Criminal Justice News

Wednesday, February 29, 2012

Mascoutah Man Pleads Guilty to Child Pornography Offenses

A Mascoutah man, Jeremy S. Beasley, 22, pled guilty on February 28, 2012 in federal court in East St. Louis to a two-count information charging him with enticement of a minor (count one) and distribution of child pornography (count two), the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today. Sentencing is scheduled for May 31, 2012. Beasley was detained, that is, held without bond, pending sentencing.

At sentencing, Beasley faces a minimum of 10 years and a maximum of life in prison, a fine up to $250,000, and a term of supervised release of five years to life on count one. On count two, Beasley faces a term of in prison of not less than five years but not more than 20 years, a fine up to $250,000, and a term of supervised release of five years to life.

The violation charged in count one occurred on September 6, 2010, when Beasley asked an individual who he believed to be 14-year-old girl to send him sexually explicit images of herself, including full frontal nudes and close-ups of her genital area. Beasley met and conversed with the person he believed to be a 14-year-old girl while posing as a 16-year-old boy on MySpace.

The violation charged in count two occurred on August 11, 2010, when an officer participating in an Internet undercover operation downloaded 18 images and/or videos containing child pornography from what was later determined to be Beasley’s computer at the residence he shared with his parents in Mascoutah, Illinois.

Beasley provided a voluntary statement to law enforcement officers in which he admitted recently using a file-sharing program to download child pornography to his computer. Beasley stated that his file-sharing account was set to share, and that he knew that other individuals could access and download the images of child pornography from his computer. Beasley said that he traded and/or distributed child pornography with 15 to 20 friends. Finally, Beasley stated anything on the computer seized from his residence, from which the files had been downloaded, belonged to him, and that no one else used this computer.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The case was investigated by the Wheaton, Illinois Police Department and the Federal Bureau of Investigation’s Metro East Cyber Crimes and Analysis Task Force. The case is assigned to Assistant United States Attorney Angela Scott.

CBP, Canada Border Services Co-Host 'Beyond the Border' Stakeholder Meetings

Toronto— U.S. Customs and Border Protection and Canada Border Services Agency hosted stakeholder meetings yesterday and today to discuss the joint U.S.-Canada declaration of a shared approach to security, the Beyond the Border Action Plan.

Tuesday’s stakeholder meeting in Niagara Falls, N.Y. gathered input regarding trade and commercial cross-border activity. Today’s meeting in Toronto addressed cross-border travel.

“The Beyond the Border agreement forged by President Obama and Prime Minister Harper is about strengthening and expediting trade and travel between our countries,” said U.S. Customs and Border Protection Acting Deputy Commissioner, Thomas Winkowski. “It’s about finding common-sense solutions to our most complicated problems. And it’s about extending national security for both of our nations, well away from the border.”

 “As these joint meetings with stakeholders indicate, we are committed to working with our U.S. partners to bring about greater consistency, efficiency and predictability in the management of our shared border,” said Canada Border Services Agency President Luc Portelance. “We understand that business operates in a world where time is money, and where deadlines are vital to integrated, cross-border supply chains. That is why we continue to involve our stakeholders in the implementation of the Beyond the Border Action Plan initiatives to keep the border open to lawful travel and trade.”

The Beyond the Border Action Plan consists of 32 separate initiatives. It calls for enhancements to the benefits of programs that help trusted businesses and travelers move efficiently across the border; introduces new measures to facilitate movement and trade across the border while reducing the administrative burden for business; and invests in improvements to our shared border infrastructure and technology. By expediting lawful trade and commerce into and across our shared border, the U.S. and Canada seek to enhance our economic competitiveness, create jobs and support economic growth.

On February 4, 2011, President Obama and Prime Minister Harper announced the United States-Canada joint declaration, Beyond the Border: A Shared Vision for Perimeter Security and Economic Competitiveness. It calls for a shared approach to security where both countries work together to address threats within, at and away from our borders while expediting lawful trade and travel.

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

Maryland Woman Sentenced to One Year in Prison for Her Role in Extensive Mortgage Fraud Scheme

Defendant Submitted Fraudulent Information to Obtain Loans

WASHINGTON—Rasheeda M. Canty, a former mortgage broker, has been sentenced to a one-year prison term for her role in an extensive mortgage fraud scheme involving properties in the District of Columbia and Maryland, announced U.S. Attorney Ronald C. Machen, Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Daniel S. Cortez, Inspector in Charge of the U.S. Postal Inspection Service, Washington Division.

Canty, 38, of Upper Marlboro, Maryland, pled guilty in September 2009 to conspiracy to commit fraud. She was sentenced on February 24, 2012 by the Honorable Richard J. Leon. Upon completion of her prison term, Canty will be placed on five years of supervised release. The judge also ordered her to pay $339,643 in restitution. Canty also must forfeit $342,572, which represents the amount of commissions she received from lenders on the fraudulent transactions.

As part of her plea agreement, Canty agreed that the scheme led to losses of at least $1 million.

According to the statement of offense filed by the government, to which Canty agreed, Canty was a mortgage broker with an office in Lanham, Maryland. As part of her job duties, Canty completed and filed, often by mail or interstate wire transactions, loan applications to financial institutions on behalf of individuals involved in real estate transactions.

Over a two-year period starting in about April 2005, Canty and others conspired to defraud financial institutions whose deposits were insured by the FDIC for the purpose of influencing the financial institutions to approve mortgage loans. She and others perpetrated this scheme by identifying distressed homeowners whose properties in Washington, D.C. and Maryland were facing imminent foreclosure and offering to purchase their properties.

The conspirators told some of the homeowners that they could repurchase their properties within one year. Canty prepared fraudulent letters to have derogatory information deleted from the sellers’ credit reports so that their credit scores would be increased, thus allowing the sellers to qualify for the re-purchase of their properties. The conspirators then sought unsophisticated individuals, with good credit scores or credit scores that could be fraudulently raised, to act as “straw purchasers,” also known as “credit partners,” for these transactions, often in exchange for a $5,000 to $10,000 fee to the straw purchaser for the use of his or her personal information to purchase the respective property. The straw purchasers understood that one of the conspirators would make the monthly mortgage payments, and the straw purchaser would not be otherwise financially responsible for the property or required to live there. On some occasions, the conspirators used the identification of innocent, unknowing victims to make these purchases.

In furtherance of the conspiracy, Canty obtained financial information from the straw purchasers which she then falsified in order to qualify the applicants for their mortgage loans. Primarily, she inflated the straw purchaser’s income, so it would decrease the debt-to-income ratio for a more favorable rate and loan approval. Canty knowingly falsified the loan applications in a number of ways, including, among others, inflating the gross income of the applicant, falsifying rental verification documents, and falsifying, often with fraudulent documents obtained from other conspirators, the job position of the applicant.

In the course of this scheme, Canty obtained loans from at least 11 lenders to which she had knowingly submitted fraudulent information.

Canty benefitted from these transactions by charging a large fee, usually five percentage points of the purchase price, on these transactions. Her commissions from lenders to which she had submitted fraudulent information was approximately $342,572. The conspirators benefitted from this scheme, in among other ways, by skimming equity from the properties, often after inflating the appraisals, and charging excessive brokerage fees. As a result of these transactions, several of the properties have gone into foreclosure.

The investigation of this case was conducted by the FBI’s Washington Field Office and the Postal Inspection Service, with assistance from numerous federal and local agencies, including the Internal Revenue Service-Criminal Investigation (IRS-CI), Metropolitan Police Department (MPD), and the D.C. Department of Insurance, Securities and Banking.

In addition to Canty, five people have been convicted of charges in the investigation.

In announcing the sentence, U.S. Attorney Machen, Assistant Director in Charge McJunkin, and Inspector in Charge Cortez praised the work of the investigative agents from all of the agencies involved in this matter. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Legal Assistant Jared Forney, as well as Assistant U.S. Attorneys Daniel Butler, who is prosecuting this matter, AUSA Diane Lucas, who assisted in the forfeiture action, and Tejpal Chawla, who assisted in the prosecution.

Coeur d’Alene Man Sentenced for Illegally Possessing Firearms

COEUR D’ALENE—Bruce W. Bandel, 57, of Coeur d’Alene, Idaho, was sentenced today to 87 months in prison for unlawful possession of a firearm, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Edward J. Lodge ordered Bandel to serve three years of supervised release following his prison term and forfeit three firearms founds in his possession. Bandel pled guilty to a one-count superseding information on October 31, 2011.

According to the plea agreement, Bandel admitted that on March 16, 1976, in Nez Perce County, Idaho, he pled guilty to grand larceny, a felony offense punishable by imprisonment for a term exceeding one year. Bandel also admitted that on February 24, 2009, during a traffic stop in Illinois, he was found in possession of approximately 100 pounds of marijuana. Bandel subsequently pled guilty to unlawful possession of cannabis with intent to deliver and was sentenced to 180 days in jail and fined $37,778. According to the plea agreement, two days after the traffic stop in Illinois, a search warrant for evidence of drug trafficking was executed at Bandel’s Coeur d’Alene residence. During the search, officers with the North Idaho Violent Crime Task force found and seized a .22 firearm, a .25 semi-automatic firearm, and a P-380 semi-automatic firearm. Bandel is prohibited from possessing firearms due to his prior felony convictions.

The case was investigated by the North Idaho Violent Crime Task Force (NIVCTF). The task force investigates a myriad of violent crimes, including armed robbery, kidnapping, felonious assault, and drug trafficking.

Prepared Remarks of Assistant Director in Charge Janice Fedarcyk on Arrests and Charges in $275 Million No-Fault Auto Insurance Fraud Scheme

Early this morning, FBI agents and detectives from the New York City Police Department began arresting members of a criminal conspiracy who are charged as a racketeering enterprise in the largest no-fault auto insurance fraud ever charged.

Search warrants were also executed at six Brooklyn locations and one in the Bronx.

The case is the result of an 18-month investigation by the FBI-NYPD Eurasian Organized Crime Joint Task Force.

The investigation uncovered a pattern of lucrative fraud dating back to at least 2007, exploiting New York’s no-fault auto insurance system to the tune of more than a quarter-of-a-billion dollars. The defendants are also charged for an extensive money laundering scheme in which they sought to conceal the vast proceeds of the enterprise.

The scheme involved a network of fraudulent medical clinics, purportedly owned by licensed physicians—as required by law—but in fact owned by Russian criminals who were the ringleaders of the scheme.

Other key players in the scheme include corrupt doctors, who were the nominal owners of the clinics and who prescribed excessive and unnecessary treatments for auto accident passengers.

Additionally, dishonest lawyers filed spurious personal injury lawsuits on behalf of accident passengers and advised them on what injuries to claim to bolster the bogus suits and maximize the unnecessary treatments.

The lifeblood of the fraudulent scheme was a steady flow of car accident “victims” who could be steered to the fraudulent clinics. Lower-level members of the conspiracy, called “runners,” were paid between $2,000 and $3,000 per patient referral.

Unlike some other insurance fraud schemes we have seen, the enterprise charged today is not alleged to have engaged in staged auto accidents. Staging accidents runs the risk of being discovered before the “victims” even start the claim and treatment process.

The runners here were paid to find passengers from real auto accidents, although the crux of the fraud was that the treatments prescribed were medically unnecessary. The accidents were real; the injuries claimed were not.

This criminal enterprise, while it lasted, was obscenely profitable. No-fault auto insurance fraud results not only in the unjust enrichment of the fraudsters and the defrauding of insurance companies. It is also a crime that indirectly victimizes every driver in New York. Wholesale fraud is an expense that drives up the cost of insurance.

Aberdeen Man Sentenced for Conspiracy to Commit Wire Fraud

United States Attorney Brendan V. Johnson announced that an Aberdeen man charged with conspiracy to commit wire fraud was sentenced on February 27, 2012 by United States District Judge Roberto A. Lange. Allen Dunlavy, age 48, was sentenced to eight months of home confinement, 18 months of federal probation, $21,436 in restitution to the Cheyenne River Sioux Tribe, and a $100 special assessment to the Victim Assistance Fund.

Dunlavy was indicted with others for conspiring to falsely obtain grazing privileges on the Cheyenne River Sioux Reservation by pasturing non-Indian owned cattle on tribally owned grazing range units by falsely claiming that the cattle were owned by a Cheyenne River Sioux tribal member. This scheme allowed all of the co-conspirators to avoid paying the $6 per head, per month, Cheyenne River Sioux grazing fee charged for non-Indian owned cattle that graze on tribal range units. Dunlavy’s part in the conspiracy defrauded the Cheyenne River Sioux Tribe of approximately $21,436 in fees.

This case was investigated by the Federal Bureau of Investigation. Assistant United States Attorney Mikal Hanson prosecuted the case.

Delano Man Pleads Guilty to Lying to Investors in Bixby Energy Scam

MINNEAPOLIS—Yesterday in federal court in St. Paul, a 62-year-old Delano man pleaded guilty to conspiring to mislead investors in an effort to induce them into committing large sums of money to Bixby Energy Systems, Inc., a Ramsey-based alternative energy company. Gary Albert Collyard specifically pleaded guilty to one count of conspiracy to commit securities fraud and one count of conspiracy to commit bank fraud. Collyard was charged on February 22, 2012 and entered his plea before United States District Court Judge Susan Richard Nelson.

In his plea agreement, Collyard admitted that from January of 2006 through December of 2010, he conspired with Robert Allen Walker, Dennis Luverne Desender, and others to use manipulative and deceptive practices in an effort to sell company securities. Collyard was a “finder,” responsible for raising funds for Bixby. He accomplished this by communicating by telephone, mail, e-mail, and in person, often providing false information to entice new investors or induce current investors to continue to provide the company with funds. Collyard also concealed information or misled investors regarding company projects, including a coal gasification project, which he said was ready for market, when, in fact, it was not. Moreover, Collyard failed to disclose that Bixby was in dire financial condition, and he admittedly solicited unqualified investors to invest in the company. In exchange for investment funds, investors were provided with Bixby securities; and while some investment money was used by the company, a significant portion was spent on high salaries and commissions for Collyard and others.

In entering his guilty plea, Collyard also admitted that from April of 2005 through September of 2011, he conspired with others to defraud multiple banks out of approximately $1.3 million through his real estate company, the Collyard Group. He admitted making numerous misrepresentations to those banks in order to receive business loans. Those misrepresentations included stating that the Collyard Group had a successful real estate development business with multiple customers; that he had a personal financial wealth of more than $20 million; that he had an active real estate license; and that he would pay back the loans. Collyard, however, used the business loans to pay personal debt, living expenses, and private schooling for his children.

In December of 2011, Bixby’s founder Robert Allen Walker, age 69, of Ramsey, Minnesota, was charged with one count of conspiracy to commit securities fraud. Also in December of 2011, the company, Bixby Energy Systems, admitted defrauding investors of between $2.5 and $7 million and took responsibility for the acts of its former officers and agents. In September of 2011, Dennis Luverne Desender, age 64, a consultant and the former acting chief financial officer for Bixby Energy, pleaded guilty to securities fraud, admitting he used manipulative and deceptive practices in an effort to sell company securities.

For his crimes, Collyard faces a potential maximum penalty of five years in prison on each charge. Judge Nelson will determine his sentence at a future hearing. This case is the result of an investigation by the U.S. Postal Inspection Service, the Internal Revenue Service-Criminal Investigation Division, and the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Christian S. Wilton.

Former Morgan Stanley Smith Barney Financial Advisor Admits Stealing from Client Accounts

NEWARK, NJ—A former Morgan Stanley Smith Barney financial advisor admitted today stealing from client accounts and using the stolen money for personal expenditures, U.S. Attorney Paul J. Fishman announced.

Victor Manuel Rivera, Jr., 47, of Clifton, N.J., pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to an information charging him with wire fraud.

According to documents filed in this case and statements made in court:

From October 2008 to October 2010, Rivera worked as a financial advisor at a Morgan Stanley Smith Barney office in Paramus, N.J. He was responsible for providing private wealth management services to clients and advising and managing their investment accounts. During this period, Rivera admitted forging wire transfer requests in the names of clients and submitting them to his supervisors for approval. After submitting the forged requests, Rivera caused wires to be executed from his clients’ accounts to an account which he controlled in another person’s name. Rivera admitted to stealing more than $90,000 from at least two accounts. Rivera also admitted he used the stolen money for his personal expenses, including to pay the mortgage on his home in Clifton.

The charge to which Rivera pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross amount of any pecuniary gain derived from the offense, or pecuniary loss sustained by any victims of the offense. Sentencing before Judge Martini is scheduled for June 27, 2012.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward, for the investigation leading to today’s guilty plea. He also thanked Morgan Stanley’s Legal and Compliance Department, which worked closely with federal law enforcement during the course of the investigation.

The government is represented by Assistant U.S. Attorneys Gurbir S. Grewal and Seth Kosto of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

Defense counsel: Miles Feinstein Esq., Clifton

North Texas man sentenced to nearly 5 years in federal prison on copyright infringement conviction

WICHITA FALLS, Texas — A local man was sentenced on Tuesday to nearly five years in federal prison, and ordered to pay $402,417 in restitution, following his June 2011 guilty plea on copyright infringement, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

U.S. District Judge Reed C. O'Connor sentenced James Clayton Baxter, 28, of Wichita Falls, Texas, to 57 months in prison. Baxter must surrender to the Bureau of Prisons by March 29.

"Homeland Security Investigations is one of the primary enforcers of intellectual property rights laws," said David M. Marwell, special agent in charge of HSI Dallas. "This sentence is part of the ongoing message to potential counterfeiters that there are serious consequences for copyright infringement." Marwell oversees 128 counties in north Texas and the state of Oklahoma.

According to documents filed in the case, from June 8, 2006 through April 9, 2007, Baxter infringed upon the copyrighted works of Adobe Systems Inc. by reproducing copies of its computer software for his financial gain. The investigation into Baxter's activities began in May 2007 when U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) was notified by investigators working for Adobe that they had purchased infringing computer software from TechKappa.com, a website that sold copies of software titles via download from the Internet. The investigation led investigators to Baxter's residence on Lou Lane in Wichita Falls.

Also in 2007, the FBI received a separate lead from the Wichita Falls Police Department (WFPD) regarding Baxter's involvement in selling pirated software. WFPD encountered Baxter selling infringing software in 2004 while investigating him for credit card abuse; he was warned that he could not sell pirated software on his websites. WFPD executed a search warrant at Baxter's residence in October 2007, and seized computers and external storage media.

The investigation revealed that Baxter owned and operated various websites, including Amerisoftware.com, Costfriendlysoftware.net, TechKappa.com, Ultrabackup.net, Superbuysoftware.net and Go-E-Soft.com. These sites, which he advertised online, offered "backup" copies of software, owned by Adobe, Microsoft and Autodesk Inc., for sale at about one-fifth of the manufacturer's retail value. Baxter also provided counterfeit product registration codes (serial numbers) that were distributed with the software so that the customer could install the software.

Between June 8, 2006, through April 9, 2007, Baxter caused more than 90 infringed copies of copyrighted software to be reproduced and distributed, for which he received more than $66,000. These included copies of the following copyrighted computer software: Adobe's Photoshop CS2, Adobe Illustrator CS2 and Adobe Photoshop 7.

Baxter admits that he knew the "backup" copies of Adobe software were illegal reproductions and that he willfully infringed on their works for his personal financial gain. Baxter and the government agree that the government can prove an actual loss of between $400,000 and $1 million.

Between 2004 and 2007, Baxter established at least 17 assumed business names with accompanying merchant bank accounts to process credit card payments for software orders. For example, during the brief time period between Aug. 7 and Aug. 18, 2006, Baxter received $18,036 in his PayPal account. Records further show that these merchant bank accounts processed 3,089 approved software orders that totaled $384,380.

The conviction and sentencing of James Clayton Baxter is the latest in a series of investigations initiated by the National IPR Coordination Center involving defendants from Wichita Falls, Texas. Six other men have also been convicted of operating websites used to sell pirated Adobe software:

           Thomas C. Rushing III, William Lance Partridge and Brian C. Rue all pleaded guilty to criminal copyright infringement in U.S. District Court in Austin, Texas, on Aug. 22, 2008.
           Timothy K. Dunaway pleaded guilty to criminal copyright infringement in U.S. District Court in Wichita Falls, Texas, on Oct. 20, 2008.
           Robert and Todd Cook pleaded guilty to criminal copyright infringement in Alexandria, Va., on March 11, 2010.

Sentences for the seven defendants ranged from 12 months and a day to 57 months imprisonment with restitution totaling more than $2 million ordered to be paid to Adobe Systems Inc., a U.S. corporation based in San Jose, Calif. Combined, the counterfeit Adobe software sold by these individuals had a retail value of more than $15 million.

This case was investigated by HSI, the Wichita Falls Police Department and the FBI.

Assistant U.S. Attorney Aisha Saleem, Northern District of Texas, prosecuted this case.

Cleveland Woman Pleads Guilty to Making Telephone Threat Against New Jersey Company

Cynthia J. Krokey, age 58, of Cleveland, Ohio, pleaded guilty in U.S. District Court to a one-count information charging that she made a telephone threat against a New Jersey company as a protest against its laboratory testing on animals, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.

Krokey was charged with, and pleaded guilty to, a violation of Title 18, United States Code, Section 844(e), for making an interstate telephone call from Ohio to the Covance Company, in New Jersey, on June 21, 2011, and recording a voice-mail message wherein she suggested she might bomb one of their facilities due to their “horrendous treatment of animals,” according to court documents.

Covance has business locations outside of New Jersey, including a plant in western Pennsylvania.

U.S. District Judge John R. Adams found Krokey guilty of the charge and scheduled the case for sentencing on April 17, 2012.

The case was prosecuted by Assistant U.S. Attorney Thomas E. Getz, Chief of the National Security Unit of the U.S. Attorney’s Office, following an investigation by the Federal Bureau of Investigation in Cleveland.

Pastor Charged in Federal Court with Stealing Government Funds from Excel Academy

United States Attorney James L. Santelle has announced that a federal grand jury has indicted Gregory L. Goner (age 40) of Franklin with various theft and fraud counts. The defendant, who is the pastor at Spirit Governed Baptist Church (SGBC) located at 3223 W. Lloyd Street in Milwaukee, operated Excel Academy, a Milwaukee choice school, from 2004 through the spring of 2010. Excel Academy was supported by government funds including more than $100,000 per year in federal funds from the United States Departments of Education and Agriculture.

The indictment alleges that Goner used Excel’s funds for various purposes unrelated to the educational mission of the school. Specifically, counts one through four of the indictment charge that the defendant misapplied Excel’s funds for various non-educational purposes including his purchase of two apartment buildings, paying a deacon at SGBC, and needlessly leasing space at SGBC. Each of those counts is alleged to be in violation of Title 18, United States Code, Section 666(a)(1)(A). If convicted, Goner is subject to a fine of not more than $250,000, imprisonment for not more than 10 years, or both, plus a mandatory $100 special assessment and not more than three years of supervised release on each count.

Count five charges Goner with wire fraud in violation of Title 18, United States Code, Section 1343, for obtaining more than $313,000 in loan funds to purchase apartment buildings at 77th and Hampton in Milwaukee by submitting a false residential rental contract in support of his loan application. If convicted, he is subject to a fine of not more than $250,000, imprisonment for not more than 20 years, or both, plus a mandatory $100 special assessment and not more than three years of supervised release.

This case was investigated by special agents from the Federal Bureau of Investigation and the Department of Education. It is being prosecuted by Assistant United States Attorney Mel S. Johnson.

The public is cautioned that an indictment is merely an accusation and the defendant is presumed innocent until and unless proven guilty.

For additional information contact:

Assistant United States Attorney Mel S. Johnson or Public Information Officer Dean Puschnig, 414-297-1700

Former Office Manager Pleads Guilty to Wire Fraud in $217,000 Scam Against Employer

Defendant Used Money for Computers, Other Personal Items

WASHINGTON—Carmelita Hines, 48, of Waldorf, Maryland, pled guilty today to a charge of wire fraud in an embezzlement scheme that cost her former employer more than $200,000, announced U.S. Attorney Ronald C. Machen Jr. and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.

Hines pled guilty before Magistrate Judge Alan Kay in the U.S. District Court for the District of Columbia. She is to be sentenced May 11, 2012 by the Honorable Ellen S. Huvelle. The charge carries a statutory maximum of 20 years of incarceration. Under federal sentencing guidelines, the likely range is between 24 and 30 months in prison and a fine of up to $50,000. As part of the plea agreement, Hines agreed to a money judgment of at least $217,074, representing the amount of proceeds from the crime. She also is subject to an order to make restitution.

According to a statement of offense presented to the court by Assistant U.S. Attorney Sherri L. Schornstein, Hines worked from 2003 until 2011 as office operations manager for the United States Commission on International Religious Freedom, an independent, bipartisan U.S. federal government commission that makes policy recommendations to the president, the secretary of state and Congress. Her duties included, among other things, managing the procession, tracking, and expenses of the commission’s expenses and other finances.

From 2007 until 2011, Hines repeatedly used credit card accounts in the name of the commission and in her own name, on behalf of the commission, to embezzle $217,074. She used the accounts to charge $146,008 in personal expenses and to make $71,066 in cash withdrawals for her personal benefit. The personal expenses included assorted gift cards, computer equipment, automobile GPS systems, an iPod Nano, gasoline, cosmetics, movie tickets, investment in a “get-rich-quick” scheme, and other items.

The defendant used her position to conceal her embezzlement and fraud. Among other things, she altered credit card statements and certified documents to hide the crimes.

In announcing the plea, U.S. Attorney Machen and Assistant Director in Charge McJunkin praised those who worked on the case, including the special agents of the FBI’s Washington Field Office as well as Legal Assistant Jared Forney of the U.S. Attorney’s Office. They also commended the efforts of Assistant U.S. Attorney Sherri L. Schornstein, who is prosecuting the case.

Payment Processor for Internet Poker Companies Pleads Guilty in Manhattan Federal Court to Bank Fraud, Money Laundering, and Gambling Offenses

Preet Bharara, the United States Attorney for the Southern District of New York, announced that RYAN LANG, a payment processor who worked directly with senior executives from Pokerstars, Full Tilt Poker, and Absolute Poker (the “Poker Companies”), pled guilty today to money laundering, fraud, and gambling offenses in connection with a scheme to deceive banks into processing hundreds of millions of dollars in Internet gambling transactions. LANG pled guilty this morning before U.S. Magistrate Judge Theodore H. Katz.

According to the superseding information filed today in Manhattan federal court, the superseding indictment unsealed on April 15, 2011 in which LANG was initially charged, other documents previously filed in the case, and statements made in court:

In late 2006, Congress enacted the Unlawful Internet Gambling Enforcement Act (“UIGEA”), making it a crime to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.” After several Internet gambling businesses withdrew from the U.S. market following the passage of the UIGEA, Pokerstars, Full Tilt Poker and Absolute Poker became the top three Internet poker operators continuing to do business in the United States. Because United States banks were largely unwilling to process Internet gambling payments, companies turned to third party payment processors, including LANG, who were willing to disguise the payments so they would appear to be unrelated to Internet gambling.

LANG worked closely with the heads of Pokerstars and Full Tilt Poker, as well as with other senior executives from all three Poker Companies, through a payment processing company that had employed him prior to the passage of the UIGEA. After its enactment, LANG left his employer and began searching for other payment processing methods that the Poker Companies could use to obtain access to the United States financial system, notwithstanding the new law. From at least 2007 through May 2010, LANG brokered a series of relationships between senior executives at the Poker Companies and various payment processors who had the ability to electronically transfer funds both to and from U.S. customer bank accounts as “electronic checks” or “e-checks.” As LANG knew—and discussed with executives from the Poker Companies—payment processors working for the Poker Companies created phony shell companies to disguise the poker transactions so that banks would not learn that the payments were connected to Internet gambling.

***

LANG, 37, a Canadian citizen and resident, voluntarily returned to the United States to face the charges pending against him. He faces a maximum sentence of 30 years in prison.

Mr. Bharara thanked the FBI for its outstanding work in the investigation, which he noted is ongoing. Mr. Bharara also thanked Immigration and Customs Enforcement’s Homeland Security Investigations’ New York and New Jersey offices for their continued assistance in the investigation.

To date, five additional defendants initially charged in the superseding indictment have appeared in the United States—Bradley Franzen, Ira Rubin, Brent Beckley, Chad Elie, and John Campos. Franzen pled guilty on May 23, 2011; Beckley pled guilty on December 20, 2011; and Rubin pled guilty on January 17, 2012. Beckley and Rubin are scheduled to be sentenced on April 19, 2012 and May 12, 2012, respectively. Charges are still pending against Elie and Campos, and they are presumed innocent unless and until proven guilty. Elie and Campos are scheduled for trial on April 9, 2012 before Judge Kaplan.

This matter is being handled by the office’s Complex Frauds Unit. Assistant U.S. Attorneys Arlo Devlin-Brown, Niketh Velamoor, Andrew Goldstein, and Nicole Friedlander are in charge of the criminal case, and Assistant U.S. Attorneys Sharon Cohen Levin, Jason Cowley, and Michael Lockard are in charge of related civil money laundering and forfeiture actions.

Chesapeake Man Pleads Guilty to Mortgage Fraud Scheme

NORFOLK, VA—Ray D. Gata, 56, of Chesapeake, Va., pleaded guilty today in Norfolk federal court to conspiracy to commit wire fraud in connection with a fraudulent foreclosure rescue scheme. Gata faces a maximum penalty of 30 years in prison when he is sentenced on June 11, 2012.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and John Boles, Special Agent in Charge of the FBI’s Norfolk Division, made the announcement after Gata’s plea was accepted by United States District Senior Judge Robert G. Doumar. A federal grand jury previously indicted Gata on January 19, 2012.

According to court documents, from November 2006 until February 2011, Gata and a conspirator engaged in a foreclosure rescue scheme that defrauded homeowners and mortgage lenders. The conspirator promised homeowners that he could save them from foreclosure by arranging a sale of their homes to Gata and other straw borrowers. To further entice the homeowners, the conspirator promised that they could remain in their homes after the sale, pay rent, and he would resell the homes back to them once they were more financially secure. The conspirator and Gata profited from this scheme by taking all of the proceeds from the home sales. To complete the scheme, the conspirator and Gata executed false closing documents that showed the proceeds of the sale going back to the homeowners when, in fact, the proceeds were going to Gata, the conspirator, and the other straw borrowers. The homeowners received nothing from the sale of their homes while the conspirator, Gata and others received in excess of $170,000. In almost every case, the conspirator required the homeowners to pay more in rent to cover a larger mortgage, and ultimately evicted these homeowners from their homes.

This case was investigated by the FBI. Assistant United States Attorney Melissa E. O’Boyle is prosecuting the case on behalf of the United States.

Lebanon Trucking Company Owners Indicted for $850,000 Scheme to Defraud Tracker Marine

SPRINGFIELD, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced that the owners of a Lebanon, Mo., trucking company and one other person were indicted by a federal grand jury today for their roles in a conspiracy to defraud Tracker Marine, a Springfield, Mo.-based manufacturer of boats and trailers sold throughout North America.

James Keith Ivey, 51, and his wife, Melinda Kay Ivey, 42, both of Lebanon, and Paul Ray Hunting, 39, formerly of Lebanon, were charged in a 24-count indictment returned by a federal grand jury in Springfield.

Today’s indictment alleges that the three co-defendants devised a scheme to defraud Tracker Marine, LLC, from January 2006 to April 2009, by inflating purchase orders and shipping invoices. During that time, the Iveys and Hunting caused more than 2,550 fraudulent invoices to be submitted to Tracker, which created a total loss of more than $850,000 to Tracker.

The Iveys owned and operated J&M Trucking, Inc., in Lebanon. Tracker contracted with J&M to transport boats and trailers to Tracker’s dealers, located throughout North America. Hunting was promoted to transportation manager for Tracker in 2006.

According to the indictment, J&M’s compensation from Tracker was determined primarily by the distance its trucks traveled. Hunting allegedly caused Tracker to make payments to J&M in excess of the contract amount by listing an inflated and false number of billable miles on purchase orders. In exchange, James Ivey paid Hunting a portion of the revenue generated by the fraudulently increased billable miles, in cash. From 2006 to 2008, according to the indictment, James Ivey paid Hunting a total of $265,775.

At the beginning of the scheme, the indictment says, there was no set amount for Hunting’s increases to the billable miles on purchase orders. However, in April 2006, James Ivey and Hunting allegedly agreed on a set amount of 158 miles as being the amount Hunting would add to each purchase order, because when multiplied by the then-applicable reimbursement rate of $1.90 per mile, the result was an additional $300 per trip. This amount, the indictment says, allowed for an even three-way split between Hunting, James Ivey, and Melinda Ivey. The defendants allegedly continued the practice of inflating billable miles by 158 miles per trip, even after the reimbursement rate was increased to $2.10 per mile in January 2007.

However, J&M paid its drivers for the actual miles they drove, the indictment says, not the number of miles for which J&M invoiced Tracker.

In addition to the fraud conspiracy, James and Melinda Ivey and Hunting are charged in a money laundering conspiracy related to the cash payments to Hunting, which involved the proceeds of the alleged mail and wire fraud conspiracy. According to the indictment, approximately every two weeks James Ivey, often accompanied by Melinda Ivey, met Hunting (usually in a parking lot in Lebanon) and paid Hunting his share of the proceeds generated from the fraudulent invoices, in cash. Hunting allegedly claimed some of those payments on his federal income tax return as income from a catering business, which was false. The Iveys allegedly claimed the payments represented a percentage of revenue generated by two trucks they claimed Hunting owned and was leasing to J&M, which was also false.

In addition to the fraud and money laundering conspiracies, James and Melinda Ivey are charged together in nine counts of wire fraud, and they are each charged with one count of making false statements to federal agents. James Ivey is also charged with 10 additional counts of wire fraud. Hunting is also charged with one count of willful failure to make an income tax return for the calendar year 2007.

Phillips cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney Steven M. Mohlhenrich. It was investigated by the FBI and IRS-Criminal Investigation.

Tuesday, February 28, 2012

Title Company Owner Sentenced to 12 Months for Mail Fraud

BIRMINGHAM—A federal judge on Monday sentenced the owner of a Birmingham property title company to 12 months and a day in prison for mail fraud in connection to a mortgage fraud scheme in which property ownership records were falsified in order to obtain mortgage loans, announced U.S. Attorney Joyce White Vance, FBI Special Agent In Charge Patrick J. Maley, and Housing and Urban Development Inspector General David Montoya.

U.S. District Judge Inge P. Johnson sentenced JERRY EUGENE PARKER, owner of Central Alabama Title, on two mail fraud counts and ordered him to pay $12,150 in restitution to International Mortgage Corporation and Taylor, Bean & Whitaker. Parker, 61, of Hoover, pleaded guilty in June 2010 to the fraud charges that arose from his involvement in a larger mortgage fraud scheme.

“Title companies are in a position to stop fraud. They are supposed to protect lenders and property owners by making sure that the person seeking a loan on a property is the rightful owner,” Vance said. “Parker not only allowed fraud to go unchecked, he assisted in carrying it out. He violated the core of his position of trust,” she said. “Financial fraud is a priority of this Justice Department. It will be prosecuted.”

According to court documents, Parker, while owner of Central Alabama Title between January 2005 and July 2007, submitted false title work as part of fraudulent mortgage transactions conducted by Al Carson Rockett, Jr. Parker would alter the title for properties Rockett owned in order to make it appear that the buyers of Rockett’s properties were the real owners. With the falsified title, the buyer would apply for and receive a refinance loan to purchase the property, thereby avoiding higher interest rates and the need to make a down payment. Parker was aware that the buyers did not previously own these properties, but he created the documents necessary to make it appear as though they did to the lending institutions.

As a result of this case, successful prosecutions were brought against Rockett and Scott Eric Perry. Both of these individuals conducted fraudulent mortgage transactions while utilizing Perry’s title company. In both Rockett’s and Perry’s mortgage fraud schemes, fraudulent documents were submitted through Parker’s title company to lending institutions. As a result, of these investigations, more than $2 million in fraud losses have been successfully prosecuted. Rockett pleaded guilty and was sentenced in 2010. Perry recently pleaded guilty to four counts of making false statements on HUD-1 Settlement Statements and is set to be sentenced on May 17.

Special agents of the FBI and the Department of Housing and Urban Development’s Office of Inspector General investigated all of these cases. Assistant U.S. Attorney Patrick Carney prosecuted the cases.

This prosecution is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Former City of Detroit Treasurer Jeffrey Beasley Indicted for Taking Bribes and Kickbacks in Return for Approving Investments by the Two City Pension Funds

Former City of Detroit Treasurer Jeffrey Beasley, of Chicago, Illinois, was charged in an indictment, unsealed today, with taking bribes and kickbacks in return for approving more than $200 million in investments by the two city of Detroit pension funds, United States Attorney Barbara L. McQuade announced today.

Joining McQuade in the announcement was FBI Special Agent in Charge Andrew G. Arena.

The indictment charges that Beasley conspired with others to personally enrich himself and his co-conspirators by accepting bribes in the form of cash, travel, meals, golf clubs, drinks, gambling money, hotel stays, entertainment, Las Vegas concert tickets, massages, limousine service, private plane flights, and other things of value. These bribes to Beasley and his co-conspirators came from individuals who had business before the General Retirement System and the Police and Fire Retirement System of the City of Detroit.

As city treasurer, Beasley was a member of the boards of trustees of the two pension systems, and he had a fiduciary responsibility to make decisions on investments pending before the boards in the best interests of the retirees and beneficiaries. The two Detroit pension funds suffered more than $84 million in losses from investments associated with Beasley’s bribery conspiracy. The charges were set forth in an indictment issued by a Detroit federal grand jury on January 18, 2012 that was unsealed today.

According to the six-count indictment, between January 2006 and September 2008, when Beasley served on the boards of trustees of the two pension funds, he conspired with other individuals to defraud current and retired city of Detroit employees who contributed to the two pension funds. The indictment alleges that Beasley deprived the employees of their right to honest services, including their right to Beasley’s service as a pension fund trustee, free of bribery and corruption. The indictment details the manner in which Beasley and his co-conspirators demanded and accepted bribes and kickbacks from individuals who were seeking investment monies from the two pension funds or who otherwise had business before them. The indictment alleges that Beasley personally received more than $100,000 in cash from people having business before the two pension funds. Another part of the scheme included demands by Beasley and others that individuals having business before the pension funds contribute tens of thousands of dollars to the Kilpatrick Civic Fund in order to receive approval for their investment requests.

Beasley also is charged in the indictment with five counts of extortion or attempted extortion. The indictment alleges that Beasley extorted more than $10,000 in cash from persons doing business before the two pension funds at a “birthday party” in his honor. Beasley demanded $250,000 from the owner of an investment company in exchange for Beasley’s support of $44 million in investment funds from the two pension funds. Beasley demanded and received $20,000 from Marc Andre Cunningham, an aid to former Mayor Kwame Kilpatrick, who acted as a consultant for a communications company that received $30 million in investment funds from the two pension funds. Beasley and his co-conspirators demanded and received trips, private plane flights, and lavish entertainment from an investment manager of the Police and Fire Retirement System who managed more than $150 million in properties owned by the system.

If convicted, Beasley faces a maximum of 20 years in prison and a fine of up to $250,000 on each of the six counts of extortion, attempted extortion, and conspiracy to commit honest services mail and wire fraud. The indictment also seeks forfeiture of more than $225,000 in unlawful payments received by Beasley and his co-conspirators in connection with his extortion and the conspiracy.

United States Attorney McQuade said, “Employees of the city of Detroit are entitled to honest services from the trustees of their pension funds. We will prosecute public officials who abuse their positions of trust to personally enrich themselves at the expense of the people they were intended to serve.”

FBI Special Agent in Charge Andrew Arena said, “This is another example of a once trusted public official abusing their power for personal gain. The FBI remains dedicated to rooting out this type of corruption and reminding public officials they serve the citizens not themselves.”

The case was investigated by agents of the FBI and the Internal Revenue Service. This case is being prosecuted by Assistant United States Attorneys Robert Cares and David A. Gardey.

An indictment is only a charge and is not evidence of guilt. It will be the government’s burden to prove guilt beyond a reasonable doubt.

U.S. Border Patrol Agents Foil 4 Narcotics Smuggling Attempts at San Diego Area Checkpoints

Agents Seize More Than $1.7 Million of Cocaine, Meth and Heroin

San Diego — U.S. Border Patrol agents assigned to San Diego Sector checkpoints along Interstate 8 near Pine Valley and Interstate 5 near San Clemente have seized a total of $1,713,050 of cocaine, methamphetamine and heroin since Wednesday. 

At approximately 7 p.m. yesterday, agents assigned to the I-8 checkpoint encountered a 56-year-old male U.S. resident driver of a white 1996 Nissan Maxima as he arrived to the checkpoint. During inspection, agents became suspicious of the man’s nervous demeanor and referred him for a secondary inspection. A Border Patrol K-9 team performed a cursory inspection of the vehicle resulting in a positive alert. Agents searched the vehicle and discovered 14 bundles of cocaine in the gas tank and eight bundles of cocaine in the doors. The cocaine weighed a total of 36.24 pounds and had an estimated street value of $362,400.

At approximately 3:30 p.m. on Wednesday, agents assigned to the I-8 checkpoint arrested a 34-year-old male United States citizen for attempting to smuggle 20 bundles of methamphetamine worth an estimated $415,400. A Border Patrol K-9 team alerted to a gold 2006 Ford Focus and agents subsequently discovered 20.77 pounds of methamphetamine hidden inside a non-factory compartment in the vehicle’s dashboard.

Earlier Wednesday afternoon, agents assigned to the Interstate 5 checkpoint arrested a 36-year-old male Mexican national for attempting to smuggle 18.62 pounds of methamphetamine. Agents encountered the driver of a white 1994 Ford Explorer and became suspicious of the man’s nervous demeanor. A Border Patrol K-9 team alerted to the vehicle’s dashboard, and a search revealed four bundles of methamphetamine. Agents also discovered six bundles of methamphetamine in a speaker box. The narcotics are worth an estimated $372,400.

On Wednesday morning around 6 a.m., agents assigned to the I-8 checkpoint encountered a 55-year-old male United States citizen driving a white 2002 Dodge Ram 1500. A Border Patrol K-9 team produced a positive alert to the truck, and a search by agents revealed 12 bundles of methamphetamine and one bundle of heroin inside of the doors. The methamphetamine weighed a total of 26.68 pounds and was worth an estimated $533,600. The heroin weighed 2.25 pounds and had an estimated street value of $29,250. 

All of the suspected smugglers and illicit narcotics involved in the smuggling events were taken into custody and turned over to the Drug Enforcement Administration or a multi-agency drug taskforce for further investigation. All four vehicles involved in the smuggling events were seized by the U.S. Border Patrol.

To prevent illicit smuggling of humans, drugs, and other contraband, the U.S. Border Patrol maintains a high level of vigilance on major corridors of egress away from our nation’s borders. To report suspicious activity to the U.S. Border Patrol, contact San Diego Sector at (619) 498-9900.

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

Former Edmond Man to Serve Additional 15 Months in Prison for Money Laundering in Scheme to Defraud Cycling Coach

OKLAHOMA CITY—Last week, MARK S. TRIMBLE, 46, formerly of Edmond, Oklahoma, was sentenced to serve 15 additional months in prison for money laundering in an investment scheme to defraud his cycling coach, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.

Trimble was a former investment manager who owned and operated Phidippides Capital Management, LLC (“Phidippides”), an Oklahoma limited liability company with offices in Edmond and Oklahoma City. He has had several prior legal proceedings which bear on the current case:

■CFTC Civil Case = Trimble and Phidippides were sued in a civil action brought by the Commodity Futures Trading Commission in an action styled Commodity Futures Trading Commission v. Mark S. Trimble, et al., Case No. CIV-09-154-D. In that case, the court barred Trimble from engaging in commodity trading activity on March 6, 2009.
■“Trimble I” Criminal Case = On March 11, 2010, Trimble was criminally charged with money laundering in Case No. CR-10-092-D arising from financial investment scheme in 2007 where he diverted investor funds to his own account. On December 21, 2010, Trimble pled guilty in Trimble I and was sentenced to serve 120 months in federal prison and pay $9,045,451.23 in restitution to investors.

After Trimble had already been barred by the court from engaging in commodity trading in the CFTC Civil Case and while charges in the Trimble I Criminal Case were pending against him, Trimble engaged in a completely new and separate scheme.

■“Trimble II” Criminal Case = From September of 2009 through January of 2011, Trimble obtained money from his cycling coach to trade on the commodities market on behalf of the coach, but instead converted the money to his own use. On April 20, 2011, he was again indicted in case No. CR-11-132-F and charged with money laundering in the scheme to defraud his cycling coach. On July 12, 2011, Trimble pled guilty to this new scheme.

At the sentencing hearing last week in Trimble II, Judge Friot ordered that Trimble serve 15 months in prison to begin after the completion of the 120 month prison sentence he is currently serving on Trimble I. In addition, Trimble was ordered to pay $41,000 in restitution to the victims in Trimble II which is in addition to the $9,045,451.23 in restitution he was ordered to pay in Trimble I.

This case is the result of an investigation conducted by the United States Secret Service, the Federal Bureau of Investigation, and the Internal Revenue Service Criminal Investigations Division. The case was prosecuted by Assistant U.S. Attorney Susan Dickerson Cox.

Dallas Doctor Arrested for Alleged Role in Nearly $375 Million Health Care Fraud Scheme

Office Manager for Doctor and Five Owners of Dallas-Area Home Health Agencies Also Arrested

WASHINGTON - A physician and the office manager of his medical practice, along with five owners of home health agencies, were arrested today on charges related to their alleged participation in a nearly $375 million health care fraud scheme involving fraudulent claims for home health services.

The arrests and charges were announced today by Deputy Attorney General James Cole and Health and Human Services (HHS) Deputy Secretary Bill Corr, along with Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Sarah R. Salda ñ a of the Northern District of Texas; HHS Inspector General Daniel R. Levinson; Special Agent in Charge Robert E. Casey   Jr. of the FBI’s Dallas Field Office; Dr. Peter Budetti, Deputy Administrator for Program Integrity for the Centers for Medicare and Medicaid Services (CMS); and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).  

The indictment, filed in the Northern District of Texas and unsealed today, charges Jacques Roy, M.D., 54, of Rockwall, Texas; Cynthia Stiger, 49, of Dallas; Wilbert James Veasey Jr., 60, of Dallas; Cyprian Akamnonu, 63, of Cedar Hill, Texas; Patricia Akamnonu, RN, 48, of Cedar Hill; Teri Sivils, 44, of Midlothian, Texas; and Charity Eleda, RN, 51, of Rowlett, Texas, each with one count of conspiracy to commit health care fraud.   Roy also is charged with nine counts of substantive health care fraud, and Veasey, Patricia Akamnonu and Eleda are each charged with three counts of health care fraud.   Eleda also is charged with three counts of making false statements related to a Medicare claim .   All the defendants are expected to make their initial appearances at 2:00 p.m. CST today in federal court in Dallas.

In addition to the indictment, CMS announced the suspension of an additional 78 home health agencies (HHA) associated with Roy based on credible allegations of fraud against them.  

Today’s enforcement actions are the result of the Medicare Fraud Strike Force operations, which are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT).   HEAT is a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce anti-fraud laws around the country.

 “The conduct charged in this indictment represents the single largest fraud amount orchestrated by one doctor in the history of HEAT and our Medicare Fraud Strike Force operations,” said Deputy Attorney General Cole.   “Thanks to the historic partnerships we’ve built to combat health care fraud, we are sending a clear message:   If you victimize American taxpayers, we will track you down and prosecute you.”

 “Thanks to our new fraud detection tools, we have greater abilities to identify the kind of sophisticated fraud scheme that previously could have escaped scrutiny,” said HHS Deputy Secretary Corr.  “Our aggressive Medicare Fraud Strike Force operations have enabled us to break up a significant alleged fraud operation and the fraud-fighting authorities in the Affordable Care Act have allowed us to stop further payments to providers connected to this scheme.  This case and our new detection tools are examples of our growing ability to stop Medicare fraud.”

According to the indictment, Dr. Roy owned and operated Medistat Group Associates P.A. in the Dallas area.  Medistat was an association of health care providers that primarily provided home health certifications and performed patient home visits.  Dr. Roy allegedly certified or directed the certification of more than 11,000 individual patients from more than 500 HHAs for home health services during the past five years.   Between January 2006 and November 2011, Medistat certified more Medicare beneficiaries for home health services and had more purported patients than any other medical practice in the United States.   These certifications allegedly resulted in more than $350 million being fraudulently billed to Medicare and more than $24 million being fraudulently billed to Medicaid by Medistat and HHAs.

 “Today, the Medicare Fraud Strike Force is taking aim at the largest alleged home health fraud scheme ever committed,” said Assistant Attorney General Breuer .  “According to the indictment, Dr. Roy and his co-conspirators, for years, ran a well-oiled fraudulent enterprise in the Dallas area, making millions by recruiting thousands of patients for unnecessary services, and billing Medicare for those services.  In Dallas, and the eight other Medicare Fraud Strike Force cities, the Criminal Division and our partners in the U.S. Attorneys’ Offices will continue to crack down on Medicare fraud, and hold accountable those stealing from the public fisc.”

 “Fraud schemes, like the one we allege Dr. Roy executed, represent the next wave of Medicare and Medicaid crime that we face,” said U.S. Attorney Salda ñ a.   “As enforcement actions have ramped up, not only in the Dallas Metroplex, but in several other areas throughout the country, fraudsters are devising new ways to beat the system.  Rest assured, however, that with the tools and resources our district’s Medicare Care Fraud Strike Force provides, we will meet this challenge head-on and bring indictments against those who seek to defraud these critical programs, and you, the taxpayer.”

 “Using sophisticated data analysis we can now target suspicious billing spikes,” said HHS Inspector General Levinson.   “In this case, our analysts discovered that in 2010, while 99 percent of physicians who certified patients for home health signed off on 104 or fewer people – Dr. Roy certified more than 5,000.”

 “The FBI views health care fraud as a severe crime problem,” said FBI Special Agent in Charge Casey.   “It causes increased costs for consumers, tax payers and health insurance plans, and degrades the integrity of our health care system and legitimate patient care.   Today’s arrests by the Dallas Medicare Fraud Strike Force send a clear message to those persons who are not only defrauding our federal Medicare and Medicaid and private health insurance programs, but victimizing the elderly, the disadvantaged, and those who are at a vulnerable time in their lives due to legitimate health issues.   The FBI will continue to dedicate a substantial amount of expert resources to investigate these crimes.”

The indictment alleges that Dr. Roy used HHAs as recruiters so that Medistat could bill unnecessary home visits and medical services.  Dr. Roy and other Medistat physicians certified and recertified plans of care so that HHAs also were able to bill Medicare for home health services that were not medically necessary and not provided.   In addition, Dr. Roy allegedly performed unnecessary home visits and ordered unnecessary medical services.

According to the indictment, Medistat maintained a “485 Department,” named for the number of the Medicare form on which the plan of care was documented.   Dr. Roy allegedly instructed Medistat employees to complete the 485s by either signing his name by hand or by using his electronic signature on the document.

Three of the HHAs Dr. Roy used as part of the scheme were Apple of Your Eye Healthcare Services Inc., owned and operated by Stiger and Veasey; Ultimate Care Home Health Services Inc., owned and operated by Cyprian and Patricia Akamnonu; and Charry Home Care Services Inc., owned and operated by Eleda.  According to the indictment, Veasey, Akamnonu, Eleda and others recruited beneficiaries to be placed at their HHAs so that they could bill Medicare for the unnecessary and not provided services.  As part of her role in the scheme, Eleda allegedly visited The Bridge Homeless Shelter in Dallas to recruit homeless beneficiaries staying at the facility, paying recruiters $50 per beneficiary they found at The Bridge and directed to Eleda’s vehicle parked outside the shelter’s gates.

Apple allegedly submitted claims to Medicare from Jan. 1, 2006, through July 31, 2011, totaling $9,157,646 for home health services to Medicare beneficiaries that were medically unnecessary and not provided.   Dr. Roy or another Medistat physician certified the services.  From Jan. 1, 2006, to Aug. 31, 2011, Ultimate submitted claims for medically unnecessary home health services totaling $43,184,628.   Charry allegedly submitted fraudulent claims from Aug. 1, 2008, to June 30, 2011, totaling $468,858 in medically unnecessary and not provided home health services.

The indictment alleges that Sivils, as Medistat’s office manager, helped facilitate the fraud scheme by, among other actions, supervising the processing of thousands of plans of care that contained Dr. Roy’s electronic signature and other Medistat physicians’ signatures, permitting HHAs to bill Medicare for unnecessary home health services and accepting cash payments from Cyprian Akamnonu in exchange for ensuring plans of care contained Dr. Roy or another Medistat physician’s signature.

As outlined in the government’s request to the court to detain Dr. Roy, in June 2011, CMS suspended provider numbers for Dr. Roy and Medistat based on credible allegations of fraud, thus ensuring Dr. Roy did not receive payment from Medicare.   Immediately after the suspension, nearly all of Medistat’s employees started billing Medicare under the provider number for Medcare HouseCalls.   The court document alleges that Dr. Roy was in fact in charge of day-to-day operations at Medcare, and that Dr. Roy continued to certify patients for home health despite the suspension.

Each charged count of conspiracy to commit health care fraud and substantive health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine.   Each false statement charge carries a maximum penalty of five years in prison and a $250,000 fine.   The indictment also seeks forfeiture of numerous items including funds in bank accounts, a sailboat, vehicles and multiple pieces of property.

An indictment is merely an allegation and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The case is being prosecuted by Assistant U.S. Attorneys Michael C. Elliott, Mindy Sauter and John DeLaGarza of the Northern District of Texas and Trial Attorney Ben O’Neil and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section.  The case was investigated by the FBI, HHS-OIG and MFCU and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Northern District of Texas.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants who collectively have falsely billed the Medicare program for more than $3.6 billion.