Criminal Justice News

Thursday, June 30, 2011

Fulton County Deputy and Three Detention Officers Indicted for Smuggling Drugs, Cell Phones Into Jail

Four Officers and Four Others Charged with Distribution of Cocaine Outside Jail

ATLANTA—Fulton County Detention Officers BRIAN SHELBY ANTHONY, 30, of Atlanta, Georgia; AKIL SCOTT, 31, of Atlanta, Georgia; and DERICK DESHUN FRAZIER, 31, of Morrow, Georgia; and Fulton County Deputy Sheriff MARVIE TREVINO DINGLE, Jr., 34, of Lithonia, Georgia, have been charged with extortion for their roles in accepting payments to deliver contraband to inmates inside the Fulton County Jail.

ANTHONY; DINGLE; AQEEL MUHSIN RASHEED, 27, of Atlanta, Georgia; KEITHAN HENRI JAMES, 33, of Decatur, Georgia; and ROBERT LEE SWAIN, Jr., 29, of Snellville, Georgia, were indicted on charges of attempted possession with intent to distribute cocaine outside the jail. Another defendant, RAYFIELD LEWIS II, 32, of Union City, Georgia, was arrested pursuant to a criminal complaint on charges of attempted possession with intent to distribute cocaine outside the jail. The defendants are making their initial appearances late today and tomorrow before United States Magistrate Judge Janet F. King.

United States Attorney Sally Quillian Yates said, “As law enforcement officers employed at the Fulton County Jail, these men took an oath to serve and protect the public. Instead, they abandoned their oaths and sold their badges by taking payoffs to smuggling contraband to jail inmates and facilitate illegal drug deals on the outside. We are committed to vigorously prosecuting corrupt law enforcement officers who betray the public and their fellow law enforcement officers.”

Brian D. Lamkin, Special Agent in Charge, FBI Atlanta, said, “The indictments and arrests announced today are the culmination of an intensive federal investigation that involved many hours of hard work by not only our agents but also our law enforcement partners, to include Fulton County Sheriff Ted Jackson. Those that choose to abdicate their oaths of office can do great harm. The greatest harm, however, is that to the public trust, which makes the work of the rest of the criminal justice community even more difficult. The public, however, should be reminded that the vast majority of law enforcement officials live by their oaths and will not tolerate such criminal conduct as is alleged in this matter. The FBI has recently dedicated a new Public Corruption Hotline, 1-877-428-5324, which the public is urged to call with any information concerning such matters.”

Ted Jackson, Fulton County Sheriff, said, “The majority of employees at the Sheriff’s Office are dedicated, hard working and honest people. The small percentage who disgraced the Sheriff’s Office, are conflicted about which side of the bars they belong. It is our position to make that decision for them. There is zero tolerance for the smuggling of contraband, to include mobile telephones. Internal procedures have been established to address this issue as well as improving security for our employees and visitors as well as the inmates at the jail. This investigation will continue until those corrupt employees are rooted out.”

According to United States Attorney Yates, the charges, the indictment, a criminal complaint, and other information presented in court: On March 18, 2011 and April 19, 2011, ANTHONY accepted money to use his position as a detention officer to attempt to possess with intent to deliver marijuana to an inmate inside the jail. The indictment further alleges that on three separate occasions between May 4, 2011 and June 2, 2011, ANTHONY accepted payments to use his position to attempt to possess with intent to distribute cocaine during transactions outside of the jail. ANTHONY is accused, along with RASHEED and JAMES, of attempting to possess with intent to distribute at least five kilograms of cocaine on May 18, 2011. Additionally, ANTHONY and RASHEED are accused along with SWAIN and LEWIS of attempting to possess with intent to distribute at least five kilograms of cocaine on June 2, 2011. According to the indictment, ANTHONY accepted $26,950 to facilitate these illegal drug transactions.

DINGLE is accused of accepting money to use his position as a deputy sheriff on March 21, 2011 to attempt to possess with intent to deliver cocaine to an inmate inside the jail. The indictment further alleges that on April 22, 2011, DINGLE accepted payment to use his position to attempt to possess with intent to distribute at least 500 grams of cocaine during a transaction outside of the jail. According to the indictment, DINGLE allegedly accepted $2,200 to facilitate these illegal drug transactions.

SCOTT is accused of accepting money to use his position as a detention officer on August 11, 2010 and again between September 22, 2010 and September 26, 2010 to attempt to possess with intent to deliver cocaine to an inmate inside the jail. According to the indictment, SCOTT allegedly accepted $650 to facilitate these illegal drug transactions.

FRAZIER is accused of accepting $700 to use his position as a detention officer on February 18, 2011 to deliver telephones and cigarettes to an inmate inside the jail.

Each charge of conspiracy to distribute at least five kilograms of cocaine and attempting to possess with intent to distribute at least five kilograms of cocaine carries a maximum penalty of life imprisonment, a mandatory minimum sentence of 10 years in prison and a fine up to $10,000,00. Each charge of attempting to possess with intent to distribute at least 500 grams of cocaine carries a maximum penalty of 40 years in prison, a mandatory minimum sentence of five years in prison and a fine of up to $5,000,000. Each charge of attempting to possess with intent to distribute less than 500 grams of cocaine carries a maximum penalty of 20 years in prison and a fine of up to $1,000,000. Each charge of attempting to possess with intent to distribute less than 50 kilograms of marijuana carries a maximum penalty of five years and a fine of up to $250,000. Each charge of accepting money to use an official law enforcement position to facilitate an illegal drug transaction or to deliver contraband to an inmate inside the jail carries a maximum sentence of 20 years in prison and a fine of up to $250,000. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.

This case is being investigated by special agents of the Federal Bureau of Investigation. Substantial assistance in the investigation has been provided by the Cherokee County Sheriff’s Department.

Assistant United States Attorney Brent Alan Gray is prosecuting the case.

For further information, please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is justice.gov/usao/gan.

Wells Fargo Bank Robbed

At approximately 4:30 p.m., a man walked into the Wells Fargo Bank located at 4600 Woodrow Bean in Northeast El Paso, Texas, approached a teller with a note, and stated, “This is a robbery.” The teller handed over an undisclosed amount of money. The suspect did not display a weapon and fled the bank on foot and was seen headed towards the Patriot Apartments, 4600 Fairbanks, across the street from the Wells Fargo Bank.

The suspect is described as a White Male, approximately 25-30 years old, 5’6” tall, medium build, wearing blue jeans, a black button-down shirt, a black hat with flaps, and dark sunglasses. The suspect was also wearing white latex gloves and had what appeared to be white makeup on his face.

This case is being worked by the FBI’s Violent Crimes Task Force, which includes the El Paso Police Department and El Paso Sheriff’s Department. If anyone was in the vicinity of this bank and/or has information about the robbery, please contact the FBI at 915-832-5000.

CBP Officers at Hidalgo International Bridge Arrest Alleged Rape Suspect

Hidalgo, Texas – U.S. Customs and Border Protection officers working at the Hidalgo International Bridge arrested a northbound pedestrian wanted by the McAllen Police Department on a state charge of alleged strong-arm rape.

On June 29, CBP officers working the northbound pedestrian lanes at the Hidalgo/Reynosa International Bridge came in contact with a male traveler identified as Gerardo Rojas He was further identified as a U.S. citizen, age 43 from McAllen, Texas. A CBP check of a national crime database identified Rojas as a fugitive wanted by the McAllen Police Department on an alleged charge of strong-arm rape.

After his arrest, Rojas was transferred to the McAllen Police Department where he remains incarcerated.

Efrain Solis Jr., acting CBP port director at Hidalgo/Pharr said, “Our frontline officers continue to screen arriving international travelers and arrest those that are identified as fugitives. I commend our officers for their work arresting and transferring this fugitive to state custody.”

U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.

Illinois Man Convicted in Federal Court of Illegally Distributing Prescription Drugs

BOSTON—An Illinois man was convicted in federal court late yesterday of illegally distributing prescription drugs and using the Internet to facilitate a drug crime. STEVEN B. IMMERGLUCK, 35, of Aurora, Illinois, pleaded guilty before U.S. District Judge Denise Casper to one count of conspiracy to distribute and dispense Schedule III and IV controlled substances, and two counts of illegal use of a communication facility to facilitate a drug crime.

Had the case proceeded to trial, the government’s evidence would have proven that between September 2006 and October 2008, IMMERGLUCK was involved in a conspiracy to possess, distribute, and dispense prescriptions that were issued outside of the usual course of professional practice and not for a legitimate medical purpose. IMMERGLUCK distributed Phendimetrazine Tartrate, Alprazolam, Clonazepam, Lorazepam, Phentermine, Phentermine Blue, and Phentermine Yellow, among others, without valid prescriptions.

IMMERGLUCK was a sales representative for Freight Savers Express in Chicago (a reseller for the express mail package delivery service DHL) which handled the interstate delivery of drug orders for Internet Pharmacy customers. Drug orders shipped were delivered without customers having a valid prescription. Specifically, after customers completed online medical questionnaires, prescriptions were authorized without a doctor/patient relationship. Of the “doctors” who authorized the prescriptions, two gave up their medical licenses after admitting they worked for Internet pharmacies. Two other individuals admitted their participation; however, the illegal pharmacies continued to use their names in the conspiracy without their authorization.

IMMERGLUCK and his superior knew that the enterprise was illegal as they had knowledge of the business and their relationship with other pharmacies who dispensed controlled substances via the Internet. In addition to contracting the delivery of the drugs to the customers, in order to increase their business, IMMERGLUCK and his superior went further and recruited pharmacists and doctors to work for their Internet pharmacy customers, including Global Access and other Internet pharmacies.

IMMERGLUCK recruited Meetinghouse Community Pharmacy in Dorchester which was the primary fulfillment pharmacy for Global Access and other Internet pharmacy operations. Between September 2006 and September 2008, approximately 35,075 packages of controlled substances were ordered through Global Access (reflected in about 89 invoices) and picked up at Meetinghouse by DHL. According to invoices attached to the e-mail communications and bank records, Freight Savers received just under $475,000 for the deliveries of controlled and noncontrolled substances for just this one illegal Internet pharmacy enterprise. IMMERGLUCK knowingly and intentionally used a communication facility, namely electronic mail via the Internet, to send and receive e-mail in order to facilitate the illegal activity.

Judge Casper scheduled sentencing for September 20. For the conspiracy, IMMERGLUCK faces up to 10 years in prison to be followed by not less than two years of supervised release and a fine of $500,000. On the remaining charge, the defendant faces up to four years in prison to be followed by not more than three years of supervised release and a $250,000 fine on each of the counts.

United States Attorney Carmen M. Ortiz; Steven W. Derr, Special Agent in Charge of the Drug Enforcement Administration in New England; Mark Dragonetti, Special Agent in Charge of the U.S. Food and Drug Administration, Office of Criminal Investigations of the New York Field Office; Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; William P. Offord, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, Boston Field Division; and Robert Bethel, Inspector in Charge of the United States Postal Inspection Service made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Mary Elizabeth Carmody and Shelbey D. Wright of Ortiz’s Health Care Fraud Unit.

Texas Man Pleads Guilty to Producing Child Pornography

MINNEAPOLIS—Yesterday in federal court, a 41-year-old Texas man who used to live in St. Paul Park pleaded guilty to producing pornographic images of a minor female over a threeyear period. Jose Antonio Soto pleaded guilty to one count of production of child pornography. Soto, who was indicted on January 11, 2011, entered his plea before United States District Court Judge David S. Doty.

In his plea agreement, Soto admitted that between March of 2004 and February of 2007, he employed, used, persuaded, induced, or coerced a minor female into engaging in sexually explicit conduct for the purpose of producing visual depictions of such conduct on videotapes. The videotapes were made at Soto’s St. Paul Park residence. Soto is currently incarcerated in Texas, serving a ten-year sentence for possession of child pornography.

For the charge now levied against him, Soto faces a potential maximum penalty of 30 years in prison, with a mandatory minimum penalty of 15 years. Judge Doty will determine his sentence at a future hearing, yet to be scheduled.

This case is the result of an investigation by the Minnesota Cyber Crimes Task Force, which is sponsored by the Federal Bureau of Investigation and the U.S. Secret Service; the San Antonio Police Department in Texas; and the St. Paul Park Police Department. It is being prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw.

The U.S. Department of Justice is committed to combating the sexual exploitation of children, particularly via the Internet. For more information about these efforts, please visit the Department’s Project Safe Childhood website, at projectsafechildhood.gov.

Former Somers Resident Sentenced to Three Years in Federal Prison for Bank Fraud, Money Laundering

David B. Fein, United States Attorney for the District of Connecticut, announced that SABIR MOGHUL, 72, of Manchester, was sentenced today by Chief United States District Judge Alvin W. Thompson in Hartford to 36 months of imprisonment, followed by three years of supervised release, for bank fraud and money laundering.

According to court documents and statements made in court, in 2005, MOGHUL applied for two mortgage loans from different banks, each in an amount of more than $1 million, using his former residence at 110 Long Hill Drive in Somers as collateral. Each loan was supposed to be secured with a first mortgage on the residence, but at no time did MOGHUL inform either lender that he had applied for another loan to be secured by the same property.

During the application processes, MOGHUL’s residence was appraised twice. One appraisal valued the residence at approximately $1.6 million and a second appraisal valued the residence at approximately $1.8 million. MOGHUL received approval for each loan and scheduled one closing to occur at his home at 10:30 a.m. on May 13, 2005, and a second closing to occur on the same day at 11:45 a.m. During the first closing, MOGHUL and his wife signed mortgage loan documents for a loan in the amount of $1,080,000 from Lehman Brothers Bank. At the second closing, MOGHUL and his wife signed mortgage loan documents for a loan from Washington Mutual in the amount of $1,200,000.

After the closings, Lehman Brothers Bank recorded a first mortgage and Washington Mutual Bank recorded a secondary security interest. MOGHUL subsequently defaulted on the loans and the home went into foreclosure. Washington Mutual sustained a loss of approximately $1.2 million as a result of MOGHUL’s fraud.

In August 2005, MOGHUL applied $445,000 of the fraudulently obtained loan proceeds to the purchase of a medical office building located in Hamden. The building has since been sold through foreclosure.

On June 14, 2010, MOGHUL waived his right to indictment and pleaded guilty to one count of bank fraud and one count of money laundering stemming from this scheme.

Today, Judge Thompson ordered MOGHUL to pay restitution in the amount of $1.2 million. MOGHUL has provided his attorney with approximately $970,474 in funds that will be used toward payment of his restitution.

This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service—Criminal Investigation. The case was prosecuted by Assistant United States Attorney Anastasia Enos King.

Las Vegas Physician to Pay U.S. $5.7 Million to Resolve False Claims Act Allegations Related to Radiation Oncology Services and Other Procedures

WASHINGTON – Rakesh Nathu, a Las Vegas physician, has agreed to pay the United States $5.7 million plus interest to settle allegations that he submitted false claims to federal health care programs for various radiation oncology services, including intensity modulated radiation therapy, the Justice Department announced today.   Intensity modulated radiation therapy is a sophisticated radiation treatment indicated for specific types of cancer where extreme precision is required to spare surrounding organs or healthy tissue.  

The government alleges that Nathu submitted improper claims to Medicare, TRICARE and the Federal Employees Health Benefits Plan from 2007 through 2009 in which he double billed for several procedures affiliated with radiation treatment plans, billed for certain high reimbursement radiation oncology services when a different, less expensive service should have been billed and billed for medically unnecessary radiation oncology services.  

“We expect that physicians who participate in federal health care programs will bill for their services accurately and honestly,” said Tony West, Assistant Attorney General for the Department’s Civil Division. “Double or excessive billing for procedures and services, as we've alleged here, won't be tolerated by the Department of Justice or the taxpayers who pay for it.”  

“Patients, employees, and others who suspect billing fraud on the part of doctors should not hesitate to report such fraud to federal authorities,” said U.S. Attorney for the District of Nevada Daniel G. Bogden. “Persons who file dishonest claims with the government in order to enrich themselves will be investigated and aggressively pursued by the Department of Justice.”

Assistant Attorney General West also noted that the settlement with this physician was the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Nevada and the Department of Health and Human Services’ Office of Inspector General.

“This case is about stealing millions of dollars from taxpayers,” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services.  “And we’ll continue to fight this kind of unconscionable abuse of our Medicare program.”

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of HHS in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $5.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are more than $7.3 billion.

Former United Nations Employee Charged in Connection with a $100,000 Fraud Scheme Involving Concurrent Jobs

WASHINGTON — A former employee of the United Nations (U.N.) was arrested today for allegedly obtaining more than $100,000 in salary payments as a result of holding jobs at the U.N. and the National Labor Relations Board (NLRB) at the same time, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

Jeffery K. Armstrong, 51, of South Riding, Va., was charged in a nine-count indictment unsealed today in the Eastern District of Virginia with wire fraud stemming from a scheme to defraud the U.N., an international organization committed to humanitarian and peace-keeping efforts, and the NLRB, an independent agency of the U.S. government.  

According to the indictment, in March 2008 Armstrong took a leave of absence from his position as a supervisory security specialist with the Department of the Army to accept a full-time position at the U.N. in New York City.   As an assistant chief of the Security and Safety Service within the Department of Safety and Security at the U.N., Armstrong was responsible for all physical security of U.N. facilities in New York City, among other functions.   According to the indictment, Armstrong received an annual salary from the U.N. of approximately $160,000.   The indictment alleges that in February 2009, after working at the U.N. for almost a year, Armstrong applied for a position as chief of the security branch within the Division of the Administration at the NLRB in Washington, D.C.   According to the indictment, Armstrong began work at the NLRB on April 13, 2009, with an annual salary of approximately $121,000.

The indictment alleges that between the middle of April and the end of September 2009, Armstrong was an employee of both the U.N. and the NLRB, receiving more than $100,000 in salary payments from the two entities.   Armstrong allegedly concealed his dual employment from both employers by, among other things, dissuading NLRB personnel from contacting his supervisor at the U.N., submitting incomplete or inaccurate employment forms to the NLRB, and causing to be mailed to the NLRB false correspondence suggesting that he no longer worked at the U.N.   In addition, Armstrong allegedly submitted medical leave documentation to the U.N., indicating that he was unable to work and was undergoing medical treatment, despite his full-time employment at the NLRB.   According to the indictment, Armstrong failed to notify his superiors at both entities of his concurrent employment.

Armstrong made his initial appearance this morning before U.S. Magistrate Judge Theresa C. Buchanan in Alexandria, Va.   Arraignment is scheduled for July 7, 2011, before U.S. District Judge Gerald B. Lee.

If convicted, Armstrong faces 20 years in prison and a fine of $250,000 on each wire fraud count.

The case is being prosecuted by Eric G. Olshan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Karen L. Dunn of the U.S. Attorney’s Office for the Eastern District of Virginia.   The case was investigated by the FBI’s Washington Field Office and the NLRB Office of Inspector General.

An indictment is merely an allegation, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

Shawnee Man Pleads Guilty to Making Child Porn

OKLAHOMA CITY, OK—RICHARD DON HILBURN, 49, of Shawnee, Oklahoma, pled guilty today to producing child pornography using a young child, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.

According to court records, a Federal Bureau of Investigation agent in Los Angeles, California, caught Hilburn sharing child pornography online during an undercover sting operation. Local FBI agents then got a search warrant and seized his computer hard drives from his Shawnee home. FBI forensic analysis of Hilburn’s computer hard drives discovered approximately 12,000 pictures and 1,000 videos of child pornography. Among the images were multiple photographs of a young child’s genitals that Hilburn himself had taken with his iPhone.

United States District Judge Robin J. Cauthron will sentence Hilburn in approximately 90 days. He faces not less than 15 years and up to 30 years in federal prison.

This case was part of Project Safe Childhood, the flagship program in the Department of Justice’s National Strategy for Child Exploitation Prevention and Interdiction, and was the result of an investigation conducted by the FBI. The case was prosecuted by Assistant U.S. Attorney Brandon Hale.

Romanian Man Sentenced to 48 Months in Prison for Role in International Fraud Scheme Involving Online Auction Websites

WASHINGTON—A Romanian man was sentenced today to 48 months in prison for his role in moving and hiding the illicit proceeds of an international fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Patrick J. Fitzgerald for the Northern District of Illinois and U.S. Attorney Ronald C. Machen Jr. for the District of Columbia.

Adrian Ghighina, 33, of Bucharest, Romania, was sentenced by U.S. District Judge Matthew F. Kennelly in Chicago. Ghighina pleaded guilty in February 2011 to one count each of wire fraud and conspiracy.

According to court documents, Ghighina, who entered the United States legally in late 2004, acted as a “money mule” in a complex Internet fraud conspiracy. Ghighina’s co-conspirators, many of whom are in Romania, created fraudulent online auctions for expensive items such as cars, motorcycles and RVs on websites such as eBay, Craigslist and AutoTrader.com.

Victims who responded to these fraudulent listings were directed, in some cases by e-mail or telephone, to transmit payment for the non-existent items using Western Union and bank wire transfers to accounts controlled by Ghighina.

Ghighina admitted that he moved from city to city, opening new accounts at various banks using false identification as part of the conspiracy. The victims never received the items for which they had paid. From approximately September 2005 until his arrest in October 2009 in Miami, Ghighina opened accounts and/or received funds in Illinois, the District of Columbia, Florida, New York, Arizona and elsewhere.

The sentence resolves two separate indictments against Ghighina, one from a federal grand jury in the Northern District of Illinois and a separate indictment from a federal grand jury in the District of Columbia. Ghighina also previously was convicted on related charges of wire and visa fraud in the Southern District of Florida and sentenced on those charges to 27 months in prison. Based on the plea agreement, the sentence imposed today will run concurrently with Ghighina’s sentence in the Florida case, for which he has already served 21 months in prison.

The Chicago case is being prosecuted by Assistant U.S. Attorney Brian Hayes with the Northern District of Illinois. The Washington case is being prosecuted by Special Assistant U.S. Attorney Joseph Springsteen for the District of Columbia. Mr. Springsteen also serves as a Trial Attorney with the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS). Assistance on the Washington case was also provided by CCIPS Trial Attorneys Gavin Corn and Mysti Degani. The Criminal Division’s Office of International Affairs provided assistance in this matter. This case is being investigated by the Chicago and Washington Field Offices of the FBI, as well as the Chicago Police Department and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

Madison Man Sentenced for Lying During Bankruptcy Proceeding

MADISON, WI—John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced that Edward W. Fedosky, 56, Madison, Wis., was sentenced Friday, May 27, by U.S. District Judge Barbara B. Crabb to six months in prison for lying under oath at a bankruptcy hearing. Fedosky pleaded guilty to this charge on March 15, 2011.

On October 3, 2006, Fedosky filed a Chapter 7 bankruptcy petition, seeking to discharge just under $19,000 owed to various creditors. Throughout the following 17 months, Fedosky repeatedly failed to provide requested documents to the bankruptcy court and failed to appear at a number of scheduled hearings. Finally, on March 24, 2008, Fedosky appeared at a scheduled meeting and falsely testified under oath about the tax return that he provided to the bankruptcy trustee. After the bankruptcy trustee found out that Fedosky had lied, Fedosky’s bankruptcy case was closed in November 2008 without an order discharging his debts and no monetary loss to the government.

In sentencing Fedosky to six months in prison, Judge Crabb rejected Fedosky’s request for a sentence of probation. Judge Crabb noted that while Fedosky looked on the outside like someone who is successful, in fact, he simply does not want anyone telling him what to do. The judge described Fedosky as a person with no personal accountability. Judge Crabb pointed out that Fedosky’s $250,000 student loan debt also suggested that he figured that the taxpayers would cover his debts while he went out and spent money on other things. Judge Crabb stated that Fedosky consciously lied during his bankruptcy and concluded that a sentence of probation would not be appropriate. Fedosky’s prison term will be followed by a two-year period of supervised release

The charges against Fedosky were the result of an investigation conducted by the Office of the United States Trustee and the Federal Bureau of Investigation. The prosecution of the case has been handled by Assistant U.S. Attorney Laura Przybylinski Finn.

CBP Now Accepting Applications for Officer Positions

Washington – Inspecting more than a million travelers and 50,000 containers, apprehending more than 75 criminals, seizing more than 2,300 pounds of narcotics and intercepting more than 500 agricultural pests is just a typical day for U.S. Customs and Border Protection officers at our nation’s ports of entry.

With funding allocated by the supplemental border security bill passed by Congress and signed by the President in August 2010, CBP is now accepting applications for the CBP officer position, focusing on the critical need to ensure our nation’s security on the southwest border.

CBP officers use state-of-the-art technology and training at more than 330 ports of entry located at international airports, seaports and land borders throughout the U.S., deterring illegal entry to our country, intercepting contraband and interdicting agricultural pests and potential diseases. CBP is accepting applications for the officer position to be located at southwest border ports of entry in California, Arizona, New Mexico and Texas.

The primary responsibilities of a CBP officer are to protect the nation’s ports of entry by detecting and preventing terrorist and weapons of mass destruction from entering the U.S. while facilitating the orderly flow of legitimate trade and travelers. CBP officers perform the full range of inspection, passenger and cargo analysis, examination and law enforcement activities relating to revenue and trade, seizure of contraband, interdiction of agricultural pests and diseases and admissibility of persons.

These are full-time, uniformed positions starting at the GS-5 to GS-7 level that pay approximately $31,300 - $38,700 annually with the opportunity of making up to an additional $35,000 in overtime. Qualified applicants must be between the ages of 18 and 36 (waivers are accepted for qualified veterans), have been a U.S. citizen for the past three years, have a valid driver’s license and pass a thorough background investigation, medical examination, fitness test and drug test.

The employment opportunity requires regular qualification and carrying of firearms, includes a generous benefits package and 17 - 19 weeks of paid training at the Field Operations Academy, Federal Law Enforcement Training Center in Glynco, Ga.

Applications must be filed on the USAJobs website and testing is available in various locations nationwide.  Additional information about the opportunity is available on CBP website

U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.

Wednesday, June 29, 2011

U.S. Attorney Charges Former Meadowcraft CEO with Fraud

BIRMINGHAM—Federal prosecutors have charged a former executive of Meadowcraft Inc. with fraud totaling more than $5 million, announced U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Patrick Maley.

A one-count information filed today in U.S. District Court charges LARRY GENE MAYNOR with wire fraud. Maynor was chief financial officer of Meadowcraft, the now defunct wrought iron furniture manufacturer that was based in Pinson. The fraud is charged in connection to a scheme by Maynor to misrepresent the terms of a large sales contract in order for Meadowcraft to borrow $5.1 million from four lending institutions. Meadowcraft’s 2007 credit agreement with those institutions – Wells Fargo Bank, Webster Business Credit Corp., RZB Finance, and Burdale Finance Limited – specifically prohibited the manufacturer from borrowing against consignment or “sale-or-return” purchases.

Maynor, 48, of Birmingham, has signed a plea agreement with the government acknowledging his guilt. According to the court documents, Maynor misrepresented the terms of Meadowcraft’s September 2008 sales contract with Outdoor Experience Inc. in order to use proceeds from the contract as collateral for the loans. In December 2008, Maynor submitted a false borrowing certificate to the lending institutions that characterized the $5.7 million agreement with Outdoor Experience as an insured account receivable. It was, however, a consignment agreement that required Meadowcraft to buy back all products that Outdoor Experience was unable to sell. The agreement signed by Maynor with the lending institutions specified that such contracts could not be loaned against.

“Corporate fraud hurts companies and employees in our community. It jeopardizes job security and can destroy the livelihood of workers and their families,” Vance said. “These type cases are serious matters that we are committed to prosecute.”

The maximum sentence for the wire fraud count is 30 years in prison and a $1 million fine. The notice of forfeiture specifies a forfeiture amount of $100,000.

The FBI investigated the case. Assistant U.S. Attorney Patrick Carney is prosecuting the case.

Operator of Two Home Health Care Businesses Indicted in Alleged $20 Million Medicare Fraud Scheme

CHICAGO—A Chicago man who operated two home health care businesses, one of which was among the state’s largest recipients of Medicare payments, was indicted on federal fraud charges for allegedly swindling Medicare of at least $20 million over five years, federal law enforcement officials announced today. The defendant, Jacinto “John” Gabriel, Jr., allegedly schemed with others to submit millions of dollars in false claims for reimbursement of home healthcare services purportedly provided to Medicare beneficiaries, which allegedly were never provided, were not medically necessary, or were inflated in price so that he and others could profit from the fraudulently-obtained funds. Gabriel and his co-schemers allegedly used the proceeds for various purposes, including: using more than $5.5 million in cash to maintain lavish lifestyles, including gambling at casinos in the Chicago area and Las Vegas, and to buy automobiles, jewelry and real estate in the United States and the Philippines; to perpetuate the businesses by paying his employees and providing them with gifts, and to bribe physicians and pay kickbacks to others in exchange for patient referrals.

Gabriel, 43, who had no formal medical training, medical degrees, nor licenses to practice as a health care professional, was charged with two counts of wire fraud, two counts of health care fraud and 11 counts of money laundering in a 15-count indictment returned yesterday by a federal grand jury, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois. The indictment also seeks forfeiture of $20 million. He has remained free on bond since he was arrested on preliminary charges in February and he will be arraigned on a date still be determined in U.S. District Court.

“The fraud alleged in this indictment illustrates complete disregard of the needs and interests of Medicare patients,” said Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General. “The OIG is determined to aggressively investigate Medicare fraud and will continue to work with our law enforcement partners to ensure that those who perpetrate these types of crimes are held accountable.”

Mr. Fitzgerald and Mr. Pugh announced the charges together with Robert D. Grant, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation, and Alvin Patton, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division. The Railroad Retirement Board Office of Inspector General also participated in the investigation, which is continuing. The investigation is being conducted by the Medicare Fraud Strike Force, which expanded to Chicago earlier this year, and is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the Justice Department and HHS to focus their efforts to prevent and deter fraud and enforce anti-fraud laws around the country.

According to the indictment, Gabriel did not identify himself as an owner, but in fact exercised ownership and control over Perpetual Home Health, Inc., based in Oak Forest, and Legacy Home Healthcare Services, which was located on the city’s north side. Both firms have ceased operating and no longer receive Medicare payments. Between May 2006 and January 2011, Perpetual submitted more than 14,000 Medicare claims seeking reimbursement for services allegedly provided to beneficiaries. As a result of those claims, Perpetual received more than $38 million in Medicare payments, making it one of the largest, if not the largest, recipients of Medicare payments for home health services in Illinois. Between 2008 and January 2011, Legacy submitted more than 2,000 claims for Medicare reimbursement and received more than $5 million.

As part of the fraud scheme, Gabriel and his co-schemers allegedly obtained personal information of Medicare beneficiaries to bill Medicare without the beneficiaries’ knowledge or consent; created false patient files to support fraudulent Medicare claims and submitted false claims based on those records; used Medicare proceeds to pay himself, co-schemers, employees, and others who assisted him in carrying out the scheme; and concealed the fraud proceeds by directing Perpetual and Legacy to issue checks payable to fictitious entities, his friends and associates.

Among other details, the indictment alleges that Gabriel authorized Perpetual and Legacy to pay various amounts, ranging between $200 and $800, to employees and others for each patient they referred and enrolled in home healthcare services. He and others also cold-called Medicare beneficiaries to try to persuade them to enroll with Perpetual and Legacy.

As part of allegedly falsifying patient records, Gabriel directed Perpetual and Legacy personnel to systematically complete standard forms by listing the same false diagnoses, including arthropathy (joint disease) and hypertension, which enabled them to claim a higher level of Medicare reimbursement, according to the charges.

In addition to the fraud counts, the money laundering charges allege that between last October and December, Gabriel cashed 11 checks in amounts under $10,000 — usually $9,000 and all involving fraud proceeds — to avoid federal currency transaction reporting requirements.

Each count of wire fraud and money laundering carries a maximum penalty of 20 years in prison, while each count of health care fraud carries a maximum 10-year prison term. Each wire fraud and healthcare fraud count carries a maximum fine of $250,000, or an alternate fine totaling twice the loss or twice the gain, whichever is greater. Each money laundering count carries a maximum fine of $500,000. If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

The public is reminded that charges are not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Owners of Tax Preparation Business Sentenced to Prison for Preparing False Tax Returns and Aggravated Identity Theft

Obtained Over $1 Million in Fraudulent Refunds

BALTIMORE, MD—U.S. District Judge William M. Nickerson sentenced Tyrone Robert Campbell, a/k/a “Mr. Muhammad,” “Muhammad Shahid,” and “Tyrone Moore,” age 42 of Baltimore, today to five years in prison, followed by three years of supervised release; and his wife, Twanna Dorothea Campbell, aka “Twanna D. Gaines,” “Twanna Campbell-Moore,” and “Mrs. T,” age 32, also of Baltimore, to a year and a day in prison, followed by three years of supervised release, for conspiracy to file false tax returns and aggravated identity theft. Tyrone Campbell was also convicted of aiding and assisting in the preparation of false tax returns. Judge Nickerson also entered and order of restitution against both Campbells, in the amount of $1.25 million.

The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Acting Special Agent in Charge Jeannine A. Hammett of the Internal Revenue Service—Criminal Investigation; and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.

"IRS Criminal Investigation has made investigating refund fraud and identity theft a top priority," stated Acting Special Agent in Charge, Jeannine A. Hammett, of the Washington DC Field Office. "Filing fraudulent tax returns in the names of other individuals may result in significant harm to those individuals whose identities were stolen, as well as a monetary loss against the U.S. Treasury."

Special Agent in Charge Richard A. McFeely of the FBI said, “The FBI and its law enforcement partners are committed to detecting and investigating identity theft and other financial crimes. But the best protection is prevention. This case reminds us all to be vigilant in protecting our personal financial information, even when dealing with trusted advisors. ”

According to their plea agreements, Tyrone and Twanna Campbell owned a tax preparation business that operated under various names, including Phoenix Tax World, 101 Taxes, 420 Income Tax Services, and 1 One 1 Taxes (collectively, “Phoenix”). Between 2006

and 2009, Phoenix was located in Baltimore at several locations, including 2216 Harford Road, 3349 Greenmount Avenue and 4829 Belair Road.

From approximately late 2005 or early 2006 through at least April 2009, the Campbells prepared over 600 fraudulent individual federal income tax returns on behalf of their clients. The Campbells required each client to fill out a questionnaire requesting that individual’s personal and financial information. After the client left the Phoenix office, the Campbells filled out an electronic tax return in which, without the client’s knowledge, they entered false items to increase the client’s tax refund. For example, the Campbells claimed: exemptions and child tax credits for non-existent dependents; losses from businesses the client did not operate; credits paid for bogus child care expenses; and federal income tax withholdings from unearned wages. Once the client’s tax refund check became available the Campbells required as a cash payment a percentage—generally between 20% and 40%—of the client’s tax refund. In this way, the Campbells’ inflation of their clients’ tax refunds increased the Campbells’ own tax preparation fees.

The Campbells also enrolled many clients in a Refund Anticipation Loan (RAL) program without their knowledge. A RAL is a short-term loan provided by a lender that is based on, and usually repaid by, an anticipated federal income tax refund. A bank funded the client’s RAL and issued the loan in the form of a check made payable to the client. In doing so, the bank deducted its own fees and also deducted an additional tax preparation fee, which it wired directly to a bank account controlled by the Campbells. Thus, the Campbells received an additional tax preparation fee that was not disclosed to their clients. In 2007, the Campbells opened a bank account using the stolen personal identifying information of one of Mrs. Campbell’s former clients to conceal the fact that these additional tax preparation fees were being paid to them. The Campbells wrote checks drawn off that bank account in order to pay for personal and business expenses.

In the course of preparing and presenting materially false tax returns on behalf of his clients, Tyrone Campbell committed several instances of aggravated identity theft. For example, on February 4, 2008, he used the name and social security number of an individual without that individual’s knowledge or permission, listing that person as a dependent on a client’s tax return, in order to increase the client’s tax refund. In fact, the individual was not a dependent of the client. Twanna Campbell maintained a list of names, dates of birth and social security numbers of children which she used to obtain larger tax refunds for her clients by claiming deductions for dependents who were not actually related to her clients. The book was recovered by law enforcement in June 2009 , when law enforcement officers executed a search warrant at the Campbell’s home, along with $96,480 in cash hidden in the home.

United States Attorney Rod J. Rosenstein commended the IRS—Criminal Investigation and the FBI for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Sujit Raman and Martin Clarke, who prosecuted the case.

Atlanta Man Convicted by Jury for Multi-Million Dollar Fraud Schemes

Defendant Refused to Appear in Court During Trial

ATLANTA, GA—After a five-day trial, a jury in federal district court has returned a guilty verdict this morning against JEAN-DANIEL PERKINS, 37, of Atlanta, Georgia, on charges of bank fraud, credit card fraud, and aggravated identity theft. PERKINS defrauded American Express, SunTrust Bank, and hundreds of individual credit card holders of millions of dollars.

United States Attorney Sally Quillian Yates said of today’s verdict, “This defendant was a predatory fraudster of the worst sort. He bought, sold, and traded in other people’s personal information to enrich himself, indifferent to the cost to others.”

FBI Atlanta Special Agent in Charge Brian Lamkin said, “This case provides a not often seen inside look into an elaborate and broad fraud based operation such as Perkins’ and demonstrates the FBI’s willingness to dedicate its undercover resources toward exposing such operations. The FBI is pleased with its role in bringing Perkins to justice in this matter.”

According to United States Attorney Yates and the evidence and testimony at trial: From November 2008 through February 2010, PERKINS executed several different fraud schemes in Atlanta. An undercover FBI agent, posing as an employee of a company with financial data, made contact with PERKINS, offering to make the sensitive financial data available to PERKINS. The undercover agent ultimately met in person with PERKINS, who gave the agent a dozen counterfeit credit cards, and the two discussed a wide variety of criminal schemes involving financial data and credit cards. The FBI agent recorded approximately 30 telephone calls with PERKINS in which they discussed the schemes, and how the maximum amounts of money could be drawn from victim financial institutions and their customers.

The evidence at trial showed that, in one of his fraud schemes, PERKINS purchased information needed to make credit cards, such as account numbers, from a source in the Ukraine. He then encoded credit cards with the data and used the cards. The dozen credit cards PERKINS gave to the FBI agent were in fact coded with information bought from the source in the Ukraine.

The evidence at trial also showed that from February 2009 through February 2010, PERKINS engaged in another fraud scheme in which he gained internal SunTrust account information and impersonated the account holders, resulting in the transfer of money from victim accounts to accounts under his control. In one instance involving an account held by a local construction company, PERKINS impersonated the company’s president, signed up for online banking services from SunTrust, and authorized transfers of over $3,500,000 from the company’s account to approximately 100 accounts under his control. Fortunately, SunTrust was able to recover the transferred money before PERKINS spent it.

In yet another fraud scheme, PERKINS set up numerous fictitious merchant accounts with American Express. The evidence at trial showed that PERKINS set up the merchant accounts at American Express to allow him to accept American Express credit cards as payment for nonexistent goods and services. PERKINS, using stolen American Express credit card account numbers, then ran American Express credit card transactions through the merchant accounts, resulting in American Express paying millions of dollars to the fictitious merchants. The American Express credit cards used by PERKINS belonged to hundreds of individual credit card holders.

On the day of PERKINS’ arrest, law enforcement recovered dozens of counterfeit credit cards from PERKINS, as well as digital media connecting PERKINS to the fraud schemes. On the same day, law enforcement seized from PERKINS’ apartment hundreds of counterfeit credit cards, items used to make counterfeit credit cards, including a device used for encoding cards with stolen credit card information, machines used to make counterfeit identification cards, items purchased with counterfeit credit cards, and more digital evidence linking PERKINS to several of the fraud schemes.

PERKINS, who is in custody, refused to attend court during the trial. Instead, he viewed a live video and audio feed of the proceedings while remaining in a cell at the courthouse.

PERKINS could receive a maximum sentence of 30 years for each count of conspiracy to commit bank fraud, 30 years for each count of bank fraud, 2 years for aggravated identity theft, a total of 50 years for the credit card fraud counts, and a total fine of up to $33 million. Sentencing is scheduled for October 7, 2011 at 3:00 p.m. before United States District Judge Carnes. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

This case was investigated by Special Agents of the Federal Bureau of Investigation and the Duluth Police Department.

Assistant United States Attorneys Lawrence Sommerfeld, Kurt Erskine, Robert McBurney, and Nick Oldham are prosecuting the case.

For further information please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.

Herrin Man Pleads Guilty to Possession of Pipe Bomb Components

Robert Allen Sloat, 51, of Herrin, IL, plead guilty today, June 28, 2011, in United States District Court to possession of explosive materials by a previously convicted felon and to possession of an unregistered destructive device, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced.

On April 20, 2011, Sloat was indicted by a federal grand jury. Sloat was previously charged on March 31, 2011, by a criminal complaint. He is detained.

The facts underlying the charges were that on March 12, 2011, in Franklin County, authorities stopped a vehicle in which Sloat was a passenger. Sloat possessed the components to make a pipe bomb: one can of gunpowder, two lead pipes wrapped in duct tape with end caps screwed onto each end, shotgun shells, and a fuse. Sloat had been previously convicted of two felonies of manufacturing methamphetamine.

Today, Sloat pled guilty in the United States District Court in Benton to both counts of the indictment, which carry maximum sentences of ten (10) years’ imprisonment, $250,000 fine, or both, and three (3) years’ supervised release. Sloat’s sentencing hearing is set for October 14, 2011.

This investigation was conducted by the Federal Bureau of Investigation, with the assistance of the Zeigler Police Department, the Illinois State Police, and the Illinois Secretary of State Bomb Squad. The case is being handled by Assistant United States Attorney Liam Coonan.

Former Morgan County Council Administrator Pleads Guilty to Fraud, Money Laundering, Theft

SALT LAKE CITY—Garth B. Day, 41, of Elwood, former Morgan County Council Administrator, pleaded guilty in federal court Monday to money laundering; false loan and credit applications; theft from a program receiving federal funds; and wire, mail, and bank fraud in connection with a fraud scheme involving the county and various financial institutions.

U.S. Magistrate Judge Samuel Alba presided over the change of plea hearing. Sentencing in the case is set for Oct. 25, 2011, at 2 p.m. before U.S. District Judge Dee Benson. Day waived indictment and was charged in a six-count Felony Information filed in April. The case is being investigated by the FBI, the Morgan County Sheriff’s Office, and the Morgan County Attorney’s Office.

Day, who was the council administrator from June 2008 to Aug. 4, 2010, was responsible for managing, controlling, and reconciling Morgan County’s finances. As a part of the plea agreement reached with federal prosecutors, Day admitted that he misappropriated approximately $1 million in county funds to pay off personal debt. He said he repaid more than half of the money he took before reporting the full extent of his conduct to county authorities around Aug. 27, 2010. According to the plea agreement, the total restitution due to victims of the fraudulent activity, including a financial institution and the county, is $416,222.24. Day agreed to pay full restitution as a part of the plea agreement.

According to the plea agreement, Day’s fraud scheme involved several electronic transfers, fraudulent mailings to banks and credit card companies to get them to extend him credit in Morgan County’s name, and forged documents. He also admitted he created false documents to cover his criminal conduct when he was questioned by county officials.

For example, Day admitted that in October 2008, he submitted a credit card application to U.S. Bank in order to obtain a credit card using the credit of Morgan County. He represented to the bank that the credit card was authorized by the county when, in fact, it was not.

On another occasion, he submitted various false documents to Centennial Bank to obtain a $250,000 line of credit in the name of Morgan County. He submitted a promissory note forging the name of a Morgan County council member. He also submitted a false government certificate to the bank with a forged signature.

Day said that he needed money generated by the scheme to pay off personal debt he accrued from two speculation homes he owned.

Theft from a program receiving federal funds carries a potential penalty of up to 10 years in federal prison; false loan and credit applications and wire, mail, and bank fraud have potential penalties of up to 30 years in federal prison. Money laundering carries a potential penalty of 10 years. Day also faces a fine of up to $1 million.

Richard Hope Sentenced to Prison for Obtaining a Fraudulent $1.75 Million Loan to Shiloh Ministries of Hagerstown

BALTIMORE, MD—U.S. District Judge William M. Nickerson sentenced Richard Wayne Hope, age 53, of Denham, Louisiana, formerly of Hagerstown, Maryland, today to 30 months in prison, followed by three years of supervised release, for conspiracy to commit bank fraud in connection with a $1.75 million loan he obtained on behalf of a company. Judge Nickerson also ordered Richard Hope to pay restitution to the bank of $1.5 million.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Acting Special Agent in Charge Jeannine A. Hammett of the Internal Revenue Service—Criminal Investigation, Washington, D.C. Field Office.

Richard A. McFeely, FBI Special Agent in Charge said, “Mortgage fraud has caused severe and lasting damage to banks, homeowners, and our economy. This sentence underscores the FBI’s commitment to tracking down those who cheat the system so that they may be held accountable.”

“Bank fraud, like all financial crimes, adds to the underground economy, erodes the integrity of our tax system and threatens the financial health of our communities. IRS-Criminal Investigation is always ready to work with our law enforcement partners and lend its financial investigative expertise to investigations like this one” said Acting IRS Special Agent in Charge Jeannine Hammett.

According to his plea agreement, Richard Hope and his brother, Otis Hope, the senior pastor for Montrose Baptist Church located in Rockville, Maryland, formed a “religious company” called Shiloh Ministries of Hagerstown, Inc. (Shiloh). The company operated the Shiloh Conference and Retreat Center in a building that Shiloh owned at 149 North Potomac Street in Hagerstown. The company renovated and maintained the building, and leased the space to groups for conferences and retreats.

On June 21, 2006 the building was significantly damaged by a fire. The fire marshal and building inspector advised the Hopes that no one could occupy the building until numerous code violations were corrected and an occupancy certificate from the fire marshal was obtained. According to former employees of Shiloh and other witnesses, Shiloh stopped conducting business and no more conferences or retreats were ever held after that date. Insurance proceeds went directly to a fire remediation company and to Kabel Company, a construction company associated with the Hopes, which had been incorporated about a month after the fire, for repairs allegedly made to the building.

In September 2006, the Hopes applied to a bank for a commercial loan in the amount of $1.75 million to refinance the mortgage and to release approximately $175,000 being held in escrow by the previous lender for renovations made to the building prior to the fire. The brothers engaged a mortgage broker to assist with the refinancing. Richard Hope falsely represented to the broker that Kabel Company repaired the damage caused by the fire, and that Shiloh was open for business and holding conferences and retreats again. In fact, Shiloh never reopened for business after the fire. A city inspection revealed numerous code violations, and found wires that were unattached to new electrical outlets or to an inoperable sprinkler system. Additionally, beginning in October 2006, the monthly utility payments were not paid. A sole occupant of the building was ejected a few months later because the building was deemed uninhabitable. The Hopes never asked the city to inspect the renovation work purportedly performed by Kabel Company so that Shiloh could obtain an occupancy permit, nor did they ever bring the building up to code.

Based on the misinformation provided by the Hopes, the bank mailed Otis Hope an initial commitment letter to fund the loan and asked for Shiloh’s past and current financial statements before making a final commitment. Richard Hope submitted fraudulent financial statements to the bank overstating the company’s assets and monthly cash flow, and falsely reflecting five months of operations during which time the business was in fact not operating. Richard Hope submitted a phony letter from a certified public accountant purporting to attest that the accountant had compiled the financial statements, when in fact Richard Hope had created the statements. Richard Hope also supplied the bank with a bogus corporate resolution giving him authority to borrow $1.75 million. The resolution purported to be signed by an individual identified as “secretary,” who in fact was not a company officer and had not signed the document.

Relying on the misrepresentations, on February 28, 2007 the bank loaned $1.75 million to Shiloh. Neither the Hopes nor anyone else from Shiloh ever made a monthly loan payment to the bank. The Hopes refused to respond to the bank’s correspondence and phone calls. Thereafter, the Shiloh building was abandoned and went into foreclosure. The bank suffered a $1.5 million loss after it sold the building at auction.

Otis Ray Hope, age 55, of Aiken, South Carolina, formerly of Hagerstown, Maryland, pleaded guilty to tax evasion, subscribing to a false document in connection with the filing of a federal tax exemption for Shiloh Company, and to conspiracy to commit bank fraud in connection with the $1.75 million bank loan obtained on behalf of Shiloh Ministries. Otis Hope was sentenced to 37 months in prison and ordered to pay restitution of $2,422,320.

United States Attorney Rod J. Rosenstein thanked the FBI and the IRS—Criminal Investigation for their investigative work. Mr. Rosenstein commended Assistant United States Attorneys Martin J. Clarke and Sujit Raman, who prosecuted the case.