Fresno Man Sentenced to 100 Months in Prison for Receiving Child Pornography

FRESNO, CA—Chief United States District Judge Anthony W. Ishii sentenced Michael Shane McFarling, 38, today to eight years and four months in prison, to be followed 15 years of supervised release, for receiving and sharing images of child pornography, United States Attorney Benjamin B. Wagner announced.

According to court documents, McFarling received more than 600 images and videos depicting minors engaging in sexually explicit conduct that involved the portrayal of sadistic, masochistic, and other depictions of violence. McFarling received the child pornography on his computer, and many of the minors depicted were prepubescent minors.

This case was the result of an investigation by the Federal Bureau of Investigation, the Fresno Police Department, and the California Department of Justice. Assistant United States Attorney Jeremy R. Jehangiri prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov or call the U.S. Attorney’s Office for the Eastern District of California and ask to speak with the PSC coordinator.

Six Face Federal Wire Fraud Charges in Real Estate Flipping Scheme That Cost Victims More Than $4 Million

SANTA ANA, CA—Federal prosecutors have charged six people—including women from Orange County and Tennessee who were arrested this week—in relation to a multi-million-dollar real estate flipping scheme in which investors were promised titles to homes that could be easily resold but in fact did not have “clean” titles, were uninhabitable, or were simply worthless.

According to an indictment returned by a federal grand jury on April 18, the six defendants participated in a real estate scheme in which they sold victims Real Estate Owned—REO, or bank owned—properties for as much as $45,000. Even though the defendants had paid less than $10,000 per property, they told buyers that the properties were valuable and could be resold—or flipped—for a profit within a year.

During a scheme that ran from mid-2009 through mid-2010, victims were promised that the properties came with clean titles, property management services, and guaranteed rentals for the first three months, according to the indictment. Furthermore, the defendants allegedly claimed they had an “exit strategy” in which buyers could choose to sell the properties back to them for $60,000.

In some cases, victims did not receive the properties because they simply did not exist. In other cases, the properties were condemned or other issues with the titles meant victims were not able to take control of the properties. Of those victims who did receive titles, some found that the titles were encumbered by tax liens, fines, or building code violations. Furthermore, the indictment alleges that investor funds were immediately disbursed upon receipt, rather than being held in escrow.

The indictment alleges that there are more than three dozen victims who suffered losses of at least $4.2 million.

The defendants solicited investors to purchase properties at seminars held in Irvine and Costa Mesa; Orlando, Florida; Dallas, Texas; and in “webinars” conducted on the Internet.

This six defendants named in the indictment are:

Sylvia Melkonian, 48, of Laguna Beach, who was arrested yesterday morning by special agents with the FBI;

Sheridan Snyder, 65, of Turtletown, Tennessee, who was also arrested yesterday by the FBI;

Andrew Wardein, 38, of Irvine, who surrendered to authorities on April 20 and was released on a $25,000 bond after a judge scheduled a trial in the case for June 12;

Craig Shults, 41, of Huntington Beach, who has agreed to appear for an arraignment in federal court tomorrow afternoon;

Paul LiCausi, 47, of Fort Pierce, Florida, who is expect to appear in court in Santa Ana on April 30; and

Joseph Haymore, 31, of Port St. Lucie, Florida, who is also expected to appear in court in Santa Ana on April 30.

After being arrested yesterday, Melkonian was arraigned in federal court in Santa Ana, where she pleaded not guilty and was released on a $20,000 bond. Snyder appeared yesterday in United States District Court in Tennessee and was released on a $30,000 bond with instructions to appear in federal court in Santa Ana on May 14 for an arraignment.

All of the defendants named in the indictment are named in at least five counts of wire fraud. Therefore, if they are convicted, each defendant would face statutory maximum sentences of at least 100 years in federal prison.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

This case was investigated by the Federal Bureau of Investigation and investigators from the California Department of Justice, Office of the Attorney General. The case is being prosecuted by Assistant United States Attorney Greg Staples and Special Assistant United States Attorney Patricia Fusco of the California Attorney General’s Office (619-645-3035).

Lindsay Man Pleads Guilty to Possessing Child Pornography

FRESNO, CA—United States Attorney Benjamin B. Wagner announced today that Timothy David Bodine, 35, of Lindsay, California, pleaded guilty before United States District Judge Lawrence J. O’Neill to possession of material involving the sexual exploitation of minors.

According to the plea agreement, Bodine possessed images and videos depicting minors engaging in sexually explicit conduct. Bodine received the child pornography on his computer, and many of the images depicted prepubescent minors.

The maximum penalties for possession of material involving the sexual exploitation of minors are 10 years of imprisonment, a fine of $250,000, or both imprisonment and a fine; and a potential lifetime term of supervised release. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables. The sentencing hearing will be held at 8:15 a.m. on May 21, 2012.

This case is the result of an extensive investigation by the Federal Bureau of Investigation, Fresno Police Department, California Department of Justice, and the Fresno County Sheriff’s Office. Assistant United States Attorney Jeremy R. Jehangiri is prosecuting the case.

This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, PSC mobilizes federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information, visit www.projectsafechildhood.gov or call the U.S. Attorney’s Office for the Eastern District of California and ask to speak with the PSC coordinator.

Tennessee Man Charged with Tax Crimes

Bail Bondsman Failed to Report Substantial Income and Failed to File Tax Returns

WASHINGTON - Kenneth L. Richardson of Nashville, Tenn., was arraigned in Nashville on charges of making and subscribing a false income tax return for 2004, and for failure to file a tax return for years 2005, 2006 and 2007, the Justice Department and Internal Revenue Service (IRS) announced today.

The indictment alleges that Richardson owned and operated a bail bonding company in Nashville, which did business as “Skyy Bonding Company.” According to the indictment, in 2004, Richardson did willfully make and subscribe an IRS Form 1040, U.S. Individual Income Tax Return, which he did not believe to be true and correct as to every material matter. The indictment alleges that Richardson knew he had substantial gross income in addition to the amount stated on his 2004 tax return.

The indictment further alleges that for tax years 2005, 2006 and 2007, Richardson had gross income that required the filing of a tax return, but willfully failed to make an income tax return as required by law.                                                                             

An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in U.S. District Court.  If convicted, the defendant faces a maximum potential sentence of six years in prison and maximum fines of $550,000.  The court has not yet set a trial date.

The case is being prosecuted by Tax Division trial attorneys Michelle M. Petersen and Kathryn B. Ward.  The case was investigated by the IRS-Criminal Investigation Division.

Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax .

Activity in the United States Attorney’s Office, District of Wyoming

Phillip Anthony Varner, 29, of Bellview, Colorado, was sentenced by Federal District Court Judge Alan B. Johnson on February 9, 2011, for conspiracy to possess with intent to distribute and to distributing between 50 and 200 grams of methamphetamine. Varner received 37 months of imprisonment, was ordered to pay a $500.00 fine and a $100.00 special assessment, and will be placed on four years of supervised release upon release from prison. This case was investigated by the Wyoming Division of Criminal Investigation.

Clay E. McDonald, 25, of Laramie, Wyoming, was sentenced by Federal District Court Judge Alan B. Johnson on February 11, 2011, for wire fraud. McDonald was ordered to pay $24,200.00 in restitution and a $100.00 special assessment and was sentenced to three years probation. As a condition of his probation, McDonald will serve six months of probation in intermittent confinement at the Albany County Detention Center in Laramie, Wyoming. This case was investigated by the Federal Bureau of Investigation.

Eugene Sunday, 61, of Lusk, Wyoming, was sentenced by Federal District Court Judge Nancy D. Freudenthal on February 16, 2011, for bank fraud and three counts of uttering counterfeit securities. Sunday received 18 months of imprisonment to be followed by five years of supervised release. In addition, Sunday was ordered to pay restitution in the amount of $56,750.25. This case was investigated by the Wyoming Secretary of State’s Office and the U.S. Secret Service.

Jose Nava-Suarez, 40, of Dubois, Wyoming, was sentenced by Federal District Court Judge Alan B. Johnson on February 16, 2011, for one count of conspiracy to possess with intent to distribute methamphetamine and cocaine, one count of distributing cocaine, and one count of distributing 50 grams or more of methamphetamine. Nava-Suarez received 160 months of imprisonment, was ordered to pay a $300.00 special assessment and a $800 fine. Upon release from prison, Nava-Suarez will be placed on five years of supervised release and is subject to deportation. This case was investigated by the U.S. Drug Enforcement Administration.

Richard Delgado-Ramirez, 31, of Mexico, was sentenced by Federal District Court Judge Alan B. Johnson on February 17, 2011, for illegal re-entry of previously deported alien in the United States. Delgado-Ramirez received 20 months of imprisonment, was ordered to pay a $100.00 special assessment, and, upon release from prison, will be placed on two years of supervised release. Delgado-Ramirez is subject to deportation upon release from imprisonment. This case was investigated by the U.S. Department of Homeland Security, Immigration and Customs Enforcement.

This article was sponsored by Police Leadership Books.

Eleven Alleged Aryan Brotherhood of Texas Members Charged for Roles in Assault

WASHINGTON - Eleven alleged members of the Aryan Brotherhood of Texas (ABT) have been indicted for their alleged roles in the 2008 beating of a gang prospect in Tomball, Texas, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Jose Angel Moreno of the Southern District of Texas.

The superseding indictment, returned by the federal grand jury on Feb. 16, 2011, and unsealed today in Houston, charges the defendants with violent crimes in aid of racketeering activity (VICAR) and conspiracy to engage in violent crimes in aid of racketeering. The defendants charged in the indictment are Zechariah Aaron Johnston, 31; Steven Walter Cooke, 47; Stephen Kyle Knebel, 33; David Bruce Harlow, 46; Robert Lynn Sheats, 33; Justin Northrup, 25; Benjamin Christian Dillon, 28; Rusty Dwayne Plante, 34; Johnny Ray Nichols, 35; Shane Everett Dallmeyer, 30; and Michael Raymond Burkett, 33. All of the defendants are from the greater Houston-area.

According to the indictment, in order to be considered for ABT membership, a person must be sponsored by another ABT member. Once sponsored, a prospective member must serve an unspecified term, during which he is referred to as a prospect, while his conduct is observed by the members of the ABT.

The indictment alleges that a prospect member of ABT sustained serious bodily injury after he was severely beaten on Sept. 22, 2008, at Cooke’s home in Tomball. The beating was allegedly administered by ABT gang members because the prospect member violated certain ABT rules of conduct.

If convicted, the defendants face a maximum sentence of 20 years in prison and a $250,000 fine on the VICAR charge. They face a maximum penalty of three years in prison and a $250,000 fine on the conspiracy charge. The defendants who were not already in federal prison are making initial appearances today in U.S. District Court in Houston.

According to the indictment, the ABT is a race-based, state-wide organization that operates inside and outside of state and federal prisons throughout Texas and elsewhere in the United States. The ABT was established in the early 1980s within the Texas prison system. As alleged in the indictment, it modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s. According to the indictment, previously, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism. Over time, however, the ABT has expanded its criminal enterprise to include illegal activities for profit.

As alleged in the indictment, the ABT enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise. Members, and oftentimes associates, are required to follow the orders of higher-ranking members, often referred to as "direct orders."

An indictment is merely a charge and defendants are presumed innocent until proven guilty.

This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the FBI; the U.S. Marshals Service; the Texas Rangers; the Texas Department of Public Safety; the Walker County, Texas, Sheriff’s Office; the Montgomery County, Texas, Sheriff’s Department; the Houston Police Department-Gang Division; and the Harris County, Texas, Sheriff’s Office.

The case is being prosecuted by David Karpel of the Criminal Division’s Gang Unit and Assistant U.S. Attorney Jay Hileman of the Southern District of Texas in Houston.

This article was sponsored by Police Books.

Former Abramoff Business Partner Michael Scanlon Sentenced to 20 Months in Prison for Role in Public Corruption and Fraud Schemes

WASHINGTON – Michael P.S. Scanlon, 40, a business partner of former lobbyist Jack Abramoff, was sentenced today in U.S. District Court in Washington, D.C., to 20 months in prison for his role in a wide-ranging public corruption and fraud conspiracy, announced the Justice Department’s Criminal Division and the FBI.

Scanlon also was ordered by U.S. District Court Judge Ellen S. Huvelle to pay $20,191,537 in restitution to his victims and to serve three years of supervised release following his prison term, as well as to perform 300 hours of community service.  Scanlon pleaded guilty in November 2005 to a one-count information charging him with participating in a conspiracy with others to commit bribery, mail and wire fraud, and honest services fraud.  

According to court documents, from March 2000 through 2001, Scanlon was employed in the Washington, D.C., offices of two law and lobbying firms where Abramoff worked.   During this time, Scanlon also formed and began to operate Capital Campaign Strategies LLC (CCS), a company that provided grass-roots work, public relations services and election campaign support.  

In pleading guilty, Scanlon admitted that he and Abramoff conspired to defraud four Native American Indian tribes that either operated or were interested in operating gaming casinos in a scheme referred to as “Gimme Five.”   Each of these four clients, which were tribes located in Mississippi, Louisiana, Texas and Michigan, hired Abramoff to give advice regarding how best to limit competition from competing casinos or, in one instance, to re-open a previously closed casino.   According to court documents, once Abramoff had established a relationship with the tribal clients, he told them that they needed grass-roots work and public relations services, and he recommended Scanlon and CCS primarily to provide these services.   As Scanlon knew, the clients relied on Abramoff’s recommendation in deciding to hire Scanlon and CCS because of Abramoff’s expertise in these matters.

As part of the scheme, Scanlon and Abramoff agreed to charge fees that incorporated huge profit margins and then split the net profits in a secret kick-back arrangement.   According to information presented in court, Scanlon knew keeping the kick-back arrangement a secret from the clients was crucial to the success of their scheme, therefore he and Abramoff concealed the arrangement from the tribal clients.   According to the plea agreement, CCS received net profits of approximately $39.5 million through this scheme. Scanlon kicked-back approximately $20 million to Abramoff for his assistance to CCS in obtaining these profits.

In addition to the kick-back scheme, Scanlon also admitted that he, Abramoff and others engaged in a pattern of bribery and honest services fraud.   Through these schemes, Scanlon and the lobbyist co-conspirators offered and provided a stream of things of value to public officials, including trips, campaign contributions, meals and entertainment, in exchange for agreements that the public officials would use their official positions and influence to benefit Abramoff, Scanlon and their clients.

In one example, according to court documents, Scanlon and Abramoff provided a stream of things of value to former Congressman Robert Ney, and members of his staff, in exchange for numerous official acts.   According to court documents, the things of value included a lavish trip to Scotland to play golf on world famous courses; tickets to sporting events and other entertainment; regular meals at restaurants, including Abramoff’s restaurant, Signatures; and campaign contributions for Ney, his political action committees and other political committees on behalf of Ney.   In exchange for these things of value, Scanlon and Abramoff, together and separately, sought and received Ney’s agreement to perform, both directly and through others, a series of official acts.   These acts included agreements to support and pass legislation, agreements to place statements in the congressional record, meetings with Abramoff and Scanlon’s clients, and advancing the application of a client of Abramoff’s for a license to install wireless telephone infrastructure in the House of Representatives.     

To date, 20 individuals, including lobbyists and public officials, have pleaded guilty or been convicted at trial in connection with the activities of Abramoff and his associates.   Abramoff pleaded guilty in January 2006 to conspiracy to commit honest services fraud, honest services fraud and tax evasion.   He was sentenced in September 2008 to 48 months in prison.

This case was prosecuted by Senior Trial Attorney Mary K. Butler and Trial Attorney M. Kendall Day of the Public Integrity Section, and Assistant Chief Nathaniel B. Edmonds of the Fraud Section. The case was investigated by the FBI, the General Services Administration Office of Inspector General, the Department of the Interior Office of the Inspector General, and the Internal Revenue Service – Criminal Investigation.

Virginia Man Sentenced to 102 Months in Prison for Engaging in a Child Exploitation Enterprise

WASHINGTON – Ryan Chiles of Hampton, Va., was sentenced today in the Western District of Pennsylvania to 102 months in prison and a lifetime of supervised release for engaging in a child exploitation enterprise, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the Western District of Pennsylvania David J. Hickton and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge John Kelleghan.

Chiles, 22, pleaded guilty before U.S. District Court Judge Arthur J. Schwab on July 14, 2010, to one count of engaging in a child exploitation enterprise.   According to court documents and proceedings, Chiles and others distributed images and videos of children being sexually abused to other members of an international group that had restricted membership and was formed on a social networking website.  Members of the group distributed to one another thousands of sexually explicit images and videos of children, many of which graphically depicted prepubescent, male children, including some infants, being sexually abused and sometimes sodomized or subjected to bondage.  

This case was investigated by HSI in Pittsburgh and the High Technology Investigative Unit of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).   Assistant U.S. Attorney Craig W. Haller of the Western District of Pennsylvania and CEOS Trial Attorney Andrew McCormack prosecuted the case.

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

House of Cards: Casino Cheating Ring Dismantled

The co-founder of a criminal enterprise known as the Tran Organization pled guilty last month to scamming casinos across the country out of millions of dollars, bringing to a close one of the largest card-cheating cases in recent FBI history.

Van Thu Tran, 45, along with her husband, parents, extended family, and others, participated in a surprisingly simple scheme to cheat casinos at the gaming tables.

Tran and her husband were dealers at an Indian tribal casino in San Diego in 2002 when they devised a plan to use a “false shuffle” to track cards and thereby guarantee successful betting.

“Initially, it was a pretty bare bones operation,” said Special Agent Peter Casey, one of several case agents who worked the Tran investigation out of our San Diego Field Office.

Over time, the couple branched out from an Asian card game called Pai Gow to blackjack, and they enlisted many others in the scheme—including dealers at other casinos—with the promise of easy money.

For awhile, the money was easy, because some of the tribal casinos’ security was not yet sophisticated enough to pick up on the scam. Before the ring was rounded up in 2007, some 29 casinos from Canada to Mississippi were hit for about $7 million.

Here’s how the card cheat worked:

When signaled, the crooked dealer would make a false shuffle. Through sleight-of-hand techniques that security cameras and pit bosses failed to notice, the false shuffle created a “slug”—a group of played cards whose order would not change when the rest of the cards were shuffled. When the slug next came to the top of the deck, members of the ring recognized the card pattern and knew how to bet.

“It’s a sophisticated scam, but at the same time it’s simple,” Casey said, “And that’s why it worked so well. The organization controlled every aspect of the table.”

The ring eventually began using card trackers, nearby spotters who used concealed devices to relay the order of the played cards to someone at a remote location who instantly entered the information into a computer. When the slug reappeared, the computer operator picked up the pattern and relayed it to the spotter, who then secretly signaled the bettors. One finger on a cigarette, for example, might mean bet, two fingers might mean stand pat. “It was almost like a catcher giving signs to the pitcher in baseball,” Casey said. In one instance, the ring won $900,000 in blackjack during a single sitting.

Some of the casinos realized they were being cheated, even if they weren’t sure exactly how, and called the authorities. We opened a case in 2004. But even as the Indian tribal casinos beefed up their security, the Tran Organization was hitting other casinos in the U.S. and Canada.

All the while, the ringleaders were living large. Tran and her husband had two homes in San Diego and property in Vietnam. They drove high-end vehicles and bought expensive jewelry—most of which was seized and forfeited when they were arrested.

We broke the case with the help of surveillance, wiretaps, an undercover operative posing as a crooked dealer, and strong partnerships with Internal Revenue Service investigators, the San Diego County Sheriff’s Department, the California Department of Justice, and the Ontario Provincial Police.

To date, of the 47 individuals indicted in the case, 42 have entered guilty pleas to various charges.