequently allow victims to withdraw some of their “profits” early in the scheme to engender trust and help convince victims of the legitimacy of the platform. As the scheme continues, victims are unable to withdraw their funds and are provided various excuses as to why. Ultimately, victims are locked out of their accounts and lose all their funds.
“In these scams, fraudsters trick U.S. citizens into believing they are transferring funds to cryptocurrency investment opportunities when, in fact, they are just unwittingly turning their money over to the fraudsters,” said U.S. Attorney Graves. “The fact these fraudsters and their accounts are typically located outside the United States, will not stop us or our partners at the FBI from doing all we can to recover the proceeds of these frauds and to hold the people running them accountable.”
“Investment scams and schemes are not new, but committing fraud with digital currency presents new challenges for law enforcement attempting to recover lost funds,” said Special Agent in Charge Carrico. “The FBI along with our law enforcement partners will continue to investigate allegations of crypto scams, but the best defense is to educate yourself before making any investment. Remember, if it sounds too good to be true, it probably is.”
Based on data submitted to the FBI’s Internet Crime Complaint Center (https://www.ic3.gov/) in 2022 alone, perpetrators of these schemes targeted tens of thousands of victims in the United States and resulted in over two billion dollars in private assets being siphoned overseas. The loss amount reported in IC3 complaints involving cryptocurrency increased 45% since 2022, from more than $3.8 billion to over $5.6 billion in 2023.
The FBI Knoxville Division is investigating the case. The Justice Department’s Office of International Affairs and FBI’s Virtual Asset Unit are providing invaluable assistance.
The Department of Justice would like to acknowledge Tether for its assistance in effectuating the transfer of these assets. This case is being prosecuted by Assistant U.S. Attorneys Kevin Rosenberg and Rick Blaylock Jr. of the District of Columbia, Assistant U.S. Attorney Joseph DeGaetano of the Eastern District of Tennessee, and Trial Attorney Stefanie Schwartz from the National Cryptocurrency Enforcement Team with the Computer Crime and Intellectual Property Section of the Department of Justice.
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U.S. Customs and Border Protection Officer Sentenced for Civil Rights Violation and Falsifying RecordsRead the Press Release
ALBUQUERQUE – A U.S. Customs and Border Protection Officer was sentenced 20 months in prison for violating the civil rights of a U.S. citizen and falsifying records in a federal investigation.
There is no parole in the federal system.
According to court documents and evidence presented at trial, on June 18, 2019, while working as a U.S. Customs and Border Protection Officer at the Columbus Port of Entry, Oscar Orrantia, 38, encountered John Doe, a 63-year-old U.S. citizen. When John Doe complained about the heat while at the port of entry, Orrantia became angry and unjustifiably extracted John Doe from his vehicle and performed a “take-down” where he threw John Doe into a side barrier, which resulted in John Doe hitting his head. John Doe sustained bruising to his body and head as a result.
After this altercation, Orrantia placed John Doe in handcuffs and took him inside the facility. In his own words, Orrantia justified his actions to another officer by stating that he believed John Doe was “fucking being a dick.” Following the incident, Orrantia wrote an official report filled with false statements in an attempt to evade accountability for his actions.
The incident came to light after John Doe sought legal counsel from the ACLU, which subsequently filed a lawsuit against Orrantia and U.S. Customs and Border Protection. This lawsuit prompted the U.S. Customs and Border Protection's Office of Professional Responsibility to review the incident and consult with the U.S. Attorney's Office regarding potential criminal charges.
The investigation uncovered a troubling pattern of misconduct by Orrantia. At least two other individuals made allegations of improper behavior during inspections at the Columbus Port of Entry, occurring in August 2019 and June 2020. Additionally, Orrantia was involved in a separate incident at a Border Patrol checkpoint in August 2018, where he disregarded proper procedures and his colleagues' authority.
Orrantia's past disciplinary records indicate that he had previously faced consequences for the August 2018 incident, as well as for another incident in May 2020 involving unauthorized visitors and dishonesty during an administrative investigation.
Orrantia was convicted by a federal jury of one count of deprivation of a right and one count of falsification of records in December 2023.
Upon his release from prison, Orrantia will be subject to three years of supervised release.
U.S. Attorney Alexander M.M. Uballez and Rosa P. Mendez-Mier, Special Agent in Charge of Customs and Border Protection, Office of Professional Responsibility in El Paso, Texas, made the announcement today.
This case was investigated by Customs and Border Protection Office of Professional Responsibility (CBP OPR) with assistance from the Federal Bureau of Investigation, CBP Law Enforcement Safety & Compliance Less Lethal Training Branch, CBP Office of Assistant Chief Counsel, Department of Homeland Security, Office of Inspector General (DHS OIG) and the United States Marshals Service. Assistant U.S. Attorneys Marisa Ong and Eliot Neal prosecuted this case.
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U.S. Attorney's Office to Co-Host “United Against Hate” Event Featuring Film Screening and Panel DiscussionRead the Press Release
CHARLOTTE, N.C. –The U.S. Attorney’s Office for the Western District of North Carolina will present a film screening and panel discussion on Thursday, September 26, 2024, from 6:30 p.m. to 8:00 p.m., at First Presbyterian Church of Charlotte. The U.S. Attorney’s Office is co-hosting the event as part of the Justice Department’s “United Against Hate” Week, taking place September 23 to 27, 2024.
The event will feature the documentary Repairing the World: Stories from the Tree of Life, which documents the Pittsburgh community’s response to the 2018 Tree of Life synagogue shooting. The documentary depicts the resilience, unity, and healing efforts of the community following the deadliest anti-Semitic attack in U.S. history. Through powerful storytelling and recollections shared by survivors, family members, and the community, the film explores the impact of hate crimes and the power of diverse people coming together after a devastating tragedy.
Following the film screening, representatives from the U.S. Attorney’s Office, the FBI in Charlotte, the Charlotte Mecklenburg Police Department, the Mecklenburg County District Attorney’s Office, and the Mecklenburg Metropolitan Interfaith Network will lead a panel discussion on hate crimes and the importance of reporting hate incidents to law enforcement. The panel will also share information on what individuals and communities can do to prevent and respond to acts of hate.
“Events like this help raise awareness about the impact of hate crimes,” said Dena J. King, U.S. Attorney for the Western District of North Carolina. “By sharing stories of loss, strength, and unity, we want to educate the public but also to facilitate a meaningful dialogue about hate crimes and taking a stand against hatred in all its forms. The United Against Hate initiative is part of my Office’s core mission to protect civil rights and increase the safety and security of individuals and communities across Western North Carolina.”
The Department of Justice launched the United Against Hate initiative in 2022, in response to the rising number of hate crimes across the country. The initiative brings together law enforcement, community organizations, and the public to address hate crimes through outreach and education and build trust with those most vulnerable to acts of hate.
In the Western District of North Carolina, the U.S. Attorney’s Office continues to actively engage with local communities since the initiative’s launch. Previous efforts have included a youth summit with Charlotte-Mecklenburg Schools, meetings with faith-based communities, and discussions focused on protecting houses of worship.
“While not all hate incidents rise to the level of a hate crime, the impact and trauma they can inflict is very real. Reporting these incidents allows law enforcement and prosecutors to investigate and take appropriate action when warranted,” said U.S. Attorney King. “My Office is committed to partnering with all communities to address their concerns. I also invite members of the community to join us in our efforts to make Western North Carolina a safer and more inclusive place for all.”
Event Details:
Date: Thursday, September 26, 2024
Time: 6:30 PM to 8:00 PM
Location: First Presbyterian Church of Charlotte
Fellowship Hall
200 West Trade Street
Charlotte, North Carolina
The event is free and open to the public. Register at https://fpc.tiny.us/repairingtheworld.
For more information about the U.S. Attorney’s Office United Against Hate initiative please visit our website.
For immediate assistance or to report a hate crime please call 9-1-1. To file a report with the FBI please call 1-800-CALL-FBI or submit a tip at tips.FBI.gov. Also report suspected civil rights violations and hate crimes to the Civil Rights Division through the Justice Department’s toll-free line at 800-253-3931 or online at www.civilrights.justice.gov.
U.S. Attorney and the Central Florida Pledge Announce the Release of Hate Crimes Prevention Training Videos in Support of United Against Hate WeekRead the Press Release
Orlando, Florida – The United States Attorney’s Office for the Middle District of Florida (USAO-MDFL) and the Central Florida Pledge joined efforts to create hate crimes prevention training videos to inform the public about hate crimes and the importance of reporting them to law enforcement. The videos, which can be viewed on the Pledge’s YouTube page, are each approximately 1-2 minutes in length and include topics how to distinguish between a hate crime and a hate incident; how to report a hate crime; what information to include when reporting a hate crime; and how to report acts of discrimination.
“In recognition of United Against Hate week, we hope the community will view these videos to learn more about hate crimes and the importance of reporting hate crimes or hate incidents they personally experience or witness,” said U.S. Attorney Roger B. Handberg. “My office is committed to using our resources to assist victims of hate crimes, to help members of the community in preventing such crimes, to encourage reporting, and to hold accountable anyone who commits a federal hate crime.”
The USAO-MDFL partnered with the Central Florida Pledge to create these videos in furtherance of its United Against Hate initiative, which brings federal prosecutors and investigative partners to present at area high schools, churches, and other community locations to help educate people on identifying, reporting, and preventing hate crimes and other civil rights violations. Together with our local partners, the USAO-MDL’s United Against Hate campaign empowers students, residents, and communities to stand against racism and discrimination and alter the course of growing intolerance. Creating inclusion and equity are vital to building healthy and resilient communities. When cities and residents work together against hate, we can restore respect, embrace the strength of diversity and build inclusive and equitable communities for all.
Anyone who feels they have been the victim of a hate crime or may have witnessed one should immediately report the crime to state or local police by dialing 9-1-1. The next step is to quickly follow up that report by notifying the FBI. You can report a hate crime to the FBI online at tips.FBI.gov. You can also call the FBI at 1-800-CALL-FBI (1-800-225-5324).
Not every hate incident involves a crime. You can report any incident or allegations discrimination to the USAO-MDFL’s Civil Rights Unit by calling our Civil Rights Hotline at (813) 274-6095 or by sending an email to [email protected].
Request a presentation for your school or community group by sending an email to [email protected].
Additional Resources:
FBI’s 2023 Hate Crime Statistics: https://www.justice.gov/hatecrimes/hate-crime-statistics
Facts on Florida’s Hate Crime Incidents: https://www.justice.gov/hatecrimes/state-specific-information/Florida
Hate Crime Case Examples: https://www.justice.gov/hatecrimes/hate-crimes-case-examples
Two Russian nationals charged in connection with operating billion-dollar money laundering services; Justice Department seizes web domains for multiple illicit crypto exchangesRead the Press Release
ALEXANDRIA, Va. – Today, the Justice Department announced actions coordinated with the Department of State, Department of the Treasury, and other federal and international law enforcement partners to combat Russian money laundering operations. The actions involved the unsealing of an indictment charging a Russian national with his involvement in operating multiple money laundering services that catered to cybercriminals, as well as the seizure of websites associated with three illicit cryptocurrency exchanges.
“Today's actions highlight the Department’s continued disruption of malicious cyber actors and their criminal ecosystem,” said Deputy Attorney General Lisa Monaco. “The two Russian nationals charged today allegedly pocketed millions of dollars from prolific money laundering and fueled a network of cyber criminals around the world, with Ivanov allegedly facilitating darknet drug traffickers and ransomware operators. Working with our Dutch partners, we shut down Cryptex, an illicit crypto exchange, and recovered millions of dollars in cryptocurrency.”
“Every step cybercriminals take in their pursuit of money leaves another track that leads us to their doorstep,” said U.S. Attorney Jessica D. Aber for the Eastern District of Virginia. “And if you follow them on their path of greed, they will lead us to you. We will not stop, because while domains can always be seized, justice is unyielding.”
“The Secret Service is relentless in pursuing those engaged in criminal activity,” said Assistant Director Brian Lambert of the U.S. Secret Service. “I thank our domestic and foreign partners for their efforts on this case, as we continue our work bringing to justice those engaged in transnational criminal activity.”
According to court documents unsealed today in the Eastern District of Virginia, Russian national Sergey Ivanov, known online as “Taleon,” among other aliases, was charged with one count of conspiracy to commit and aid and abet bank fraud for providing payment processing support to the carding website Rescator, and one count of conspiracy to commit money laundering for laundering proceeds from the carding website Joker’s Stash. (“Carding” is the unlawful acquisition of and trade in stolen credit and debit card information for fraudulent purposes.) Ivanov allegedly operated for nearly two decades as a professional cyber money launderer, advertising his services to other cybercriminals on exclusive Russian-speaking criminal forums. Over the years, Ivanov’s laundering services and payment systems have catered to cybercrime marketplaces, ransomware groups, and hackers responsible for significant data breaches of major U.S. companies.
Ivanov allegedly created and/or operated Russian payment and exchange services UAPS, PinPays, and PM2BTC, which provided money transfer and laundering services directly to criminals. Cryptocurrency blockchain analysis revealed that, between July 12, 2013, and August 10, 2024, cryptocurrency addresses associated with Ivanov’s alleged money laundering services conducted transactions totaling approximately $1.15 billion in value. Approximately 32% of all traced bitcoin sent to these addresses originated from other cryptocurrency addresses associated with criminal activity. For example, more than $158 million of bitcoin flowing into Ivanov’s addresses allegedly represented fraud proceeds, more than $8.8 million allegedly represented proceeds from known ransomware payments, and approximately $4.7 million allegedly originated from darknet drug markets. The U.S. Secret Service has obtained court authorization to seize domains associated with the UAPS and PM2BTC websites.
The Rescator carding website allegedly sold stolen payment card data from U.S. financial institutions and personally identifiable information (PII) of U.S. citizens. For example, the website allegedly advertised the sale of data from up to 40 million payment cards and the PII of approximately 70 million people that had been stolen from a major U.S. retail victim in 2013. The breach cost the U.S. retail victim at least $202 million in expenses and caused damage to the U.S. retail victim’s customers, who became targets of identity theft by other cybercriminals. Ivanov allegedly provided payment processing support for the Rescator carding site through the UAPS and PinPays services for purchases made on the site using bitcoin.
Additionally, Russian national Timur Shakhmametov, known online as “JokerStash” and “Vega,” among other aliases, is charged in the same indictment with one count of conspiracy to commit and aid and abet bank fraud, one count of conspiracy to commit access device fraud, and one count of conspiracy to commit money laundering related to his work in operating the carding website Joker’s Stash and laundering the proceeds. Joker’s Stash offered for sale data from approximately 40 million payment cards annually, totaling hundreds of millions of payment cards overall, and was one of the largest known carding markets in history. Estimates of its profits range from $280 million to more than $1 billion. Shakhmametov and others allegedly promoted Joker’s Stash and its products by advertising the Joker’s Stash website and its stolen payment card data on numerous online cybercrime forums.
Separately, the U.S. Secret Service executed a seizure order from the District of Maryland against two website domain names used to support the cryptocurrency money laundering exchange “Cryptex.net.” According to court records unsealed today, Cryptex.net and Cryptex.one were associated with the administration and operation of Cryptex, which offers complete anonymity to Cryptex users by allowing them to register for accounts without providing know-your-customer compliance requirements. Like UAPS and PM2BTC, Cryptex advertised itself directly to cybercriminals.
According to a company that provides blockchain analytics services to law enforcement, there have been more than 37,500 transactions involving bitcoin addresses associated with Cryptex, amounting to a total value of approximately 62,586 bitcoin, or $1.4 billion at the time the transactions were made. Of that amount, about 31% of the bitcoin sent, or $441 million, originated from cryptocurrency addresses associated with criminal conduct, including $297 million of fraud proceeds and more than $115 million of proceeds from ransomware payments. Nine percent of all bitcoin sent to Cryptex, or $162 million, originated from cryptocurrency addresses associated with services often used by cybercriminals. Further, 28% of all bitcoin sent from Cryptex was sent to companies or darknet markets sanctioned by the United States.
The seizure of these domains by the government will prevent the owners and third parties from using the sites for money laundering. Individuals visiting those sites now will see a message indicating that the site has been seized by the federal government.
As part of the coordinated actions taken today, our Dutch partners seized the servers hosting PM2BTC and Cryptex. Those servers have been taken offline at various locations around the world, and the Dutch have seized cryptocurrency from those servers worth over $7 million.
In coordination with the department’s actions, other U.S. government agencies and foreign law enforcement partners are also taking related actions. The U.S. Department of State issued reward offers up to $11 million through its Transnational Organized Crime Rewards Program for information leading to the arrest and/or conviction of Ivanov and others involved in the operation of his money laundering services, and for Shakhmametov and others involved in the operation of Joker’s Stash. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an order that identifies PM2BTC as being of “primary money laundering concern” in connection with Russian illicit finance. Concurrently, Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Cryptex and Ivanov.
The U.S. Secret Service Cyber Investigative Section is investigating the case.
Assistant U.S. Attorney Zoe Bedell for the Eastern District of Virginia is prosecuting the case against Ivanov and Shakhmametov. Trial Attorney Jeff Pearlman and Senior Counsel Jessica Peck of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Thomas Sullivan for the District of Maryland are handling the investigation into Cryptex. The Justice Department’s Office of International Affairs also provided assistance in these matters.
The Netherlands Police, Dutch Fiscal Information and Investigation Service, International Cooperation Department of the Central Criminal Police of the State Police of Latvia, Europol, National Cyber-Forensics & Training Alliance, German Federal Criminal Police Office, and UK National Crime Agency provided invaluable assistance.
The text of FinCEN’s order can be found here.
More information on the individuals and entities that OFAC designated today can be found here.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia.
An indictment is merely an accusation. The defendant is presumed innocent until proven guilty.
Two Russian Nationals Charged in Connection with Operating Billion Dollar Money Laundering ServicesRead the Press Release
The Justice Department today announced actions coordinated with the Department of State, Department of the Treasury, and other federal and international law enforcement partners to combat Russian money laundering operations. The actions involved the unsealing of an indictment charging a Russian national with his involvement in operating multiple money laundering services that catered to cybercriminals, as well as the seizure of websites associated with three illicit cryptocurrency exchanges.
“Today's actions highlight the Department’s continued disruption of malicious cyber actors and their criminal ecosystem,” said Deputy Attorney General Lisa Monaco. “The two Russian nationals charged today allegedly pocketed millions of dollars from prolific money laundering and fueled a network of cyber criminals around the world, with Ivanov allegedly facilitating darknet drug traffickers and ransomware operators. Working with our Dutch partners, we shut down Cryptex, an illicit crypto exchange and recovered millions of dollars in cryptocurrency.”
“Cryptex promised its cybercriminal customers a safe space to launder their illicit proceeds anonymously,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “But the coordinated actions announced today — including seizing the Cryptex domains, servers, and proceeds — should put cybercriminals on notice that there are no safe spaces for cybercriminals online. The Criminal Division will continue to work with its domestic and international partnerships to disrupt platforms that enable cybercrime and render those platforms unprofitable.”
“Every step cybercriminals take in their pursuit of money leaves another track that leads us to their doorstep,” said U.S. Attorney Jessica D. Aber for the Eastern District of Virginia. “And if you follow them on their path of greed, they will lead us to you. We will not stop, because while domains can always be seized, justice is unyielding.”
“The Secret Service is relentless in pursuing those engaged in criminal activity,” said Assistant Director Brian Lambert of the U.S. Secret Service. “I thank our domestic and foreign partners for their efforts on this case, as we continue our work bringing to justice those engaged in transnational criminal activity.”
According to court documents unsealed today in the Eastern District of Virginia, Russian national Sergey Ivanov, known online as “Taleon,” among other aliases, was charged with one count of conspiracy to commit and aid and abet bank fraud for providing payment processing support to the carding website Rescator, and one count of conspiracy to commit money laundering for laundering proceeds from the carding website Joker’s Stash. “Carding” is the unlawful acquisition of and trade in stolen credit and debit card information for fraudulent purposes. Ivanov allegedly operated for nearly two decades as a professional cyber money launderer, advertising his services to other cybercriminals on exclusive Russian-speaking criminal forums. Over the years, Ivanov’s laundering services and payment systems have catered to cybercrime marketplaces, ransomware groups, and hackers responsible for significant data breaches of major U.S. companies.
Ivanov allegedly created and/or operated Russian payment and exchange services UAPS, PinPays, and PM2BTC, which provided money transfer and laundering services directly to criminals. Cryptocurrency blockchain analysis revealed that between July 12, 2013, and Aug. 10, cryptocurrency addresses associated with Ivanov’s alleged money laundering services conducted transactions totaling approximately $1.15 billion in value. Approximately 32% of all traced bitcoin sent to these addresses originated from other cryptocurrency addresses associated with criminal activity. For example, more than $158 million of bitcoin flowing into Ivanov’s addresses allegedly represented fraud proceeds, more than $8.8 million allegedly represented proceeds from known ransomware payments, and approximately $4.7 million allegedly originated from darknet drug markets. The U.S. Secret Service has obtained court authorization to seize domains associated with the UAPS and PM2BTC websites.
The Rescator carding website allegedly sold stolen payment card data from U.S. financial institutions and personally identifiable information (PII) of U.S. citizens. For example, the website allegedly advertised the sale of data from up to 40 million payment cards and the PII of approximately 70 million people that had been stolen from a major U.S. retail victim in 2013. The breach cost the U.S. retail victim at least $202 million in expenses and caused damage to the U.S. retail victim’s customers, who became targets of identity theft by other cybercriminals. Ivanov allegedly provided payment processing support for the Rescator carding site through the UAPS and PinPays services for purchases made on the site using bitcoin.
Additionally, Russian national Timur Shakhmametov, known online as “JokerStash” and “Vega,” among other aliases, is charged in the same indictment with one count of conspiracy to commit and aid and abet bank fraud, one count of conspiracy to commit access device fraud, and one count of conspiracy to commit money laundering related to his work in operating the carding website Joker’s Stash and laundering the proceeds. Joker’s Stash offered for sale data from approximately 40 million payment cards annually, totaling hundreds of millions of payment cards overall, and was one of the largest known carding markets in history. Estimates of its profits range from $280 million to more than $1 billion. Shakhmametov and others allegedly promoted Joker’s Stash and its products by advertising the Joker’s Stash website and its stolen payment card data on numerous online cybercrime forums.
Separately, the U.S. Secret Service executed a seizure order from the District of Maryland against two website domain names used to support the cryptocurrency money laundering exchange “Cryptex.net.” According to court records unsealed today, Cryptex.net and Cryptex.one were associated with the administration and operation of Cryptex, which offers complete anonymity to Cryptex users by allowing them to register for accounts without providing know-your-customer compliance requirements. Like UAPS and PM2BTC, Cryptex advertised itself directly to cybercriminals.
According to a company that provides blockchain analytics services to law enforcement, there have been more than 37,500 transactions involving bitcoin addresses associated with Cryptex, amounting to a total value of approximately 62,586 bitcoin, or $1.4 billion at the time the transactions were made. Of that amount, about 31% of the bitcoin sent, or $441 million, originated from cryptocurrency addresses associated with criminal conduct, including $297 million of fraud proceeds and more than $115 million of proceeds from ransomware payments. Nine percent of all bitcoin sent to Cryptex, or $162 million, originated from cryptocurrency addresses associated with services often used by cybercriminals. Further, 28% of all bitcoin sent from Cryptex was sent to companies or darknet markets sanctioned by the United States.
The seizure of these domains by the government will prevent the owners and third parties from using the sites for money laundering. Individuals visiting those sites now will see a message indicating that the site has been seized by the federal government.
As part of the coordinated actions taken today, our Dutch partners seized the servers hosting PM2BTC and Cryptex. Those servers have been taken offline at various locations around the world, and the Dutch have seized cryptocurrency from those servers worth over $7 million.
In coordination with the department’s actions, other U.S. government agencies and foreign law enforcement partners are also taking related actions. The U.S. Department of State issued reward offers up to $11 million through its Transnational Organized Crime Rewards Program for information leading to the arrest and/or conviction of Ivanov and others involved in the operation of his money laundering services, and for Shakhmametov and others involved in the operation of Joker’s Stash. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an order that identifies PM2BTC as being of “primary money laundering concern” in connection with Russian illicit finance. Concurrently, Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Cryptex and Ivanov.
The U.S. Secret Service Cyber Investigative Section is investigating the case.
Assistant U.S. Attorney Zoe Bedell for the Eastern District of Virginia is prosecuting the case against Ivanov and Shakhmametov. Trial Attorney Jeff Pearlman and Senior Counsel Jessica Peck of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Thomas Sullivan of the District of Maryland are handling the investigation into Cryptex. The Justice Department’s Office of International Affairs also provided assistance in these matters.
The Netherlands Police, Dutch Fiscal Information and Investigation Service, the International Cooperation Department of the Central Criminal Police of the State Police of Latvia, Europol, the National Cyber-Forensics & Training Alliance, the German Federal Criminal Police Office, and the UK National Crime Agency provided invaluable assistance.
The text of FinCEN’s order can be found here.
For more information on the individuals and entities that OFAC designated today, click here.
Two Nigerian Nationals Charged in Connection with Business Email Compromise SchemeRead the Press Release
MINNEAPOLIS – Two Nigerian nationals have been indicted for engaging in a fraudulent business email compromise scheme targeting several Minnesota-based health care companies, announced U.S. Attorney Andrew M. Luger.
According to court documents, from October 2020 through 2024, Shodiya Babatunde, 43, and Jamui Ahmed, 31, devised and carried out a fraudulent business email compromise scheme that targeted and deceived employees of several Minnesota-based health care companies into making payments to bank accounts controlled by Babatunde, Ahmed, and their co-conspirators, rather than to the intended beneficiaries of the payments.
As part of the scheme, Babatunde and Ahmed created a fake “spoofed” internet domain designed to appear as though it was controlled by Fairview Health. Babatunde and Ahmed also created fake email accounts designed to look as though they belonged to Fairview Health executives, including the CEO, the Executive Vice President and General Counsel, and a business analyst. Babatunde and Ahmed used the fake emails to carry out a “phishing” scheme to fraudulently obtain names, passwords, and access to payment accounts. The defendants also used their spoofed accounts to email several other Minnesota-based health insurance companies and provide new accounts into which such payments intended for Fairview Health should be wired. Unbeknownst to the vendor companies, the new accounts were actually controlled by Babatunde and Ahmed and their co-conspirators, not Fairview Health. In total, Babatunde and Ahmed fraudulently directed more than $13 million in payments intended for Fairview Health from Minnesota-based health care companies to accounts controlled by Babatunde, Ahmed, and their co-conspirators.
Babatunde and Ahmed are citizens and residents of Nigeria. They remain fugitives from justice.
This case is the result of an investigation conducted by the FBI.
Assistant U.S. Attorney Joseph H. Thompson is prosecuting the case.
An indictment is merely an allegation and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Two Defendants Plead Guilty to Roles in Beckley Drug Trafficking OrganizationRead the Press Release
BECKLEY, W.Va. – Today, Christopher Michael Shepherd, 48, of Fayetteville, pleaded guilty to possession with intent to distribute fentanyl and Kimberly Rosetta Logan, 47, of Beckley, pleaded guilty to distribution of fentanyl. Shepherd and Logan admitted to roles in a drug trafficking organization (DTO) that distributed methamphetamine, fentanyl and cocaine base, also known as “crack,” in Beckley and elsewhere within the Southern District of West Virginia.
According to court documents and statements made in court, on April 24, 2024, Shepherd arranged to exchange approximately 8.5 grams of heroin with co-defendant Tilford Joe Bradley Jr. for approximately 8.5 grams of fentanyl. Shepherd met with Bradley at a Beckley-area gas station and made the exchange later that day. Law enforcement observed the transaction and conducted a traffic stop of a vehicle driven by Shepherd shortly afterward. Shepherd admitted that he threw a bag of controlled substances from his vehicle while officers attempted the traffic stop. Officers found and seized 150 grams of fentanyl, 53 grams of methamphetamine, 1.7 grams of crack, and $4,007 as a result of the traffic stop. Shepherd admitted that he possessed the seized controlled substances and intended to distribute them within the Southern District of West Virginia.
Logan admitted that she sold a quantity of fentanyl to a confidential informant at her residence in Beckley on April 10, 2024. Logan further admitted to distributing additional amounts of fentanyl and cocaine to other individuals while using some herself throughout May 2024. Logan ordered an average of 8 grams of fentanyl and 4 grams of cocaine per week from her Beckley-based supplier by phone during that time period, receiving the controlled substances at her residence.
Shepherd and Logan are scheduled to be sentenced on January 31, 2025, and each faces a maximum penalty of 20 years in prison, at least three years of supervised release, and a $1 million fine.
Shepherd, Logan and Bradley are among 12 individuals indicted on charges alleging the defendants conspired to distribute methamphetamine, fentanyl, and crack within the Southern District of West Virginia from in or about June 2023 to in or about May 2024. The charges against Bradley and the other defendants are pending. An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
United States Attorney Will Thompson made the announcement and commended the investigative work of the Federal Bureau of Investigation (FBI), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and the Beckley/Raleigh County Drug and Violent Crime Unit, which consists of officers from the West Virginia State Police, the Raleigh County Sheriff’s Department, and the Beckley Police Department.
United States Magistrate Judge Omar J. Aboulhosn presided over the hearing. Assistant United States Attorney Andrew D. Isabell is prosecuting the case.
The investigation was part of the Department of Justice’s Organized Crime Drug Enforcement Task Force (OCDETF). The program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations and is the keystone of the Department of Justice’s drug reduction strategy. OCDETF combines the resources and expertise of its member federal agencies in cooperation with state and local law enforcement. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking organizations, transnational criminal organizations and money laundering organizations that present a significant threat to the public safety, economic, or national security of the United States.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Southern District of West Virginia. Related court documents and information can be found on PACER by searching for Case No. 5:24-cr-90.
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Tennessee Man Pleads Guilty to Using Drone to Fly Marijuana into Yazoo City Federal Correctional ComplexRead the Press Release
Jackson, Miss. – A Tennessee man pled guilty to providing marijuana to an inmate of a federal prison.
According to court documents and statements made in court, Mark Anderson, 49, of Tullahoma, Tennessee, flew a drone carrying approximately 195 grams of marijuana over the Federal Correctional Complex in Yazoo City and delivered it by releasing it from the air where an inmate would later retrieve it during the early morning hours of October 2, 2021.
Anderson pled guilty to providing contraband in a prison. He is scheduled to be sentenced on January 7, 2025, and faces a maximum penalty of 5 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Todd W. Gee of the Southern District of Mississippi and Acting Special Agent in Charge Eric DeLaune of Homeland Security Investigations made the announcement.
The case was investigated by Homeland Security Investigations and the Tennessee Bureau of Investigations.
Assistant U.S. Attorney Bert Carraway is prosecuting the case.
St. Paul Felon Pleads Guilty to Illegal Possession of FirearmRead the Press Release
MINNEAPOLIS – A St. Paul man has pleaded guilty to illegally possessing a firearm as a convicted felon, announced United States Attorney Andrew M. Luger.
According to court documents, on June 22, 2023, law enforcement executed a search warrant at the residence of Dean Wade Guenther, 57. In conducting the search, officers discovered a locked black safe in Guenther’s bedroom. Inside the safe, law enforcement found two 9mm semiautomatic pistols, 142 grams of fentanyl, and miscellaneous drug paraphernalia. Because Guenther has prior felony convictions, he is prohibited from possessing firearms or ammunition at any time.
Guenther pleaded guilty today in U.S. District Court before Judge David S. Doty to one count of possession of a firearm as a felon. A sentencing hearing will be scheduled at a later date.
This case is the result of an investigation conducted by the St. Paul Police Department, the Minnesota Bureau of Criminal Apprehension, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives, with assistance from the Paul Bunyan Drug Task Force.
Assistant U.S. Attorney Evan B. Gilead is prosecuting the case.
St. Louis Postal Worker Accused of Stealing Checks from Mail, Pandemic FraudRead the Press Release
ST. LOUIS – A U.S. Postal Service mail handler was indicted Wednesday in U.S. District Court and accused of pandemic fraud and stealing checks from the mail.
Anthony Virdure II, 29, was indicted on three counts of mail theft and one count of wire fraud. The indictment accuses Virdure of stealing checks with a face value of more than $1.5 million from the mail. Virdure worked at the Postal Service Processing and Distribution Center at 1720 Market Street in St. Louis and had access to all first-class mail routed through the center, the indictment says.
The indictment also accuses Virdure of fraudulently applying for and receiving a $20,832 Pandemic Protection Program (PPP) loan in 2021 for a tobacco store called Virdure Dynamics. The loan application contained false information about the business’ income and Virdure supplied a false IRS Schedule C in support of the application, the indictment says. The purported address of the store was actually his grandmother’s house, it says.
“This indictment proves the U.S. Postal Inspection Service’s commitment to preserving the safety and security of the U.S. mail, and to stopping those who perpetrate mail theft and fraud schemes,” said Acting Inspector in Charge, John Jackman, who leads the United States Postal Inspection Service, St. Louis Field Office. “The Postal Inspection Service and its law enforcement partners will aggressively investigate those individuals who steal or defraud individuals or businesses of money and property.”
Charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
The wire fraud charge carries a penalty of up to 20 years in prison, a $250,000 fine or both prison and a fine. The mail theft charges carry a penalty of up to five years in prison and the same fine.
This case was investigated by the U.S. Postal Service Office of Inspector General and the U.S. Postal Inspection Service. Assistant U.S. Attorney Gwen Carroll is prosecuting the case.
St. Louis Nonprofit Executive Accused of More Than $2 Million Dollar Student Meal FraudRead the Press Release
ST. LOUIS – The owner of a nonprofit was indicted Wednesday and accused of fraudulently obtaining more than $2 million in funds intended to feed low-income Missouri children, both before and during the coronavirus pandemic.
Cymone McClellan, 31, of St. Louis, was indicted in U.S. District Court in St. Louis on four felony counts of wire fraud.
The indictment says McClellan owned and ran a non-profit organization called Sister of Lavender Rose (S.O.L.R.). From about January 2019 to June 2022, McClellan and her nonprofit submitted false and fraudulent meal reimbursement claims to Missouri’s Department of Health and Senior Services (DHSS). S.O.L.R. submitted reimbursement claims to the Food and Nutrition Programs for Children claiming that she served 860,876 meals to children but only bought enough food and milk to serve fewer than one-quarter of those meals, the indictment says. According to the indictment, McClellan defrauded the State of Missouri out of more than $2 million through her fraudulent reimbursement claims.
The indictment says McClellan attempted to cover up her crime by providing bogus sign-in sheets to DHSS falsely claiming to have taken the attendance of meal recipients at certain food distribution locations. S.O.L.R. submitted management plans to DHSS falsely asserting that state meal reimbursement dollars were spent only in connection with the provision of meals to low-income children, and that the nonprofit did not use meal money to make purchases over $5,000. The indictment says McClellan spent $60,000 on a down payment on a house in Collinsville, Illinois and also bought five vehicles and a house in Florissant, Missouri.
One of the addresses where McClellan informed the State of Missouri that she was purportedly preparing food for low-income children belonged to an adults-only nightclub called Elmo’s Love Lounge, the indictment says.
The indictment seeks the forfeiture of the real estate, as well as a 2021 Chevrolet Traverse, a 2012 Chevrolet Express G3500 van, a 2020 Mercedes-Benz Metris van, a 2012 Ford E350 box truck and a 2018 Lexus RX SUV.
Charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty. The wire fraud charges carry a penalty of up to 20 years in prison, a $250,000 fine or both prison and a fine.
This case was investigated by the FBI and the U.S. Department of Agriculture Office of Inspector General. Assistant U.S. Attorney Derek Wiseman is prosecuting the case.
For information about how to report pandemic or disaster fraud, go to justice.gov/archives/disaster-fraud.
Southeast Missouri Felon Caught Twice with Guns, Drugs Sentenced to 110 Months in PrisonRead the Press Release
CAPE GIRARDEAU – U.S. District Judge Rodney W. Sippel on Thursday sentenced a convicted felon who was caught twice with guns and drugs to 110 months in prison.
Joshua Allen Morris, 39, pleaded guilty in U.S. District Court in Cape Girardeau in June to one count of being a felon in possession of a firearm. He admitted being caught with two handguns and methamphetamine on Feb. 20, 2023, during a traffic stop by the Dunklin County Sheriff’s Office. On June 11, 2023, the Kennett Police Department received a report that Morris pistol-whipped someone at a store. Officers found Morris and discovered a vacuum sealed bag of marijuana, 23 grams of meth, a digital scale and a .45-caliber semi-automatic pistol under the hood of his car.
Morris has prior felony convictions and is thus barred from possessing a firearm.
The Dunklin County Sheriff’s Office and Kennett Police Department investigated the case. Assistant U.S. Attorney Julie Hunter prosecuted the case.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.
South L.A. Man Sentenced to 4 Years in Federal Prison for Illegal Firearms Sales, Including ‘Ghost Guns’Read the Press Release
LOS ANGELES – A South Los Angeles man was sentenced today to 48 months in federal prison for participating in a scheme in which he and others illegally sold more than two dozen firearms – including “ghost guns,” firearms that lack serial numbers – and three silencers.
Jonathan Perez, 35, was sentenced by United States District Judge John A. Kronstadt.
After a three-day bench trial in August 2023, Judge Kronstadt found Perez guilty the following month of one count of conspiracy to engage in the business of dealing in firearms without a license, one count of engaging in the business of dealing in firearms without a license, and one count of possessing an unregistered firearm silencer.
Perez and his co-conspirators sold 22 guns and three firearm silencers over the course of seven transactions to a confidential informant. In a text to an associate that was introduced as evidence in the trial, Perez said he was “selling straps to the cartel.” Perez personally manufactured many of the 18 “ghost guns” that were sold to the informant during the transactions in 2017.
“[Perez] made a business out of manufacturing and selling firearms, and he did so without any concern for where the firearms might end up, what they may be used for, or who might get hurt,” prosecutors argued in a sentencing memorandum.
Two other defendants in this case pleaded guilty in 2018 and 2021 to separate charges stemming from a related narcotics conspiracy.
The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated this matter.
Assistant United States Attorney Declan T. Conroy of the International Narcotics, Money Laundering, and Racketeering Section and Assistant United States Attorney Maria Jhai of the Violent and Organized Crime Section prosecuted this case.
South Bend Man Sentenced to 57 Months in PrisonRead the Press Release
SOUTH BEND – Atlantis Griffin, 39 years old, of South Bend, Indiana, was sentenced by United States District Court Judge Damon R. Leichty after pleading guilty to being a convicted felon in possession of a firearm, announced United States Attorney Clifford D. Johnson.
Griffin was sentenced to 57 months in prison followed by 1 year of supervised release.
According to documents in the case, in February 2024, Griffin was driving in Mishawaka with a loaded handgun, cocaine, and over $1,000 cash. A traffic stop resulted in the recovery of the gun, drugs, and cash. Griffin had previously been convicted of a felony offense and, as such, was prohibited from possessing the firearm in this case.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives with assistance from the Mishawaka Police Department and the St. Joseph County Police Department. The case was prosecuted by Assistant United States Attorney Joel Gabrielse.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.
Smithtown Man Pleads Guilty to $1 Million Covid-19 FraudRead the Press Release
Earlier today, at the federal courthouse in Central Islip, Carmine G. Agnello pleaded guilty to wire fraud in connection with his receipt of approximately $1.1 million in small business loans under the United States Small Business Administration’s Economic Injury Disaster Loan Program (EIDLP). Today’s proceeding was held before United States District Judge Nusrat J. Choudhury. When sentenced, Agnello faces up to 30 years in prison, as well as restitution totaling more than $940,000 and a fine of up to $2.2 million.
Breon Peace, United States Attorney for the Eastern District of New York, and Daniel Brubaker, Inspector in Charge, United States Postal Inspection Service, New York Division (USPIS), announced the guilty plea.
“The defendant shamefully used the public health and economic crisis of the COVID-19 pandemic as an opportunity to line his pockets with stolen funds,” stated United States Attorney Peace. “The reality is, those who engaged in blatant theft of taxpayer dollars intended to assist legitimate businesses and their employees during the COVID-19 pandemic should know that despite the passage of time, there is no free pass for their crimes and they will be vigorously prosecuted by the Office.”
“Agnello allegedly used over $1 Million in COVID relief funds for his own financial gain. Government money that was intended to assist struggling businesses during the COVID-19 pandemic. Postal Inspectors will relentlessly pursue any individuals who scheme to defraud the government and steal taxpayer funds. We, along with our law enforcements partners, will not end this pursuit of justice until those who take advantage of the U.S. Mail to commit fraud are held fully accountable. Today’s guilty plea is proof of that fact. I would like to thank our partners in Homeland Security Investigations and the United States Attorney's Office, Eastern District of New York, for their work on this investigation,” stated USPIS Inspector in Charge Brubaker.
Congress created the EIDLP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Enacted on March 29, 2020, the CARES Act provided emergency financial assistance in connection with economic effects of the COVID-19 pandemic. One source of relief provided by the CARES Act was the EIDLP, which provided low-interest financing to small businesses, renters and homeowners in regions affected by declared disasters.
As set forth in court filings, between April 2020 and November 2021, amid the COVID-19 pandemic, Agnello fraudulently applied for, and received, at least three EIDLP loans totaling approximately $1.1 million that he submitted on behalf of Crown Auto Parts & Recycling, LLC (Crown), a Jamaica, Queens-based business that he operated. As part of the scheme, Agnello submitted documentation to the Small Business Administration and financial institution responsible for disbursing the funds, that falsely claimed he had no criminal record when, in reality, he had a 2018 misdemeanor conviction. Agnello also submitted false information about the number of employees that worked for Crown and the intended use of the loan proceeds. Instead of using the funds for disaster relief, Agnello diverted them for his personal use, including by investing approximately $420,000 in a cryptocurrency business.
The government’s case is being handled by the Criminal Section of the Office’s Long Island Division. Assistant United States Attorney Bradley T. King is in charge of the prosecution.
The Defendant:
CARMINE G. AGNELLO
Age: 38
Smithtown, New YorkE.D.N.Y. Docket No. 24-CR-366 (NJC)
Sex Offender Returned to Prison for Manufacturing Ghost Guns and Possessing MethamphetamineRead the Press Release
NEWNAN, Ga. - Richard Eric Greeson has been sentenced to federal prison for manufacturing and selling unserialized and untraceable rifles, commonly referred to as “ghost guns,” and possessing methamphetamine.
“Greeson threatened the safety of our community by illegally possessing, manufacturing, and selling illegal firearms,” said U.S. Attorney Ryan K. Buchanan. “This joint investigative effort by federal, state, and local law enforcement officers helped achieve Greeson’s prosecution and conviction, which makes our community safer.”
“Criminals must understand that there are serious repercussions for the illegal possession, manufacturing, and selling of firearms,” said ATF Assistant Special Agent in Charge Alicia D. Jones. “ATF and our law enforcement partners will contribute all necessary time and effort to ensure criminals are brought to justice.”
“The Carroll County Sheriff's Office is thankful for our strong partnership with the ATF and is proud that our Aggressive Criminal Enforcement (ACE) Unit played a key role in assisting with the investigation and safely apprehending Mr. Greeson. This collaboration has led to the removal of dangerous drugs and illegal firearms from the streets of Carroll County, helping to make our community safer.”
According to U.S. Attorney Buchanan, the charges and other information presented in court: In 2008, Richard Eric Greeson received a state court sentence of imprisonment followed by 10 years of probation after pleading guilty to one count of aggravated child molestation, and six counts of child molestation, involving a six-year-old girl. In September 2022, Greeson’s probation officer learned Greeson was allegedly manufacturing firearms at his home in Carroll County, Georgia.
During a subsequent search of Gresson’s truck, his probation officer discovered firearm trigger components, cleaning parts, and ammunition. The probation officer also found evidence that Greeson had ordered gun parts from vendors on the internet. Law enforcement then searched Greeson’s home and discovered a firearms workshop in one of his bedrooms. The investigators recovered an industrial drill, a jig, and a partially milled firearm receiver in the home. In addition, buried in a wooded area behind Greeson’s home, the officers uncovered a gun case containing a fully assembled, unserialized semiautomatic rifle, a milled out lower AR receiver, more than 400 rounds of ammunition, and eight high-capacity magazines.
On December 12, 2023, a grand jury indicted Greeson for violating federal firearms laws. Two days later, during a traffic stop, special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives arrested Greeson with the assistance of local law enforcement officers. During the arrest, officers seized a bag of methamphetamine, a small quantity of marijuana, and two glass pipes from inside Greeson’s truck.
Richard Eric Greeson, 47, of Carrollton, Georgia, was sentenced by Chief U.S. District Judge Timothy C. Batten, Sr. to seven years in prison to be followed by three years of supervised release. Greeson was convicted of engaging in the business of manufacturing and dealing firearms without a license and possession of methamphetamine, after he pleaded guilty to the charges on June 11, 2024.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives with assistance from the Georgia Department of Community Supervision, Carroll County Sheriff’s Office, and Carrollton Police Department.
Assistant U.S. Attorney Theodore S. Hertzberg prosecuted the case.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.
For further information please contact the U.S. Attorney’s Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.
San Francisco Software Engineering Manager Convicted of Tax EvasionRead the Press Release
SAN FRANCISCO – A federal jury in San Francisco returned a guilty verdict against Dwayne Lorenzo Richardson on three counts of tax evasion, announced United States Attorney Ismail J. Ramsey and Internal Revenue Service Criminal Investigation (IRS-CI) Acting Special Agent in Charge Michael Mosley. The guilty verdict followed a three-day jury trial before the Honorable William Alsup, Senior U.S. District Judge. A three-count indictment was filed on June 27, 2023, charging Richardson with tax evasion in violation of 26 U.S.C. § 7201.
According to court documents and evidence presented at trial, Richardson, 53, of San Francisco, evaded his personal income taxes for tax years 2017, 2018, and 2019 by claiming to owe only about $28,496 in total tax when he made over $1.2 million as a software engineering manager. Richardson did so by declaring over $1.1 million in medical expenses on his tax returns, overstating those expenses by more than $945,000.
Richardson received tax refunds totaling over $165,000 for the three charged tax years, according to evidence presented at trial. Richardson then lied to an IRS revenue agent in two audit interviews, stating that the $1.1 million of medical expenses were related to an appendectomy. But according to the court record, Richardson paid no more than a few hundred dollars for treatment related to the appendectomy, which took place in 2010, not 2017, 2018, or 2019. As Richardson explained to one of his representatives in the tax audit, Richardson deducted nonexistent medical expenses from his taxes for multiple years because he had not been “caught” the first time he did it.
Assistant United States Attorneys Jared S. Buszin and Ryan Rezaei and Special Assistant United States Attorney Matthew Chou are prosecuting the case, with assistance from Helen Yee. The prosecution is the result of an investigation by IRS-CI.
Richardson’s sentencing hearing is set for Jan. 14, 2025. Richardson faces a maximum statutory penalty of five years in prison and a $100,000 fine on each of the three counts. However, any sentence will be imposed only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Sacred Heart Rehabilitation Center Agrees to Consent Decree and $1,000,000 Penalty for Alleged Controlled Substances Act ViolationsRead the Press Release
GRAND RAPIDS – U.S. Attorney for the Western District of Michigan Mark Totten today announced that Chief U.S. District Court Judge Hala Y. Jarbou has entered a consent decree against Sacred Heart Rehabilitation Center, Inc. (Sacred Heart), a behavioral health and addiction treatment services network, as well as its president and chief executive officer, Paula Nelson, and medical director, Janis Romanik, D.O. The court order imposes certain monitoring and compliance obligations on the defendants as well as a $1,000,000 civil penalty and resolves the United States’ allegations that the defendants violated certain dispensing and recordkeeping requirements of the Controlled Substances Act (CSA).
“Now more than ever, Michigan addiction treatment centers like Sacred Heart play a critical role in treating and healing communities plagued by the opioid epidemic and other forms of addiction,” said U.S. Attorney Mark Totten. “But as this resolution demonstrates, it is crucial that these organizations and their officers handle controlled substances in a way that maintains the integrity of these services and ensures patient safety. The goal of this consent decree is to provide the necessary support and oversight to ensure that Sacred Heart can continue to provide necessary addiction treatment services, but in a safe and compliant manner.”
In its complaint, the United States alleged that a Drug Enforcement Administration (DEA) inspection discovered multiple violations of the CSA at a Sacred Heart treatment facility in Berrien Center named Serenity Hills Recovery & Wellness Center (Serenity Hills). The United States alleged that Serenity Hills staff routinely dispensed controlled substances to treat patients presenting with addiction withdrawal symptoms before a qualified healthcare practitioner evaluated or examined those patients. In many instances, patients spent days on a regimen of controlled substances without being seen by a qualified healthcare practitioner.
The United States also alleged that Serenity Hills failed to maintain accurate records of the controlled substances dispensed to patients, and that the facility neglected to take a biennial inventory of controlled substances and did not file a timely report of the theft or loss of missing controlled substances. The United States alleged that these recordkeeping violations followed a history of similar violations at other Sacred Heart facilities over the last twelve years.
Under the terms of the consent decree, Sacred Heart has agreed to review and revise its controlled substance policies and procedures and to hire an independent monitor to inspect Sacred Heart’s facilities for compliance with the CSA and share the findings of those inspections with Sacred Heart and the DEA. Following this monitoring period, the defendants will enter a probationary period during which future violations may result in payment of liquidated damages.
“When rehabilitation and treatment centers do not live up to their obligations, our office will vigorously pursue the violations,” said Orville Green, Special Agent in Charge of the Detroit Field Division of DEA. “Careless behavior and failure to adhere to the provisions of the CSA, allows for substances to be diverted and sold without accountability.”
The resolution obtained in this case was the result of a coordinated effort between the U.S. Attorney’s Office for the Western District of Michigan and DEA’s Diversion Group in the Grand Rapids District Office. Assistant United States Attorney Andrew J. Hull prosecuted this case with assistance from DEA Field Counsel Stacy M. Race.
The complaint and consent decree in this case can be found on the Court’s online docket under United States v. Sacred Heart Rehabilitation Center, Inc., et al., No. 1:24-cv-995 (W.D. Mich.).
The claims resolved by the settlement are allegations only and there has been no determination of liability.
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Rock Island, Illinois Man Sentenced to 84 Months in Federal Prison for Firearms ChargeRead the Press Release
DAVENPORT, Iowa – A Rock Island man was sentenced September 24, 2024, to 84 months in federal prison for possessing a firearm as a felon.
According to public court documents, in July 2023, Daryel Deanthony Shears, 20, was a passenger in a vehicle stopped by officers with the Davenport Police Department. Shears was arrested on his outstanding state warrant for not returning to a residential facility in October 2021. In the vehicle, law enforcement located a loaded, stolen handgun. The Iowa Department of Criminal Investigations (DCI) Criminalistics Laboratory located Shears DNA profile on the handgun. Shears was convicted for previous felony state crimes in Iowa and was therefore prohibited from possessing firearms.
After completing his term of imprisonment, Shears will be required to serve a three-year term of supervised release. There is no parole in the federal system.
United States Attorney Richard D. Westphal of the Southern District of Iowa made the announcement. This case was investigated by the Davenport Police Department.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results. For more information about Project Safe Neighborhoods, please visit Justice.gov/PSN.
Rochester man sentenced for stealing mail using stolen postal keyRead the Press Release
ROCHESTER, N.Y. - U.S. Attorney Trini E. Ross announced today that Legend Terrance Davis, 21, of Rochester, NY, who was convicted of possession of United States Postal Service key and theft of mail, was sentenced to serve three years’ probation to include six months home detention, and 50 hours of community service, by U.S. District Judge Frank P. Geraci, Jr.
Assistant U.S. Attorney Katelyn M. Hartford, who handled the case, stated that in October 2023, Davis unlawfully possessed a United States Postal Service key, which had been stolen from a mail carrier. On October 1 and October 2, 2023, Davis, and others, used the stolen key to steal mail from mailboxes near the Brighton Station Post Office on N. Winton Road, near the Greece Post Office on Latta Road, and near the Jefferson Road Post Office on Jefferson Road, all in Rochester, NY.
The sentencing is the result of an investigation by the U.S. Postal Inspection Service, under the direction of Boston Division Inspector-in-Charge Ketty Larco-Ward and the Monroe County Sheriff’s Office, under the direction of Sheriff Todd Baxter.
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Rochester man pleads guilty to purchases made on illicit online marketplaceRead the Press Release
ROCHESTER, N.Y. -- U.S. Attorney Trini E. Ross announced today that Brandon Hall, 23, of Rochester, NY, pleaded guilty before U.S. District Judge Frank P. Geraci, Jr. to possessing 15 or more unauthorized access devices with intent to defraud, which carries a maximum penalty of 10 years in prison and a $250,000 fine.
Assistant U.S. Attorney Charles M. Kruly, who is handling the case, stated that since August 2018, the FBI has been investigating an illicit online marketplace known as Genesis Market, whose operators compile stolen data, such as computer and mobile device identifiers, email addresses, usernames, and passwords, from malware-infected computers around the globe and package it for sale on the market. Purchases made through Genesis Market are conducted using virtual currency, such as bitcoin.
Between November 2019, and February 2021, Hall deposited approximately $224.50 worth of bitcoin in a Genesis account that he had created, using an account he maintained at Coinbase to fund these transactions. Hall used the funds he deposited in his Genesis account to 12 packages containing approximately 1,146 unauthorized access devices.
The plea is the result of an investigation by the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Matthew Miraglia and the Rochester Police Department, under the direction of Chief David Smith.
Sentencing is scheduled for January 16, 2024, before Judge Geraci.
Richmond County man sentenced to federal prison for threatening to blow up Social Security officeRead the Press Release
AUGUSTA, GA: A Richmond County man was sentenced to federal prison for threatening to blow up Augusta’s Social Security office.
Keyon Tishaye Dickens, 39, of Augusta, was sentenced to 36 months in prison after pleading guilty to Using a Telephone to Make a Threat to Injure a Person or Damage a Building by Explosives, said Jill E. Steinberg, U.S. Attorney for the Southern District of Georgia. U.S. District Court Judge J. Randal Hall also ordered Dickens to serve three years of supervised release upon completion of his prison term.
There is no parole in the federal system.
“Threats of violence against workers and customers of any facility are completely unacceptable,” said U.S. Attorney Steinberg. “We commend our law enforcement partners for ensuring the safety of those in the Social Security office and assisting in holding Keyon Dickens accountable for his actions.”
As described in court documents and testimony, Dickens received a notice in September 2023 that he had been receiving overpayments to his Supplemental Security Income (SSI) and that the Social Security Administration intended to recoup the funds from future SSI checks. In response, Dickens called the Social Security Administration office in Augusta and said, “I’m going to shoot the office up and I’m going to blow it up. I haven’t decided yet what I’m going to do.”
Carrying a backpack, Dickens later visited the Social Security office and showed the security guard a note that read “I have a bomb.” The officer notified the Richmond County Sheriff’s Office, and the building was locked down and evacuated. No bomb was found, and Richmond County deputies took Dickens into custody.
“Americans should not have to fear for their lives simply for doing their jobs or going about their daily errands,” said Supervisory Senior Resident Agent Matthew Ploskunak of FBI Atlanta’s Augusta Resident Agency. “Thanks to the quick response by our local law enforcement partners, this case was investigated thoroughly and quickly brought to a successful conclusion.”
“This case underscores our unwavering commitment to public safety and the serious consequences of making threats of violence,” said Beau Kolodka, Assistant Special Agent in Charge of the Atlanta Field Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives. “The actions taken by our local law enforcement not only prevented potential harm but also reaffirmed our collective responsibility to protect our communities from such reckless behavior.”
“Keyon Dickens’ malicious actions are criminal and intolerable. This sentence demonstrates that threats to Social Security employees and offices are felonious and will not be ignored. We will continue to aggressively respond to threats, investigate the perpetrators and seek prosecution,” said Michelle L. Anderson, Acting SSA Inspector General. “I am thankful that there was no harm to SSA employees. I appreciate the immediate response from the security officers in the local SSA office, the Richmond County Sheriff’s Office, the FBI, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives in investigating this matter and I thank the U.S. Attorney’s Office for prosecuting this case.”
The case was investigated by the FBI, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Social Security Administration Office of the Inspector General, and the Richmond County Sheriff’s Office, and prosecuted for the United States by Assistant U.S. Attorney George J.C. Jacobs III.
Remarks of United States Attorney Todd Gee Announcing the Justice Department’s Findings of Civil Rights Violations by the Lexington, Mississippi, Police Department and City of LexingtonRead the Press Release
Thank you, Assistant Attorney General Clarke. The findings we announce today are a result of an extremely productive partnership between the U.S. Attorney’s Office for the Southern District of Mississippi and the Civil Rights Division that has made a real difference in Mississippi over many years, going back to that successful effort in 1964 to prevent a voting rights activist in Holmes County from being imprisoned for false charges.
Lexington, Mississippi, is a small town of about 1200 residents located in Holmes County, Mississippi, one of the poorest counties in the state and in the nation. With a median household income of roughly $39,000—about half the national average—many residents are barely getting by.
Despite this poverty, our investigation found that Lexington’s police department funds its very existence by imposing and collecting fines for petty offenses allegedly committed by the City’s low-income residents and the few people passing through this small town about 15 miles from the nearest interstate.
The City and its police department raise these funds by first imposing fines at nearly every available opportunity, sometimes for minor violations. For example, one man was fined $224.25 for public profanity and had to pay $140 before the Lexington police department would release him from custody.
Then the City collects those fines through unlawful means. Specifically, without making the required assessment of whether a person has the ability to pay, Lexington police unlawfully arrest, jail, and continue to detain people until they come up with the money to pay the fines they owe.
Our investigation found one woman who came to the police station to give a statement in a murder investigation was arrested for her old fines.
Another man was arrested for trespassing. He spent five days in jail until he could pay $200 toward an old fine. That wasn’t good enough. Lexington jailed him for five more days until he paid a $50 processing fee.
In effect, Lexington has turned the jail into the kind of debtors’ prisons Charles Dickens described in his novels written in the 1800s. Only this is happening in Mississippi in 2024.
This scheme bears fruit for the City and its police force, and a bitter harvest for its residents. The police department takes up a large percentage of the City’s expenditures—almost 40% in 2022—but that is still not enough to pay for the approximately 10 officers. The police used this unconstitutional scheme to collect fines that funded almost a quarter of the department’s budget. Yet people still owe Lexington over $1.7 million in fines. That’s about $1,400 for every man, woman, and child in town.
And the Lexington police department’s unconstitutional policing does not just end with how it collects fines. Our investigation found that Lexington police use excessive force and conduct unlawful stops, searches, and arrests.
The City also arrested and fined people for using profanity, which the Supreme Court clearly held unconstitutional over 50 years ago. In one instance, Lexington police arrested a young man for profanity even after he reminded the officers that he had freedom of speech. Adding insult to injury, the arresting officer used the same profanity while making the arrest.
We even found occasions when residents were held in custody for unlawful “investigative holds” without being charged with any crime. Detaining innocent people for “investigation” is common in authoritarian regimes, but it is not legal in the United States.
In one such unconstitutional “investigative hold,” two Lexington police officers—one of them in a leadership position—held an African-American woman in jail for almost two days without filing any charge and tried to coerce her into sex in exchange for her freedom.
Worse yet, we found that unconstitutional abuses happen disproportionately to African-Americans, who make up about 75 percent of Lexington’s population. And this trend has only gotten worse in recent years. For example, our investigation found that in 2019, Black people were 2.5 times more likely to be arrested by Lexington police than white people. But by 2022, Black people were 12 times more likely to be arrested. In 2023, Black people were 17.6 times more likely to be arrested than white people.
These findings are troubling. As I said when this investigation was first launched, all of us in Mississippi and throughout the nation want to feel safe in our homes and in public. But we want that safety to be obtained fairly and legally, not through illegal force or abuse of power.
It is no excuse that Lexington is a small town and has limited funds. The Constitution applies in every place in America, no matter how small or poor. Lexington’s police force must be funded legally, and its officers must follow the law and treat people fairly.
Let me add that as the Department has conducted this investigation, we have heard troubling accounts that many of the unlawful policing practices used in Lexington may also be applied in other small towns in Mississippi. I urge every police chief, mayor, sheriff, and public official involved in law enforcement in Mississippi—and indeed in this nation—to read the Department’s report. Gone are the days when rural isolation and remoteness could conceal the injustice of unconstitutional policing. Make changes now if your agency is policing in these same unlawful ways.
The City of Lexington cooperated in the Department’s investigation, and we hope that same cooperation continues as we move to the next step of negotiating ways the City can bring its policing practices into compliance with the law. Good police work is done legally and fairly every day in many places in America and in Mississippi. The residents of small towns in Mississippi, like Lexington, deserve the same.
Thank you.
Raleigh Man Sentenced for Transporting and Possessing Child PornographyRead the Press Release
WILMINGTON, N.C. – A Raleigh man was sentenced to eight years in prison followed by 20 years of supervised release for transporting and possessing child pornography after more than 1,000 images were found on his digital devices.
According to court documents and other information presented in court, Nico Aaron Lowers, 24 was investigated by the Raleigh Police Department and the Department of Homeland Security after receiving a lead from Chesapeake, Virginia. Law enforcement in Virginia received a cybertip from the National Center for Missing and Exploited Children regarding a Google user uploading child pornography. The information in the cybertip led law enforcement to search Lowers’ parents’ residence in Virginia. Finding no contraband on any digital device, Lowers’ parents mentioned their adult son had recently moved to Raleigh.
Officers from the Raleigh Police Department and agents from Homeland Security located Lowers in Raleigh and asked him about the investigation that had taken place in Virginia. Lowers denied having any knowledge of child pornography and consented to a search of his cellular device. Within the deleted files in his cell phone, law enforcement found multiple child pornography videos depicting the rape and torture of an infant. Based upon that finding, law enforcement executed a search warrant at his Raleigh residence and seized other digital devices.
Once all his digital devices were forensically examined, law enforcement found over 1,000 images and 36 videos that depicted child sexual abuse material. Lowers admitted to downloading child sexual abuse material and admitted to bringing a flash drive that contained child sexual abuse material to North Carolina from Virginia. Lowers’ collection of images and videos included very young children, infants, and toddlers, as well as images depicting sadistic and masochistic conduct.
Michael Easley, U.S. Attorney for the Eastern District of North Carolina made the announcement after the sentencing was concluded. Chief U.S. District Judge Richard E. Myers II presided over the sentencing. The Raleigh Police Department and the Department of Homeland Security investigated the case and Assistant U.S. Attorney Charity Wilson prosecuted the case.
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 U.S. Attorneys' Offices and 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 Justice.gov/PSC.
Related court documents and information can be found on the website of the U.S. District Court for the Eastern District of North Carolina or on PACER by searching for Case No. 5:22-CR-178-M.
Previously convicted felon sentenced to 14 years in prison for trafficking fentanyl and cocaine and illegally possessing firearmsRead the Press Release
RICHMOND, Va. – A Richmond man was sentenced today to 14 years in prison for possession with intent to distribute para-fluorofentanyl, fentanyl, and cocaine and being a felon in possession of firearms.
According to court documents, from January 2021 to May 2021, Richmond Police (RPD) detectives observed Tycota Rich Slater, 37, engaged in what appeared to be drug trafficking activities and made two controlled purchases of narcotics from Slater.
On Aug. 31, 2021, detectives searched Slater’s residence in Chesterfield County. Detectives recovered two firearms, ammunition, and 743 grams of para-fluorofentanyl, as well as a press, a scale, and other items used for packaging illegal narcotics for distribution. In Slater's car, which was parked at the residence, agents recovered a firearm with an extended magazine along with federal court paperwork and $9,700 in drug-trafficking proceeds.
On Oct. 26, 2023, RPD narcotics detectives with the assistance of agents of the Drug Enforcement Administration, searched Slater's residence in Richmond. The detectives and agents recovered a firearm, two press machines, three cellphones, and $71,144 in drug-trafficking proceeds, as well as a money counting machine, a vacuum sealer and bags, digital scales, and ammunition. Two of Slater’s vehicles were also searched, leading to the recovery of 500 grams of fentanyl, three kilograms of cocaine, and two more firearms.
Detectives searched Slater's storage unit in Henrico County and recovered additional cocaine and four more firearms.
Slater was convicted previously of possession with intent to distribute cocaine, domestic violence, possession of a firearm by a convicted felon, and other crimes. As a convicted felon, Slater cannot legally possess firearms or ammunition.
Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia; James VanVliet, Acting Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives Washington Field Division; Jarod Forget, Special Agent in Charge for the Drug Enforcement Administration’s (DEA) Washington Division; Jason S. Miyares, Attorney General of Virginia; and Rick Edwards, Chief of Richmond Police, made the announcement after sentencing by U.S. District Judge David J. Novak.
Assistant U.S. Attorney Olivia L. Norman and Special Assistant U.S. Attorney Ellen Hubbard, an Assistant Attorney General with the Virginia Attorney General’s Office, prosecuted the case.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 3:23-cr-162.
Plymouth Man Indicted for His Role in International Conspiracy to Traffic Counterfeit Computer Network DevicesRead the Press Release
MINNEAPOLIS – A Plymouth man has been indicted for engaging in an international counterfeit access device fraud scheme, announced First Assistant U.S. Attorney Lisa D. Kirkpatrick.
According to court documents, Benjamin Paley, 75,who co-owned and operated GEN8 Services, Inc., an information technology business based in Plymouth, and his co-conspirators Wade Huber, 59, and David Rosenblatt, 68, engaged in an international counterfeiting scheme spanning Minnesota, North Carolina, and Ukraine, among other locations, to use and traffic in counterfeit access devices.
According to court documents, Brocade Communications Systems, Inc., a global technology company headquartered in San Jose, California, manufactured and sold computer networking products, including equipment commonly known in the technology sector as a “Brocade switch.” Brocade switches are networking hardware that allow multiple devices to connect to a computer network. Switches are used to maintain computer networks across a wide variety of industries and sectors, including businesses, universities, hospitals, and government agencies. To use a Brocade switch, customers are required to purchase a license and pay a licensing fee to Brocade, which range between $1,400 to over $100,000. Counterfeiters use programs that create counterfeit software license keys to “crack the code” and generate illegitimate license key strings that are indistinguishable from Brocade’s legitimate licensing tools. Counterfeit license keys are illicitly sold on the black market for a fraction of the price of a legitimate license transaction.
According to court documents, from 2014 through April 2022, Paley, Huber, Rosenblatt, and others used and trafficked in counterfeit license keys obtained with the intent to defraud Brocade and others to make money for themselves by fraudulently selling license keys at a heavily discounted rate. As part of the scheme, Rosenblatt and Huber routinely communicated with and obtained information from clients and prospective customers who wanted to purchase switches and license keys. Paley used that information to procure counterfeit license keys that enabled additional ports or functionality on the switches to be accessible to their clients. In total, Paley possessed and sold at least 3,637 counterfeit license keys for switches at amounts substantially below the market rate for legitimate license key sales, resulting in millions of dollars in financial losses to Brocade.
Paley is charged with one count of conspiracy to commit access device fraud and three counts of access device fraud. He is scheduled to make his initial appearances in U.S. District Court before Magistrate Judge Douglas L. Micko on October 10, 2024.
On November 30, 2023, and January 5, 2024, Huber and Rosenblatt, respectively, pleaded guilty before Judge John R. Tunheim to one count each of conspiracy to commit access device fraud. They will be sentenced at a later date.
This case is the result of an investigation conducted by the FBI.
The case is being prosecuted by Assistant U.S. Attorney Matthew S. Ebert for the District of Minnesota, Assistant Deputy Chief Adrienne Rose, and Trial Attorney Bryce Rosenbower of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS).
An indictment is merely an allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Pennsylvania Man Sentenced to 78 Months in Prison for $4.8 Million Cares Act Loan Fraud SchemeRead the Press Release
TRENTON, N.J. – A Pennsylvania man was sentenced today to 78 months in prison for his role in a scheme to fraudulently obtain over $4.8 million in federal Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) for himself and others, U.S. Attorney Philip R. Sellinger announced.
Darryl Duanne Young, aka “Darryl Duanne Isom Young,” 61, of Kingston, Pennsylvania, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court on Nov. 14, 2023, to an information charging him with one count of conspiracy to commit bank fraud and one count of money laundering. U.S. District Judge Georgette Castner imposed the sentence today in Trenton federal court.
“This defendant admitted taking advantage of government programs that were specifically designed to provide needed financial assistance to Americans during the COVID-19 pandemic,” U.S. Attorney Sellinger said. “Combatting pandemic fraud in all of its forms is a top priority for this office and our law enforcement partners. Together, we will continue to root out those who have exploited the suffering of others to line their own pockets, and bring them to justice.”
“COVID-19 relief funds were meant to assist honest, hardworking Americans during an unprecedented time of hardship in our country, not to aid those trying to enrich their lives through deception,” Special Agent in Charge Jenifer L. Piovesan, IRS Criminal Investigation, Newark Field Office, said. “Mr. Young’s sentence today reinforces that individuals who defraud our federal programs will be held accountable.”
“This sentencing should serve as a resounding message to anyone who wants to utilize the US Mail to defraud the American taxpayer. Postal Inspectors will continue to aggressively work with our partners in law enforcement and the US Attorney’s Office to hold these types of fraudsters accountable,” stated Christopher A. Nielsen, Inspector in Charge of the Philadelphia Division.
“Mr. Young and his fellow conspirators committed crimes and selfishly profited from the Paycheck Protection Program and the Economic Injury Disaster Loans; Mr. Young exploited Federal assistance programs intended to help those in need during a national crisis. This sentence now holds him accountable for his criminal acts,” said Michelle L. Anderson, Acting Inspector General for the SSA. “I thank our law enforcement partners for working to pursue perpetrators who fraudulently profit from Federal benefit programs. I appreciate the collaboration among the investigating agencies and the work of the U.S. Attorney’s Office for prosecuting this case.”
“Today’s sentencing sends a clear message that those who fraudulently obtained funds from COVID-19 relief programs will be held accountable,” Special Agent in Charge Patricia Tarasca of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG) said. “The FDIC OIG remains committed to working with our law enforcement partners to investigate and bring to justice those who participate in fraudulent schemes and threaten to undermine the integrity of our Nation’s banking system.”
“Darryl Duanne Young defrauded the federal government of nearly $5 million in pandemic relief funds for his own personal gain and will now pay the price for his crimes,” said Brian Tucker, Special Agent in Charge, Eastern Region, Office of Inspector General for the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau. “We are proud to have worked with our federal law enforcement partners and the U.S. Attorney’s Office to hold Mr. Young accountable for his crimes.”
“Young will serve time for selfishly pocketing millions of dollars in emergency funds our government intended to give qualified Americans and small businesses who needed economic assistance in the wake of the COVID-19 pandemic,” said HSI Newark acting Special Agent in Charge Spiros Karabinas. “HSI Newark and our law enforcement partners are committed to ensuring justice is served in cases where individuals perpetrated illicit schemes for personal gain during an unprecedented public health crisis.”
According to documents filed in this case and statements made in court:
Young engaged in a scheme to illegally obtain for himself and his conspirators over $4.8 million in loans authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Young submitted and directed others to submit fraudulent PPP and EIDL loan applications, which fabricated numbers of employees and misrepresented company information, to induce lenders to approve the loan applications that they otherwise would not have approved. Among other things, Young submitted falsified tax documents and bank statements to a victim lender in support of PPP loan applications. Young personally received over $230,000 in PPP loans for businesses he controlled and received a percentage of loan proceeds for assisting in submitting fraudulent applications on behalf of others.
In addition to the prison term, Judge Castner sentenced Young to three years of supervised release and ordered restitution of $5.28 million.
U.S. Attorney Sellinger credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jenifer L. Piovesan; postal inspectors of the U.S. Postal Inspection Service in Newark, under the direction of Inspector in Charge Christopher A. Nielsen Philadelphia Division; special agents of the Social Security Administration, Office of the Inspector General, under the direction of Acting Special Agent in Charge Corwin Rattler; special agents of the U.S. Attorney’s Office for the District of New Jersey, under the direction of Special Agent in Charge Thomas Mahoney; special agents of the Board of Governors of the Federal Reserve System - Consumer Financial Protection Bureau, Office of Inspector General, under the direction of Special Agent in Charge Brian Tucker; special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Robert Manchak; special agents of the Federal Deposit Insurance Corporation – Office of the Inspector General, under the direction of Special Agent in Charge Patricia Tarasca in New York; and special agents of Homeland Security Investigations Newark, under the direction of Acting Special Agent in Charge Spiros Karabinas, with the investigation leading to the sentencing.
The government is represented by Assistant U.S. Attorneys Katherine M. Romano and David E. Dauenheimer of the U.S. Attorney’s Office’s Health Care Fraud Unit in Newark.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The District of New Jersey COVID-19 Fraud Enforcement Strike Force is one of the five strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud. The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors. The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds.
Pain Doctors Sentenced to 6 ½ Years in $45 Million Healthcare FraudRead the Press Release
Two pain management doctors who pantomimed injections on patients were sentenced today to six and a half years apiece for healthcare fraud, announced U.S. Attorney for the Northern District of Texas Leigha Simonton.
Drs. Desi Barroga, 51, and Deno Barroga, 51, were indicted in November 2023 and pleaded guilty in May 2024 to one count each of conspiracy to commit healthcare fraud. They were sentenced Thursday by U.S. District Judge Brantley Starr, who ordered them jointly and severally liable for $9,016,883.10 in restitution. Under the terms of their plea agreement, both men were also required to forfeit their medical licenses.
“These doctors exploited drug users’ vulnerabilities, requiring them to submit to monthly visits in exchange for controlled substance prescriptions, then billing their insurance providers for services the patients did not need nor receive. In a bizarre attempt to cover up their crimes, the defendants feigned giving injections without actually piercing the patients’ skin,” said U.S. Attorney Leigha Simonton. “Not only did they defraud their patients’ insurers, they facilitated their patients’ addictions. Their actions are antithetical to the practice of medicine, and the U.S. Attorney’s Office is proud to hold them accountable for their crimes.”
“Deno and Desi Barroga conspired to fraudulently bill private insurance companies, which included Employee Retirement Income Security Act of 1974 covered plans, tens of millions of dollars for services not rendered. Among other things, both doctors falsely represented to insurance companies that patients received over eighty injections during the office visits, when, in fact, the patients received few or no injections at all. This sentencing reflects the Office of Inspector General’s commitment to working with the U.S. Department of Labor’s (DOL) Employee Benefits Security Administration and our law enforcement partners to investigate and bring to justice those who engage in fraud against employee benefit programs,” said Casey J. Howard, Special Agent in Charge, Central Region, U.S. Department of Labor - Office of Inspector General.
According to court documents, the twin brothers admitted that they conspired to defraud Blue Cross Blue Shield, Cigna, and United Healthcare by submitting claims for corticosteroid injections that were never administered.
As part of the conspiracy, the Barrogas required patients to submit to monthly office visits. This allowed patients to continue receiving highly addictive Schedule II controlled substances – including hydrocodone, oxycodone, and morphine – while allowing the defendants to bill patients’ insurance companies for expensive services they never provided.
The Barrogas reported to insurance that they performed as many as 80 corticosteroid injections per patient per visit. In reality, the majority of these injections were never administered. In many instances, the doctor simply placed a needle on the patient’s body without actually piercing the skin to mimic giving an injection.
They defendants created fake medical records, which were often cut and pasted, or cloned, from patient to patient with little to no variation. They also instructed patients to include false statements pertaining to the injections and other treatments in the record.
In plea papers, the brothers admitted that they billed insurers at least $45 million and were paid at least $9 million as part of the scheme.
The U.S. Department of Labor’s Office of Inspector General, the U.S Department of Labor’s Employee Benefits Security Administration, U.S Office of Personnel Management’s Office of the Inspector General, the Drug Enforcement Administration’s Dallas Field Division Diversion Group, and the Texas Department of Insurance – Fraud Unit – Austin and Fort Worth Field Offices conducted the investigation. Assistant U.S. Attorney Renee Hunter is prosecuting the case. Assistant U.S. Attorney Dimitri Rocha assisted with forfeiture.
Owner of Online Luxury Baby Boutique Sentenced to 90 Months for Defrauding Covid-19 Relief ProgramsRead the Press Release
DENVER - The United States Attorney’s Office for the District of Colorado announces that Shambrica Washington, 39, now a resident of Parker, Texas, was sentenced to 90 months in prison to be followed by three years of supervised release, and restitution of $542,924.45 after being found guilty by a federal jury on 31 counts including wire fraud, bank fraud, money laundering, and false claims offenses.
According to facts established at trial, Washington obtained loans from the Small Business Administration for two Economic Injury Disaster Loans (EIDL) and from JP Morgan Chase for two Paycheck Protection Program (PPP) loans for a total of $485,749.00 between March of 2020 and July of 2020. During that time, Washington obtained the loans under two business names. One was “Tiny Toes and Tiaras,” which was an online luxury baby boutique based in Colorado Springs. To obtain the fraudulent loans, Washington misrepresented how many people were employed by her businesses and the businesses’ wages, revenues, and costs of operation. She used the funds to purchase a car, a custom-built home, pay for elective surgery, and pay credit card debt and other bills. She then applied for millions of dollars in additional loans, grants, and tax credits, including by applying for advance tax credits from the Internal Revenue Service and a $6 million grant through a Small Business Administration program intended for shuttered concert venues.
“People who steal taxpayer dollars for personal benefit can and will pay the price,” said Acting United States Attorney for the District of Colorado Matt Kirsch. “Our office has and will continue to find people who have abused Covid-19 funds and prosecute them to the fullest extent of the law.”
“Shambrica Washington fraudulently obtained PPP and EIDL designated to provide Americans financial relief during the COVID-19 pandemic,” said Tom Demeo, Acting Special Agent in Charge, IRS Criminal Investigation Denver Field Office. “Washington’s sentence demonstrates the federal government's commitment to holding individuals accountable who defrauded critical programs that served to provide aid for families and small businesses.”
United States District Court Judge William J. Martinez presided over the trial. IRS Criminal Investigation and the FBI Denver Field Office conducted the investigation. Assistant United States Attorneys Craig Fansler and Taylor Glogiewicz handled the prosecution.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
On July 11, 2023, the Attorney General selected the District of Colorado’s U.S. Attorney’s Office to head one of five national COVID-19 Fraud Strike Force Teams. The Department of Justice established the Strike Force to enhance existing efforts to combat and prevent COVID-19 related financial fraud. The Strike Force combines law enforcement and prosecutorial resources and focuses on large-scale, multistate pandemic relief fraud perpetrated by criminal organizations and transnational actors, as well as those who committed multiple instances of pandemic relief fraud. The Strike Force uses prosecutor-led and data analyst-driven teams to identify and bring to justice those who stole pandemic relief funds. Additional information regarding the Strike Force may be found at https://www.justice.gov/opa/pr/justice-department-announces-results-nationwide-covid-19-fraud-enforcement-action.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Owner of Brick Construction Business Admits Failure to Collect and Pay over TaxesRead the Press Release
TRENTON, N.J. – An Ocean County man today admitted failing to collect and pay over employee taxes, U.S. Attorney Philip R. Sellinger announced.
Gerard Artz, 44, of Brick, New Jersey pleaded guilty before U.S. District Judge Robert Kirsch in Trenton federal court to an information charging him with one count of failure to collect and pay over taxes.
According to documents filed in this case and statements made in court:
Artz owned and operated a construction company in Brick, New Jersey, and New York City. Beginning around 2016, Artz’s company, under his direction, withheld employment taxes from the company’s employees’ paychecks and did not remit those employment taxes to the IRS. From 2016 to 2020, Artz and his company failed to collect and pay over $937,943 in employment taxes owed by his company.
The count of failure to collect and pay over taxes carries a maximum penalty of five years in prison and a $250,000 fine. As part of his plea agreement, Artz has agreed to pay the government restitution of $937,943. Sentencing is scheduled for Feb. 5, 2024.
U.S. Attorney Sellinger credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jenifer L. Piovesan, with the investigation leading to the guilty plea.
The government is represented by Assistant U.S. Attorney Eric Suggs of the Criminal Division in Trenton.
artz.information.pdfNew York City Mayor Eric Adams Charged with Bribery and Campaign Finance OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, James E. Dennehy, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Jocelyn E. Strauber, the Commissioner of the New York City Department of Investigation (“DOI”), announced today the unsealing of an Indictment charging ERIC ADAMS, the Mayor of New York City, with bribery, campaign finance, and conspiracy offenses. The case is assigned to U.S. District Judge Dale E. Ho.
U.S. Attorney Damian Williams said: “As alleged, Mayor Adams abused his position as this City’s highest elected official, and before that as Brooklyn Borough President, to take bribes and solicit illegal campaign contributions. By allegedly taking improper and illegal benefits from foreign nationals—including to allow a Manhattan skyscraper to open without a fire inspection—Adams put the interests of his benefactors, including a foreign official, above those of his constituents. This Office and our partners at the FBI and DOI will continue to pursue corruption anywhere in this City, especially when that corruption takes the form of illegal foreign influence on our democratic system.”
FBI Assistant Director James E. Dennehy said: “Today’s indictment serves as a sobering moment but also sends a powerful message to every elected official in this country: public service is a profound responsibility, and it should be a noble calling. When that’s perverted by greed and dishonesty, it robs us of our trust. This is a reminder that no one is above the law or beyond reproach.”
DOI Commissioner Jocelyn E. Strauber said: “The indictment unsealed today alleges that Mayor Adams abused his power and position for nearly a decade, obtaining personal benefits and illegal campaign contributions from foreign nationals, and others, giving them undue influence over him. As charged, this illegal conduct compromised his integrity as an elected official and New Yorkers expect better. I thank the U.S. Attorney’s Office for the Southern District of New York and the FBI for their commitment to partner with DOI to root out corruption in City government.”
As alleged in the Indictment:[1]
For nearly a decade, ADAMS has used his prominent positions in New York City government to obtain illegal campaign contributions and luxury travel. ADAMS solicited and accepted these benefits from foreign nationals, businessmen, and others. ADAMS then pressured the New York City Fire Department to facilitate the opening of a foreign government’s Manhattan skyscraper that had not passed a fire inspection. To conceal this criminal conduct, ADAMS took steps to hide his receipt of improper benefits from the public and law enforcement.
In 2014, ADAMS was elected Brooklyn Borough President. Thereafter, ADAMS sought and accepted improper valuable benefits, such as luxury international travel, including from wealthy foreign businesspeople and at least one Turkish government official seeking to gain influence over him. By 2018, ADAMS—who had by then made known his plans to run for Mayor of New York City—not only accepted, but sought illegal campaign contributions to his 2021 mayoral campaign from foreign nationals, as well as other things of value. As ADAMS’s prominence and power grew, his foreign-national benefactors sought to cash-in on their corrupt relationships with him, particularly when it became clear that ADAMS would become New York City’s mayor in 2021. ADAMS agreed, providing favorable treatment in exchange for the illicit benefits he received. After his inauguration as Mayor of New York City, ADAMS soon began preparing for his next election, including by planning to solicit more illegal contributions and granting requests from those who supported his 2021 mayoral campaign with such donations.
ADAMS sought and accepted illegal campaign contributions in the form of “nominee” or “straw” contributions, meaning that the true contributors conveyed their money through nominal donors, who falsely certified they were contributing their own money. By smuggling their contributions to ADAMS through U.S.-based straw donors, ADAMS’s overseas contributors defeated federal laws that serve to prevent foreign influence on U.S. elections. Wealthy individuals evaded laws designed to limit their power over elected officials by restricting the amount any one person can donate to a candidate. And businesses circumvented New York City’s ban on corporate contributions by funneling their donations through multiple employees, frustrating a law which seeks to reduce corporate power in politics. ADAMS increased his fundraising by accepting these concealed, illegal donations—at the cost of giving his secret patrons the undue influence over him that the law tries to prevent.
ADAMS compounded his gains from the straw contributions by using them to defraud New York City and steal public funds. New York City has a matching funds program that matches small-dollar contributions from individual City residents with up to eight times their amount in public funds, to give New Yorkers a greater voice in elections. ADAMS’s campaigns applied for matching funds based on known straw donations, fraudulently obtaining as much as $2,000 in public funds for each illegal contribution. ADAMS and those working at his direction falsely certified compliance with applicable campaign finance regulations despite ADAMS’s repeated acceptance of straw donations, relying on the concealed nature of these illegal contributions to falsely portray his campaigns as law-abiding. As a result of those false certifications, ADAMS’s 2021 mayoral campaign received more than $10,000,000 in public funds.
ADAMS also sought and received other improper benefits from some of the same co-conspirators who funneled straw donations to his campaigns. In particular, a senior official in the Turkish diplomatic establishment (the “Turkish Official”), who facilitated many straw donations to ADAMS, also arranged for ADAMS and his companions to receive free or discounted travel on Turkey’s national airline (the “Turkish Airline”), which is owned in significant part by the Turkish Government, to destinations including France, China, Sri Lanka, India, Hungary, and Turkey itself. The Turkish Official and other Turkish nationals further arranged for ADAMS and his companions to receive, among other things, free rooms at opulent hotels, free meals at high-end restaurants, and free luxurious entertainment—while in Turkey.
ADAMS and others working at his direction repeatedly took steps to shield his solicitation and acceptance of these benefits from public scrutiny. ADAMS did not disclose the travel benefits he had obtained in annual financial disclosures he was required to file as a New York City employee. Sometimes, ADAMS agreed to pay a nominal fee, to create the appearance of having paid for travel that was heavily discounted. Other times, ADAMS created and instructed others to create fake paper trails, falsely suggesting that he had paid, or planned to pay, for travel benefits that were actually free. And ADAMS deleted messages with others involved in his misconduct, including, in one instance, assuring a co-conspirator in writing that he “always” deleted her messages.
In September 2021, the Turkish Official told ADAMS that it was his turn to repay the Turkish Official, by pressuring the New York City Fire Department (“FDNY”) to facilitate the opening of a new Turkish consular building—a 36-story skyscraper—without a fire inspection, in time for a high-profile visit by Turkey’s president. At the time, the building would have failed an FDNY inspection. In exchange for free travel and other travel-related bribes in 2021 and 2022 arranged by the Turkish Official, ADAMS did as instructed. Because of ADAMS’s pressure on the FDNY, the FDNY official responsible for the FDNY’s assessment of the skyscraper’s fire safety was told that he would lose his job if he failed to acquiesce, and, after ADAMS intervened, the skyscraper opened as requested by the Turkish Official.
If you believe you have information related to bribery, fraud, or any other illegal conduct by ADAMS or any other New York City employees, please contact DOI at [email protected] or (212) 825-2828. If you were involved in such conduct, please consider self-disclosing through the SDNY Whistleblower Pilot Program at [email protected].
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ADAMS, 64, of Brooklyn, New York, is charged with one count of conspiracy to receive campaign contributions from foreign nationals and commit wire fraud and bribery, which carries a maximum sentence of five years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; two counts of soliciting campaign contributions from foreign nationals, which each carry a maximum sentence of five years in prison; and one count of soliciting and accepting a bribe, which carries a maximum sentence of 10 years in prison.
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding work of the FBI and DOI.
The prosecution of this case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Hagan Scotten, Celia V. Cohen, Andrew Rohrbach, and Derek Wikstrom are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
A link to the Indictment is here.
[1] As the introductory phrase signifies, the entirety of the Indictment and the descriptions of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
New Orleans Man Pleads Guilty to Being Felon in Possession of FirearmRead the Press Release
NEW ORLEANS, LOUISIANA – U.S. Attorney Duane A. Evans announced on Wednesday, September 18, 2024, TRAVIS JORDAN, (“JORDAN”), age 39, a resident of Orleans Parish, pled guilty to being a felon in possession of a firearm, in violation of Title 18, United States Code, Sections 922(g)(1) and 924(a)(8). JORDAN faces up to 15 years of imprisonment, a fine of up to $250,000, up to 3 years of supervised release, and a mandatory special assessment fee of $100.00.
On February 18, 2024, attempted to enter the Saint Bar in Orleans Parish, but was refused due to intoxication. JORDAN became angry and started an altercation with a bar employee. While doing so, a firearm fell from JORDAN’s waistband. JORDAN tried to reach for the firearm, but another bar employee kicked the gun away, took possession of it and placed the gun inside the bar. A third employee restrained JORDAN until police arrived.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.
U.S. Attorney Evans praised the work of the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the New Orleans Police Department. The case is being prosecuted by AssistantUnited States Attorney Inga Petrovich of the Violent Crime Unit.
New Jersey Business Owner Admits Wire Fraud Conspiracy, Wire FraudRead the Press Release
NEWARK, N.J. – A New Jersey business owner today admitted his role in a fraud scheme involving COVID funds, fraudulent tax filings and a fraudulent loan application, U.S. Attorney Philip R. Sellinger announced.
Richard Fadraga, aka “Ricardo Fadraga,” 53, of Elizabeth, New Jersey, pleaded guilty before U.S. District Judge Michael E. Farbiarz in Newark federal court to an information charging him with one count of wire fraud conspiracy and two counts of wire fraud.
According to documents filed in this case and statements made in court:
In June 2020, Fadraga and a conspirator who was in the business of preparing tax returns submitted a fraudulent application for an Economic Injury Disaster Loan (EIDL), which resulted the Small Business Administration (SBA) paying $110,000 in COVID-19 related proceeds. In July 2020, Fadraga and the conspirator submitted another fraudulent EIDL application, which resulted in the SBA paying $131,200 in COVID-19 related proceeds. The July 2020 application was submitted under another person’s name to conceal the involvement of Fadraga and his conspirator, but law enforcement was subsequently able to link the July 2020 application back the two conspirators.
At the urging of his conspirator, Fadraga also obtained an Employer Identification Number (EIN) and Electronic Filer Identification Number (EFIN) using Fadraga’s personal identifying information. His conspirator then used the EIN and EFIN to submit federal tax returns on behalf of other people that contained false information. The fraudulent EIN was associated with tax returns that received more than $195,000 in federal refunds for tax year 2023, and the fraudulent EFIN was associated with tax returns that received more than $595,000 in federal refunds for tax year 2023, including tax refunds totaling more than $100,000 in the names (including variations of the names) of the conspirator and the conspirator’s associates.
Fadraga also fraudulently applied for a bank loan in connection with the purchase of property in Florida. When the lender requested additional information, Fadraga sent bank statements to his conspirator, who then altered those bank statements to make it appear as if Fadraga’s bank account contained more money than it really did.
Each count of wire fraud conspiracy and wire fraud carries a maximum penalty of 20 years in prison and a maximum fine of $250,000 fine, or twice the gross gain to the defendant or loss to the victim, whichever is greatest. Sentencing is scheduled for Feb. 10, 2025.
U.S. Attorney Sellinger credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jenifer L. Piovesan in Newark, with the investigation leading to the guilty plea.
The government is represented by Assistant U.S. Attorney Matthew Specht of the Special Prosecutions Division in Newark.
fadraga.information.pdfNew Britain Man Pleads Guilty to Child Exploitation OffenseRead the Press Release
Vanessa Roberts Avery, United States Attorney for the District of Connecticut, announced that JOSHUA GLAESER, 36, of New Britain, pleaded guilty today before U.S. District Judge Omar A. Williams in Hartford to possession of child pornography.
According to court documents and statements made in court, in the summer of 2022, a Connecticut State Police detective investigating child exploitation offenses identified an IP address at Glaeser’s New Britain residence that was being used in the distribution of child pornography. In 2012, Glaeser was convicted in state court of possession of child pornography and was sentenced to 10 years of imprisonment, execution suspended after two years, followed by 10 years of probation, which Glaeser was currently serving.
On December 9, 2022, HSI special agents executed a court authorized search warrant at Glaeser’s residence and seized his Chromebook, tablet, smartphone and storage cards. Analysis of the seized items revealed more 3,000 images and videos of child pornography, including images depicting the sexual abuse of children, including infants and toddlers. The investigation also revealed that Glaeser used a peer-to-peer file sharing network to distribute child pornography to other users.
At sentencing, which is not scheduled, Glaeser faces a mandatory minimum term of imprisonment of 10 years and maximum term of imprisonment of 20 years. The penalties in this matter are enhanced because of Glaeser’s prior state conviction for possessing child pornography.
Glaeser has been detained since December 9, 2022.
This matter is being investigated by Homeland Security Investigations (HSI) and the Connecticut State Police. The case is being prosecuted by Assistant U.S. Attorney Daniel E. Cummings.
This prosecution is part of the U.S. Department of Justice’s Project Safe Childhood Initiative, which is aimed at protecting children from sexual abuse and exploitation. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
To report cases of child exploitation, please visit www.cybertipline.com.
Montgomery Man Found Guilty of Conspiring to Bring Cocaine into Alabama from TexasRead the Press Release
Montgomery, Alabama – On September 25, 2024, a federal jury convicted 45-year-old Vanshun Traywick, a resident of Montgomery, Alabama, on federal drug conspiracy charges, announced Acting United States Attorney Kevin Davidson.
According to court records and evidence presented during Traywick’s trial, in 2020, law enforcement began an investigation related to a suspected drug-trafficking operation bringing cocaine from Texas to Montgomery. The investigation revealed that Traywick ordered kilogram quantities of cocaine from a co-conspirator, 45-year-old Michael Golden, from Houston, Texas. The cocaine would be delivered to Montgomery by another co-conspirator, Rufus Flanagan, 56, also from Houston. On October 20, 2020, law enforcement in Montgomery conducted a traffic stop of a semi-truck driven by Flanagan. Upon searching the vehicle, officers found a bag with approximately one kilogram of cocaine inside. In addition to arranging for the purchase of large quantities of cocaine from Golden, the investigation also revealed that, on October 13, 2020, Traywick purchased two ounces of cocaine from another co-conspirator, 51-year-old Deneco Nettles, also from Montgomery. The jury found Traywick guilty on two counts of conspiracy to distribute cocaine.
Following his conviction, Traywick faces a sentence between 5 and 40 years in federal prison. Earlier this year, Golden, Flanagan, and Nettles all pleaded guilty to federal drug conspiracy charges. On June 18, 2024, Nettles received a sentence of 18 months in prison. Golden’s sentencing hearing is scheduled for December 3, 2024. Flanagan’s sentencing hearing is scheduled for December 5, 2024. A sentencing hearing for Traywick will be scheduled in the coming months.
This case was part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
The Drug Enforcement Administration, Alabama Law Enforcement Agency, and Montgomery Police Department investigated this case. Assistant United States Attorneys Mark E. Andreu, Justin L. Jones, and B. Chelsea Wilson are prosecuting the case.
Missoula meth, fentanyl trafficker sentenced to more than six years in prisonRead the Press Release
MISSOULA — A Missoula woman who admitted conspiring to traffic methamphetamine and fentanyl was sentenced on Wednesday to six and one-half years in prison, to be followed by five years of supervised release, U.S. Attorney Jesse Laslovich said today.
The defendant, Robin Marie Holcomb, 42, pleaded guilty in May to conspiracy to possess with intent to distribute controlled substances.
U.S. District Judge Donald W. Molloy presided.
The government alleged in court documents that from May 2022 to September 2023, Holcomb and others distributed meth and fentanyl in the Missoula area. Law enforcement served a search warrant on a hotel where Holcomb was staying and located meth and 99 fentanyl pills. Holcomb attempted to call her sister to have her remove cash and drugs from Holcomb’s vehicle. Law enforcement searched the vehicle and located $20,520 cash, 794 grams, which is approximately one and three-quarters pound, of meth and 5,013 fentanyl pills.
The U.S. Attorney’s Office prosecuted the case. The Bureau of Alcohol, Tobacco, Firearms and Explosives, Drug Enforcement Administration and Missoula High Intensity Drug Trafficking Area Task Force conducted the investigation.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results. For more information about Project Safe Neighborhoods, please visit Justice.gov/PSN.
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Marijuana Trafficker Sentenced to PrisonRead the Press Release
Vanessa Roberts Avery, United States Attorney for the District of Connecticut, announced that DELROY ANDERSON, also known as “Max,” 57, formerly of Stamford, was sentenced today by U.S. District Judge Kari A. Dooley in Bridgeport to 13 months of imprisonment, followed by three years of supervised release, for leading a money laundering conspiracy related to his large-scale trafficking of marijuana. Anderson also must serve the first six months of his supervised release in home detention.
According to court documents and statements made in court, for approximately five years, Anderson conspired with others to launder proceeds from a marijuana trafficking operation by paying for marijuana cultivation, package shipping, electricity, and air travel expenses with the proceeds. He also deposited the drug trafficking proceeds into multiple bank accounts opened in the name of Maximillion Enterprises Inc., and structured deposits to evade reporting requirements under federal law. Between 2015 and 2019, Anderson operated marijuana cultivation farms in Santa Rosa, California, and Willits, California, and he employed others to grow, harvest, package, and ship the marijuana for distribution in Connecticut, Virginia, New York, and elsewhere.
In February 2020, Anderson and his co-conspirators, Kelvin Jackson and Stephanie Atkinson, were charged by indictment with various money laundering offenses. On February 18, 2022, Anderson, who had been released on bond pending trial, was scheduled to appear before Judge Dooley for a guilty plea proceeding. He failed to appear for that court proceeding and ceased contact with his attorney and the U.S. Probation Office.
On November 8, 2023, the U.S. Marshals Service located and arrested Anderson in Dallas, Texas. He has been detained since his arrest. On July 1, 2024, he pleaded guilty to conspiracy to launder monetary instruments.
Anderson has forfeited his interest in multiple bank accounts associated with the charged conspiracy.
Jackson, of Bristol, Virginia, and Atkinson, of Stamford, previously pleaded guilty to the same charge and await sentencing.
This matter has been investigated by the Drug Enforcement Administration with the assistance of the U.S. Marshals Service, the Stamford Police Department, and the Sonoma County (Calif.) Sheriff’s Office.
This case is being prosecuted by Assistant U.S. Attorneys David T. Huang and Jocelyn Courtney Kaoutzanis through the Organized Crime Drug Enforcement Task Forces (OCDETF) Program. OCDETF identifies, disrupts, and dismantles drug traffickers, money launderers, gangs, and transnational criminal organizations through a prosecutor-led and intelligence-driven approach that leverages the strengths of federal, state, and local law enforcement agencies. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
Memphis Man Charged with Firearms OffenseRead the Press Release
KNOXVILLE, Tenn. - On September 18, 2024, a federal grand jury in Knoxville, TN, returned a one-count indictment against Antonio Fontaine, 47, of Memphis, TN. According to the indictment, the defendant is charged with being a felon in possession of a firearm and ammunition in violation of 18 U.S.C. § 922(g)(1), stemming from offense conduct on September 11, 2024.
Fontaine had his initial appearance on September 26, 2024, before the Honorable Jill E. McCook, United States Magistrate Judge, and entered a plea of not guilty. This case has been set for trial on January 14, 2025, before the Honorable Katherine A. Crytzer, United States District Judge, in the Eastern District of Tennessee at Knoxville.
If convicted, Fontaine faces a prison term of up to 15 years and other penalties.
U.S. Attorney Francis M. Hamilton III of the Eastern District of Tennessee made the announcement.
This indictment is the result of an investigation led by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, with significant support from the Knoxville Police Department.
Assistant U.S. Attorney Michael Gilmore will represent the United States.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.
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Long Island Man Convicted at Trial of Participating in Multimillion-Dollar Cryptocurrency-Related CrimesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that EUGENE WILLIAM AUSTIN, JR., a/k/a “Hugh Austin” (“AUSTIN”) was convicted Tuesday, September 24, 2024, of three criminal counts stemming from his participation in a conspiracy to commit wire fraud, money laundering, and the interstate transportation of stolen property. The defendant and his son, BRANDON AUSTIN (“BRANDON”), were responsible for defrauding numerous victims across the country of millions of dollars. AUSTIN was convicted after a jury trial before U.S. District Judge P. Kevin Castel. The defendant’s son, BRANDON, previously pled guilty to conspiracy to commit money laundering and was sentenced principally to 4 years in prison.
U.S. Attorney Damian Williams said: “A unanimous jury has found that Hugh Austin engaged in a yearslong fraud and money laundering scheme. Austin’s scheming caused millions of dollars of losses. Austin even conspired with his own son to rip off his victims. Thanks to the hard work of the career prosecutors of this Office and our law enforcement partners, Austin’s crime spree has come to an end, and he will be held accountable for his conduct.”
As reflected in the Indictment, public filings, and the evidence presented at trial:
AUSTIN participated in a scheme with his son BRANDON and others to steal money from entrepreneurs, investors, and other victims by fraudulently offering to, among other things: serve as a broker for sales of large quantities of cryptocurrency; provide short-term investments in cryptocurrency for purportedly high returns; and secure investors for startups and other small businesses from their purported network of high-net-worth individuals. AUSTIN also frequently sought personal loans from friends and acquaintances in connection with AUSTIN’s purported cryptocurrency and investment businesses, falsely promising to pay lenders back with interest. In each instance, investors and lenders lost their money, and AUSTIN and BRANDON frequently spent investors’ funds on personal expenses, including airline travel, luxury hotels, restaurants, shopping, transfers of money to relatives, as well as nominal payments to victims to prolong the scheme. Over the course of the scheme, AUSTIN and BRANDON have caused millions of dollars in losses to numerous victims all over the country. Below are several examples of victims defrauded by AUSTIN and BRANDON.
- In or about August 2018, AUSTIN and BRANDON fraudulently induced a California-based investment firm to send an interstate wire transfer of approximately $5 million to a Manhattan-based attorney for the purported purchase of cryptocurrency, which was never provided to the victim.
- In or about September 2018, AUSTIN and BRANDON fraudulently induced a cryptocurrency start-up company to send an interstate wire transfer of approximately $100,000 as a short-term loan for a purported cryptocurrency transaction; instead of using the funds as promised, AUSTIN and BRANDON used the money to fund their lifestyle.
- In or about June 2020, AUSTIN and BRANDON laundered approximately $567,000 that had been sent via an interstate wire transfer to the trust account of a New York-based real estate attorney for a purported cryptocurrency transaction.
- In or about October 2021, AUSTIN and BRANDON stole approximately $528,000 that had been sent via an interstate wire transfer to the bank account of a Manhattan-based company for the purported purchase of Bitcoin.
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AUSTIN, 62, of Port Jefferson, New York, was convicted by a jury of one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 year in prison; one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison; and one count of conspiracy to receive stolen property, which carries a maximum sentence of five years in prison. AUSTIN will be sentenced before Judge Castel on February 20, 2025.
The maximum potential sentences are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of Homeland Security Investigations.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Andrew Chan, Steven Kochevar, Matthew Weinberg, and Olga I. Zverovich are in charge of the prosecution, with assistance from Paralegal Specialists Chanel-Ashley Foster, Frank Mastroianni, and Christine Woods.
Lexington Men Plead Guilty to Conspiracy to Commit Wire Fraud and Mail FraudRead the Press Release
COLUMBIA, S.C. — Kenneth J. Brown, 45, and Nicholas R. Shepard, 45, of Lexington pleaded guilty to one count of conspiracy to commit wire fraud and mail fraud for their involvement in a business email compromise and romance scam scheme.
Evidence obtained in the investigation revealed that Brown and Shepard coordinated with others to receive checks from victims of the business email compromises and romance scams through the United States mail to their business, Golden Eagle Precious Metals Exchange, based in Irmo. After receiving the checks, Brown and Shepard deposited them into their business account and then converted the money into cryptocurrency.
Brown and Shepard face a maximum penalty of 20 years in federal prison. They also face a fine of up to $250,000, restitution, and three years of supervision to follow the term of imprisonment. United States District Judge Joseph F. Anderson, Jr. accepted the guilty pleas and will sentence Brown and Shepard after receiving and reviewing a sentencing report prepared by the U.S. Probation Office.
This case was investigated by the United States Secret Service, the United States Postal Inspection Service, the Lexington County Sheriff’s Department, and the Richland County Sheriff’s Department. Assistant U.S. Attorneys Scott Matthews and Winston Holliday are prosecuting the case.
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Lexington Man Convicted of Fraudulently Obtaining COVID Relief Loans and COVID Relief Rental AssistanceRead the Press Release
LEXINGTON, Ky. – A Lexington man, Vonnie McDaniels, 35, was found guilty on Wednesday, by a federal jury sitting in Lexington, of four counts of wire fraud, for fraudulently applying for three Small Business Administration (SBA) Covid-19 relief loans and for fraudulently applying to the Lexington Fayette Urban County Government’s (LFUCG) federally funded Housing Stabilization Program (HSP), a tenant rent relief program; two counts of aggravated identity theft for submitting tenant rent relief applications, pretending to be his tenants; six counts of money laundering; and two counts of committing an offense while on conditions of release. He was convicted following a three-day trial.
According to the evidence at trial, McDaniels submitted a materially false application to the SBA, to obtain an Economic Injury Disaster Loan (EDIL), for one business, fraudulently obtaining a $100,000 loan. The Defendant also submitted three materially false Payment Protection Program (PPP) applications, for the same business and for another business that was no longer in operation at the time of the pandemic. Two of the three PPP applications were eventually funded, and McDaniels obtained $93,231. McDaniels also inflated numbers on his applications to increase the loan amount and uploaded fraudulent tax documents to support his numbers. In 2020, he obtained a total of $193,231 in disaster relief funds from the SBA. The theft was discovered by law enforcement when preparing for an earlier trial, back in June 2021, when McDaniels was previously convicted of bank fraud and aggravated identity theft.
McDaniels used the SBA loan proceeds to pay off personal credit cards and loans, free up home equity lines of credit, purchase a new property in South Carolina, and pay his unlawfully obtained mortgage, which had been the subject of his June 2021 bank fraud trial.
In 2021, McDaniels also submitted a materially false application to LFUCG’s HSP for tenant rent relief for two properties. McDaniels uploaded fraudulent leases, vastly inflating the monthly rent amount and pretended to be his two tenants when he submitted the tenant portions of the application. McDaniels solicited personal identifying information from his tenants, told his tenants about the rent relief program, and informed his tenants that they did not qualify. Then, he fraudulently obtained $45,000 in Covid rental relief assistance, while he continued to make his tenants pay their monthly rent. He committed these offenses while subject to conditions of release, following his prior conviction.
Carlton S. Shier, IV, United States Attorney for the Eastern District of Kentucky, and Kathy Enstrom, Special Agent in Charge, Office of Inspector General, Federal Deposit Insurance Corporation, jointly announced the jury’s verdict.
The investigation was conducted by the Federal Deposit Insurance Corporation – Office of Inspector General. Assistant U.S. Attorneys Brittany Dunn-Pirio and Andrea Mattingly Williams are representing the United States in the case.
McDaniels is scheduled to appear for sentencing on January 24, 2025. He faces up to 20 years in prison, and a mandatory minimum sentence of two years for aggravated identity theft. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal sentencing statutes before imposing a sentence. McDaniels also faces potential fines, a forfeiture money judgment, and a judgment of restitution, as ordered by the Court.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
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Leader in 2012 Benghazi Attack that Killed U.S. Ambassador Stevens and 3 Other Americans Is Resentenced to 28 YearsRead the Press Release
WASHINGTON -- Ahmed Abu Khatallah, aka Ahmed Mukatallah, 53, a Libyan national, was resentenced today to 28 years in prison on federal terrorism charges and other offenses stemming from the Sept. 11, 2012, terrorist attack on the U.S. Special Mission in Benghazi, Libya. Ambassador J. Christopher Stevens and U.S. government personnel Sean Smith, Tyrone Woods, and Glen Doherty died in the attack at the Mission and the nearby Annex in Benghazi.
The announcement was made by Assistant Attorney General for National Security Matthew G. Olsen, U.S. Attorney for the District of Columbia Matthew M. Graves, Assistant Director David J. Scott of the FBI’s Counterterrorism Division, and Assistant Director in Charge James E. Dennehy of the FBI’s New York Field Office.
On June 15, 2014, Khatallah was captured in Libya and brought to the United States to face trial in the U.S. District Court for the District of Columbia.
On Nov. 28, 2017, at his original sentencing, Khatallah was sentenced to 22 years in federal prison after a federal jury found him guilty of one count of conspiracy to provide material support or resources to terrorists, one count of providing material support or resources to terrorists, one count of maliciously destroying and injuring dwellings and property and placing lives in jeopardy within the special maritime and territorial jurisdiction of the United States, and one count of using and carrying a semiautomatic assault rifle during a crime of violence.
Khatallah appealed his conviction, and the government cross-appealed the sentence imposed. On July 26, 2022, the D.C. Circuit affirmed the conviction, but, having found that the defendant’s “sentence [was] substantively unreasonably low in light of the gravity of his crimes of terrorism” the court reversed the sentence and remanded for resentencing.
U.S. District Court Judge Christopher Cooper today resentenced Khatallah to 28 years.
According to the government’s evidence, Khatallah was a leader of an extremist militia named Ubaydah bin Jarrah, which operated outside the law, and in the months prior to the attacks, he sought to incite violence by his and other militia groups against the presence of the United States in Libya. In early September 2012, he and other members of his group mobilized for an attack by stockpiling truckloads of weaponry.
On the night of Sept. 11, 2012, according to the government’s evidence, Khatallah directed his group to carry out the violence, striking first at the U.S. Special Mission in Benghazi. A group of men, armed with AK-47 rifles, grenades, and other weapons, swept into the Mission compound, setting fires and breaking into buildings. During that violence, Ambassador Stevens and Mr. Smith valiantly tried to protect themselves when the attackers stormed into a villa, but they were fatally overcome by thick, black smoke when the attackers set a fire. A State Department employee, who tried to guide them to safety, was injured.
Before, during and after the attack, Khatallah maintained contact with his group in a series of cellphone calls. Also, according to the government’s evidence, for much of the attack, he positioned himself on the perimeter of the compound and kept others, including emergency responders, from getting to the scene. The government’s evidence also showed that Khatallah made calls to leaders of other militia groups warning them not to interfere with the attack.
Following the attack at the Mission, in the early hours of Sept. 12, 2012, the violence continued at a nearby CIA Annex, first with gunfire and then with a precision mortar attack. Mr. Woods and Mr. Doherty died in the mortar attack, and a State Department employee and U.S. government security specialist were seriously wounded.
This case was investigated by the FBI New York Field Office’s Joint Terrorism Task Force with substantial assistance from various other government agencies, including the two victim agencies, the CIA and the Department of State.
This latest proceeding in the case was handled by Assistant U.S. Attorney John Crabb, Jr., and Special Assistant U.S. Attorney Michael C. DiLorenzo. Assistance also was provided by Trial Attorney Joseph Kaster of the National Security Division’s Counterterrorism Section and Victim/Witness Advocate Yvonne Bryant of the U.S. Attorney’s Office for the District of Columbia.
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Le Mars Man Sentenced to Federal Prison for Meth and Firearm ConvictionsRead the Press Release
Timothy Mullally, 49, from Le Mars, Iowa, was sentenced September 25, 2024 to 66 months’ imprisonment. Mullally pled guilty on May 16, 2024, in federal court in Sioux City to one count of conspiracy to distribute methamphetamine and one count of prohibited person in possession of firearms.
At the plea and sentencing hearings evidence showed that between January 2022 through September 2022, Mullally and others distributed more than two kilograms of methamphetamine. Evidence showed that on two occasions in August and September 2022 Mullally distributed more than 800 grams of pure methamphetamine to an individual cooperating with law enforcement. During investigation of this matter, law enforcement and United States Postal Inspection Service interdicted a three-pound package of methamphetamine coming from California to Mullally’s house in September 2022. During the investigation, including search warrants at Mullally’s properties and vehicles, law enforcement seized $5,830 and two firearms. Mullally admitted to being a regular user of methamphetamine, and thereby was prohibited from possessing firearms.
Sentencing was held before United States District Court Judge Leonard T. Strand. Mullally was sentenced to 66 months’ imprisonment, $1,000 fine, and must serve a three-year term of supervised release following imprisonment. There is no parole in the federal system. Mullally remains in the custody of the United States Marshal until he can be transported to a federal prison.
The case was prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated by Tri-State Drug Task Force based in Sioux City, Iowa, that consists of law enforcement personnel from the Drug Enforcement Administration; Sioux City, Iowa, Police Department; Homeland Security Investigations; Woodbury County Sheriff’s Office; South Sioux City, Nebraska, Police Department; Nebraska State Patrol; Iowa National Guard; Iowa Division of Narcotics Enforcement; United States Marshals Service; South Dakota Division of Criminal Investigation; and Woodbury County Attorney’s Office.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 22-4083. Follow us on Twitter @USAO_NDIA.
KC Tax Preparer Sentenced for Wire Fraud, False Tax ReturnsRead the Press Release
KANSAS CITY, Mo. – A Kansas City, Mo., tax preparer was sentenced in federal court today for a nearly $1 million wire fraud scheme in which he filed federal income tax returns for his clients that contained false information.
Ebens Louis-Loradin, 45, was sentenced by U.S. District Judge Brian C. Wimes to 20 months in federal prison without parole. The court also ordered Louis-Loradin to pay $722,121 in restitution.
On March 27, 2024, Louis-Loradin pleaded guilty to one count of wire fraud and 10 counts of aiding in the preparation of false tax returns. According to court documents, Louis-Loradin prepared and filed 154 fraudulent tax returns that inflated his clients’ refunds by a total of nearly $1 million and thereby boosted the fees he charged them.
Louis-Loradin, who has been a tax preparer since 2012, admitted that he engaged in a scheme to defraud the IRS and obtain money by preparing and electronically filing federal tax returns containing false items over a seven-year period from 2013 to 2020. Louis-Loradin claimed items on his clients’ federal tax returns that his clients were not entitled to claim, including dependents, inflated income tax withholding amounts, credits for child and dependent care expenses, American opportunity credits, earned income credits, itemized deductions, and business losses. These false claims had the effect of reducing his clients’ taxable income and increasing his clients’ tax credit eligibility.
Louis-Loradin’s fraud scheme resulted in a total loss of $953,873 to the United States. Many of his clients, who told investigators they weren’t aware of the false items he placed on their tax returns, have been paying back the Internal Revenue Service for the refund overpayments caused by Louis-Loradin’s fraud scheme.
According to court documents, Louis-Loradin failed to file personal federal income tax returns for tax years 2016, 2017, and 2018. He also fraudulently utilized multiple identities, including those of children, in the commission of his fraud scheme. Specificallym Louis-Loradin utilized the identity of at least seven minors to claim them as dependents on various clients’ tax returns.
According to court documents, Louis-Loradin was in Haiti when he was indicted in July 2021. He traveled to Florida in May 2023 and was arrested.
This case was prosecuted by Assistant U.S. Attorney Nicholas P. Heberle. It was investigated by IRS-Criminal Investigations.
Justice Department Finds Civil Rights Violations by the City of Lexington, Mississippi, and the Lexington Police DepartmentRead the Press Release
WASHINGTON – Following a comprehensive investigation, the Justice Department announced today that the City of Lexington, Mississippi (City), and Lexington Police Department (LPD) engage in a pattern or practice of conduct that deprives people of their rights under the U.S. Constitution and federal law. Lexington is a town of approximately 1,200 people, located about an hour outside of Jackson, Mississippi.
Specifically, the Justice Department finds that LPD unlawfully
- Arrests, jails and detains people who cannot pay fines or fees, without assessing their ability to pay;
- Uses excessive force;
- Conducts stops, searches and arrests without probable cause, including jailing people on illegal “investigative holds” and arresting people solely because they owe outstanding fines;
- Imposes money bail without justification or assessment of ability to pay;
- Jails people without prompt access to court;
- Violates the rights of people engaged in free speech and expression, including by retaliating against people who criticize the police;
- Discriminates against Black people; and
- Operates under an unconstitutional conflict of interest because LPD’s funding depends on the money it raises through its enforcement.
“Today’s findings show that the Lexington Police Department abandoned its sacred position of trust in the community by routinely violating the constitutional rights of those it was sworn to protect,” said Attorney General Merrick B. Garland. “The Justice Department’s investigation uncovered that Lexington police officers have engaged in a pattern or practice of discriminating against the city’s Black residents, used excessive force, and retaliated against those who criticize them. Additionally, Lexington’s approach to fines and fees — including unlawfully arresting, jailing, and detaining people based on their failure to pay money without assessing if they can afford to do so — has been devastating for its residents. Being poor is not a crime, but practices like these amount to punishing people for poverty. People in that community deserve better, and the Justice Department is committed to working with them, the City, and the Police Department to make the City safer for all its citizens.”
“Public safety depends on public confidence in our justice system,” said Deputy Attorney General Lisa Monaco. “The Lexington Police Department’s incarceration of individuals because they could not afford to pay fines — as detailed in today’s findings report — undermined that confidence and violated the civil rights of Lexington residents. I’m grateful to the Civil Rights Division for its thorough investigation and continued work to address these findings.”
“Lexington is a small, rural community but its police department has had a heavy hand in people’s lives, wreaking havoc through use of excessive force, racially discriminatory policing, retaliation, and more. In every corner of our country, police officers must respect people’s constitutional rights and treat people with dignity,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “After an extensive review, we found that police officers in Lexington routinely make illegal arrests, use brutal and unnecessary force, and punish people for their poverty — including by jailing people who cannot afford to pay fines or money bail. For too long, the Lexington Police Department has been playing by its own rules and operating with impunity — it’s time for this to end. Our findings report furthers the Justice Department’s commitment to ensuring fairness and the rule of law.”
“Police have the authority to enforce the law, not to act as debt collectors for the City, extracting payments from the poor with threats of jail,” said U.S. Attorney Todd Gee for the Southern District of Mississippi. “No matter how large or small, every police department has an obligation to follow the Constitution.”
Based on the department’s investigation, over the past two years, LPD has made nearly one arrest for every four people in town, primarily for low-level offenses and traffic violations. That is more than 10 times the per capita arrest rate for Mississippi as a whole. Many of these arrests were for non-criminal conduct, like owing outstanding fines and using profanity. Most of those arrested are Black people. In 2023, Black people were 17.6 times more likely to be arrested by LPD than white people were.
When making low-level arrests, LPD uses tactics normally reserved for serious offenses. For example, LPD officers broke down a Black man’s door to arrest him for swearing at a public official. In another case, while attempting to arrest a man for having a tinted windshield, officers followed the man’s car to his house, forced their way into his home, and tased him for 15 seconds. On the same day the Justice Department opened the investigation, LPD officers chased a man accused only of disturbing a business and tased him nine times.
LPD’s enforcement strategy has put hundreds of people in debt to the police department. In a town of about 1,200 people, the total sum of outstanding fines owed to LPD is more than $1.7 million.
The department also found that LPD lacks any meaningful accountability system and that people experiencing poverty who are accused of crimes in Lexington regularly lack access to counsel, both of which allow LPD’s misconduct to continue unchecked.
The Justice Department opened its investigation on Nov. 8, 2023. Career attorneys and staff in the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the Southern District of Mississippi conducted the investigation. The team was assisted in this investigation by experts in law enforcement practices. The team conducted an extensive review of LPD’s records, including hundreds of arrest reports and municipal court records and hundreds of hours of body-worn camera footage. The team also interviewed City and LPD leadership and line officers, accompanied officers on ride-alongs, observed the Lexington Municipal Court, and met with dozens of community members.
In February, while the investigation was ongoing, the department issued a letter to the City of Lexington raising significant concerns regarding their practice of jailing people for unpaid fines without first assessing whether they can afford to pay them.
The City and LPD cooperated fully with the investigation. The City and LPD have committed to working cooperatively with the department to address the violations identified in the department’s findings.
The department conducted this investigation pursuant to 34 U.S.C. § 12601 (Section 12601), which prohibits law enforcement officers from engaging in a pattern or practice of conduct that deprives people of rights protected by the Constitution or federal law. Section 12601 authorizes the Attorney General to file a lawsuit in federal court seeking court-ordered remedies to eliminate a pattern or practice of unlawful conduct.
This investigation reflects the Justice Department’s efforts to ensure constitutional policing and to combat unlawful practices with respect to fines and fees. The department previously addressed policing for profit in its findings on the Ferguson Police Department in Missouri in 2015. The consent decree that followed has resulted in the dismissal of about 63,000 citations and a reduction of over $1 million in fines and fees. In July 2022, the department filed a Statement of Interest in Coleman v. Brookside, explaining that judges, prosecutors, and police violate the Constitution when they are motivated by profit rather than justice. And in April 2023, the department issued a Dear Colleague Letter containing updated guidance on fines and fees for state and local courts.
The department will be conducting outreach to members of the Lexington community for input on remedies to address the department’s findings. Individuals may submit recommendations to [email protected].
The Justice Department will hold a public community meeting on Sept. 26 at 6:00 p.m. CT at St. Paul C.O.G.I.C. Fellowship Hall, 17214 Highway 17 South, Lexington, MS 39095. Members of the public are encouraged to attend.
Additional information about the Justice Department’s Civil Rights Division is available on its website at www.justice.gov/crt. Additional information about the U.S. Attorney’s Office for the Southern District of Mississippi is available at www.justice.gov/usao-sdms. Information specific to the Civil Rights Division’s Police Reform Work can be found at www.justice.gov/crt/file/922421/download.
Justice Department Finds Civil Rights Violations by the City of Lexington, Mississippi, and the Lexington Police DepartmentRead the Press Release
Note: View the findings report here.
Following a comprehensive investigation, the Justice Department announced today that the City of Lexington, Mississippi (City), and Lexington Police Department (LPD) engage in a pattern or practice of conduct that deprives people of their rights under the U.S. Constitution and federal law. Lexington is a town of approximately 1,200 people, located about an hour outside of Jackson, Mississippi.
Specifically, the Justice Department finds that LPD unlawfully
- Arrests, jails and detains people who cannot pay fines or fees, without assessing their ability to pay;
- Uses excessive force;
- Conducts stops, searches and arrests without probable cause, including jailing people on illegal “investigative holds” and arresting people solely because they owe outstanding fines;
- Imposes money bail without justification or assessment of ability to pay;
- Jails people without prompt access to court;
- Violates the rights of people engaged in free speech and expression, including by retaliating against people who criticize the police;
- Discriminates against Black people; and
- Operates under an unconstitutional conflict of interest because LPD’s funding depends on the money it raises through its enforcement.
“Today’s findings show that the Lexington Police Department abandoned its sacred position of trust in the community by routinely violating the constitutional rights of those it was sworn to protect,” said Attorney General Merrick B. Garland. “The Justice Department’s investigation uncovered that Lexington police officers have engaged in a pattern or practice of discriminating against the city’s Black residents, used excessive force, and retaliated against those who criticize them. Additionally, Lexington’s approach to fines and fees — including unlawfully arresting, jailing, and detaining people based on their failure to pay money without assessing if they can afford to do so — has been devastating for its residents. Being poor is not a crime, but practices like these amount to punishing people for poverty. People in that community deserve better, and the Justice Department is committed to working with them, the City, and the Police Department to make the City safer for all its citizens.”
“Public safety depends on public confidence in our justice system,” said Deputy Attorney General Lisa Monaco. “The Lexington Police Department’s incarceration of individuals because they could not afford to pay fines — as detailed in today’s findings report — undermined that confidence and violated the civil rights of Lexington residents. I’m grateful to the Civil Rights Division for its thorough investigation and continued work to address these findings.”
“Lexington is a small, rural community but its police department has had a heavy hand in people’s lives, wreaking havoc through use of excessive force, racially discriminatory policing, retaliation, and more. In every corner of our country, police officers must respect people’s constitutional rights and treat people with dignity,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “After an extensive review, we found that police officers in Lexington routinely make illegal arrests, use brutal and unnecessary force, and punish people for their poverty — including by jailing people who cannot afford to pay fines or money bail. For too long, the Lexington Police Department has been playing by its own rules and operating with impunity — it’s time for this to end. Our findings report furthers the Justice Department’s commitment to ensuring fairness and the rule of law.”
“Police have the authority to enforce the law, not to act as debt collectors for the City, extracting payments from the poor with threats of jail,” said U.S. Attorney Todd Gee for the Southern District of Mississippi. “No matter how large or small, every police department has an obligation to follow the Constitution.”
Based on the department’s investigation, over the past two years, LPD has made nearly one arrest for every four people in town, primarily for low-level offenses and traffic violations. That is more than 10 times the per capita arrest rate for Mississippi as a whole. Many of these arrests were for non-criminal conduct, like owing outstanding fines and using profanity. Most of those arrested are Black people. In 2023, Black people were 17.6 times more likely to be arrested by LPD than white people were.
When making low-level arrests, LPD uses tactics normally reserved for serious offenses. For example, LPD officers broke down a Black man’s door to arrest him for swearing at a public official. In another case, while attempting to arrest a man for having a tinted windshield, officers followed the man’s car to his house, forced their way into his home, and tased him for 15 seconds. On the same day the Justice Department opened the investigation, LPD officers chased a man accused only of disturbing a business and tased him nine times.
LPD’s enforcement strategy has put hundreds of people in debt to the police department. In a town of about 1,200 people, the total sum of outstanding fines owed to LPD is more than $1.7 million.
The department also found that LPD lacks any meaningful accountability system and that people experiencing poverty who are accused of crimes in Lexington regularly lack access to counsel, both of which allow LPD’s misconduct to continue unchecked.
The Justice Department opened its investigation on Nov. 8, 2023. Career attorneys and staff in the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the Southern District of Mississippi conducted the investigation. The team was assisted in this investigation by experts in law enforcement practices. The team conducted an extensive review of LPD’s records, including hundreds of arrest reports and municipal court records and hundreds of hours of body-worn camera footage. The team also interviewed City and LPD leadership and line officers, accompanied officers on ride-alongs, observed the Lexington Municipal Court, and met with dozens of community members.
In February, while the investigation was ongoing, the department issued a letter to the City of Lexington raising significant concerns regarding their practice of jailing people for unpaid fines without first assessing whether they can afford to pay them.
The City and LPD cooperated fully with the investigation. The City and LPD have committed to working cooperatively with the department to address the violations identified in the department’s findings.
The department conducted this investigation pursuant to 34 U.S.C. § 12601 (Section 12601), which prohibits law enforcement officers from engaging in a pattern or practice of conduct that deprives people of rights protected by the Constitution or federal law. Section 12601 authorizes the Attorney General to file a lawsuit in federal court seeking court-ordered remedies to eliminate a pattern or practice of unlawful conduct.
This investigation reflects the Justice Department’s efforts to ensure constitutional policing and to combat unlawful practices with respect to fines and fees. The department previously addressed policing for profit in its findings on the Ferguson Police Department in Missouri in 2015. The consent decree that followed has resulted in the dismissal of about 63,000 citations and a reduction of over $1 million in fines and fees. In July 2022, the department filed a Statement of Interest in Coleman v. Brookside, explaining that judges, prosecutors, and police violate the Constitution when they are motivated by profit rather than justice. And in April 2023, the department issued a Dear Colleague Letter containing updated guidance on fines and fees for state and local courts.
The department will be conducting outreach to members of the Lexington community for input on remedies to address the department’s findings. Individuals may submit recommendations to [email protected].
The Justice Department will hold a public community meeting on Sept. 26 at 6:00 p.m. CT at St. Paul C.O.G.I.C. Fellowship Hall, 17214 Highway 17 South, Lexington, MS 39095. Members of the public are encouraged to attend.
Additional information about the Justice Department’s Civil Rights Division is available on its website at www.justice.gov/crt. Additional information about the U.S. Attorney’s Office for the Southern District of Mississippi is available at www.justice.gov/usao-sdms. Information specific to the Civil Rights Division’s Police Reform Work can be found at www.justice.gov/crt/file/922421/download.
Justice Department Announces New Resources to Improve Firearm Background Checks and Reduce Gun ViolenceRead the Press Release
The Justice Department today announced several actions to improve firearm background checks and reduce gun violence. The Department is releasing model legislation and information that would help states permit the sharing of juvenile criminal history and mental health records with the National Instant Criminal Background Check System (NICS), solely for the purpose of conducting firearm background checks. In addition, the Department is announcing significant new grant funding for gun violence prevention, totaling over $200 million. Finally, the Department is unveiling new resources for law enforcement across the country, including training and funding guidance.
“The Department of Justice is committed to doing everything in its power to combat gun violence and save lives,” said Attorney General Merrick B. Garland. “Today’s actions are a continuation of our efforts to fully implement the Bipartisan Safer Communities Act, to provide critical funding to community violence intervention programs, and to assist our state and local partners as they work day in and day out to drive down gun crime.”
Under the Bipartisan Safer Communities Act of 2022 (BSCA), NICS is required to contact state and local law enforcement entities to determine if a purchaser under 21 years of age is prohibited from purchasing a firearm. However, as part of established juvenile justice and mental health systems, some states and territories have important laws in place which restrict the sharing of juvenile mental health and/or criminal history records, so that youthful mistakes do not follow young people into adulthood.
At the same time, these protections may prevent jurisdictions from providing the FBI with potentially disqualifying juvenile records when an enhanced background check is conducted. The model legislation released today, following in the example of several states that have appropriately and narrowly amended their record-sharing laws, provides a template for states that wish to permit greater information-sharing with NICS for the sole purpose of responding to a federal enhanced background check, thereby advancing public safety. In addition, the Justice Department is also releasing today information on state laws around the country, including whether they permit information-sharing with regard to juvenile records for enhanced background checks.
Additionally, the Justice Department is also announcing two major rounds of grant funding designed to reduce and prevent gun violence. First, the Department is announcing an additional $85 million in funding through the Office of Justice Programs Community Violence Intervention and Prevention Initiative (CVIPI). This funding will help 30 agencies and organizations develop and expand their community violence intervention work, including hospital-based violence intervention, street outreach, and cognitive behavioral therapy, and will support training and technical assistance plus rigorous research to help grow the evidence base for violence intervention models. Second, the Department is announcing over $135 million in formula awards to 48 states under the Byrne State Crisis Intervention Program (Byrne SCIP), which provides funding for the implementation of extreme risk protection order programs, state crisis intervention court proceedings, and related programs/initiatives.
Moreover, the Justice Department is committed to supporting implementation of the recommendations from the Critical Incident Report (CIR) on the mass shooting at Robb Elementary School in Uvalde, Texas. These implementation efforts include a suite of resources to not only support the local community of Uvalde, but also to serve as a resource across the country, particularly for local, rural, and regional agencies serving their communities. Today, the Department’s Community Oriented Policing Services (COPS) office is releasing a Tenets of Training Checklist to assist law enforcement executives and training personnel in enhancing relevant training and a Resource Webpage tailored to the needs of Small and Rural agencies. This fall, DOJ will release a Self-Assessment Tool to help communities assess how well they are implementing the recommendations in the CIR and an Implementation and Resource Guide to identify resources and generally accepted practices and standards in the CIR. Additional resources will be released on a continual basis to continue to support law enforcement agencies and their communities.
The COPS Office Collaborative Reform Initiative Technical Assistance Center (CRI-TAC) is also launching a renewed focus on assisting small and rural law enforcement agencies. Small and rural agencies will continue to have access to the no-cost training and technical assistance that CRI-TAC is known for, but now CRI-TAC will provide training and technical assistance opportunities geared for the unique challenges confronting small and rural policing agencies. Through the Small and Rural Agency Initiative, agencies will be able to participate in training programs addressing areas such as active assailant response, multi-jurisdictional coordination, community partnerships, resource allocation, addressing hate crimes, report writing, duty to intervene, and crash re-construction.
Model Legislation to Remove Barriers to Completing Enhanced Background Checks (PDF)
States’ Legal Ability to Provide Juvenile Information
Individual Sentenced to over 19 years in Prison for Child Exploitation and Drug TraffickingRead the Press Release
SAN JUAN, Puerto Rico –Today, Bryan Xavier Pérez Hernández was sentenced by United States District Court Judge María Antongiorgi-Jordan to 235 months (19 years and seven months) in prison, followed by 5 years of supervised release, for production of child exploitation material and drug trafficking charges.
According to court documents, Bryan Xavier Pérez Hernández knowingly used, persuaded, induced, enticed, and coerced 13-year-old female minor G.L.C.C., to engage in sexually explicit conduct for the purpose of producing child exploitation material. On April 18, 2024, Pérez Hernández also pleaded guilty to possession with intent to distribute cocaine, including distribution to a minor.
On August 16, 2024, Melanie Cruz Clivilles, mother of the minor victim was sentenced to four years in prison for lying to a federal law enforcement agent. Cruz Clivilles made a materially false, fictitious, and fraudulent statement and representation by falsely stating to a Task Force Officer of the United States Department of Homeland Security Investigations that she first met Bryan Xavier Pérez Hernández at the hospital on August 4, 2023, where he arrived with defendant’s deceased daughter G.L.C.C. The statement and representation were false because, as she then and there knew, she had met Pérez Hernández at the latest in July of 2023, and had been with him during a meeting on August 3, 2023.
“This sentence concludes a disturbing case in which a 13-year-old girl died at the hands of her adult boyfriend and her complicit mother,” said W. Stephen Muldrow, United States Attorney for the District of Puerto Rico. “I commend the prosecution team and our law enforcement partners who worked diligently to ensure that these defendants were held accountable for their crimes.”
“13-year-old Gabriela Cabán Cruz died at the hands of individuals she trusted. As a society we can’t accept inappropriate relationships between minors and adults, we need to report, get involved, most importantly if it involves child neglect,’ said Rebecca González-Ramos, Special Agent in Charge HSI San Juan. “Today we mourn the death of a thirteen-year-old who we failed, let’s stay vigilant and if we see something, say something. As an agency our priority will always be the safety of our minors. This sentencing reflects the commitment HSI and the PRPB have towards child exploitation investigations, a tough investigation worked together to seek justice for Gabriela.”
Homeland Security Investigations and the Puerto Rico Police Bureau investigated the case.
Assistant U.S. Attorney Jenifer Hernández Vega, Chief of the Child Exploitation and Immigration Unit prosecuted the case.
For more information about HSI’s efforts to protect children from sexual predators, visit https://www.ice.gov/topics/iGuardians; and to denounce suspicious activities call 787-729-6969.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
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Greensboro Clinic Owner Is Sentenced to 52 Months in Prison for Defrauding MedicaidRead the Press Release
CHARLOTTE, N.C. – Aljihad Shabazz, 45, of Kernersville, N.C., was sentenced today to 52 months in prison followed by two years of supervised release for his role in a scheme that defrauded the North Carolina Medicaid Program (Medicaid) of more than $4.7 million, announced Dena J. King, U.S. Attorney for the Western District of North Carolina. In addition to the prison term imposed, U.S. District Judge Frank D. Whitney also ordered Shabazz to pay $4,711,159.88 in restitution.
Robert M. DeWitt, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, Donald “Trey” Eakins, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, Charlotte Field Office (IRS-CI), and North Carolina Attorney General Josh Stein, who oversees the North Carolina Medicaid Division (MID), join U.S. Attorney King in making today’s announcement.
According to court records and the sentencing hearing, Shabazz was the owner and operator of Reign & Inspirations, LLC (R&I), a clinic that provided outpatient behavioral services in Greensboro and surrounding areas. Between 2017 and 2020, Shabazz conspired with other individuals to carry out an extensive health care fraud scheme involving the fraudulent submissions of fake reimbursement claims to Medicaid, for services that were never provided to Medicaid beneficiaries. Court records show that Shabazz obtained the personal identifying information (PII) of Medicaid beneficiaries through community outreach programs, including football and mentoring programs, and misused the beneficiaries’ PII to create and submit hundreds of fraudulent reimbursement claims and to receive payment for services that were never in fact provided by R&I. Over the course of the scheme, Shabazz used the beneficiaries’ PII to submit more than 1,500 fraudulent reimbursement claims to Medicaid, some of which claimed that R&I provided services that exceeded 24 hours in a single day.
Court records show that the reimbursement payments made by Medicaid were deposited in bank accounts under Shabazz’s control. Shabazz used a portion of the fraudulent proceeds to pay kickbacks to his co-conspirators and to cover personal expenses, including to pay for personal travel, luxury items, and timeshares, and to make cash withdrawals.
On June 14, 2023, Shabazz pleaded guilty to health care fraud conspiracy and money laundering conspiracy. He will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility.
In announcing Shabazz’s sentence, Judge Whitney stated that, “There are serious consequences for stealing from government funded programs such as Medicaid and Medicare.”
The FBI in Charlotte, IRS-CI, and NCDOJ’s Medicaid Investigations Division investigated the case.
Assistant U.S. Attorneys Michael E. Savage and Special Assistant U.S. Attorney Kristina Fleisch with the U.S. Attorney’s Office in Charlotte prosecuted the case.