May 28, 2010 - DENVER—Wayne Cook, age 45, of Highlands Ranch, Colorado, was sentenced Tuesday by U.S. District Court Judge Robert E. Blackburn to serve 84 months (seven years) in federal prison for possession of child pornography, United States Attorney David Gaouette and FBI Special Agent in Charge James Davis announced. Following his prison sentence, Cook was ordered to serve five years on supervised release. Judge Blackburn also ordered Cook to participate in a sex offender evaluation program as well as register as a sex offender. Cook was also told that he is subject to unannounced searches, including his residence, vehicle, computer or other electronic media. The defendant appeared at the sentencing hearing free on bond. He was ordered to report to a Bureau of Prisons facility after designation.
Wayne Cook was first charged by Information on January 14, 2010. To be charged by Information a defendant waives the Constitutional right to be indicted by a grand jury. On February 1, 2010, an amended Information was filed. Cook pled guilty before Judge Blackburn on February 3, 2010. He was sentenced on May 25, 2010.
According to the stipulated facts contained in the plea agreement, on April 23, 2008, an FBI agent in Oklahoma, operating in an undercover capacity, connected to a “peer to peer” network, then searched for files of child pornography available for downloading. Further investigation revealed that the child pornography came from a Highlands Ranch address belonging to Wayne Cook. On October 31, 2008, FBI special agents executed a federal search warrant at the Highlands Ranch address. Agents seized a computer, which was later subjected to forensic examination. That examination revealed that the computer contained approximately 2,000 images and 30 videos of suspected child pornography. All of the images contained on the computer depicted children under the age of 12 years old. The images portray sadistic or masochistic conduct or other depictions of violence.
According to the plea agreement, during the execution of the warrant, Mr. Cook was present and agreed to speak with FBI agents. Cook reported that the “house computer” was in the basement, and contained pictures of child pornography.
The Cook case was investigated by Special Agents and Task Force officers with the Federal Bureau of Investigation’s Innocent Images Task Force.
The defendant was prosecuted by Assistant U.S. Attorney Judith Smith.
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 Attorney’s 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.
Saturday, May 29, 2010
Former Principal of AFW Wealth Advisers Sentenced in Manhattan Federal Court to 97 Months in Prison for Multimillion-Dollar Fraud
May 28, 2010 - PREET BHARARA, the United States Attorney for the Southern District of New York, announced that MATTHEW D. WEITZMAN, a former principal of AFW Asset Management, Inc., doing business as AFW Wealth Advisers, Inc. ("AFW"), was sentenced today to 97 months in prison for misappropriating millions of dollars from AFW investors, lying to the investors about how their money was used, and converting their money to his own use. United States District Judge LAURA TAYLOR SWAIN imposed the sentence today in Manhattan federal court.
WEITZMAN previously pleaded guilty to a criminal Information on October 19, 2009. According to the Information, the criminal Complaint previously filed in this case, and statements made during the guilty plea proceeding:
AFW is a financial planning and investment management firm with offices in Purchase, New York, and Natick, Massachusetts. WEITZMAN was a co-founder of AFW, and until early April 2009 was a Certified Financial Planner at AFW. AFW had more than $190 million in assets under management at the end of 2008, which it held at an independent brokerage firm (the "Brokerage Firm").
Between 2002 and March of 2009, WEITZMAN fraudulently obtained more than $7 million of AFW investor funds and converted those funds to his own personal use. WEITZMAN obtained the funds by submitting forged documents to the Brokerage Firm which made it appear as if clients had authorized him to transfer their funds, and by lying to investors about how their funds would be used.
WEITZMAN, 44, resides in Armonk, New York.
In addition to his prison term, Judge SWAIN ordered WEITZMAN to pay $7,082,032 in forfeiture.
Mr. BHARARA praised the work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission for its assistance in the investigation of this case.
This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement 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.
Assistant United States Attorneys JOAN LOUGHNANE and VIRGINIA CHAVEZ ROMANO are in charge of the prosecution.
Friday, May 28, 2010
Vice President of A&B Check Cashing Sentenced to Three Years in Prison in $12.4 Million Check Kiting Scheme
One of the Largest Fraud Schemes Ever Perpetrated in Maryland
May 28, 2010 - BALTIMORE—U.S. District Judge Benson E. Legg, Jr. sentenced Brian I. Satisky, age 56, of Pikesville, Maryland, today to three years in prison, followed by four years of supervised release, for bank fraud in connection with a check kiting scheme in which his check cashing service business withdrew money based upon inflated balances in its business accounts. Judge Legg also ordered Satisky to pay restitution totaling $12.4 million to the victim banks.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.
“Mr. Satisky did not use a weapon, but his specialty was stealing money from banks,” said U.S. Attorney Rod J. Rosenstein. “This was essentially a bank robbery scheme carried out by con artists who caused one of the largest fraud losses ever prosecuted in Maryland, resulting in actual losses of more than $12 million to local banks.”
Brian Satisky became the President of the Maryland Association of Financial Service Centers, Inc., a trade group. He served on the board of directors of Financial Service Centers of America (FiSCA) which is a national trade group representing more than 5,000 money service businesses. In June 2003, Satisky testified before Congress on behalf of FiSCA. According to the plea agreement, the check kite fraud scheme described below began in June 2003.
According to Satisky’s plea agreement, Brian Satisky and his brother Alec owned and operated Colleen, Inc., which their parents began as a family shoe store in the Hollingswood Shopping Center. The shoe store became their secondary business and their primary business became A&B Check Cashing, a money services company operating from 21 locations in the Baltimore metropolitan area. For a fee, A&B Check Cashing: cashed checks; sold money orders, transit passes, prepaid phone and calling card products and lottery tickets; transferred money; and provided bill payer services for Verizon and BGE. Many of its customers were “unbanked” individuals who did not have access to traditional forms of banking, credit, or traditional loans.
In 2001, the business was sued in a class action law suit alleging that one of its products constituted a payday loan in violation of Maryland law. Brian Satisky and his brother settled the law suit in 2003, agreeing that they would not collect some $1.6 million in customers’ checks which had been received to repay the alleged payday loans. This caused a significant and immediate shortfall for the business.
In an effort to stay ahead of the business’s debt, the brothers began to “kite” checks between two of the business’s bank accounts. Each day, checks were drawn on two of the business’s bank accounts when the brothers knew A&B Check Cashing had insufficient funds to cover the checks. The checks, when cross-deposited into the two bank accounts, artificially inflated the balances of the accounts and enabled the brothers to write checks to the operating account and to third party vendors and creditors in excess of the amounts of cash their business actually had.
The scheme required that either Alec or Brian write fraudulently inflated checks every day to cross deposit into the business’s bank accounts. Whomever was to write the checks that day calculated the amount needed for the kited checks by examining the day’s legitimate deposits, the online bank balance and outstanding checks for the account at Carrollton Bank. A telephone call would then be made to the Baltimore County Savings Bank (BCSB) to obtain a telephonic message of the bank balance and outstanding checks there. Eighty percent of the checks were written by Alec, with Brian writing checks on days when Alec had his regularly scheduled day off or was on vacation. While Alec was on vacation from October 18 - 26, 2005, Brian wrote in excess of $10 million of kited checks daily to keep the kite going. The kited amounts gradually increased as A&B Check Cashing used kited funds to cover business expenses, including paying their own salaries and the costs of opening new locations.
The kite continued until it collapsed in June 2006. At that time, Alec Satisky committed suicide. A&B Check Cashing is no longer in business. BCSB lost $10.6 million and Carrollton Bank lost $1.8 million.
United States Attorney Rod J. Rosenstein thanked Assistant United States Attorney Joyce K. McDonald, who prosecuted the case.
May 28, 2010 - BALTIMORE—U.S. District Judge Benson E. Legg, Jr. sentenced Brian I. Satisky, age 56, of Pikesville, Maryland, today to three years in prison, followed by four years of supervised release, for bank fraud in connection with a check kiting scheme in which his check cashing service business withdrew money based upon inflated balances in its business accounts. Judge Legg also ordered Satisky to pay restitution totaling $12.4 million to the victim banks.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.
“Mr. Satisky did not use a weapon, but his specialty was stealing money from banks,” said U.S. Attorney Rod J. Rosenstein. “This was essentially a bank robbery scheme carried out by con artists who caused one of the largest fraud losses ever prosecuted in Maryland, resulting in actual losses of more than $12 million to local banks.”
Brian Satisky became the President of the Maryland Association of Financial Service Centers, Inc., a trade group. He served on the board of directors of Financial Service Centers of America (FiSCA) which is a national trade group representing more than 5,000 money service businesses. In June 2003, Satisky testified before Congress on behalf of FiSCA. According to the plea agreement, the check kite fraud scheme described below began in June 2003.
According to Satisky’s plea agreement, Brian Satisky and his brother Alec owned and operated Colleen, Inc., which their parents began as a family shoe store in the Hollingswood Shopping Center. The shoe store became their secondary business and their primary business became A&B Check Cashing, a money services company operating from 21 locations in the Baltimore metropolitan area. For a fee, A&B Check Cashing: cashed checks; sold money orders, transit passes, prepaid phone and calling card products and lottery tickets; transferred money; and provided bill payer services for Verizon and BGE. Many of its customers were “unbanked” individuals who did not have access to traditional forms of banking, credit, or traditional loans.
In 2001, the business was sued in a class action law suit alleging that one of its products constituted a payday loan in violation of Maryland law. Brian Satisky and his brother settled the law suit in 2003, agreeing that they would not collect some $1.6 million in customers’ checks which had been received to repay the alleged payday loans. This caused a significant and immediate shortfall for the business.
In an effort to stay ahead of the business’s debt, the brothers began to “kite” checks between two of the business’s bank accounts. Each day, checks were drawn on two of the business’s bank accounts when the brothers knew A&B Check Cashing had insufficient funds to cover the checks. The checks, when cross-deposited into the two bank accounts, artificially inflated the balances of the accounts and enabled the brothers to write checks to the operating account and to third party vendors and creditors in excess of the amounts of cash their business actually had.
The scheme required that either Alec or Brian write fraudulently inflated checks every day to cross deposit into the business’s bank accounts. Whomever was to write the checks that day calculated the amount needed for the kited checks by examining the day’s legitimate deposits, the online bank balance and outstanding checks for the account at Carrollton Bank. A telephone call would then be made to the Baltimore County Savings Bank (BCSB) to obtain a telephonic message of the bank balance and outstanding checks there. Eighty percent of the checks were written by Alec, with Brian writing checks on days when Alec had his regularly scheduled day off or was on vacation. While Alec was on vacation from October 18 - 26, 2005, Brian wrote in excess of $10 million of kited checks daily to keep the kite going. The kited amounts gradually increased as A&B Check Cashing used kited funds to cover business expenses, including paying their own salaries and the costs of opening new locations.
The kite continued until it collapsed in June 2006. At that time, Alec Satisky committed suicide. A&B Check Cashing is no longer in business. BCSB lost $10.6 million and Carrollton Bank lost $1.8 million.
United States Attorney Rod J. Rosenstein thanked Assistant United States Attorney Joyce K. McDonald, who prosecuted the case.
Two Securities Broker-Dealers Indicted for Securities Fraud Scheme in Texas
May 28, 2010 - WASHINGTON—Two securities broker-dealers were charged in an indictment unsealed today for their alleged roles in a securities fraud scheme involving several publicly traded companies, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
A federal grand jury returned an indictment under seal on May 26, 2010, charging Blake Williams, 27, of Dallas, and Derek Lopez, 43, of Torrance, California with one count of conspiracy to commit securities fraud and seven counts of securities fraud. The charges, filed in U.S. District Court for the Northern District of Texas—Dallas Division, were unsealed today. Williams and Lopez were arrested today in Dallas and Torrance, respectively, and are making initial court appearances.
According to the indictment, Williams was a securities broker-dealer and employee of TBeck Capital Inc., a purported investment banking and securities trading firm in Grapevine, Texas. Lopez was a securities broker-dealer who provided services to TBeck Capital. According to the indictment, from June 2006 through December 2008, Williams, Lopez and their co-conspirators engaged in a scheme to manipulate the price and volume of stocks traded in the over-the-counter market.
The indictment alleges that companies owned and controlled by a co-conspirator obtained control of large positions of free-trading stock in various publicly-traded companies. Williams, Lopez and others allegedly would then coordinate trades with each other and with their co-conspirators to create the false appearance that there was greater investor interest in the stock. Williams and Lopez allegedly traded stock in their own names as well as through TBeck Capital and other companies to keep the stock price artificially inflated. These alleged actions allowed the defendants and their co-conspirators to then sell that stock at an artificially high price.
According to the indictment, Lopez allegedly traded in his own name, as well as in the name “Da Big Kahuna,” to disguise his trades. Williams allegedly traded in his own name and in the name of several companies to make it appear that there were multiple unrelated entities buying and selling the stock. According to the indictment, Williams allegedly received cash payments and Lopez received free-trading stock and cash payments in return for their assistance in manipulating the stock prices of companies in which TBeck Capital owned and controlled large positions of free-trading stock.
If convicted on the conspiracy charge, the defendants face a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss, whichever is greater. Each of the securities fraud charges carries a maximum penalty of 20 years in prison and a $5 million fine.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
The case is being prosecuted by Acting Deputy Chief Hank Bond Walther and Trial Attorney Nicole H. Sprinzen of the Criminal Division’s Fraud Section and is being investigated by the FBI’s Washington Field Office.
These charges are part of President Barack Obama’s Financial Fraud Enforcement Task Force.
President Obama established the interagency Financial Fraud Enforcement 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.
A federal grand jury returned an indictment under seal on May 26, 2010, charging Blake Williams, 27, of Dallas, and Derek Lopez, 43, of Torrance, California with one count of conspiracy to commit securities fraud and seven counts of securities fraud. The charges, filed in U.S. District Court for the Northern District of Texas—Dallas Division, were unsealed today. Williams and Lopez were arrested today in Dallas and Torrance, respectively, and are making initial court appearances.
According to the indictment, Williams was a securities broker-dealer and employee of TBeck Capital Inc., a purported investment banking and securities trading firm in Grapevine, Texas. Lopez was a securities broker-dealer who provided services to TBeck Capital. According to the indictment, from June 2006 through December 2008, Williams, Lopez and their co-conspirators engaged in a scheme to manipulate the price and volume of stocks traded in the over-the-counter market.
The indictment alleges that companies owned and controlled by a co-conspirator obtained control of large positions of free-trading stock in various publicly-traded companies. Williams, Lopez and others allegedly would then coordinate trades with each other and with their co-conspirators to create the false appearance that there was greater investor interest in the stock. Williams and Lopez allegedly traded stock in their own names as well as through TBeck Capital and other companies to keep the stock price artificially inflated. These alleged actions allowed the defendants and their co-conspirators to then sell that stock at an artificially high price.
According to the indictment, Lopez allegedly traded in his own name, as well as in the name “Da Big Kahuna,” to disguise his trades. Williams allegedly traded in his own name and in the name of several companies to make it appear that there were multiple unrelated entities buying and selling the stock. According to the indictment, Williams allegedly received cash payments and Lopez received free-trading stock and cash payments in return for their assistance in manipulating the stock prices of companies in which TBeck Capital owned and controlled large positions of free-trading stock.
If convicted on the conspiracy charge, the defendants face a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss, whichever is greater. Each of the securities fraud charges carries a maximum penalty of 20 years in prison and a $5 million fine.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
The case is being prosecuted by Acting Deputy Chief Hank Bond Walther and Trial Attorney Nicole H. Sprinzen of the Criminal Division’s Fraud Section and is being investigated by the FBI’s Washington Field Office.
These charges are part of President Barack Obama’s Financial Fraud Enforcement Task Force.
President Obama established the interagency Financial Fraud Enforcement 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.
CBP Officers Work With ICE and DEA Agents to Intercept Methamphetamine Precursor Chemicals
Buffalo, N.Y. – U.S. Customs and Border Protection, in conjunction with special agents from the Buffalo office of U.S. Immigration and Customs Enforcement, today announced the seizure of a variety of precursor chemicals and cold medication used in the production of methamphetamine from a 29-year-old Clymer, N.Y. man. The seizure resulted in the federal arrest of U.S. citizen Thomas Oldani.
On May 27, CBP officers encountered Oldani as he applied for admission into the U.S. as the sole operator of his personal vehicle at the Peace Bridge Port of Entry, in Buffalo, N.Y. During the primary inspection of Oldani, CBP officers noticed that he was exhibiting signs of nervous and erratic behavior, and was physically shaking and avoiding eye contact when answering basic questions.
CBP officers immediately took control of Oldani and continued with the vehicle inspection in a secure search area. The search of Oldani and his vehicle revealed a film canister with a white powdery substance later determined to be ephedrine, and multiple precursor chemicals, tools and cold medication used in the production of methamphetamine.
Oldani was turned over to the custody of special agents from ICE. The investigation is ongoing at this time as ICE and Drug Enforcement Administration agents search a location in Tonawanda for additional evidence. The chemicals found thus far have been identified and secured by specially trained DEA personnel working with ICE and CBP personnel.
Federal prosecution was accepted under chapter 21 of the United States Code, section 841, "Manufacture, or possess with intent to manufacture, distribute, or dispense, a controlled substance." Additional charges may be forthcoming for Oldani after the investigation is completed.
“CBP officers took quick action to secure and isolate this subject and the hazardous chemicals found in his vehicle when he arrived at the Peace Bridge. This seizure and federal arrest are the direct result of CBP, ICE and DEA agents working together to remove these dangerous items destined for the streets of our local community,” said James T. Engleman, CBP director of field operations for the Buffalo Field Office.
“This case is an outstanding example of close coordination between CBP, ICE, DEA and state and local law enforcement,” said J. Michael Kennedy, acting special agent in charge of the ICE Office of Investigations in Buffalo. “All law enforcement agencies are committed to stopping drug trafficking and keeping narcotics off the street of our communities.”
On May 27, CBP officers encountered Oldani as he applied for admission into the U.S. as the sole operator of his personal vehicle at the Peace Bridge Port of Entry, in Buffalo, N.Y. During the primary inspection of Oldani, CBP officers noticed that he was exhibiting signs of nervous and erratic behavior, and was physically shaking and avoiding eye contact when answering basic questions.
CBP officers immediately took control of Oldani and continued with the vehicle inspection in a secure search area. The search of Oldani and his vehicle revealed a film canister with a white powdery substance later determined to be ephedrine, and multiple precursor chemicals, tools and cold medication used in the production of methamphetamine.
Oldani was turned over to the custody of special agents from ICE. The investigation is ongoing at this time as ICE and Drug Enforcement Administration agents search a location in Tonawanda for additional evidence. The chemicals found thus far have been identified and secured by specially trained DEA personnel working with ICE and CBP personnel.
Federal prosecution was accepted under chapter 21 of the United States Code, section 841, "Manufacture, or possess with intent to manufacture, distribute, or dispense, a controlled substance." Additional charges may be forthcoming for Oldani after the investigation is completed.
“CBP officers took quick action to secure and isolate this subject and the hazardous chemicals found in his vehicle when he arrived at the Peace Bridge. This seizure and federal arrest are the direct result of CBP, ICE and DEA agents working together to remove these dangerous items destined for the streets of our local community,” said James T. Engleman, CBP director of field operations for the Buffalo Field Office.
“This case is an outstanding example of close coordination between CBP, ICE, DEA and state and local law enforcement,” said J. Michael Kennedy, acting special agent in charge of the ICE Office of Investigations in Buffalo. “All law enforcement agencies are committed to stopping drug trafficking and keeping narcotics off the street of our communities.”
Lawrenceville Man Pleads Guilty in Cocaine Trafficking Conspiracy
May 28, 2010 - Acting United States Attorney Robert S. Cessar announced today, May 27, 2010, that Thomas Carl Thomas, Jr., a resident of Pittsburgh, Pennsylvania, pleaded guilty in federal court in Pittsburgh to a violation of the federal drug laws.
Thomas, age 33, pleaded guilty to one count before United States District Judge Terrence F. McVerry.
In connection with the guilty plea, Assistant United States Attorney Troy Rivetti advised the court that from in or around October 2007, and continuing until in or around September 2008, in the Western District of Pennsylvania and elsewhere, Thomas conspired with others to distribute and possess with the intent to distribute more than 500 grams but less than two kilograms of cocaine, a Schedule II controlled substance.
Judge McVerry scheduled sentencing for September 17, 2010, at 10:30 a.m. The law provides for a total sentence of not less than 5 years and up to 40 years in prison, a fine of $2,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.
The Drug Enforcement Administration, the Federal Bureau of Investigation, and the Pittsburgh Bureau of Police conducted the investigation that led to the prosecution of Thomas Carl Thomas, Jr. Other agencies participating in the investigation include the Pennsylvania State Police, the District Attorney's Office—Violent Crimes/Firearms Task Force, the Allegheny County Sheriff's Department, the Allegheny County Police Department, the Allegheny County Adult Probation, the Internal Revenue Service—Criminal Investigation, the United States Marshals Service, the West Mifflin Police Department, the Coraopolis Police Department, the Jefferson Hills Police Department, the Mount Lebanon Police Department, and the Pennsylvania State Parole.
Thomas, age 33, pleaded guilty to one count before United States District Judge Terrence F. McVerry.
In connection with the guilty plea, Assistant United States Attorney Troy Rivetti advised the court that from in or around October 2007, and continuing until in or around September 2008, in the Western District of Pennsylvania and elsewhere, Thomas conspired with others to distribute and possess with the intent to distribute more than 500 grams but less than two kilograms of cocaine, a Schedule II controlled substance.
Judge McVerry scheduled sentencing for September 17, 2010, at 10:30 a.m. The law provides for a total sentence of not less than 5 years and up to 40 years in prison, a fine of $2,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.
The Drug Enforcement Administration, the Federal Bureau of Investigation, and the Pittsburgh Bureau of Police conducted the investigation that led to the prosecution of Thomas Carl Thomas, Jr. Other agencies participating in the investigation include the Pennsylvania State Police, the District Attorney's Office—Violent Crimes/Firearms Task Force, the Allegheny County Sheriff's Department, the Allegheny County Police Department, the Allegheny County Adult Probation, the Internal Revenue Service—Criminal Investigation, the United States Marshals Service, the West Mifflin Police Department, the Coraopolis Police Department, the Jefferson Hills Police Department, the Mount Lebanon Police Department, and the Pennsylvania State Parole.
Federal Mortgage Fraud Charges Filed Against Five Persons
May 28, 2010 - LAS VEGAS—Five persons were indicted by the federal grand jury today on mortgage fraud charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Lloyd H. Gardley, 56, and Candis Gardley, 53, of Chandler, Arizona; Suzanne McAllister, 32, of Las Vegas; Arcell Mitchell, Jr., 31, of Ft. Riley, Kansas; and Sharon Wagner, 61, of Sun City West, Arizona, are charged with conspiracy to commit bank fraud, mail fraud, and wire fraud, six counts of bank fraud, and criminal forfeiture.
Arrest warrants have been issued for the Gardleys and Mitchell. Defendants McAllister and Wagner were summoned, and are scheduled for an initial appearance before a United States Magistrate Judge in Las Vegas on Friday, June 4, 2010, at 8:30 a.m.
Lloyd Gardley was president, director, secretary and resident agent of Prolific Management, Inc., a Nevada corporation, and registered agent of Avante Conquest, LLC, a Nevada limited liability company. Lloyd and Candis Gardley were managing members of Excel Consulting, LLC, a Nevada limited liability company. Candis Gardley was president and resident agent of Oakhill Management, Inc., a Nevada corporation. McAllister was an assistant escrow officer and notary at Lawyers Title. Mitchell worked as a loan officer for Valley Mortgage Group. Wagner was a realtor for Coldwell Banker Wardley.
The Indictment alleges that from about 2005 to April 2007, the defendants devised a mortgage fraud scheme which involved the use of straw buyers and the submission of false information to financial institutions in order to obtain mortgage loans. The defendants solicited persons to act as straw buyers to purchase real estate, and in some instances, the defendants had the straw buyers purchase multiple houses at or about the same time. The defendants caused to be submitted to the financial institutions mortgage loan applications containing fraudulent information about the straw buyers’ employment, income, assets, liabilities, rental history, value of the property, intent to occupy the homes, social security number, and source of earnest money deposits and costs. The Indictment lists 28 real property sales transactions involving 21 homes sold in Las Vegas between August 25, 2005, and April 18, 2007. Seven of the homes were “flipped” or sold twice within short periods of time. The majority of the homes sold for more than $700,000, and the total value of the mortgages for the 28 transactions was $18.9 million.
If convicted, the defendants face up to 30 years in prison and a $1,000,000 fine on each count, and may be required to forfeit up to approximately $4.2 million.
This investigation is being led by the U.S. Postal Inspection Service and other agencies of the Southern Nevada Mortgage Fraud Task Force, including the FBI, Office of the Inspector General for the Department of Housing and Urban Development, the U.S. Secret Service, the Las Vegas Metropolitan Police Department, and Office of the Inspector General for the Social Security Administration. The case is being prosecuted by Assistant United States Attorney Brian Pugh.
Persons who have information concerning potential mortgage fraud may contact the Southern Nevada Mortgage Fraud Hotline at (702) 584-5555.
This law enforcement action is sponsored by President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement 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.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Lloyd H. Gardley, 56, and Candis Gardley, 53, of Chandler, Arizona; Suzanne McAllister, 32, of Las Vegas; Arcell Mitchell, Jr., 31, of Ft. Riley, Kansas; and Sharon Wagner, 61, of Sun City West, Arizona, are charged with conspiracy to commit bank fraud, mail fraud, and wire fraud, six counts of bank fraud, and criminal forfeiture.
Arrest warrants have been issued for the Gardleys and Mitchell. Defendants McAllister and Wagner were summoned, and are scheduled for an initial appearance before a United States Magistrate Judge in Las Vegas on Friday, June 4, 2010, at 8:30 a.m.
Lloyd Gardley was president, director, secretary and resident agent of Prolific Management, Inc., a Nevada corporation, and registered agent of Avante Conquest, LLC, a Nevada limited liability company. Lloyd and Candis Gardley were managing members of Excel Consulting, LLC, a Nevada limited liability company. Candis Gardley was president and resident agent of Oakhill Management, Inc., a Nevada corporation. McAllister was an assistant escrow officer and notary at Lawyers Title. Mitchell worked as a loan officer for Valley Mortgage Group. Wagner was a realtor for Coldwell Banker Wardley.
The Indictment alleges that from about 2005 to April 2007, the defendants devised a mortgage fraud scheme which involved the use of straw buyers and the submission of false information to financial institutions in order to obtain mortgage loans. The defendants solicited persons to act as straw buyers to purchase real estate, and in some instances, the defendants had the straw buyers purchase multiple houses at or about the same time. The defendants caused to be submitted to the financial institutions mortgage loan applications containing fraudulent information about the straw buyers’ employment, income, assets, liabilities, rental history, value of the property, intent to occupy the homes, social security number, and source of earnest money deposits and costs. The Indictment lists 28 real property sales transactions involving 21 homes sold in Las Vegas between August 25, 2005, and April 18, 2007. Seven of the homes were “flipped” or sold twice within short periods of time. The majority of the homes sold for more than $700,000, and the total value of the mortgages for the 28 transactions was $18.9 million.
If convicted, the defendants face up to 30 years in prison and a $1,000,000 fine on each count, and may be required to forfeit up to approximately $4.2 million.
This investigation is being led by the U.S. Postal Inspection Service and other agencies of the Southern Nevada Mortgage Fraud Task Force, including the FBI, Office of the Inspector General for the Department of Housing and Urban Development, the U.S. Secret Service, the Las Vegas Metropolitan Police Department, and Office of the Inspector General for the Social Security Administration. The case is being prosecuted by Assistant United States Attorney Brian Pugh.
Persons who have information concerning potential mortgage fraud may contact the Southern Nevada Mortgage Fraud Hotline at (702) 584-5555.
This law enforcement action is sponsored by President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement 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.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Youngstown Resident Charged with Distributing Crack Cocaine
Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced that a federal grand jury sitting in Cleveland, Ohio, returned a two count indictment charging Daquann R. Hackett, age 19, of Youngstown, Ohio, with federal narcotics violations.
Counts 1 and 2 of the indictment charge Hackett with 2 separate and distinct acts in which Hackett distributed greater than 5 grams of cocaine base (crack cocaine) in Youngstown, Ohio.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offenses and the unique characteristics of the violations. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The case is being prosecuted by Assistant U.S. Attorneys Robert F. Corts and Daniel J. Riedl. The investigation was conducted by agents of the Youngstown Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) along with the Youngstown Federal Bureau of Investigation (FBI) and the City of Youngstown Police Department.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
Counts 1 and 2 of the indictment charge Hackett with 2 separate and distinct acts in which Hackett distributed greater than 5 grams of cocaine base (crack cocaine) in Youngstown, Ohio.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offenses and the unique characteristics of the violations. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The case is being prosecuted by Assistant U.S. Attorneys Robert F. Corts and Daniel J. Riedl. The investigation was conducted by agents of the Youngstown Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) along with the Youngstown Federal Bureau of Investigation (FBI) and the City of Youngstown Police Department.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
Federal Court Bars Kansas Man from Preparing Federal Tax Returns
May 28, 2010 - WASHINGTON – A federal judge in Kansas City, Kan., has permanently barred a Garden City, Kan. tax preparer, Jose Lares, from preparing federal tax returns, the Justice Department announced today. The permanent injunction, to which Lares consented, was entered by Kathryn H. Vratil, Chief Judge of the U.S. District Court for the District of Kansas. It makes permanent a ban imposed by a preliminary injunction entered last March.
The government complaint in the case alleged that Lares claims false dependent exemptions and false filing statuses for his customers, many of whom are recent Mexican immigrants with limited English-language skills and little or no knowledge of the complexities of the Internal Revenue Code or of the deductions and credits falsely claimed by Lares on their returns. The complaint also alleged that Internal Revenue Service (IRS) audits of customers of Lares’s former company, Income Tax Dinero Rapido, resulted in customers owing over $2 million. The complaint further states that IRS audits of customers of Lares’s current business, Dinero Rapido Tax Services, has revealed an average tax loss of over $6,000 per return.
The court also ordered Lares to send a copy of the court order to his customers and to provide a complete customer list to the Department of Justice.
The government complaint in the case alleged that Lares claims false dependent exemptions and false filing statuses for his customers, many of whom are recent Mexican immigrants with limited English-language skills and little or no knowledge of the complexities of the Internal Revenue Code or of the deductions and credits falsely claimed by Lares on their returns. The complaint also alleged that Internal Revenue Service (IRS) audits of customers of Lares’s former company, Income Tax Dinero Rapido, resulted in customers owing over $2 million. The complaint further states that IRS audits of customers of Lares’s current business, Dinero Rapido Tax Services, has revealed an average tax loss of over $6,000 per return.
The court also ordered Lares to send a copy of the court order to his customers and to provide a complete customer list to the Department of Justice.
Former Midland Businessman Pleads Guilty to Defrauding U.S. Bankruptcy Court
May 28, 2010 - United States Attorney John E. Murphy announced that in Midland this morning, 49-year-old David Alberto Montealegre, owner of Computron USA , Inc., pleaded guilty to defrauding the U.S. Bankruptcy Court. As a result, Montealegre faces up to five years in federal prison and a maximum $250,000 fine.
On December 8, 2004, Montealegre filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Western District of Texas listing $128,275 in assets, approximately 80 creditors and $905,051.93 in liabilities. In March 2005, Montealegre received a final discharge of more than $1.2 million in liabilities.
Appearing before United States Magistrate Judge David Counts, Montealegre admitted that in his bankruptcy petition, he failed to disclose a $84,531.25 insurance payment for a damage claim to his property, the sale of a tour bus for $58,863.88, as well as the fact that he owned a home in Guadalajara, Mexico. He also admitted to failing to identify approximately a dozen bank accounts which he used to conceal assets from the U.S. Bankruptcy Trustee and creditors.
This case was investigated by the Federal Bureau of Investigation and the United States Bankruptcy Trustee. Assistant United States Attorney Austin Berry is prosecuting this case on behalf of the Government
On December 8, 2004, Montealegre filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Western District of Texas listing $128,275 in assets, approximately 80 creditors and $905,051.93 in liabilities. In March 2005, Montealegre received a final discharge of more than $1.2 million in liabilities.
Appearing before United States Magistrate Judge David Counts, Montealegre admitted that in his bankruptcy petition, he failed to disclose a $84,531.25 insurance payment for a damage claim to his property, the sale of a tour bus for $58,863.88, as well as the fact that he owned a home in Guadalajara, Mexico. He also admitted to failing to identify approximately a dozen bank accounts which he used to conceal assets from the U.S. Bankruptcy Trustee and creditors.
This case was investigated by the Federal Bureau of Investigation and the United States Bankruptcy Trustee. Assistant United States Attorney Austin Berry is prosecuting this case on behalf of the Government
Thursday, May 27, 2010
The Global Fight Against Child Exploitation
May 27th, 2010 Posted by Tracy Russo
Key partners in the global battle against child exploitation gathered today at a meeting hosted by the Department of Justice. Representatives from the United Kingdom, Australia met with officials from the Departments of Justice and Homeland Security, as well as representatives from the National Center for Missing and Exploited Children. An official from Canada participated in the meeting by phone.
Child exploitation is an international problem that requires global collaboration and cooperation. The U.S. is a member of the Virtual Global Task Force (VGT), which is made up of law enforcement agencies from around the world who work together to fight child abuse online. The aim of the VGT is to build an effective, international partnership of law enforcement agencies to help to protect children from online child abuse. The U.S. representative on the VGT is the Department of Homeland Security.
Child pornography is a serious problem – one of the most serious facing the world’s law enforcement today – and growing threat. The Internet has made it easier than ever to traffic child pornography between nations and across borders. Images depicting the sexual assault of American children can now be found on computers not only at home but abroad; the same is true for foreign children.
The Department of Justice is strongly committed to working with its international allies to solve this problem – to prevent the abuse of children and stop the spread of these kinds of vile images. As part of our new National Strategy for Child Exploitation Prevention and Interdiction, the Department will be renewing its commitment to cooperation with its international allies in hopes of finding new, innovative and technology-based – solutions to this scourge.
The meeting was attended by Neil Gaughan, Assistant Commissioner of the Australian Federal Police and Chair of the Virtual Global Task Force; Jim Gamble, Chief Executive of the UK’s Child Exploitation and Online Protection Centre, Sunny Parmar, Canadian Police Centre for Missing and Exploited Children; Erik Barnett, Senior Counselor to the Assistant Secretary, Immigration and Customs Enforcement; Francey Hakes, Office of the Deputy Attorney General; Peter Trahon, FBI; and Ernie Allen, President and CEO of the National Center for Missing and Exploited Children.
Key partners in the global battle against child exploitation gathered today at a meeting hosted by the Department of Justice. Representatives from the United Kingdom, Australia met with officials from the Departments of Justice and Homeland Security, as well as representatives from the National Center for Missing and Exploited Children. An official from Canada participated in the meeting by phone.
Child exploitation is an international problem that requires global collaboration and cooperation. The U.S. is a member of the Virtual Global Task Force (VGT), which is made up of law enforcement agencies from around the world who work together to fight child abuse online. The aim of the VGT is to build an effective, international partnership of law enforcement agencies to help to protect children from online child abuse. The U.S. representative on the VGT is the Department of Homeland Security.
Child pornography is a serious problem – one of the most serious facing the world’s law enforcement today – and growing threat. The Internet has made it easier than ever to traffic child pornography between nations and across borders. Images depicting the sexual assault of American children can now be found on computers not only at home but abroad; the same is true for foreign children.
The Department of Justice is strongly committed to working with its international allies to solve this problem – to prevent the abuse of children and stop the spread of these kinds of vile images. As part of our new National Strategy for Child Exploitation Prevention and Interdiction, the Department will be renewing its commitment to cooperation with its international allies in hopes of finding new, innovative and technology-based – solutions to this scourge.
The meeting was attended by Neil Gaughan, Assistant Commissioner of the Australian Federal Police and Chair of the Virtual Global Task Force; Jim Gamble, Chief Executive of the UK’s Child Exploitation and Online Protection Centre, Sunny Parmar, Canadian Police Centre for Missing and Exploited Children; Erik Barnett, Senior Counselor to the Assistant Secretary, Immigration and Customs Enforcement; Francey Hakes, Office of the Deputy Attorney General; Peter Trahon, FBI; and Ernie Allen, President and CEO of the National Center for Missing and Exploited Children.
Manhattan U.S. Attorney Charges Assistant to Top Disney Executive and Accomplice with Insider Trading Scheme
May 27, 2010 - PREET BHARARA, the United States Attorney for the Southern District of New York, and GEORGE VENIZELOS, the Acting Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation ("FBI"), announced today the arrest of BONNIE J. HOXIE, an assistant to a top executive at Walt Disney Company ("Disney"), and YONNI SEBBAG, a/k/a "Jonathan Cyrus," a friend of HOXIE, on charges of conspiracy and wire fraud. The charges against both HOXIE and SEBBAG stem from their participation in an insider trading scheme in which HOXIE, in her capacity as a Disney employee, obtained confidential inside information, including about Disney's quarterly earnings, and passed that information to SEBBAG, who in turn attempted to sell the information to buyers seeking to trade on inside information.
According to the two-count Complaint filed in Manhattan federal court:
From March 2010 through May 25, 2010, HOXIE was employed as a secretary to Disney's Head of Corporate Communications. In this capacity, HOXIE obtained material, nonpublic information, including Disney's quarterly earnings statements (the "Inside Information"). Then, in violation of her duties of trust and confidence, HOXIE disclosed the Inside Information to SEBBAG, who in turn disclosed the Inside Information to outside investors for the purpose of trading in advance of the official public announcement of Disney's earnings.
As part of the scheme, SEBBAG and HOXIE caused to be sent anonymous letters to multiple hedge funds and other investment companies, many of which were located in Manhattan, offering to sell the Inside Information for purposes of illegal insider trading. Various agents of the FBI, who were working in undercover capacities, posed as hedge fund traders (the "Tippees") and offered to buy the Inside Information from SEBBAG and HOXIE for purposes of trading in advance of the public announcement of the Inside Information.
On May 8, 2010, three days in advance of the May 11, 2010, public announcement of Disney's earnings for the second quarter of 2010, SEBBAG and HOXIE caused to be sent to the Tippees a confidential document titled "The Walt Disney Company Q2 Fiscal 2010 Key Topics Speaking Points," which contained a collection of talking points that Disney executives referred to while answering analysts' questions during the May 11, 2010, earnings call.
In addition, on May 11, 2010, roughly two hours in advance of the public announcement, the defendants notified the Tippees that Disney's earnings per share would be 48 cents—which was better than what stock analysts had predicted. On May 14, 2010, SEBBAG met with two undercover FBI agents in New York and accepted payment of $15,000 cash for having released the Inside Information. SEBBAG further agreed that he would provide similar confidential information in the future in return for a thirty percent share of any profits from the insider-trading scheme.
HOXIE, 33, and SEBBAG, 29, both of Los Angeles, California, were arrested this morning in Los Angeles and are expected to be presented this afternoon before a United States Magistrate Judge in Los Angeles federal court.
HOXIE and SEBBAG are each charged with one count of wire fraud and one count of conspiracy to commit securities fraud and wire fraud. They each face a maximum sentence of 20 years in prison on the wire fraud charge and five years in prison on the conspiracy charge. On both counts, HOXIE and SEBBAG also face a fine of the greater of $250,000, or twice the gross gain or gross loss from the offense.
U.S. Attorney PREET BHARARA stated: "Today's arrests of Disney insider Bonnie Hoxie and her alleged accomplice Yonni Sebbag suggest that the integrity of the securities exchanges can be compromised not only by top executives, but also by anyone entrusted with material, non-public information. This Office, along with the FBI and the Securities and Exchange Commission, is committed to identifying and prosecuting all individuals—on whatever rung of the corporate ladder—whose greed motivates them to betray their employer's trust and corrupt the market."
GEORGE VENIZELOS, the Acting Assistant Director-in-Charge of the New York FBI stated: "This investigation should serve as a warning, if you're contemplating acquiring and profiteering from insider information, sometimes the person you're trying to sell it to is really an undercover FBI agent. What the case also shows is that the FBI's vigilance is needed to police the small percentage of bad apples who can cause so much damage. The majority behave like the dozens of hedge funds and investment companies that received Hoxie and Sebbag's offers of insider Disney information: none took the bait, and almost all notified the FBI. The FBI continues its commitment to vigorous enforcement in securities trading and the handling of material non-public information."
Mr. BHARARA praised the work of the FBI and thanked the United States Securities and Exchange Commission for its assistance in the investigation. Mr. BHARARA added that the investigation is continuing.
This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement 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.
Assistant United States Attorneys ALEXANDER J. WILLSCHER and JULIAN J. MOORE are in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.
According to the two-count Complaint filed in Manhattan federal court:
From March 2010 through May 25, 2010, HOXIE was employed as a secretary to Disney's Head of Corporate Communications. In this capacity, HOXIE obtained material, nonpublic information, including Disney's quarterly earnings statements (the "Inside Information"). Then, in violation of her duties of trust and confidence, HOXIE disclosed the Inside Information to SEBBAG, who in turn disclosed the Inside Information to outside investors for the purpose of trading in advance of the official public announcement of Disney's earnings.
As part of the scheme, SEBBAG and HOXIE caused to be sent anonymous letters to multiple hedge funds and other investment companies, many of which were located in Manhattan, offering to sell the Inside Information for purposes of illegal insider trading. Various agents of the FBI, who were working in undercover capacities, posed as hedge fund traders (the "Tippees") and offered to buy the Inside Information from SEBBAG and HOXIE for purposes of trading in advance of the public announcement of the Inside Information.
On May 8, 2010, three days in advance of the May 11, 2010, public announcement of Disney's earnings for the second quarter of 2010, SEBBAG and HOXIE caused to be sent to the Tippees a confidential document titled "The Walt Disney Company Q2 Fiscal 2010 Key Topics Speaking Points," which contained a collection of talking points that Disney executives referred to while answering analysts' questions during the May 11, 2010, earnings call.
In addition, on May 11, 2010, roughly two hours in advance of the public announcement, the defendants notified the Tippees that Disney's earnings per share would be 48 cents—which was better than what stock analysts had predicted. On May 14, 2010, SEBBAG met with two undercover FBI agents in New York and accepted payment of $15,000 cash for having released the Inside Information. SEBBAG further agreed that he would provide similar confidential information in the future in return for a thirty percent share of any profits from the insider-trading scheme.
HOXIE, 33, and SEBBAG, 29, both of Los Angeles, California, were arrested this morning in Los Angeles and are expected to be presented this afternoon before a United States Magistrate Judge in Los Angeles federal court.
HOXIE and SEBBAG are each charged with one count of wire fraud and one count of conspiracy to commit securities fraud and wire fraud. They each face a maximum sentence of 20 years in prison on the wire fraud charge and five years in prison on the conspiracy charge. On both counts, HOXIE and SEBBAG also face a fine of the greater of $250,000, or twice the gross gain or gross loss from the offense.
U.S. Attorney PREET BHARARA stated: "Today's arrests of Disney insider Bonnie Hoxie and her alleged accomplice Yonni Sebbag suggest that the integrity of the securities exchanges can be compromised not only by top executives, but also by anyone entrusted with material, non-public information. This Office, along with the FBI and the Securities and Exchange Commission, is committed to identifying and prosecuting all individuals—on whatever rung of the corporate ladder—whose greed motivates them to betray their employer's trust and corrupt the market."
GEORGE VENIZELOS, the Acting Assistant Director-in-Charge of the New York FBI stated: "This investigation should serve as a warning, if you're contemplating acquiring and profiteering from insider information, sometimes the person you're trying to sell it to is really an undercover FBI agent. What the case also shows is that the FBI's vigilance is needed to police the small percentage of bad apples who can cause so much damage. The majority behave like the dozens of hedge funds and investment companies that received Hoxie and Sebbag's offers of insider Disney information: none took the bait, and almost all notified the FBI. The FBI continues its commitment to vigorous enforcement in securities trading and the handling of material non-public information."
Mr. BHARARA praised the work of the FBI and thanked the United States Securities and Exchange Commission for its assistance in the investigation. Mr. BHARARA added that the investigation is continuing.
This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement 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.
Assistant United States Attorneys ALEXANDER J. WILLSCHER and JULIAN J. MOORE are in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.
FBI and San Diego Police Identify Man Arrested Following Robbery of Bank of America
The FBI and San Diego Police Department have identified Bill Smith, age 46, as the man arrested by San Diego Police Officers on Tuesday, May 25, 2010, following the robbery of the Bank of America, 450 B Street, San Diego, California. Smith was arrested in the vicinity of the 2600 block of Congress, shortly after the 11:24 a.m. robbery of the Bank of America.
Smith is currently being held at the San Diego County Jail pending his court appearance. Smith has no known address at this time. This is case is being prosecuted by the San Diego District Attorney’s Office.
Smith is currently being held at the San Diego County Jail pending his court appearance. Smith has no known address at this time. This is case is being prosecuted by the San Diego District Attorney’s Office.
Former Village Clerk Sentenced for Embezzlement
MADISON, WI—Stephen P. Sinnott, United States Attorney for the Western District of Wisconsin, announced that Shea Ann Howard, 35, North Freedom, Wisconsin, was sentenced today in United States District Court in Madison to one year of probation. She pleaded guilty on March 19 to embezzling approximately $9,250 from the Village of Rock Springs, Wisconsin, while she was the Village Clerk.
The government's proof at the guilty plea hearing established that Howard was employed as the Village Clerk for the Village of Rock Springs. As Clerk, she was responsible for printing and sending out water bills, issuing building permits, paying general bills, and taking minutes of village council meetings. From approximately August 2008 to February 2009, Howard wrote unauthorized checks to herself on the Village bank account. Each check was for approximately $750. After cashing the checks, she voided the checks from the villages' system so they would not show in the account statement report run for the village board of trustees.
Unites States Attorney Sinnott stated that today's sentencing was the result of an investigation conducted by the Madison Office of the Federal Bureau of Investigation. The prosecution of the case has been handled by Assistant U.S. Attorney John W. Vaudreuil.
The government's proof at the guilty plea hearing established that Howard was employed as the Village Clerk for the Village of Rock Springs. As Clerk, she was responsible for printing and sending out water bills, issuing building permits, paying general bills, and taking minutes of village council meetings. From approximately August 2008 to February 2009, Howard wrote unauthorized checks to herself on the Village bank account. Each check was for approximately $750. After cashing the checks, she voided the checks from the villages' system so they would not show in the account statement report run for the village board of trustees.
Unites States Attorney Sinnott stated that today's sentencing was the result of an investigation conducted by the Madison Office of the Federal Bureau of Investigation. The prosecution of the case has been handled by Assistant U.S. Attorney John W. Vaudreuil.
Member of Perfume Warehouse Armed Robbery Scheme Involving NYPD Officers Pleads Guilty to Conspiracy
NEWARK, NJ—Luis Morales, 32, of Brooklyn, New York, pleaded guilty today to conspiring to commit the armed robbery of a Carlstadt perfume warehouse, in which he, together with three active NYPD officers, one former NYPD officer, and others stole approximately $600,000 in perfume while holding 11 employees hostage, United States Attorney Paul J. Fishman announced.
Morales pleaded guilty before United States District Judge William H. Walls to an Information charging him with the robbery conspiracy.
On March 5, 2010, Morales was arrested and charged by Complaint along with NYPD Officers Brian Checo and Richard LeBlanca, both of New York, New York; former NYPD Officer Orlando Garcia of New York, New York; Alan Bannout of Brooklyn, New York; Gabriel Vargas of Brooklyn, New York; and Anselmo Jimenes, a/k/a “Ansemo Jimenes,” of Brooklyn, New York. According to the Complaint, the defendants conspired to obstruct commerce by robbing hundreds of boxes of perfumes and fragrances from a warehouse used by In-Style USA, Inc. in Carlstadt, New Jersey.
NYPD Officer Kelvin L. Jones, of New York, New York, also was charged on March 5, 2010, in a separate Complaint, as part of a continuing investigation by federal authorities into the heist.
According to documents filed in this case and statements made in court:
Morales admitted that, in early February 2010, he conspired with NYPD officers and others to rob the In-Style USA warehouse. Morales stated that he was recruited by one of the other conspirators the day before the robbery took place to participate in the robbery in exchange for a payment of $2,500. Morales further admitted that, during the course of the robbery, the NYPD officers entered the warehouse office and restrained 11 employees as other conspirators loaded hundreds of boxes of perfume onto trucks that were used to transport the stolen perfume.
Morales is the sixth member of this conspiracy to plead guilty. As for the other defendants, the charges against them are merely accusations and they are considered innocent unless and until proven guilty.
At sentencing, Morales faces a maximum potential penalty of 20 years in prison and a maximum fine of $250,000 for this offense. Morales’ sentencing is scheduled for August 30, 2010.
In determining an actual sentence, Judge Walls will consult the advisory United States Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant’s criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining the sentence. Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all that time.
Fishman credited Special Agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Michael B. Ward in Newark, New Jersey, for conducting the investigation. Fishman also thanked the Bergen County Prosecutor’s Office, under the direction of John L. Molinelli, as well as the Carlstadt Police Department and the NYPD Internal Affairs Bureau, for their assistance.
This case is being prosecuted by Assistant U.S. Attorneys Eric T. Kanefsky and Christopher J. Gramiccioni of the U.S. Attorney’s Office Special Prosecutions Division.
Morales pleaded guilty before United States District Judge William H. Walls to an Information charging him with the robbery conspiracy.
On March 5, 2010, Morales was arrested and charged by Complaint along with NYPD Officers Brian Checo and Richard LeBlanca, both of New York, New York; former NYPD Officer Orlando Garcia of New York, New York; Alan Bannout of Brooklyn, New York; Gabriel Vargas of Brooklyn, New York; and Anselmo Jimenes, a/k/a “Ansemo Jimenes,” of Brooklyn, New York. According to the Complaint, the defendants conspired to obstruct commerce by robbing hundreds of boxes of perfumes and fragrances from a warehouse used by In-Style USA, Inc. in Carlstadt, New Jersey.
NYPD Officer Kelvin L. Jones, of New York, New York, also was charged on March 5, 2010, in a separate Complaint, as part of a continuing investigation by federal authorities into the heist.
According to documents filed in this case and statements made in court:
Morales admitted that, in early February 2010, he conspired with NYPD officers and others to rob the In-Style USA warehouse. Morales stated that he was recruited by one of the other conspirators the day before the robbery took place to participate in the robbery in exchange for a payment of $2,500. Morales further admitted that, during the course of the robbery, the NYPD officers entered the warehouse office and restrained 11 employees as other conspirators loaded hundreds of boxes of perfume onto trucks that were used to transport the stolen perfume.
Morales is the sixth member of this conspiracy to plead guilty. As for the other defendants, the charges against them are merely accusations and they are considered innocent unless and until proven guilty.
At sentencing, Morales faces a maximum potential penalty of 20 years in prison and a maximum fine of $250,000 for this offense. Morales’ sentencing is scheduled for August 30, 2010.
In determining an actual sentence, Judge Walls will consult the advisory United States Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant’s criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining the sentence. Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all that time.
Fishman credited Special Agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Michael B. Ward in Newark, New Jersey, for conducting the investigation. Fishman also thanked the Bergen County Prosecutor’s Office, under the direction of John L. Molinelli, as well as the Carlstadt Police Department and the NYPD Internal Affairs Bureau, for their assistance.
This case is being prosecuted by Assistant U.S. Attorneys Eric T. Kanefsky and Christopher J. Gramiccioni of the U.S. Attorney’s Office Special Prosecutions Division.
U.S. Marshals Task Force Finds Fugitive with Loaded Firearm in Baby Stroller
Mansfield, OH – Earlier today, members of the U.S. Marshals Northern Ohio Violent Fugitive Task Force arrested Mychael J. Martin, age 19, at a residence on the 700 block of Burns Street in Mansfield, after a lengthy investigation. Martin was wanted by the Mansfield Police Department for pandering obscenity involving a minor, a second degree felony, as well as failing to appear in the Richland County Common Pleas Court for a drug trafficking trial. The fugitive case was referred to the Northern Ohio Violent Fugitive Task Force and the team went on the hunt. After a month of developing probable locations for Martin, Task Force investigators got the tip needed that placed Martin at the residence. In the process of taking Martin into custody, officers found a loaded handgun in a baby stroller within Martin’s reach. Martin’s one year old child was present in the same room as the firearm. The Mansfield Police Department is looking into additional charges concerning the firearm.
U.S. Marshal Pete Elliott stated, “This is an excellent example of teamwork and cooperation between agencies paying dividends. We were able to help Mansfield Police close their investigation, bring him before the courts on his other charges, and take another firearm off of the street.”
Detective Jeff Shook of the Mansfield Police Department said, “We are pleased that this violent offender was taken into custody safely. This case had the recipe for danger but through teamwork, that wasn’t allowed to happen.”
Anyone with information regarding the whereabouts of a known fugitive is encouraged to contact the U.S. Marshals Northern Ohio Violent Fugitive Task Force at: 1-866-4-WANTED. Callers may remain anonymous.
The Northern Ohio Violent Fugitive Task Force - Richland County Division is composed of the following federal, state and local agencies: Ashland County Sheriff’s Office, Bellville Police Department, Bureau of Alcohol, Tobacco & Firearms, Galion Police Department, Lexington Police Department, Mansfield Municipal Probation, Mansfield Police Department, Ohio Adult Parole Authority, Ontario Police Department, Plymouth Police Department, Richland County Probation, Richland County Prosecutor’s Office, Richland County Sheriff’s Office, Shelby Police Department and the U.S. Marshals Service.
U.S. Marshal Pete Elliott stated, “This is an excellent example of teamwork and cooperation between agencies paying dividends. We were able to help Mansfield Police close their investigation, bring him before the courts on his other charges, and take another firearm off of the street.”
Detective Jeff Shook of the Mansfield Police Department said, “We are pleased that this violent offender was taken into custody safely. This case had the recipe for danger but through teamwork, that wasn’t allowed to happen.”
Anyone with information regarding the whereabouts of a known fugitive is encouraged to contact the U.S. Marshals Northern Ohio Violent Fugitive Task Force at: 1-866-4-WANTED. Callers may remain anonymous.
The Northern Ohio Violent Fugitive Task Force - Richland County Division is composed of the following federal, state and local agencies: Ashland County Sheriff’s Office, Bellville Police Department, Bureau of Alcohol, Tobacco & Firearms, Galion Police Department, Lexington Police Department, Mansfield Municipal Probation, Mansfield Police Department, Ohio Adult Parole Authority, Ontario Police Department, Plymouth Police Department, Richland County Probation, Richland County Prosecutor’s Office, Richland County Sheriff’s Office, Shelby Police Department and the U.S. Marshals Service.
Agriprocessors’ Accountant Sentenced for Conspiring to Make False Statements to Bank
May 27, 2010 - Agriprocessors, Inc.’s former head accountant was sentenced today to more than three years in federal prison for conspiring to make false statements to a bank.
Mitch Meltzer, age 50, from Postville, Iowa, received the prison term after a September 28, 2009, guilty plea to one count of conspiring to make false statements and reports to a bank.
At the guilty plea hearing, Meltzer admitted he conspired with others between at least September 2007 and about October 2008 to make false statements to a bank in connection with requests for advances on a loan. He admitted he signed a Collateral Certificate on February 1, 2008, that overstated the value of Agriprocessors’ collateral as part of his employer’s request for an advance on a revolving loan.
According to information disclosed in court, Meltzer was the head accountant at Agriprocessors, Inc. in Postville. Meltzer participated in a scheme with Agriprocessors’ vice-president Sholom Rubashkin and Agriprocessors’ chief financial officer Yomtov (Toby) Bensasson to fraudulently inflate the amount of accounts receivable collateral on Agriprocessors' books. Rubashkin used the inflated collateral numbers to fraudulently borrow more money from the bank than otherwise would have been allowed. At Rubashkin’s direction, Meltzer and Bensasson also manipulated monthly financial statements sent to the bank.
Meltzer was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Meltzer was sentenced to 41 months’ imprisonment. A special assessment of $100 was imposed, and he was ordered to make $26,919,419 in restitution to banks that were victimized by the fraud. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Meltzer is the ninth Agriprocessors’ management or office employee to be sentenced on a federal conviction. Sholom Rubashkin is scheduled to be sentenced on June 22, 2010, at 3:30 p.m. in Cedar Rapids. Rubashkin was convicted by a jury on November 12, 2009, of 86 counts of financial fraud and related offenses.
The United States Attorney's Office works to ensure victims are made whole as quickly as possible and is seeking the public's assistance in locating or identifying Meltzer's assets. If anyone has information regarding Meltzer's assets with a significant value, they are urged to call 319-731-4080.
Meltzer was released on the bond previously set and is to surrender to the Bureau of Prisons on a date yet to be set.
The case was prosecuted by Assistant United States Attorneys Peter E. Deegan, Jr., C.J. Williams, and Matthew Cole and was investigated by U.S. Immigration and Customs Enforcement and the Federal Bureau of Investigation.
Mitch Meltzer, age 50, from Postville, Iowa, received the prison term after a September 28, 2009, guilty plea to one count of conspiring to make false statements and reports to a bank.
At the guilty plea hearing, Meltzer admitted he conspired with others between at least September 2007 and about October 2008 to make false statements to a bank in connection with requests for advances on a loan. He admitted he signed a Collateral Certificate on February 1, 2008, that overstated the value of Agriprocessors’ collateral as part of his employer’s request for an advance on a revolving loan.
According to information disclosed in court, Meltzer was the head accountant at Agriprocessors, Inc. in Postville. Meltzer participated in a scheme with Agriprocessors’ vice-president Sholom Rubashkin and Agriprocessors’ chief financial officer Yomtov (Toby) Bensasson to fraudulently inflate the amount of accounts receivable collateral on Agriprocessors' books. Rubashkin used the inflated collateral numbers to fraudulently borrow more money from the bank than otherwise would have been allowed. At Rubashkin’s direction, Meltzer and Bensasson also manipulated monthly financial statements sent to the bank.
Meltzer was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Meltzer was sentenced to 41 months’ imprisonment. A special assessment of $100 was imposed, and he was ordered to make $26,919,419 in restitution to banks that were victimized by the fraud. He must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Meltzer is the ninth Agriprocessors’ management or office employee to be sentenced on a federal conviction. Sholom Rubashkin is scheduled to be sentenced on June 22, 2010, at 3:30 p.m. in Cedar Rapids. Rubashkin was convicted by a jury on November 12, 2009, of 86 counts of financial fraud and related offenses.
The United States Attorney's Office works to ensure victims are made whole as quickly as possible and is seeking the public's assistance in locating or identifying Meltzer's assets. If anyone has information regarding Meltzer's assets with a significant value, they are urged to call 319-731-4080.
Meltzer was released on the bond previously set and is to surrender to the Bureau of Prisons on a date yet to be set.
The case was prosecuted by Assistant United States Attorneys Peter E. Deegan, Jr., C.J. Williams, and Matthew Cole and was investigated by U.S. Immigration and Customs Enforcement and the Federal Bureau of Investigation.
Arnold, Missouri Man Pleads Guilty to Federal Child Pornography Charges
May 27, 2010 - ST. LOUIS, MO—The United States Attorney’s Office announced today that Craig Stelzner has entered a guilty plea to one count of receipt of child pornography and three counts of possession of child pornography for his receipt and possession of child pornography between October 2008 and January 2009.
CRAIG STELZNER, Arnold, Missouri, pleaded guilty to one felony count of receipt of child pornography and three counts of possession of child pornography. He appeared before United States District Judge Carol E. Jackson. Sentencing has been set for August 24, 2010.
Receipt of child pornography carries a penalty range of five to 20 years in prison and/or $250,000; each count of possession carries a maximum penalty of 10 years in prison and/or fines up to $250,000.
This case was investigated by the St. Louis County Police Department, the Jefferson County Sheriff’s Department, the Regional Computer Crime Education and Enforcement Group and the Federal Bureau of Investigation. Assistant United States Attorney Carrie Costantin is handling the case for the U.S. Attorney’s Office.
CRAIG STELZNER, Arnold, Missouri, pleaded guilty to one felony count of receipt of child pornography and three counts of possession of child pornography. He appeared before United States District Judge Carol E. Jackson. Sentencing has been set for August 24, 2010.
Receipt of child pornography carries a penalty range of five to 20 years in prison and/or $250,000; each count of possession carries a maximum penalty of 10 years in prison and/or fines up to $250,000.
This case was investigated by the St. Louis County Police Department, the Jefferson County Sheriff’s Department, the Regional Computer Crime Education and Enforcement Group and the Federal Bureau of Investigation. Assistant United States Attorney Carrie Costantin is handling the case for the U.S. Attorney’s Office.
Seventeenth Defendant Sentenced in $15 Million Medicare Fraud Scheme Targeting Elderly, Mentally Ill
SANTA ANA, CA—Concluding six years of litigation, the 17th and final defendant convicted in relation to a $15 million health care fraud scheme that targeted the mentally ill and elderly was sentenced earlier this week to 30 months in federal prison.
Xinming Fu, 48, an Irvine physician, was sentenced Monday afternoon after previously pleading guilty to conspiracy to pay kickbacks and health care fraud, admitting that he was part of a scheme that bilked Medicare out of $15 million for respiratory treatments that were unnecessary, not performed in accordance with Medicare rules, or not performed at all. Fu, who was one of six medical doctors convicted in the scheme, was also ordered to pay $390,000 in restitution by United States District Judge James V. Selna.
The 17 defendants were named in a criminal information and three indictments returned by federal grand juries as far back as 2004. Three of the cases involved a scheme in which the owner of a respiratory treatment program, Herman Thomas, recruited Medicare patients who were housed at board-and-care facilities throughout Southern California. As part of the scheme, which operated from 2000 through 2006, Thomas and doctors that he recruited paid illegal kickbacks to marketers, who in turn paid illegal kickbacks to the owners and administrators of the board-and-care facilities, who provided access to mentally ill and elderly residents. On a monthly basis, the doctors ordered respiratory treatments, which typically were unnecessary and were performed by respiratory therapists on a daily or almost daily basis without any physician supervision, in violation of Medicare rules requiring that a physician be on-site when respiratory treatments are performed. The respiratory treatments also violated Medicare rules because the treatments should have been performed at a doctor’s office or in a mobile medical unit, instead of at the board-and-care facilities, where treatments were often performed in the facilities’ smoking rooms. The mentally ill and elderly residents of the board-and-care facilities were enticed to undergo the respiratory treatments with soda, candy, donuts and even cigarettes. Sometimes residents were not present at the board-and-care facilities because they were off-site receiving treatment at local hospitals, but Medicare was billed for respiratory treatments anyway.
The fourth case in this investigation arose from a respiratory therapist/marketer who previously worked for Thomas and recruited a doctor to run a separate, but similar respiratory program.
The defendants previously sentenced as a result of this investigation were:
• Dr. Aziz Awad, 47, formerly of Anaheim and Pasadena, was sentenced to 15 years in prison and ordered to pay $2,625,722 in restitution (see: http://www.justice.gov/usao/cac/pressroom/pr2006/126.html);
• Herman Thomas, 51, of Bellflower, who was convicted at trial with Awad, was sentenced to 88 months imprisonment and ordered to pay $2,625,722 in restitution;
• Dr. Paul Arnold Lessler, 71, of West Hills, was sentenced to two years in custody and ordered to pay nearly $1.1 million in restitution after pleading guilty to conspiracy to commit health care fraud and health care fraud;
• Dr. Gershon Walter Hepner, 72, of Los Angeles, was sentenced to 30 months in custody and ordered to pay $422,400 in restitution after pleading guilty to conspiracy to commit health care fraud and pay kickbacks, and health care fraud;
• Dr. Aginah M. DeBerry, 57, of Rancho Cucamonga, was sentenced to one year in prison and ordered to pay $707,800 in restitution after pleading guilty to conspiracy to commit health care fraud and pay kickbacks;
• Glen Garcia Madrid, 46, of Yorba Linda, a marketer, was sentenced to one year in prison and ordered to pay $1,566,977 in restitution after pleading guilty to conspiracy to pay kickbacks and health care fraud;
• Levi Raitchik, 49, of Los Angeles, a marketer, was sentenced to eight months in custody and ordered to pay $395,100 in restitution after pleading guilty to conspiracy to pay kickbacks and health care fraud;
• Schmuel B. Fogelman, 49, of Los Angeles, a marketer, was sentenced to one year in custody and ordered to pay $693,000 in restitution after pleading guilty to conspiracy to pay kickbacks and health care fraud;
• Barbara Sue Thrash, 60, of Corona, a board-and-care administrator, was sentenced to 15 months in custody and ordered to pay $495,019.05 in restitution after pleading guilty to conspiracy to receive kickbacks and health care fraud;
• Teresita Cagudala Bolong, 62, of Rancho Palos Verdes, a board-and-care owner and administrator, was sentenced to six months in prison, ordered to pay a $17,000 fine, and ordered to pay $108,000 in restitution after pleading guilty to receiving kickbacks; Dr. David Todd Asher, 42, of Fullerton, was sentenced to probation and ordered to pay $6,850 in restitution after pleading guilty to conspiracy to pay kickbacks;
• Emilita Nunez Canenea, 50, of San Dimas, a board-and-care owner and administrator, was sentenced to probation, ordered to pay a $20,000 fine, and ordered to pay $18,000 in restitution after pleading guilty to receiving kickbacks;
• Shahnaz Chadorbaf-Arastoo, 54, of Irvine, a board-and-care owner and administrator, was sentenced to probation, ordered to pay a $5,000 fine, and ordered to pay $4,000 in restitution after pleading guilty to receiving kickbacks;
• Magdalena Gonzales, 57, of Denver, a board-and-care administrator, was sentenced to probation and ordered to pay $9,500 in restitution after pleading guilty to aiding and abetting a false claim
• Hamid Rafizadeh, 54, of Escondido, a board-and-care administrator, was sentenced to probation, ordered to pay a $5,000 fine, and ordered to pay $8,500 in restitution after pleading guilty to receiving kickbacks; and
• Alexander Tanciano Tagaro, 62, of Perris, a board-and-care administrator, was sentenced to probation and ordered to pay $7,500 in restitution after pleading guilty to receiving kickbacks.
These cases were the product of a joint investigation by the Federal Bureau of Investigation, the United States Postal Inspection Service, and IRS-Criminal Investigation.
Xinming Fu, 48, an Irvine physician, was sentenced Monday afternoon after previously pleading guilty to conspiracy to pay kickbacks and health care fraud, admitting that he was part of a scheme that bilked Medicare out of $15 million for respiratory treatments that were unnecessary, not performed in accordance with Medicare rules, or not performed at all. Fu, who was one of six medical doctors convicted in the scheme, was also ordered to pay $390,000 in restitution by United States District Judge James V. Selna.
The 17 defendants were named in a criminal information and three indictments returned by federal grand juries as far back as 2004. Three of the cases involved a scheme in which the owner of a respiratory treatment program, Herman Thomas, recruited Medicare patients who were housed at board-and-care facilities throughout Southern California. As part of the scheme, which operated from 2000 through 2006, Thomas and doctors that he recruited paid illegal kickbacks to marketers, who in turn paid illegal kickbacks to the owners and administrators of the board-and-care facilities, who provided access to mentally ill and elderly residents. On a monthly basis, the doctors ordered respiratory treatments, which typically were unnecessary and were performed by respiratory therapists on a daily or almost daily basis without any physician supervision, in violation of Medicare rules requiring that a physician be on-site when respiratory treatments are performed. The respiratory treatments also violated Medicare rules because the treatments should have been performed at a doctor’s office or in a mobile medical unit, instead of at the board-and-care facilities, where treatments were often performed in the facilities’ smoking rooms. The mentally ill and elderly residents of the board-and-care facilities were enticed to undergo the respiratory treatments with soda, candy, donuts and even cigarettes. Sometimes residents were not present at the board-and-care facilities because they were off-site receiving treatment at local hospitals, but Medicare was billed for respiratory treatments anyway.
The fourth case in this investigation arose from a respiratory therapist/marketer who previously worked for Thomas and recruited a doctor to run a separate, but similar respiratory program.
The defendants previously sentenced as a result of this investigation were:
• Dr. Aziz Awad, 47, formerly of Anaheim and Pasadena, was sentenced to 15 years in prison and ordered to pay $2,625,722 in restitution (see: http://www.justice.gov/usao/cac/pressroom/pr2006/126.html);
• Herman Thomas, 51, of Bellflower, who was convicted at trial with Awad, was sentenced to 88 months imprisonment and ordered to pay $2,625,722 in restitution;
• Dr. Paul Arnold Lessler, 71, of West Hills, was sentenced to two years in custody and ordered to pay nearly $1.1 million in restitution after pleading guilty to conspiracy to commit health care fraud and health care fraud;
• Dr. Gershon Walter Hepner, 72, of Los Angeles, was sentenced to 30 months in custody and ordered to pay $422,400 in restitution after pleading guilty to conspiracy to commit health care fraud and pay kickbacks, and health care fraud;
• Dr. Aginah M. DeBerry, 57, of Rancho Cucamonga, was sentenced to one year in prison and ordered to pay $707,800 in restitution after pleading guilty to conspiracy to commit health care fraud and pay kickbacks;
• Glen Garcia Madrid, 46, of Yorba Linda, a marketer, was sentenced to one year in prison and ordered to pay $1,566,977 in restitution after pleading guilty to conspiracy to pay kickbacks and health care fraud;
• Levi Raitchik, 49, of Los Angeles, a marketer, was sentenced to eight months in custody and ordered to pay $395,100 in restitution after pleading guilty to conspiracy to pay kickbacks and health care fraud;
• Schmuel B. Fogelman, 49, of Los Angeles, a marketer, was sentenced to one year in custody and ordered to pay $693,000 in restitution after pleading guilty to conspiracy to pay kickbacks and health care fraud;
• Barbara Sue Thrash, 60, of Corona, a board-and-care administrator, was sentenced to 15 months in custody and ordered to pay $495,019.05 in restitution after pleading guilty to conspiracy to receive kickbacks and health care fraud;
• Teresita Cagudala Bolong, 62, of Rancho Palos Verdes, a board-and-care owner and administrator, was sentenced to six months in prison, ordered to pay a $17,000 fine, and ordered to pay $108,000 in restitution after pleading guilty to receiving kickbacks; Dr. David Todd Asher, 42, of Fullerton, was sentenced to probation and ordered to pay $6,850 in restitution after pleading guilty to conspiracy to pay kickbacks;
• Emilita Nunez Canenea, 50, of San Dimas, a board-and-care owner and administrator, was sentenced to probation, ordered to pay a $20,000 fine, and ordered to pay $18,000 in restitution after pleading guilty to receiving kickbacks;
• Shahnaz Chadorbaf-Arastoo, 54, of Irvine, a board-and-care owner and administrator, was sentenced to probation, ordered to pay a $5,000 fine, and ordered to pay $4,000 in restitution after pleading guilty to receiving kickbacks;
• Magdalena Gonzales, 57, of Denver, a board-and-care administrator, was sentenced to probation and ordered to pay $9,500 in restitution after pleading guilty to aiding and abetting a false claim
• Hamid Rafizadeh, 54, of Escondido, a board-and-care administrator, was sentenced to probation, ordered to pay a $5,000 fine, and ordered to pay $8,500 in restitution after pleading guilty to receiving kickbacks; and
• Alexander Tanciano Tagaro, 62, of Perris, a board-and-care administrator, was sentenced to probation and ordered to pay $7,500 in restitution after pleading guilty to receiving kickbacks.
These cases were the product of a joint investigation by the Federal Bureau of Investigation, the United States Postal Inspection Service, and IRS-Criminal Investigation.
Malik Hannabal Shabazz Pleads Guilty in U.S. Federal Court
The United States Attorney’s Office announced that during a federal court session in Great Falls on May 25, 2010, before U.S. District Judge Sam E. Haddon, MALIK HANNABAL SHABAZZ, a 19-year-old resident of Washington, D.C., pled guilty to false impersonation of an officer of the United States. Sentencing has been set for August 26, 2010. He is currently detained.
In an Offer of Proof filed by Assistant U.S. Attorney Bryan R. Whittaker, the government stated it would have proved at trial the following:
On March 5, 2010, in Cascade County, SHABAZZ approached a ticketing agent at the Great Falls International Airport in an attempt to board a United Airlines (UA) flight. SHABAZZ presented a boarding pass, which the UA employee scanned. She then informed SHABAZZ that one of his carry-on bags was too large and needed to be checked. SHABAZZ then stated that he could not check the bag because he had a firearm in the carry-on bag. In response to SHABAZZ’s claim, the UA employee asked him if he was a law enforcement officer. SHABAZZ replied that he was and that he worked for the FBI.
SHABAZZ was wearing a knit, short-sleeved, collared shirt with an FBI seal on the left breast. Underneath the seal, were the words “Washington Field Office, FBI Junior Academy”. When asked by a UA employee for his law enforcement credentials, SHABAZZ produced a “DC One Card” bearing a photograph of him in a military style uniform. SHABAZZ told the UA employee that if she scanned the card, it would confirm that he could carry a firearm onto the plane.
Later, when questioned by the FBI, SHABAZZ admitted that he told the UA ticketing agent that he had a gun in his carry-on bag. He further admitted that when questioned about being a law enforcement officer, he responded by claiming to work for the FBI. He also stated that he displayed a “DC One Card” when asked for credentials by the UA employee and told her that if scanned, the card would allow him to carry a firearm on the plane.
SHABAZZ admitted that he told TSA employees that he had checked a bag containing a gun and that he worked for the FBI in Intelligence but was prohibited from telling them what he did for the FBI.
During the interview with the FBI, SHABAZZ admitted that he did not work, nor did he ever work, for the FBI and that he made the decision to say there was a gun in his carry-on bag prior to arriving at the gate. He stated that his purpose for claiming he was in possession of a firearm, in the pretend character of an FBI employee, was to be able to observe the response of airport personnel.
SHABAZZ faces possible penalties of three years in prison, a $250,000 fine and at least one year supervised release.
The investigation was conducted by the Federal Bureau of Investigation.
In an Offer of Proof filed by Assistant U.S. Attorney Bryan R. Whittaker, the government stated it would have proved at trial the following:
On March 5, 2010, in Cascade County, SHABAZZ approached a ticketing agent at the Great Falls International Airport in an attempt to board a United Airlines (UA) flight. SHABAZZ presented a boarding pass, which the UA employee scanned. She then informed SHABAZZ that one of his carry-on bags was too large and needed to be checked. SHABAZZ then stated that he could not check the bag because he had a firearm in the carry-on bag. In response to SHABAZZ’s claim, the UA employee asked him if he was a law enforcement officer. SHABAZZ replied that he was and that he worked for the FBI.
SHABAZZ was wearing a knit, short-sleeved, collared shirt with an FBI seal on the left breast. Underneath the seal, were the words “Washington Field Office, FBI Junior Academy”. When asked by a UA employee for his law enforcement credentials, SHABAZZ produced a “DC One Card” bearing a photograph of him in a military style uniform. SHABAZZ told the UA employee that if she scanned the card, it would confirm that he could carry a firearm onto the plane.
Later, when questioned by the FBI, SHABAZZ admitted that he told the UA ticketing agent that he had a gun in his carry-on bag. He further admitted that when questioned about being a law enforcement officer, he responded by claiming to work for the FBI. He also stated that he displayed a “DC One Card” when asked for credentials by the UA employee and told her that if scanned, the card would allow him to carry a firearm on the plane.
SHABAZZ admitted that he told TSA employees that he had checked a bag containing a gun and that he worked for the FBI in Intelligence but was prohibited from telling them what he did for the FBI.
During the interview with the FBI, SHABAZZ admitted that he did not work, nor did he ever work, for the FBI and that he made the decision to say there was a gun in his carry-on bag prior to arriving at the gate. He stated that his purpose for claiming he was in possession of a firearm, in the pretend character of an FBI employee, was to be able to observe the response of airport personnel.
SHABAZZ faces possible penalties of three years in prison, a $250,000 fine and at least one year supervised release.
The investigation was conducted by the Federal Bureau of Investigation.
Manhattan U.S. Attorney Charges Assistant to Top Disney Executive and Accomplice with Insider Trading Scheme
PREET BHARARA, the United States Attorney for the Southern District of New York, and GEORGE VENIZELOS, the Acting Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation ("FBI"), announced today the arrest of BONNIE J. HOXIE, an assistant to a top executive at Walt Disney Company ("Disney"), and YONNI SEBBAG, a/k/a "Jonathan Cyrus," a friend of HOXIE, on charges of conspiracy and wire fraud. The charges against both HOXIE and SEBBAG stem from their participation in an insider trading scheme in which HOXIE, in her capacity as a Disney employee, obtained confidential inside information, including about Disney's quarterly earnings, and passed that information to SEBBAG, who in turn attempted to sell the information to buyers seeking to trade on inside information.
According to the two-count Complaint filed in Manhattan federal court:
From March 2010 through May 25, 2010, HOXIE was employed as a secretary to Disney's Head of Corporate Communications. In this capacity, HOXIE obtained material, nonpublic information, including Disney's quarterly earnings statements (the "Inside Information"). Then, in violation of her duties of trust and confidence, HOXIE disclosed the Inside Information to SEBBAG, who in turn disclosed the Inside Information to outside investors for the purpose of trading in advance of the official public announcement of Disney's earnings.
As part of the scheme, SEBBAG and HOXIE caused to be sent anonymous letters to multiple hedge funds and other investment companies, many of which were located in Manhattan, offering to sell the Inside Information for purposes of illegal insider trading. Various agents of the FBI, who were working in undercover capacities, posed as hedge fund traders (the "Tippees") and offered to buy the Inside Information from SEBBAG and HOXIE for purposes of trading in advance of the public announcement of the Inside Information.
On May 8, 2010, three days in advance of the May 11, 2010, public announcement of Disney's earnings for the second quarter of 2010, SEBBAG and HOXIE caused to be sent to the Tippees a confidential document titled "The Walt Disney Company Q2 Fiscal 2010 Key Topics Speaking Points," which contained a collection of talking points that Disney executives referred to while answering analysts' questions during the May 11, 2010, earnings call.
In addition, on May 11, 2010, roughly two hours in advance of the public announcement, the defendants notified the Tippees that Disney's earnings per share would be 48 cents—which was better than what stock analysts had predicted. On May 14, 2010, SEBBAG met with two undercover FBI agents in New York and accepted payment of $15,000 cash for having released the Inside Information. SEBBAG further agreed that he would provide similar confidential information in the future in return for a thirty percent share of any profits from the insider-trading scheme.
HOXIE, 33, and SEBBAG, 29, both of Los Angeles, California, were arrested this morning in Los Angeles and are expected to be presented this afternoon before a United States Magistrate Judge in Los Angeles federal court.
HOXIE and SEBBAG are each charged with one count of wire fraud and one count of conspiracy to commit securities fraud and wire fraud. They each face a maximum sentence of 20 years in prison on the wire fraud charge and five years in prison on the conspiracy charge. On both counts, HOXIE and SEBBAG also face a fine of the greater of $250,000, or twice the gross gain or gross loss from the offense.
U.S. Attorney PREET BHARARA stated: "Today's arrests of Disney insider Bonnie Hoxie and her alleged accomplice Yonni Sebbag suggest that the integrity of the securities exchanges can be compromised not only by top executives, but also by anyone entrusted with material, non-public information. This Office, along with the FBI and the Securities and Exchange Commission, is committed to identifying and prosecuting all individuals—on whatever rung of the corporate ladder—whose greed motivates them to betray their employer's trust and corrupt the market."
GEORGE VENIZELOS, the Acting Assistant Director-in-Charge of the New York FBI stated: "This investigation should serve as a warning, if you're contemplating acquiring and profiteering from insider information, sometimes the person you're trying to sell it to is really an undercover FBI agent. What the case also shows is that the FBI's vigilance is needed to police the small percentage of bad apples who can cause so much damage. The majority behave like the dozens of hedge funds and investment companies that received Hoxie and Sebbag's offers of insider Disney information: none took the bait, and almost all notified the FBI. The FBI continues its commitment to vigorous enforcement in securities trading and the handling of material non-public information."
Mr. BHARARA praised the work of the FBI and thanked the United States Securities and Exchange Commission for its assistance in the investigation. Mr. BHARARA added that the investigation is continuing.
This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement 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.
Assistant United States Attorneys ALEXANDER J. WILLSCHER and JULIAN J. MOORE are in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.
According to the two-count Complaint filed in Manhattan federal court:
From March 2010 through May 25, 2010, HOXIE was employed as a secretary to Disney's Head of Corporate Communications. In this capacity, HOXIE obtained material, nonpublic information, including Disney's quarterly earnings statements (the "Inside Information"). Then, in violation of her duties of trust and confidence, HOXIE disclosed the Inside Information to SEBBAG, who in turn disclosed the Inside Information to outside investors for the purpose of trading in advance of the official public announcement of Disney's earnings.
As part of the scheme, SEBBAG and HOXIE caused to be sent anonymous letters to multiple hedge funds and other investment companies, many of which were located in Manhattan, offering to sell the Inside Information for purposes of illegal insider trading. Various agents of the FBI, who were working in undercover capacities, posed as hedge fund traders (the "Tippees") and offered to buy the Inside Information from SEBBAG and HOXIE for purposes of trading in advance of the public announcement of the Inside Information.
On May 8, 2010, three days in advance of the May 11, 2010, public announcement of Disney's earnings for the second quarter of 2010, SEBBAG and HOXIE caused to be sent to the Tippees a confidential document titled "The Walt Disney Company Q2 Fiscal 2010 Key Topics Speaking Points," which contained a collection of talking points that Disney executives referred to while answering analysts' questions during the May 11, 2010, earnings call.
In addition, on May 11, 2010, roughly two hours in advance of the public announcement, the defendants notified the Tippees that Disney's earnings per share would be 48 cents—which was better than what stock analysts had predicted. On May 14, 2010, SEBBAG met with two undercover FBI agents in New York and accepted payment of $15,000 cash for having released the Inside Information. SEBBAG further agreed that he would provide similar confidential information in the future in return for a thirty percent share of any profits from the insider-trading scheme.
HOXIE, 33, and SEBBAG, 29, both of Los Angeles, California, were arrested this morning in Los Angeles and are expected to be presented this afternoon before a United States Magistrate Judge in Los Angeles federal court.
HOXIE and SEBBAG are each charged with one count of wire fraud and one count of conspiracy to commit securities fraud and wire fraud. They each face a maximum sentence of 20 years in prison on the wire fraud charge and five years in prison on the conspiracy charge. On both counts, HOXIE and SEBBAG also face a fine of the greater of $250,000, or twice the gross gain or gross loss from the offense.
U.S. Attorney PREET BHARARA stated: "Today's arrests of Disney insider Bonnie Hoxie and her alleged accomplice Yonni Sebbag suggest that the integrity of the securities exchanges can be compromised not only by top executives, but also by anyone entrusted with material, non-public information. This Office, along with the FBI and the Securities and Exchange Commission, is committed to identifying and prosecuting all individuals—on whatever rung of the corporate ladder—whose greed motivates them to betray their employer's trust and corrupt the market."
GEORGE VENIZELOS, the Acting Assistant Director-in-Charge of the New York FBI stated: "This investigation should serve as a warning, if you're contemplating acquiring and profiteering from insider information, sometimes the person you're trying to sell it to is really an undercover FBI agent. What the case also shows is that the FBI's vigilance is needed to police the small percentage of bad apples who can cause so much damage. The majority behave like the dozens of hedge funds and investment companies that received Hoxie and Sebbag's offers of insider Disney information: none took the bait, and almost all notified the FBI. The FBI continues its commitment to vigorous enforcement in securities trading and the handling of material non-public information."
Mr. BHARARA praised the work of the FBI and thanked the United States Securities and Exchange Commission for its assistance in the investigation. Mr. BHARARA added that the investigation is continuing.
This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement 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.
Assistant United States Attorneys ALEXANDER J. WILLSCHER and JULIAN J. MOORE are in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.
Former Accountant for University of Northern Virginia Pleads Guilty to Stealing $225,000
ALEXANDRIA, VA—John F. Rickard Jr., 50, of Manassas, Virginia, pleaded guilty today to stealing more than $225,000 from the University of Northern Virginia (UNVA).
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Shawn Henry, Assistant Director in Charge of the FBI Washington Field Office, made the announcement after the plea was accepted by United States District Judge Leonie M. Brinkema. Rickard pled guilty to one count of wire fraud and faces a maximum penalty of 20 years in prison when he is sentenced on Aug. 11, 2010.
In a statement of facts filed with his plea agreement, Rickard worked as the business manager and accountant for UNVA from October 2008 to December 2009. In that position, he was responsible for bookkeeping and payroll deposits for UNVA employees, and he would send e-mail requests to the payroll processing company for payroll checks to be processed for specific individuals. For more than a year, Rickard requested more than 50 checks in his name that exceeded his salary by more than $225,000.
According to court records, Rickard used one accounting code for payroll deductions in UNVA’s accounting books and falsified an audit report during his tenure with UNVA to hide his payroll diversions. They came to light after he left the University and his replacement reviewed the University’s books.
This case was investigated by the FBI Washington Field Office. Assistant United States Attorney Jack Hanly is prosecuting the case on behalf of the United States.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Shawn Henry, Assistant Director in Charge of the FBI Washington Field Office, made the announcement after the plea was accepted by United States District Judge Leonie M. Brinkema. Rickard pled guilty to one count of wire fraud and faces a maximum penalty of 20 years in prison when he is sentenced on Aug. 11, 2010.
In a statement of facts filed with his plea agreement, Rickard worked as the business manager and accountant for UNVA from October 2008 to December 2009. In that position, he was responsible for bookkeeping and payroll deposits for UNVA employees, and he would send e-mail requests to the payroll processing company for payroll checks to be processed for specific individuals. For more than a year, Rickard requested more than 50 checks in his name that exceeded his salary by more than $225,000.
According to court records, Rickard used one accounting code for payroll deductions in UNVA’s accounting books and falsified an audit report during his tenure with UNVA to hide his payroll diversions. They came to light after he left the University and his replacement reviewed the University’s books.
This case was investigated by the FBI Washington Field Office. Assistant United States Attorney Jack Hanly is prosecuting the case on behalf of the United States.
New Jersey Man Charged in Superseding Indictment with Drug Offenses
Nyene Henry Baker, Jr., a/k/a Jason Anderson, a/k/a Joshua Irving, a/k/a Bryan Smith, a/k/a Unsco, a/k/a Henry, was charged today in a four-count superseding indictment with conspiracy to possess with intent to distribute 500 grams or more of cocaine and marijuana, possession with intent to distribute 500 grams or more of cocaine, leasing a storage unit for the purpose of unlawfully storing and distributing marijuana, and possession with the intent to distribute marijuana, announced United States Attorney Zane David Meneger. The superseding indictment alleges that from mid-2007 to February 25, 2010, Baker conspired with other individuals to obtain and transport kilogram quantities of cocaine in Los Angeles and transport the cocaine back to Philadelphia.
INFORMATION REGARDING THE DEFENDANT
NAME ADDRESS DATE OF BIRTH
Nyene Baker Trenton, NJ 1978
If convicted the defendant faces a maximum sentence of life imprisonment with a mandatory minimum of 20 years' imprisonment, a $13 million fine, a mandatory minimum 10 years' to lifetime supervised release, and a $400 special assessment.
This case was investigated by the U.S. Federal Bureau of Investigation and Pennsylvania State Police and is being prosecuted by Assistant United States Attorney James R. Pavlock.
INFORMATION REGARDING THE DEFENDANT
NAME ADDRESS DATE OF BIRTH
Nyene Baker Trenton, NJ 1978
If convicted the defendant faces a maximum sentence of life imprisonment with a mandatory minimum of 20 years' imprisonment, a $13 million fine, a mandatory minimum 10 years' to lifetime supervised release, and a $400 special assessment.
This case was investigated by the U.S. Federal Bureau of Investigation and Pennsylvania State Police and is being prosecuted by Assistant United States Attorney James R. Pavlock.
New Orleans Man Sentenced for Weapons Violation
NEW ORLEANS, LA—NICOLAS PIERRE, a/k/a Nicholas Pierre, a/k/a Nikolas Pierre, age 28, a resident of New Orleans, was sentenced today in federal court by U.S. District Judge Helen G. Berrigan to twenty-seven (27) months in prison for illegally possessing a firearm, announced U.S. Attorney Jim Letten. In addition to the term of imprisonment, Judge Berrigan ordered that PIERRE be placed on three (3) years of supervised release following the term of imprisonment, during which time the defendant will be under federal supervision and risks an additional term of imprisonment should he violate any terms of his supervised release.
According to court documents, on February 17, 2010, PIERRE pled guilty admitting on September 29, 2009, FBI Task Force Agents acted upon a court authorized search warrant at the residence located at 7406 Sussex Place which was occupied by PIERRE. During the course of the search, agents located a loaded black Helwan 9mm handgun in PIERRE’s bedroom closet. PIERRE is prohibited from possessing any firearms due to a 2002 felony conviction in Orleans Parish for Car Jacking.
The case was investigated by agents from the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Rick Veters.
According to court documents, on February 17, 2010, PIERRE pled guilty admitting on September 29, 2009, FBI Task Force Agents acted upon a court authorized search warrant at the residence located at 7406 Sussex Place which was occupied by PIERRE. During the course of the search, agents located a loaded black Helwan 9mm handgun in PIERRE’s bedroom closet. PIERRE is prohibited from possessing any firearms due to a 2002 felony conviction in Orleans Parish for Car Jacking.
The case was investigated by agents from the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Rick Veters.
Real Estate Investor Pleads Guilty to Mail Fraud
NEW ORLEANS, LA—MICHAEL B. SMUCK, age 61, of Metairie, Louisiana, pled guilty in federal court today before U.S. District Judge Lance N. Africk to mail fraud, announced United States Attorney Jim Letten.
According to court documents, SMUCK owned and operated MBS Realty Investors, LTD and MBS Management Services, Inc. located at One Galleria Blvd, Suite 1950, Metairie, LA. One of the real estate investment partnerships operated by SMUCK, MBS Realty Investors, LTD and MBS Management Services, Inc. was called MBS-Briar Meadows, LTD which owned an apartment community in Houston, TX. Beginning on or about May 30, 2007 and continuing until on or about September 29, 2007, SMUCK devised a scheme to defraud in order to obtain approximately $3,477,980.00 in investor property to pay company debts unrelated to the Briar Meadows partnership.
SMUCK sold the property known as Briar Meadows and misappropriated the funds from the sale to pay other company debts rather than disburse those sale proceeds to the investors of Briar Meadows. SMUCK continued to send documentation to investors in Briar Meadows in order to give the fictitious appearance that the investment property was still active.
Pursuant to the plea agreement entered into by the parties, SMUCK faces a term of imprisonment of 30 months and a $250,000.00 fine. In an effort to make the victims of this crime whole, the United States has secured from the defendant an agreement to pay a minimum of $3,299,480 in restitution to investors in both Briar Meadows and Yellowstone Ranch, which are apartment communities in Houston, TX.
United States Attorney Jim Letten has acknowledged that the stipulated sentence in the plea agreement was the result of careful and lengthy consideration by the prosecution team, which included the recognition of the recommended sentencing guidelines range, as well as recognition of the goal of securing, to the extent possible, restitution to the victims. Sentencing is set for September 2, 2010 at 2:00 p.m.
The case is being investigated by the United States Postal Inspection Service and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney G. Dall Kammer.
According to court documents, SMUCK owned and operated MBS Realty Investors, LTD and MBS Management Services, Inc. located at One Galleria Blvd, Suite 1950, Metairie, LA. One of the real estate investment partnerships operated by SMUCK, MBS Realty Investors, LTD and MBS Management Services, Inc. was called MBS-Briar Meadows, LTD which owned an apartment community in Houston, TX. Beginning on or about May 30, 2007 and continuing until on or about September 29, 2007, SMUCK devised a scheme to defraud in order to obtain approximately $3,477,980.00 in investor property to pay company debts unrelated to the Briar Meadows partnership.
SMUCK sold the property known as Briar Meadows and misappropriated the funds from the sale to pay other company debts rather than disburse those sale proceeds to the investors of Briar Meadows. SMUCK continued to send documentation to investors in Briar Meadows in order to give the fictitious appearance that the investment property was still active.
Pursuant to the plea agreement entered into by the parties, SMUCK faces a term of imprisonment of 30 months and a $250,000.00 fine. In an effort to make the victims of this crime whole, the United States has secured from the defendant an agreement to pay a minimum of $3,299,480 in restitution to investors in both Briar Meadows and Yellowstone Ranch, which are apartment communities in Houston, TX.
United States Attorney Jim Letten has acknowledged that the stipulated sentence in the plea agreement was the result of careful and lengthy consideration by the prosecution team, which included the recognition of the recommended sentencing guidelines range, as well as recognition of the goal of securing, to the extent possible, restitution to the victims. Sentencing is set for September 2, 2010 at 2:00 p.m.
The case is being investigated by the United States Postal Inspection Service and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney G. Dall Kammer.
Final U.S. Defendant to Face Charges Related to International Child Pornography Conspiracy Case
The final U.S. defendant arrested in connection with a series of superseding indictments charging 26 individuals for their participation in an online child pornography conspiracy will make his initial appearance today in federal court in Indianapolis, to face charges related to his alleged participation in the conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Timothy M. Morrison of the Southern District of Indiana, Deputy Chief Postal Inspector Guy Cottrell for the U.S. Postal Inspection Service (USPIS), and Assistant Secretary John Morton of U.S. Immigration and Customs Enforcement (ICE).
Edward Oedewaldt, 47, was arrested in Arcadia, La., on April 23, 2010, after an extensive search involving assistance from law enforcement in the United States and abroad. Oedewaldt is charged with one count of conspiracy to advertise child pornography, one count of conspiracy to distribute child pornography, 13 counts of advertising child pornography and two counts of distributing child pornography. An indictment is merely an accusation and a defendant is presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
The charges against Oedewaldt and his 25 co-defendants are a result of "Operation Nest Egg," an ongoing and joint investigation led by the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), the U.S. Attorney’s Office for the Southern District of Indiana, USPIS and ICE. Operation Nest Egg, launched in February 2008, targeted the 26 defendants charged in the Southern District of Indiana, as well as approximately 500 additional individuals located throughout the world for their involvement in an online group dedicated to trading images of child pornography.
According to court documents filed in the Southern District of Indiana, Oedewaldt and 25 co-conspirators participated in a sophisticated, password-protected Internet bulletin board group, which existed to allow members to meet like-minded individuals with a sexualized interest in children, to discuss that interest and to trade images of child pornography. The defendants are charged with conspiring to advertise and distribute child pornography, along with substantive counts of advertising and distributing child pornography. According to court documents, the defendants allegedly served as administrators and members of the bulletin board and played an active role in decisions that affected its administration. Twenty-two of the 26 defendants charged in the conspiracy have been arrested. Nineteen of the 22 individuals arrested have been convicted or have pleaded guilty.
"The individuals who participated in this Internet-based bulletin board exploited the most innocent and vulnerable in our society," said Assistant Attorney General Breuer. "The Department of Justice is committed to working with law enforcement agencies in the United States and abroad to find and prosecute those responsible for trafficking in images of child sexual exploitation."
"This investigation produced one of the largest number of conspirators charged in a single advertising and distribution case," said U.S. Attorney Morrison. "The fact that four at-large defendants remain identified only by their screen names attests to the great obstacles law enforcement had to overcome."
On April 15, 2010, Roger Lee Loughry Sr., 57, of Baltimore, was convicted by a federal jury in the Southern District of Indiana for his role as an administrator of the online bulletin board. Following a four-day trial, Loughry was found guilty of one count of conspiracy to advertise child pornography, one count of conspiracy to distribute child pornography, 12 counts of advertising child pornography, and two counts of distributing child pornography. Loughry faces a mandatory minimum sentence of 15 years in prison, a maximum sentence of 30 years in prison, a fine of $250,000 and a lifetime term of supervised release following his prison term.
Six of the 19 individuals who have pleaded guilty for their role in the conspiracy have been sentenced to prison. On May 21, 2010, Thomas Lenti, 42, of Brooklyn, N.Y., was sentenced to 20 years in prison for his role as a lead administrator for the bulletin board group. Lenti was previously convicted in 2000 of sexually abusing a minor who was under the age of 11. On May 19, 2010, William Gregory, 56, of Chester, Va., was sentenced to 10 years in prison. Also on May 19, 2010, Jonathan Hans, 37, of Woodstock, Ga., was sentenced to 10 years in prison for his role in the conspiracy.
On Sept. 21, 2009, Charles Werenczak, 47, of Jamestown, N.Y., a convicted sex-offender in the state of New York, was sentenced to 378 months. Kevin Harkless, 53, of Copper Hill, Va., who was previously convicted of child pornography offenses in Pennsylvania, was sentenced on Nov. 30, 2009, to 240 months in prison. Patrick Jansen, 28, of Lockport, N.Y., was sentenced to 15 years in prison on Oct. 30, 2009.
Each defendant also received a lifetime of supervised release following their release from prison as part of their sentence.
"This arrest underlines the fact that there will be no refuge for child sexual predators who believe that they pursue their perverse behavior with impunity online," said Assistant Secretary Morton. "Law enforcement agencies will work tirelessly across jurisdictions and national boundaries to protect children anywhere in the world."
"The Postal Inspection Service is proud to have participated in this multi-agency initiative," said Deputy Chief Postal Inspector Guy Cottrell. "Through Operation Nest Egg, multiple offenders who trafficked in child pornography were identified and arrested and huge amounts of child pornography have been seized. Most importantly, many children have been rescued from further sexual abuse and exploitation."
Four of the 26 individuals charged in the conspiracy remain at large and are known only by their online identities. Efforts to identify and apprehend these four individuals continue.
To date, as a result of Operation Nest Egg, more than 80 searches have been conducted in the United States. In total, more than 50 individuals have been arrested and 35 individuals have been convicted. The investigation is ongoing. Numerous members of the Internet-based bulletin board were found to have been personally sexually abusing children, sometimes producing images of the sexual abuse. For example, lead administrator Delwyn Savigar of the United Kingdom, was identified and arrested in partnership with the U.K.’s Child Exploitation and Online Protection Centre, for his involvement in the conspiracy. After his initial arrest, Savigar was identified through DNA testing as the perpetrator of a previously unsolved sexual assault against a minor female in Great Britain, to which he pleaded guilty. Following this discovery, Savigar was linked to additional incidents of sexual assaults. Ultimately, he pleaded guilty to either abusing or attempting to abuse three minors from 1999 to 2002. He was sentenced to 14 years in prison in the United Kingdom. To date, 16 child victims have been identified through Operation Nest Egg.
Operation Nest Egg is a spinoff investigation from leads developed through "Operation Joint Hammer," the U.S. component of an ongoing global law enforcement operation targeting transnational rings of child pornography trafficked through the Internet and U.S. mail. Operation Joint Hammer was initiated through evidence developed by European law enforcement and shared with U.S. counterparts by Europol and Interpol.
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 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 is being prosecuted by Assistant U.S. Attorney Steven D. DeBrota of the Southern District of Indiana, Assistant U.S. Attorney Elizabeth M. Yusi of the Eastern District of Virginia and CEOS Trial Attorney Alecia Riewerts Wolak. The investigation was conducted jointly by CEOS’ High Technology Investigative Unit, ICE and USPIS, with assistance provided by the Northern Virginia/Washington, D.C. Internet Crimes Against Children (ICAC) Taskforce, the Indiana ICAC Taskforce, Indiana State Police, and numerous local and international law enforcement agencies across the United States and Europe.
Edward Oedewaldt, 47, was arrested in Arcadia, La., on April 23, 2010, after an extensive search involving assistance from law enforcement in the United States and abroad. Oedewaldt is charged with one count of conspiracy to advertise child pornography, one count of conspiracy to distribute child pornography, 13 counts of advertising child pornography and two counts of distributing child pornography. An indictment is merely an accusation and a defendant is presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
The charges against Oedewaldt and his 25 co-defendants are a result of "Operation Nest Egg," an ongoing and joint investigation led by the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), the U.S. Attorney’s Office for the Southern District of Indiana, USPIS and ICE. Operation Nest Egg, launched in February 2008, targeted the 26 defendants charged in the Southern District of Indiana, as well as approximately 500 additional individuals located throughout the world for their involvement in an online group dedicated to trading images of child pornography.
According to court documents filed in the Southern District of Indiana, Oedewaldt and 25 co-conspirators participated in a sophisticated, password-protected Internet bulletin board group, which existed to allow members to meet like-minded individuals with a sexualized interest in children, to discuss that interest and to trade images of child pornography. The defendants are charged with conspiring to advertise and distribute child pornography, along with substantive counts of advertising and distributing child pornography. According to court documents, the defendants allegedly served as administrators and members of the bulletin board and played an active role in decisions that affected its administration. Twenty-two of the 26 defendants charged in the conspiracy have been arrested. Nineteen of the 22 individuals arrested have been convicted or have pleaded guilty.
"The individuals who participated in this Internet-based bulletin board exploited the most innocent and vulnerable in our society," said Assistant Attorney General Breuer. "The Department of Justice is committed to working with law enforcement agencies in the United States and abroad to find and prosecute those responsible for trafficking in images of child sexual exploitation."
"This investigation produced one of the largest number of conspirators charged in a single advertising and distribution case," said U.S. Attorney Morrison. "The fact that four at-large defendants remain identified only by their screen names attests to the great obstacles law enforcement had to overcome."
On April 15, 2010, Roger Lee Loughry Sr., 57, of Baltimore, was convicted by a federal jury in the Southern District of Indiana for his role as an administrator of the online bulletin board. Following a four-day trial, Loughry was found guilty of one count of conspiracy to advertise child pornography, one count of conspiracy to distribute child pornography, 12 counts of advertising child pornography, and two counts of distributing child pornography. Loughry faces a mandatory minimum sentence of 15 years in prison, a maximum sentence of 30 years in prison, a fine of $250,000 and a lifetime term of supervised release following his prison term.
Six of the 19 individuals who have pleaded guilty for their role in the conspiracy have been sentenced to prison. On May 21, 2010, Thomas Lenti, 42, of Brooklyn, N.Y., was sentenced to 20 years in prison for his role as a lead administrator for the bulletin board group. Lenti was previously convicted in 2000 of sexually abusing a minor who was under the age of 11. On May 19, 2010, William Gregory, 56, of Chester, Va., was sentenced to 10 years in prison. Also on May 19, 2010, Jonathan Hans, 37, of Woodstock, Ga., was sentenced to 10 years in prison for his role in the conspiracy.
On Sept. 21, 2009, Charles Werenczak, 47, of Jamestown, N.Y., a convicted sex-offender in the state of New York, was sentenced to 378 months. Kevin Harkless, 53, of Copper Hill, Va., who was previously convicted of child pornography offenses in Pennsylvania, was sentenced on Nov. 30, 2009, to 240 months in prison. Patrick Jansen, 28, of Lockport, N.Y., was sentenced to 15 years in prison on Oct. 30, 2009.
Each defendant also received a lifetime of supervised release following their release from prison as part of their sentence.
"This arrest underlines the fact that there will be no refuge for child sexual predators who believe that they pursue their perverse behavior with impunity online," said Assistant Secretary Morton. "Law enforcement agencies will work tirelessly across jurisdictions and national boundaries to protect children anywhere in the world."
"The Postal Inspection Service is proud to have participated in this multi-agency initiative," said Deputy Chief Postal Inspector Guy Cottrell. "Through Operation Nest Egg, multiple offenders who trafficked in child pornography were identified and arrested and huge amounts of child pornography have been seized. Most importantly, many children have been rescued from further sexual abuse and exploitation."
Four of the 26 individuals charged in the conspiracy remain at large and are known only by their online identities. Efforts to identify and apprehend these four individuals continue.
To date, as a result of Operation Nest Egg, more than 80 searches have been conducted in the United States. In total, more than 50 individuals have been arrested and 35 individuals have been convicted. The investigation is ongoing. Numerous members of the Internet-based bulletin board were found to have been personally sexually abusing children, sometimes producing images of the sexual abuse. For example, lead administrator Delwyn Savigar of the United Kingdom, was identified and arrested in partnership with the U.K.’s Child Exploitation and Online Protection Centre, for his involvement in the conspiracy. After his initial arrest, Savigar was identified through DNA testing as the perpetrator of a previously unsolved sexual assault against a minor female in Great Britain, to which he pleaded guilty. Following this discovery, Savigar was linked to additional incidents of sexual assaults. Ultimately, he pleaded guilty to either abusing or attempting to abuse three minors from 1999 to 2002. He was sentenced to 14 years in prison in the United Kingdom. To date, 16 child victims have been identified through Operation Nest Egg.
Operation Nest Egg is a spinoff investigation from leads developed through "Operation Joint Hammer," the U.S. component of an ongoing global law enforcement operation targeting transnational rings of child pornography trafficked through the Internet and U.S. mail. Operation Joint Hammer was initiated through evidence developed by European law enforcement and shared with U.S. counterparts by Europol and Interpol.
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 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 is being prosecuted by Assistant U.S. Attorney Steven D. DeBrota of the Southern District of Indiana, Assistant U.S. Attorney Elizabeth M. Yusi of the Eastern District of Virginia and CEOS Trial Attorney Alecia Riewerts Wolak. The investigation was conducted jointly by CEOS’ High Technology Investigative Unit, ICE and USPIS, with assistance provided by the Northern Virginia/Washington, D.C. Internet Crimes Against Children (ICAC) Taskforce, the Indiana ICAC Taskforce, Indiana State Police, and numerous local and international law enforcement agencies across the United States and Europe.
FBI Releases Bank Robbery Pictures
The FBI and Milwaukie Police are releasing very clear pictures that show a man robbing a Milwaukie bank on Monday. Investigators believe that anyone who knows the suspect will be able to easily identify him based on these photos. The man walked into the Bank of the West located at 11050 SE McLoughlin Boulevard on Monday at about 10:55 a.m., approached a teller and demanded cash.
The man is:
Race: White
Age: 20's
Height: 5'8"-5'9"
Build: Thin
Hair: Brown, short with sideburns
Wearing: Gray hooded sweatshirt, khaki pants, black shoes and a black baseball cap with “PUMA” stitched on the front
Anyone with information is asked to call the FBI at (503) 224-4181.
Man Sentenced to Four Years in Prison for Robbing Gilbert Bank with Hoax Bomb
PHOENIX—Donald Ray Ludington, 49, of Gilbert, Ariz., was sentenced yesterday by U.S. District Judge David G. Campbell to 48 months in federal prison for committing a bank robbery threatening use of a hoax bomb. He was also ordered to pay $5,602 in restitution.
Ludington pleaded guilty to one count of Armed Bank Robbery for robbing a bank in Gilbert in October 2009. Ludington walked into a bank with a backpack, set it down at his feet, and presented the victim teller with a lengthy note that read “I have a bomb at my feet” demanding “20's, 50's, and 100's.” The teller was very fearful, gave him money, and the defendant ran away.
Police received an anonymous tip naming Ludington as the bank robber. Police then conducted surveillance on Ludington, who was found casing a bank in the East Valley. Agents and officers took a photograph of Ludington, whom bank employees identified as the person who robbed the bank back in October. Ludington was arrested and interviewed, and in the interview admitted using a hoax bomb to rob the bank in Gilbert.
This investigation was conducted by the FBI’s Violent Crime/Bank Robbery Task Force and the Gilbert Police Department. The FBI has partnered with the Maricopa County Sheriff’s Office, the Mesa Police Department, the Phoenix Police Department, the Scottsdale Police Department, the U.S. Attorney’s Office and the Maricopa County Attorney’s Office to form the Violent Crime/Bank Robbery Task Force in order to investigate, arrest and seek prosecution of those responsible for robbing banks in the Valley. The prosecution was handled by Jennifer E. Green, Assistant U.S. Attorney, District of Arizona, Phoenix.
CASE NUMBER: 09-01399-PHX-DGC
RELEASE NUMBER: 2010-106(Ludington)
Ludington pleaded guilty to one count of Armed Bank Robbery for robbing a bank in Gilbert in October 2009. Ludington walked into a bank with a backpack, set it down at his feet, and presented the victim teller with a lengthy note that read “I have a bomb at my feet” demanding “20's, 50's, and 100's.” The teller was very fearful, gave him money, and the defendant ran away.
Police received an anonymous tip naming Ludington as the bank robber. Police then conducted surveillance on Ludington, who was found casing a bank in the East Valley. Agents and officers took a photograph of Ludington, whom bank employees identified as the person who robbed the bank back in October. Ludington was arrested and interviewed, and in the interview admitted using a hoax bomb to rob the bank in Gilbert.
This investigation was conducted by the FBI’s Violent Crime/Bank Robbery Task Force and the Gilbert Police Department. The FBI has partnered with the Maricopa County Sheriff’s Office, the Mesa Police Department, the Phoenix Police Department, the Scottsdale Police Department, the U.S. Attorney’s Office and the Maricopa County Attorney’s Office to form the Violent Crime/Bank Robbery Task Force in order to investigate, arrest and seek prosecution of those responsible for robbing banks in the Valley. The prosecution was handled by Jennifer E. Green, Assistant U.S. Attorney, District of Arizona, Phoenix.
CASE NUMBER: 09-01399-PHX-DGC
RELEASE NUMBER: 2010-106(Ludington)
Texas Man Sentenced for His Role in Identity Theft and Credit Card Fraud Ring
BOSTON, MA—A Texas man was sentenced to 14 years in prison late yesterday, for his role in a scheme to steal credit cards from health club locker rooms and take more than $400,000 in cash advances at horse race tracks in at least 10 states.
United States Attorney Carmen M. Ortiz; Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation - Boston Field Division; Robert Bethel, Inspector in Charge of the U.S. Postal Inspection Service; Steven D. Ricciardi, Special Agent in Charge of the U.S. Secret Service; and Commissioner Edward Davis of the Boston Police Department, announced that DENNIS SAVARESE, of Austin, Texas, was sentenced by U.S. District Court Judge Richard G. Stearns to 14 years in prison, to be followed by three years of supervised release. Judge Stearns has also ordered SAVARESE to forfeit to the Government more than $429,000. The sentencing followed SAVARESE’s conviction on February 2, 2010, after a jury trial, on charges of conspiracy, aggravated identity theft and identity fraud.
SAVARESE conspired with at least four others, including JAMES DESIMONE, DONALD DESIMONE, JR., RICHARD REGNETTA and ARTHUR RIZZO to steal credit cards from health club locker rooms all over the country and then use those cards to steal hundreds of thousands of dollars in cash. On a weekly basis, for more than two years, SAVARESE traveled around the country and broke into lockers at two different nationwide health club chains. After SAVARESE stole the credit cards, he then transferred the names from the credit cards to one of his co-conspirators in Massachusetts who purchased fake identifications with photos of SAVARESE or one of his co-conspirators and the names from the stolen cards. Then, on weekends, SAVARESE met up with one or more of the other defendants at racetracks and casinos all over the country to use those stolen credit cards to make thousands of dollars in fraudulent cash advances. The remaining defendants have pleaded guilty to similar charges.
DESIMONE pled guilty and is awaiting sentencing; DONALD DESIMONE, JR. pled guilty and was sentenced to 28 months’ imprisonment; REGNETTA pled guilty and was sentenced to 24 months’ imprisonment; and RIZZO pled guilt and was sentenced to 51 months’ imprisonment.
The case was investigated by the Boston Police Department, U.S. Postal Inspection Service, U.S. Secret Service and the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorneys Adam J. Bookbinder of Ortiz’s Computer Crime Unit and Sarah E. Walters of her Economic Crimes Unit.
United States Attorney Carmen M. Ortiz; Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation - Boston Field Division; Robert Bethel, Inspector in Charge of the U.S. Postal Inspection Service; Steven D. Ricciardi, Special Agent in Charge of the U.S. Secret Service; and Commissioner Edward Davis of the Boston Police Department, announced that DENNIS SAVARESE, of Austin, Texas, was sentenced by U.S. District Court Judge Richard G. Stearns to 14 years in prison, to be followed by three years of supervised release. Judge Stearns has also ordered SAVARESE to forfeit to the Government more than $429,000. The sentencing followed SAVARESE’s conviction on February 2, 2010, after a jury trial, on charges of conspiracy, aggravated identity theft and identity fraud.
SAVARESE conspired with at least four others, including JAMES DESIMONE, DONALD DESIMONE, JR., RICHARD REGNETTA and ARTHUR RIZZO to steal credit cards from health club locker rooms all over the country and then use those cards to steal hundreds of thousands of dollars in cash. On a weekly basis, for more than two years, SAVARESE traveled around the country and broke into lockers at two different nationwide health club chains. After SAVARESE stole the credit cards, he then transferred the names from the credit cards to one of his co-conspirators in Massachusetts who purchased fake identifications with photos of SAVARESE or one of his co-conspirators and the names from the stolen cards. Then, on weekends, SAVARESE met up with one or more of the other defendants at racetracks and casinos all over the country to use those stolen credit cards to make thousands of dollars in fraudulent cash advances. The remaining defendants have pleaded guilty to similar charges.
DESIMONE pled guilty and is awaiting sentencing; DONALD DESIMONE, JR. pled guilty and was sentenced to 28 months’ imprisonment; REGNETTA pled guilty and was sentenced to 24 months’ imprisonment; and RIZZO pled guilt and was sentenced to 51 months’ imprisonment.
The case was investigated by the Boston Police Department, U.S. Postal Inspection Service, U.S. Secret Service and the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorneys Adam J. Bookbinder of Ortiz’s Computer Crime Unit and Sarah E. Walters of her Economic Crimes Unit.
Wednesday, May 26, 2010
Writing: What is a one-word sentence called? - CliffsNotes
Writing: What is a one-word sentence called? - CliffsNotes Can a writer use one word for emphasis, and if so, is it a sentence?
Decatur Pediatrician Pleads Guilty to Theft Related to Health Care and Agrees to Surrender Medical License
May 26, 2010 - SPRINGFIELD, IL—A pediatrician who has practiced in Decatur, Illinois, Jamie S. Warnick, pled guilty today to theft in connection with health care and agreed to permanently surrender her license to practice medicine in the United States. Warnick, 54, previously was the sole physician practicing as Decatur Pediatric Clinic, at 1770 E. Lake Shore Drive, Suite 300, Decatur, Illinois. Sentencing has been scheduled on Oct. 4, 2010, before U.S. District Judge Richard Mills.
In November 2009, Warnick was charged by criminal complaint with health care fraud. During court hearings today and on May 14, before U.S. Magistrate Judge Byron G. Cudmore, Warnick waived indictment and entered a plea of guilty to an information charging her with theft in connection with health care. Under terms of the plea agreement with the government, Warnick has agreed to permanently surrender her license to practice medicine in the U.S. within 10 days. Further, the parties have agreed to recommend to the court at sentencing that Warnick be ordered to serve three years probation, the first six months of which under home confinement. Terms of the plea agreement also establish an agreed relevant loss amount of $63,561.89 to the Illinois Department of Public Health based on the value of the vaccine misapplied by Warnick.
During today’s hearing and in court documents, Warnick admitted that she obtained vaccines, at no cost to her, from the U.S. Centers for Disease Control through the Illinois Department of Public Health. The vaccines were meant primarily for children without health insurance and for under-insured children, whose insurance did not pay for vaccines.
On multiple occasions between 2005 and Oct. 1, 2009, Warnick admitted she knowingly misapplied some vaccines and encouraged and directed parents of minor patients to falsely certify that they, and their child, qualified for the free vaccine, even though they had health insurance to cover the immunizations. Insurance company records show that a large number of these vaccines were billed to the insurance companies by Warnick, and paid as if the vaccine had been purchased by Warnick. Many other insured individuals did not sign the form; yet the vaccines were administered to their children and their insurance company was billed as if Warnick had purchased the vaccine.
The federally-funded Vaccines for Children (VFC) program provides vaccines at no cost to children who might not otherwise be vaccinated because of an inability to pay. Created in 1993, the VFC became a required part of each state’s Medicaid plan and was officially implemented in October 1994. Federal funding is ultimately allocated to the Centers for Disease Control and Prevention (CDC). CDC buys vaccines and distributes them to grantees, such as state health departments and public health agencies, which distribute them at no charge to private physicians’ offices and public health clinics registered as VFC providers.
The Central Illinois Health Care Fraud Task Force, which includes agents of the U.S. Health and Human Services Office of Inspector General, Federal Bureau of Investigation, the Illinois State Police’s Medicaid Fraud Control Bureau, U.S. Postal Inspection Service, Illinois Attorney General’s Office and the Illinois Department of Public Health, conducted the investigation. Assistant U.S. Attorney Patrick D. Hansen is prosecuting the case.
In November 2009, Warnick was charged by criminal complaint with health care fraud. During court hearings today and on May 14, before U.S. Magistrate Judge Byron G. Cudmore, Warnick waived indictment and entered a plea of guilty to an information charging her with theft in connection with health care. Under terms of the plea agreement with the government, Warnick has agreed to permanently surrender her license to practice medicine in the U.S. within 10 days. Further, the parties have agreed to recommend to the court at sentencing that Warnick be ordered to serve three years probation, the first six months of which under home confinement. Terms of the plea agreement also establish an agreed relevant loss amount of $63,561.89 to the Illinois Department of Public Health based on the value of the vaccine misapplied by Warnick.
During today’s hearing and in court documents, Warnick admitted that she obtained vaccines, at no cost to her, from the U.S. Centers for Disease Control through the Illinois Department of Public Health. The vaccines were meant primarily for children without health insurance and for under-insured children, whose insurance did not pay for vaccines.
On multiple occasions between 2005 and Oct. 1, 2009, Warnick admitted she knowingly misapplied some vaccines and encouraged and directed parents of minor patients to falsely certify that they, and their child, qualified for the free vaccine, even though they had health insurance to cover the immunizations. Insurance company records show that a large number of these vaccines were billed to the insurance companies by Warnick, and paid as if the vaccine had been purchased by Warnick. Many other insured individuals did not sign the form; yet the vaccines were administered to their children and their insurance company was billed as if Warnick had purchased the vaccine.
The federally-funded Vaccines for Children (VFC) program provides vaccines at no cost to children who might not otherwise be vaccinated because of an inability to pay. Created in 1993, the VFC became a required part of each state’s Medicaid plan and was officially implemented in October 1994. Federal funding is ultimately allocated to the Centers for Disease Control and Prevention (CDC). CDC buys vaccines and distributes them to grantees, such as state health departments and public health agencies, which distribute them at no charge to private physicians’ offices and public health clinics registered as VFC providers.
The Central Illinois Health Care Fraud Task Force, which includes agents of the U.S. Health and Human Services Office of Inspector General, Federal Bureau of Investigation, the Illinois State Police’s Medicaid Fraud Control Bureau, U.S. Postal Inspection Service, Illinois Attorney General’s Office and the Illinois Department of Public Health, conducted the investigation. Assistant U.S. Attorney Patrick D. Hansen is prosecuting the case.
Minneapolis Man Pleads Guilty to Robbing Wells Fargo Bank
May 26, 2010 - Earlier today in federal court in St. Paul, a 36-year-old Minneapolis man pleaded guilty to the February 23, 2010, robbery of the Wells Fargo Bank at 4141 Lyndale Avenue North in Minneapolis. Appearing before United States District Court Judge Patrick J. Schiltz, Marc Antonio Clark pleaded guilty to one count of bank robbery. Clark was indicted on April 6, 2010.
In his plea agreement, Clark admitted stealing $1,350 from the bank after presenting a demand note that read, “Look, I have a gun. Give me all $100.00 dollar bills.” When informed that the teller did not have $100s, Clark asked for $50s, which he received before fleeing the bank.
According to a law enforcement affidavit filed in the case, photographs of the robbery were subsequently shown by the local media, and as a result, law enforcement received several tips from citizens who identified Clark as the robber. Then, on February 25, 2010, police were called to the home of Clark’s girlfriend. She reported that Clark had threatened her, and so he was arrested for making domestic threats. At that time, she also told authorities Clark had confessed to her that he had robbed the bank. Therefore, while being held in State custody on domestic abuse charges, Clark also was charged with the bank robbery. He remains in custody at this time.
As for the federal bank robbery charge, Clark faces a potential maximum penalty of 20 years in prison. Judge Schiltz will determine his sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by the Minneapolis Police Department and the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Erika R. Mozangue.
In his plea agreement, Clark admitted stealing $1,350 from the bank after presenting a demand note that read, “Look, I have a gun. Give me all $100.00 dollar bills.” When informed that the teller did not have $100s, Clark asked for $50s, which he received before fleeing the bank.
According to a law enforcement affidavit filed in the case, photographs of the robbery were subsequently shown by the local media, and as a result, law enforcement received several tips from citizens who identified Clark as the robber. Then, on February 25, 2010, police were called to the home of Clark’s girlfriend. She reported that Clark had threatened her, and so he was arrested for making domestic threats. At that time, she also told authorities Clark had confessed to her that he had robbed the bank. Therefore, while being held in State custody on domestic abuse charges, Clark also was charged with the bank robbery. He remains in custody at this time.
As for the federal bank robbery charge, Clark faces a potential maximum penalty of 20 years in prison. Judge Schiltz will determine his sentence at a future hearing, yet to be scheduled. This case is the result of an investigation by the Minneapolis Police Department and the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Erika R. Mozangue.
Tuesday, May 25, 2010
NIJ Duty Holster Standard for Law Enforcement
The National Institute of Justice (NIJ) is seeking comments on two draft documents for duty holsters used by the law enforcement community. The documents are entitled: (1) “NIJ Duty Holster Standard for Law Enforcement” and (2) “NIJ Duty Holster Certification Program Requirements.”
The opportunity to provide comments on these documents is open to industry technical representatives; criminal justice agencies and organizations; research, development and scientific communities; and all other stakeholders and interested parties. These comments will be considered as the documents are further developed.
To provide comments go to: www.justnet.org/Pages/Holsters_Standard_Comments.aspx.
The opportunity to provide comments on these documents is open to industry technical representatives; criminal justice agencies and organizations; research, development and scientific communities; and all other stakeholders and interested parties. These comments will be considered as the documents are further developed.
To provide comments go to: www.justnet.org/Pages/Holsters_Standard_Comments.aspx.
Jeff Tillotson Sentenced to 17 Years in Prison for Child Pornography Crimes
Kingsport Resident Convicted of Three Child Pornography Crimes
May 25, 2010 - GREENEVILLE, TN—Jeff Francis Tillotson, 26, of Kingsport, Tennessee, was sentenced to 204 months in prison in the United States District Court for the Eastern District of Tennessee at Greeneville, by the Honorable J. Ronnie Greer, United States District Judge. He was ordered to complete sex offender treatment during imprisonment; pay $300 in special assessments; and remain under federal supervised release for the remainder of his life. The sentence was the result of conviction at trial by Tillotson on December 12, 2008, to a federal grand jury indictment charging him with distributing, advertising, and possessing child pornography. Tillotson has remained in federal custody since his arrest after indictment on May 6, 2008.
The indictment and subsequent conviction of Tillotson was the result of investigations conducted by the United States Department of Homeland Security Immigration and Customs Enforcement (ICE); Pennsylvania State Police Bureau of Criminal Investigations; Knoxville Police Department Internet Crimes Against Children Task Force; Kingsport Police Department; and Federal Bureau of Investigation. Assistant United States Attorneys Robert Reeves and Helen Smith represented the United States at trial.
“All children have an absolute right to grow up free from the fear of sexual exploitation,” said Raymond R. Parmer, Jr., special agent in charge of the ICE Office of Investigations in New Orleans. “ICE relentlessly pursues predators who sexually abuse children, whether that abuse is physical in nature or if it is accomplished by exploiting their images. The sentencing of Tillotson sends a strong message that ICE will not tolerate such despicable crimes. Our agents will continue to police cyberspace and target those who travel abroad to exploit one of the most vulnerable segments of our society — our children.”
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 the 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 http://www.projectsafechildhood.gov/.
May 25, 2010 - GREENEVILLE, TN—Jeff Francis Tillotson, 26, of Kingsport, Tennessee, was sentenced to 204 months in prison in the United States District Court for the Eastern District of Tennessee at Greeneville, by the Honorable J. Ronnie Greer, United States District Judge. He was ordered to complete sex offender treatment during imprisonment; pay $300 in special assessments; and remain under federal supervised release for the remainder of his life. The sentence was the result of conviction at trial by Tillotson on December 12, 2008, to a federal grand jury indictment charging him with distributing, advertising, and possessing child pornography. Tillotson has remained in federal custody since his arrest after indictment on May 6, 2008.
The indictment and subsequent conviction of Tillotson was the result of investigations conducted by the United States Department of Homeland Security Immigration and Customs Enforcement (ICE); Pennsylvania State Police Bureau of Criminal Investigations; Knoxville Police Department Internet Crimes Against Children Task Force; Kingsport Police Department; and Federal Bureau of Investigation. Assistant United States Attorneys Robert Reeves and Helen Smith represented the United States at trial.
“All children have an absolute right to grow up free from the fear of sexual exploitation,” said Raymond R. Parmer, Jr., special agent in charge of the ICE Office of Investigations in New Orleans. “ICE relentlessly pursues predators who sexually abuse children, whether that abuse is physical in nature or if it is accomplished by exploiting their images. The sentencing of Tillotson sends a strong message that ICE will not tolerate such despicable crimes. Our agents will continue to police cyberspace and target those who travel abroad to exploit one of the most vulnerable segments of our society — our children.”
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 the 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 http://www.projectsafechildhood.gov/.
Thirty-Year Sentence for Child Sexual Abuse
May 25, 2010 - BISMARC, ND—Acting United States Attorney Lynn Jordheim announced that on May 24, 2010, Glenn J. White Bull, 42, of Fort Yates, North Dakota, was sentenced before United States District Court Judge Daniel L. Hovland on five counts of aggravated sexual abuse of a child under 12 years of age. White Bull was found guilty by a federal jury on February 25, 2010.
Judge Hovland sentenced White Bull to serve 30 years in federal prison, the mandatory minimum sentence, to be followed by lifetime supervised release. White Bull was ordered to pay restitution of $656.55 and to pay a $500 special assessment to the Crime Victim's Fund. White Bull must register as a sex offender.
The jury found that from September 2008 until March 2009, White Bull sexually abused a child on five separate occasions in and near Fort Yates, North Dakota, on the Standing Rock Indian Reservation. During the most recent incident, the child’s older sister caught White Bull engaging in or attempting to engage in a sexual act with the child in the basement of the family home.
The case was investigated by the Federal Bureau of Investigation, Bureau of Indian Affairs - Standing Rock Agency and Dakota Children's Advocacy Center.
Assistant United States Attorney Rick Volk is prosecuting the case.
Judge Hovland sentenced White Bull to serve 30 years in federal prison, the mandatory minimum sentence, to be followed by lifetime supervised release. White Bull was ordered to pay restitution of $656.55 and to pay a $500 special assessment to the Crime Victim's Fund. White Bull must register as a sex offender.
The jury found that from September 2008 until March 2009, White Bull sexually abused a child on five separate occasions in and near Fort Yates, North Dakota, on the Standing Rock Indian Reservation. During the most recent incident, the child’s older sister caught White Bull engaging in or attempting to engage in a sexual act with the child in the basement of the family home.
The case was investigated by the Federal Bureau of Investigation, Bureau of Indian Affairs - Standing Rock Agency and Dakota Children's Advocacy Center.
Assistant United States Attorney Rick Volk is prosecuting the case.
Virginia Businessman Sentenced to Five Years in Prison for $2.3 Million Mortgage and Investment Scheme
May 25, 2010 - RICHMOND, VA—Chief United States District Judge James R. Spencer sentenced Robert S. Capehart, 55, of Richmond, Virginia to five years in prison on one count of mail fraud, and ordered him to pay $1,967,074 in restitution. Neil H. MacBride, United States Attorney for the Eastern District of Virginia; and Michael F.A. Morehart, Special Agent-in-Charge of the FBI’s Richmond Field Office, made the announcement.
Capehart was the president of two Virginia companies, Retirement Investment Group (RIG) and BYB Investments. Through these companies, he promoted real estate ventures, including a convenience store and multiple pieces of real estate that he purchased for rental and investment purposes. Capehart admitted to falsifying mortgage applications, check kiting and defrauding 22 investors in a Ponzi scheme.
Court documents show that from 2003 until 2006, Capehart purchased approximately 40 rental properties with little or no down payment and a large mortgage-backed loan. In obtaining the loans from banks, however, he did not fully disclose all of his real estate loan liabilities and other real estate holdings. As time passed, he would obtain new appraisals and refinance the properties based on the appreciated value of the properties without disclosing all of his liabilities and real estate holdings. After paying off the original loan, Capehart would then use the excess funds for business and personal purposes. The combined losses of Wachovia Bank NA, J. P. Morgan Chase Bank, and Suntrust Bank were approximately $252,000.
Capehart also admitted that as the real estate appreciation slowed down or disappeared in or about 2006, he could not generate additional funds by simply refinancing the properties. Therefore, he turned to private investors whom he solicited with a promissory note program carrying high interest rates, such as 20 percent over three months, equating to an annual rate of 80 percent. He represented that he would be able to pay such high rates of interest because he was investing in a variety of properties, such as the Sans Souci Hotel and Apartment Complex in Buckroe Beach, Virginia a beach house in Kure Beach, N.C., a convenience store in Richmond, Virginia and various other properties in Newport News and Hampton, Va.
Capehart solicited money from approximately 22 potential investors and induced them to invest approximately $2.053 million by making materially false, fraudulent and misleading representations. Capehart’s program was a Ponzi scheme, in which early investors are paid with the contribution of later investors rather than the profit from an underlying business activity. Capehart also lulled investors into believing that their “investment” funds would be safe and secure. To prevent the discovery of the true use of investors’ funds and forestall legal action by investors, Capehart encouraged investors not to seek the immediate return of funds but to "roll over" their investments and thereby purportedly earn even greater profits.
Court documents show that in late 2006 and early 2007, in order to continue to buy time, Capehart began kiting hundreds of thousands of dollars of checks between First Market Bank, Village Bank and First Capital Bank. The purpose of the illegal scheme is to artificially inflate the balance of a checking account to allow checks that have been written to clear that would otherwise bounce.
The case was investigated by the FBI’s Richmond Field Office. Assistant United States Attorney David T. Maguire prosecuted the case on behalf of the United States.
Capehart was the president of two Virginia companies, Retirement Investment Group (RIG) and BYB Investments. Through these companies, he promoted real estate ventures, including a convenience store and multiple pieces of real estate that he purchased for rental and investment purposes. Capehart admitted to falsifying mortgage applications, check kiting and defrauding 22 investors in a Ponzi scheme.
Court documents show that from 2003 until 2006, Capehart purchased approximately 40 rental properties with little or no down payment and a large mortgage-backed loan. In obtaining the loans from banks, however, he did not fully disclose all of his real estate loan liabilities and other real estate holdings. As time passed, he would obtain new appraisals and refinance the properties based on the appreciated value of the properties without disclosing all of his liabilities and real estate holdings. After paying off the original loan, Capehart would then use the excess funds for business and personal purposes. The combined losses of Wachovia Bank NA, J. P. Morgan Chase Bank, and Suntrust Bank were approximately $252,000.
Capehart also admitted that as the real estate appreciation slowed down or disappeared in or about 2006, he could not generate additional funds by simply refinancing the properties. Therefore, he turned to private investors whom he solicited with a promissory note program carrying high interest rates, such as 20 percent over three months, equating to an annual rate of 80 percent. He represented that he would be able to pay such high rates of interest because he was investing in a variety of properties, such as the Sans Souci Hotel and Apartment Complex in Buckroe Beach, Virginia a beach house in Kure Beach, N.C., a convenience store in Richmond, Virginia and various other properties in Newport News and Hampton, Va.
Capehart solicited money from approximately 22 potential investors and induced them to invest approximately $2.053 million by making materially false, fraudulent and misleading representations. Capehart’s program was a Ponzi scheme, in which early investors are paid with the contribution of later investors rather than the profit from an underlying business activity. Capehart also lulled investors into believing that their “investment” funds would be safe and secure. To prevent the discovery of the true use of investors’ funds and forestall legal action by investors, Capehart encouraged investors not to seek the immediate return of funds but to "roll over" their investments and thereby purportedly earn even greater profits.
Court documents show that in late 2006 and early 2007, in order to continue to buy time, Capehart began kiting hundreds of thousands of dollars of checks between First Market Bank, Village Bank and First Capital Bank. The purpose of the illegal scheme is to artificially inflate the balance of a checking account to allow checks that have been written to clear that would otherwise bounce.
The case was investigated by the FBI’s Richmond Field Office. Assistant United States Attorney David T. Maguire prosecuted the case on behalf of the United States.
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