According to the indictment and the defendant’s admissions in court, on March 12, 2011, on the Coeur d’Alene Indian Reservation, Allen intentionally assaulted one victim by pushing a firearm into the victim’s body and the other victim by pointing a firearm in the victim’s direction. Allen verbally threatened both of the victims.
Tuesday, January 31, 2012
Worley Man Sentenced for Assault on Coeur d’Alene Indian Reservation
COEUR D’ALENE—Timothy Allen, Jr., 19, of Worley, Idaho, was sentenced today in federal court in Coeur d’Alene to 33 months in prison for two counts of assault with a dangerous weapon, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Edward J. Lodge also ordered Allen to serve three years of supervised release following his prison term and perform 80 hours of community service. He pleaded guilty to the charges on November 16, 2011.
The case was investigated by the Coeur d’Alene Tribal Police and the Federal Bureau of Investigation.
Norfolk Contractor Sentenced to 37 Months in Prison for Kickback Scheme and Failure to File Tax Return
WASHINGTON—A Virginia contractor was sentenced today to serve 37 months in prison for participating in a scheme to steer contracts to him for repair, maintenance, and renovation work at health care and nursing home facilities owned by Medical Facilities of America Inc. (MFA), the Department of Justice announced.
Edward T. Fodrey, a resident of Norfolk, Va., was sentenced in U.S. District Court in Norfolk by Judge Mark S. Davis and was ordered to pay $326,799 in restitution. Fodrey pleaded guilty on April 4, 2011, to one count of conspiracy to commit mail fraud in connection with his participation in a kickback scheme and one count of failing to file a tax return.
According to the charge filed on March 30, 2011, from about May 2006 until at least December 2006, Fodrey conspired with an MFA employee who oversaw the bidding process for repair, maintenance and renovation contracts at MFA facilities in North Carolina and Virginia. The MFA employee steered contracts to Fodrey in return for kickbacks by creating fictitious competitor bids that were higher than the quotes submitted by Fodrey and other co-conspirator venders in order to create the appearance of competition. The MFA employee directed subordinates to solicit quotes only from Fodrey or other conspiring vendors and specified the amount Fodrey should quote to MFA as well as the amount of the kickback on each of the contracts.
Fodrey paid more than $160,000 in kickbacks to the MFA employee and received contracts and subcontracts totaling more than $750,000. The court document states that as a result of the kickback scheme, MFA was deprived of competitive pricing to its financial detriment. Fodrey was also charged with failing to file a tax return for 2006, which is the year in which Fodrey received payment on the MFA contracts.
Fodrey is the first to be sentenced of the four individuals charged to date in connection with the department’s ongoing fraud investigation into the award of repair, maintenance, and renovation contracts at facilities owned by MFA. The investigation is being conducted by the Antitrust Division’s Philadelphia Field Office, the U.S. Attorney’s Offices for the Eastern District of Virginia and the Western District of Virginia, the FBI in Roanoke, Va., and the Internal Revenue Service-Criminal Investigation in Roanoke. Anyone with information concerning fraudulent behavior relating to the award of contracts by MFA should contact the Antitrust Division’s Philadelphia Field Office at 215-597-7405 or visit Justice.gov/atr/contact/newcase.htm.
CBP Officers Capture Man Sought on Child Sexual Assault Charges
El Paso, Texas – U.S. Customs and Border Protection (CBP) officers working at the El Paso port of entry arrested a 21-year-old El Paso man who was being sought by the El Paso Police Department on two counts of sexual assault of a child. The arrest was made Sunday.
U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws
“CBP officers working at area ports of entry this weekend identified and took custody of six people being sought by law enforcement agencies,” said Hector Mancha, U.S. Customs and Border Protection El Paso Port Director. “The vigilance exhibited by CBP officers on a daily basis is leading to these apprehensions.”
The arrest was made shortly before noon at the Ysleta international crossing when Carlos Eduardo Rios entered the port as a pedestrian and presented his passport to the CBP officer working at the primary inspection booth. The CBP officer queried the document and received notification that Rios was being sought by local law enforcement. CBP officers took the subject into custody and confirmed the warrant. Rios was turned over to the El Paso County Sheriff’s office and booked into the El Paso County Jail where he is currently detained.
While anti-terrorism is the primary mission of U.S. Customs and Border Protection, the inspection process at the ports of entry associated with this mission results in impressive numbers of enforcement actions in all categories.
CBP Officers Locate Drug Load in Framed Quinceanera Plaques
18-year-old from Denver arrested
Columbus, New Mexico – U.S. Customs and Border Protection (CBP) officers working at the Columbus port of entry made an unusual seizure Sunday. They discovered bundles of marijuana stashed inside wood-framed and mirrored Quinceanara plaques. The seizure was one of several large and unusual drug busts made by CBP officers in recent days. “This seizure illustrates that smugglers will go to great lengths in the effort to conceal their contraband,” said Robert Reza, U.S. Customs and Border Protection Columbus Port Director. “No expense was spared in the production of these smuggling tools.”
The seizure was made shortly before noon when a 2002 Ford Explorer with a lone occupant entered the port from neighboring Palomas, Mexico. CBP officers were conducting an operation inspecting vehicles in line when they approached the driver of the vehicle. CBP officers selected the vehicle for a secondary exam.
CBP officers initiated an exam of the vehicle during which they located numerous boxes filled with quincinera decorations. A CBP officer noticed an anomaly in several framed/mirrored Quinceanara plaques which were in the vehicle. CBP officers drilled into one plaque and recovered a green substance which tested positive for marijuana. CBP officers dismantled the plaques and recovered 100 thin rectangular wrapped packages. The packages contained marijuana and weighed 104 pounds.
CBP officers arrested the driver of the vehicle, 18-year-old Tahlia Arana Perea of Denver, Colorado. She was turned over to U.S. Immigration and Customs Enforcement HSI agents to face federal charges including importation of a controlled substance and possession with intent to distribute a controlled substance.
In addition to the above seizure, CBP officers working at area ports of entry made six additional drug seizures this weekend during which they confiscated 1,046 pounds of marijuana and 2.5 pounds of cocaine.While anti-terrorism is the primary mission of U.S. Customs and Border Protection, the inspection process at the ports of entry associated with this mission results in impressive numbers of enforcement actions in all categories.
Timeshare Marketing Scams
Timeshare owners across the country are being scammed out of millions of dollars by unscrupulous companies that promise to sell or rent the unsuspecting victims’ timeshares. In the typical scam, timeshare owners receive unexpected or uninvited telephone calls or e-mails from criminals posing as sales representatives for a timeshare resale company. The representative promises a quick sale, often within 60-90 days. The sales representatives often use high-pressure sales tactics to add a sense of urgency to the deal. Some victims have reported that sales representatives pressured them by claiming there was a buyer waiting in the wings, either on the other line or even present in the office.
■Check with the Better Business Bureau to ensure the company is reputable.
Timeshare owners who agree to sell are told that they must pay an upfront fee to cover anything from listing and advertising fees to closing costs. Many victims have provided credit cards to pay the fees ranging from a few hundred to a few thousand dollars. Once the fee is paid, timeshare owners report that the company becomes evasive—calls go unanswered, numbers are disconnected, and websites are inaccessible.
In some cases, timeshare owners who have been defrauded by a timeshare sales scheme have been subsequently contacted by an unscrupulous timeshare fraud recovery company as well. The representative from the recovery company promises assistance in recovering money lost in the sales scam. Some recovery companies require an up-front fee for services rendered, while others promise no fees will be paid unless a refund is obtained for the timeshare owner. The IC3 has identified some instances where people involved with the recovery company also have a connection to the resale company, raising the possibility that timeshare owners are being scammed twice by the same people.
If you are contacted by someone offering to sell or rent your timeshare, the IC3 recommends using caution. Listed below are tips you can use to avoid becoming a victim of a timeshare scheme:
■Be wary if a company asks you for up-front fees to sell or rent your timeshare.
■Read the fine print of any sales contract or rental agreement provided.■Check with the Better Business Bureau to ensure the company is reputable.
To obtain more information on Internet schemes, visit www.LooksTooGoodToBeTrue.com.
Anyone who believes they have been a victim of this type of scam should promptly report it to the IC3’s website at www.IC3.gov. The IC3’s complaint database links complaints together to refer them to the appropriate law enforcement agency for case consideration.
Justice Department Charges St. Bernard Parish, Louisiana for Limited Rental Housing Opportunities for African-Americans
WASHINGTON – The Department of Justice today filed a lawsuit against St. Bernard Parish, La., alleging that the parish violated the Fair Housing Act by engaging in a multi-year campaign to limit rental housing opportunities for African-Americans in the parish.
The complaint, filed in the U.S. District Court for the Eastern District of Louisiana, alleges that the parish violated the Fair Housing Act when it took repeated actions to limit the availability of multi-family and rental housing in the parish. These actions include the establishment of an onerous permit-approval process for single-family rentals, the elimination of multi-family housing in large portions of the parish and repeated attempts to block the development of multi-family affordable-housing. The complaint alleges that the parish’s actions both were intended to and had the effect of disproportionately disadvantaging African-Americans seeking to rent housing in St. Bernard Parish.
The parish has been sued previously over housing and land-use decisions since Hurricane Katrina and found in contempt of court orders repeatedly. In October 2011, a federal district court found that the parish had engaged in intentional discrimination in violation of the Fair Housing Act by “doggedly attempt[ing] to preserve the pre-Katrina demographics of St. Bernard Parish.”
“Every person should have the opportunity to choose where they will live. When a local government puts up discriminatory barriers, as St. Bernard Parish has, it violates the law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will use our enforcement tools to break down such barriers and ensure that people have housing choice free of discrimination.”
“The Department of Justice is committed to ensuring that everyone in our community – regardless of race, color or national origin – enjoys the equal protection of our Constitution and our laws, as well as the absolute right to live in any community of their choosing without discrimination,” said James Letten, U.S. Attorney for the Eastern District of Louisiana.
“Today’s action exemplifies how HUD and the Justice Department are working together to eradicate housing discrimination,” stated John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Our agencies will not allow zoning or other exclusionary means to deny housing because of race.”
The complaint is based in part on referrals from the Department of Housing and Urban Development (HUD). From March 2008 to September 2011, 10 residents and homeowners filed complaints with HUD, alleging that the parish’s actions violated the Fair Housing Act. HUD referred these complaints to the Department of Justice in accordance with a provision in the Fair Housing Act that authorizes the department to enforce allegations of discriminatory zoning or land use practices by a local government.
Assistant Secretary for Fair Housing and Equal Opportunity, John Trasviña, also filed a complaint on behalf of the HUD Secretary alleging that the parish violated the Fair Housing Act by passing an ordinance that restricted new multifamily housing construction to certain areas of the city and prohibited it in others. HUD referred this complaint to the Department of Justice on Jan. 20, 2012.
The department’s lawsuit seeks a court order that would enjoin the parish from making unavailable or denying housing on the basis of race and requires it to take actions to prevent any similar discriminatory conduct in the future. The lawsuit also seeks monetary damages for persons harmed by the parish’s actions and a civil penalty.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at Justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at fairhousing@usdoj.gov, or contact HUD at 1-800-669-9777.
Justice Department Celebrates 25th Anniversary of False Claims Act Amendments of 1986
Considered Single Most Important Tool U.S. Taxpayers Have to Recover Funds Lost Due to Fraud Against the Government
The Justice Department today celebrated the 25th anniversary of the 1986 amendments to the False Claims Act. The False Claims Act has been called the single most important tool that American taxpayers have to recover funds when false claims are made to the federal government, including health care fraud, mortgage fraud, and procurement fraud.
“In the last quarter century, the False Claims Act’s success has been unparalleled with more than $30 billion dollars recovered since it was amended in 1986 and $8.8 billion since January 2009,” said Attorney General Eric Holder. “In these challenging economic times when resources are scarce, government budgets are being tightened and so many Americans are forced to do more with less, the need to act as sound stewards of every taxpayer dollar has never been more clear or more urgent. The Department of Justice has achieved record recoveries in recent years and we will continue to aggressively pursue those who would take advantage of their fellow citizens.”
The False Claims Act was originally passed by Congress during the administration of President Abraham Lincoln in 1863 to help the government recover federal funds stolen through fraud by U.S. government contractors. During the Civil War, the law was used to recover monies from unscrupulous contractors who sold the Union Army decrepit horses and mules in ill health, faulty rifles and ammunition, and rancid rations and provisions.
In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act. The amendment permitted the government to seek treble damages and revised the statute’s qui tam, or whistleblower, provisions to increase the incentives for whistleblowers to come forward with allegations of fraud. Since those changes were enacted, the Justice Department has recovered more than $30 billion under the act.
On this, the 25th anniversary of the 1986 amendments, Tony West, Assistant Attorney General of the Civil Division of the Department of Justice, paid tribute to the bill’s sponsors, thanking them for “their foresight in providing the Department with this powerful tool to fight fraud, waste and abuse.” He also expressed his gratitude to Senator Patrick J. Leahy, Chairman of the Senate Judiciary Committee, and to Senator Grassley and Representative Berman for their support of the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes.
“One need look no further than the record recoveries this department has obtained in civil fraud cases to demonstrate the tremendous importance and effectiveness of the False Claims Act,” said Assistant Attorney General West. “That framework was put in place in 1986, but our successes would not have been possible without the ongoing efforts and collaboration of career civil servants, private counsel, and, of course, the whistleblowers who come forward to report fraud.”
In FY 2011 alone, the Department of Justice secured more than $3 billion in settlements and judgments in civil cases involving fraud against the government. Since January 2009, the department has recovered $8.8 billion under the False Claims Act – the largest three-year total in the Justice Department’s history, and 28 percent of all recoveries since the False Claims Act was amended in 1986.
Among the top settlements the government has achieved since the passage of the 1986 amendments are the following, which include, in some cases, criminal and state civil recoveries: $2.3 billion – Pfizer Inc. (2010); $1.7 billion – Columbia/HCA I & II (2000 and 2003); $1.415 billion – Eli Lilly and Company (2009); $950 million – Merck Sharp & Dohme (2011); $923 million – Tenet Healthcare Corporation (2006); $875 million – TAP Pharmaceuticals (2002); $750 million – GlaxoSmithKline (2010); $704 million – Serono, S.A. (2005); $650 million – Merck (2008); and $634 million – Purdue Pharma (2007).
Investigating Insurance Fraud, A $30-Billion-a-Year Racket
Putting the brakes on major white-collar frauds of all kinds is one of our most important responsibilities, and there is no shortage of work these days for the FBI and its partners.Our corporate and securities fraud cases, for example, resulted in more than 600 convictions last year—including a number of high-level executives—and more than $23 billion in recoveries, fines, and restitutions over the past three years. Our mortgage fraud efforts continue to pinpoint the most egregious offenders; approximately 70 percent of our 3,000 pending mortgage fraud investigations involve losses of more than $1 million. There are also plenty of cases involving health care fraud, bankruptcy fraud, credit card fraud, mass marketing fraud, and various wire and mail fraud schemes.
Insurance fraud—non-health care-related fraud involving casualty, property, disability, and life insurance—is another financial crime that falls under FBI jurisdiction. The U.S. insurance industry consists of thousands of companies that collect more than $1.1 trillion in premiums each year, according to the Insurance Information Institute, and the estimated cost of fraud is approximately $30 billion a year. Most of this expense is passed on to consumers in the form of higher insurance premiums, to the tune of about $200 to $300 a year per family, according to the National Insurance Crime Bureau. Not to mention the number of insurance companies that go under because of excessive claims and/or the looting of company assets.
There are many capable private and government investigative and regulatory entities at the national and state level that look into insurance fraud, so the FBI directs its resources toward identifying the most prevalent schemes and the top echelon criminals and criminal organizations who commit the fraud. But even when conducting our own investigations, we often work closely with private fraud associations, state fraud bureaus, state insurance regulators, and other federal agencies.
The FBI currently focuses on the following schemes:
■Disaster related fraud, which became such a problem after Hurricane Katrina that a special task force was created to address it (and evolved into today’s National Center for Disaster Fraud);
■Premium and asset diversion, which happens when insurance agents, brokers, even insurance company executives steal insurance premiums submitted by policy holders and sometimes plunder company financial assets for their own personal use;■Viatical fraud (a “viatical” settlement is one where an investor buys the right to receive the benefit of a terminally ill or elderly person’s life insurance policy);
■Staged auto accidents;
■Bodily injury fraud; and
■Property insurance fraud.
Who commits insurance fraud. Mostly dishonest policy holders, insurance industry insiders (i.e., agents, brokers, company execs), and loosely organized networks of crooked medical professionals and attorneys who use their knowledge to bypass anti-fraud measures put in place by insurance companies.
How we investigate it. Like many other white-collar crime investigations, insurance fraud is mostly about following the money trail—which often involves questioning victims and victim companies, reviewing financial documents, and using sensitive techniques like informants and cooperating witnesses.
We also use our intelligence capabilities to keep our finger on the pulse of emerging trends—for example, as more insurance companies conduct business online, we fully expect to see a rise in the theft of policy holders’ identities and in cyber-based insurance scams. We will keep you posted.
Defend Yourself From Insurance Fraud
- Never ignore a notice from your insurance company—even if your agent tells you it’s a mistake and that he or she will take care of it.- Don’t give an insurance agent money without getting a receipt.
- Don’t give out your insurance identification number to companies or individuals you don’t know.
- After an auto accident, be careful of strangers who offer you quick cash or recommend a particular attorney or health care provider.
• Don’t buy life insurance as an investment without fully understanding what it is you’re buying.
- Never buy insurance from unlicensed agents or companies, and if you have any doubts about them, check their status by contacting your state’s insurance office.
Monday, January 30, 2012
Two Defendants Indicted for Home Equity Loan Fraud
SACRAMENTO, CA—United States Attorney Benjamin B. Wagner announced that a federal grand jury returned an indictment yesterday charging two defendants with mail fraud and money laundering in connection with a mortgage fraud scheme that resulted in losses of at least $180,000 to lenders. Charged are Andrey Kim, 28, of Sacramento; and Sultanmurod Rashidov, 29, of Brooklyn, N.Y. Kim was indicted for another mortgage fraud scam last month. He is scheduled to appear on the new charges on January 31, 2012, before Magistrate Judge Carolyn K. Delaney. Rashidov is believed to be out of the country.
The charges are only allegations, and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
According to court records, Kim and Rashidov were responsible for taking out more than $236,000 in home equity loans for a single property in West Sacramento. As part of the loan application process, Kim allegedly submitted false and fraudulent information related to his gross monthly income and outstanding mortgage balance. About a year after obtaining a $58,800 home equity loan, Kim signed a deed granting joint ownership of the property to Rashidov. The indictment alleges that Rashidov then submitted a home equity loan application containing false and fraudulent information related to his employer, gross monthly income, and outstanding mortgage balance. After obtaining $178,000 from the lender, Rashidov defaulted on the loan.
This case is the product of a joint investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant United States Attorney Dominique N. Thomas is prosecuting the case.
If convicted of mail fraud, the defendants face a maximum statutory penalty of 30 years in prison and a $1 million fine. If convicted of money laundering, they face a maximum statutory penalty of 10 years in prison and a $250,000 fine. If convicted, the actual sentence will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Nogales CBP Officers Seize Cocaine Valued at nearly $250,000
Nogales, Ariz. — Customs and Border Protection officers assigned to the Tucson Field Office seized more than 27 pounds of cocaine, valued at nearly $250,000, at the Dennis DeConcini Port Friday.
U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.
A 20-year-old Mexican male, attempting to enter the United States, was selected for a secondary inspection of his Chevrolet van. After a CBP narcotics detection canine alerted to the presence of drugs, the van was taken to a vehicle lift where officers located 10 packages of cocaine inside a non-factory compartment. The drugs and vehicle were processed for seizure. The man was arrested and turned over to U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Individuals arrested are charged with a criminal complaint, which raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.
CBP's Office of Field Operations is the primary organization within Homeland Security tasked with an anti-terrorism mission at our nation’s ports. Officers screen all people, vehicles and goods entering the United States while facilitating the flow of legitimate trade and travel. Their mission also includes carrying out border-related duties, including narcotics interdiction, enforcing immigration and trade laws, and protecting the nation's food supply and agriculture industry from pests and diseases.
Tennessee Man Arrested on Child Pornography Charges
ATLANTA—Special Agent in Charge Brian D. Lamkin announces, on behalf of the FBI’s Northwest Georgia Safe Child Task Force, the following arrest at Chatsworth, Georgia:
The public should be reminded that the above are mere allegations and that all persons are presumed innocent until proven guilty in a court of law.
Michael Robert Doan, 51 years of age, of Ooltewah, Tennessee, was arrested on Thursday, January 26, 2012, by FBI agents and task force officers after coming to the attention of undercover officers on the Internet. Doan is currently facing state charges of attempted aggravated child molestation (four counts) and violation of the Computer Pornography and Child Exploitation Act after having attempted to meet with a minor child for purposes of having sex. He was met instead by FBI agents and task force officers of the FBI’s Northwest Georgia Safe Child Task Force, where he was arrested.
Doan is currently being housed at the Murray County Jail, Chatsworth, Georgia.
Yazaki Corp., Denso Corp., and Four Yazaki Executives Agree to Plead Guilty to Automobile Parts Price-Fixing and Bid-Rigging Conspiracies
Companies Agree to Pay a Total of $548 Million in Criminal Fines–Includes Second Largest Criminal Fine Ever for an Antitrust Violation; Executives Agree to Serve Prison Time
WASHINGTON—Two Japanese suppliers of automotive electrical components—Yazaki Corporation and DENSO Corporation—have agreed to plead guilty and to pay a total of $548 million in criminal fines for their involvement in multiple price-fixing and bid-rigging conspiracies in the sale of parts to automobile manufacturers in the United States, the Department of Justice today announced. Four executives, all Japanese nationals, have also agreed to plead guilty and to serve prison time in the United States.
Yazaki has agreed to pay a $470 million criminal fine—the second largest criminal fine obtained for a Sherman Act antitrust violation—and DENSO has agreed to pay a $78 million criminal fine. The four executives from Yazaki—Tsuneaki Hanamura, Ryoji Kawai, Shigeru Ogawa, and Hisamitsu Takada—will serve prison time ranging from 15 months to two years. The two-year sentences would be the longest term of imprisonment imposed on a foreign national voluntarily submitting to U.S. jurisdiction for a Sherman Act antitrust violation. The fine amount and prison sentences are subject to court approval.
“As a result of the Antitrust Division’s ongoing criminal investigation of price fixing and bid rigging in the auto parts industry, more than $748 million in fines have been obtained—which already surpasses the total amount in criminal fines obtained by the division for all of last fiscal year,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Criminal antitrust enforcement remains a top priority and the Antitrust Division will continue to work with the FBI and our law enforcement counterparts to root out this kind of pernicious cartel conduct that results in higher prices to American consumers and businesses.”
“I would like to commend the employees of the FBI’s Detroit Field Office and the Department of Justice Antitrust Division for their fine work on this very important antitrust investigation. This team has devoted countless hours to the investigation and I appreciate their devotion to the mission. The companies involved in this case conspired to the price fixing and bid rigging of automotive parts. This criminal activity has a significant impact on the automotive manufacturers in the United States, Canada, Japan, and Europe and had been occurring at least a decade. The conduct had also affected commerce on a global scale in almost every market where automobiles are manufactured and/or sold,” said FBI’s Special Agent in Charge Andrew G. Arena.
According to court documents filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Yazaki, DENSO, Hanamura, Kawai, Ogawa, Takada, and their co-conspirators carried out the conspiracies by agreeing, during meetings and conversations, to allocate the supply of the named products on a model-by-model basis and to coordinate price adjustments requested by automobile manufacturers in the United States and elsewhere. They sold automotive electrical components to automobile manufacturers at inflated prices and engaged in meetings and conversations for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme.
According to a three-count felony charge, Yazaki engaged in three separate conspiracies: to rig bids for and fix, stabilize and maintain the prices of automotive wire harnesses and related products from 2000 through 2010; to rig bids for and fix, stabilize and maintain the prices of instrument panel clusters from 2002 through 2010; and to fix, stabilize and maintain the prices of fuel senders from 2004 through 2010. All three conspiracies involved products sold to customers in the United States and elsewhere. Automotive wire harnesses are automotive electrical distribution systems used to direct and control electronic components, wiring and circuit boards in cars. Instrument panel clusters, also known as meters, are the mounted array of instruments and gauges housed in front of the driver of an automobile. Fuel senders reside in the fuel tank of an automobile and measure the amount of fuel in the tank.
According to a two-count felony charge, DENSO engaged in conspiracies to rig bids for and to fix, stabilize and maintain the prices of electronic control units (ECUs) and heater control panels (HCPs) sold to customers in the United States and elsewhere. An ECU is an embedded system that controls one or more of the electronic systems or subsystems in a motor vehicle. HCPs are located in the center console of an automobile and control the temperature of the interior environment of a vehicle.
According to four separate one-count felony charges, Hanamura, Kawai, Ogawa, and Takada each engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices of automotive wire harnesses and related products sold to customers in the United States and elsewhere. The department said that the individuals participated in the conspiracies at various times from at least as early as January 2000, until at least February 2010. During the conspiracies, the individuals held the following positions: Hanamura was a branch manager at Yazaki North America in Columbus, Ohio, and a Honda division sales manager in Japan; Kawai was director of Toyota Sales of Yazaki North America in Lexington, Ky., and vice division head of Yazaki’s Toyota Business Unit in Japan; Ogawa was assistant section manager and later section manager in Yazaki’s Honda Business Unit in Japan, and branch manager in Yazaki’s Honda Sales Unit and later director at Yazaki North America in Columbus; Takada was assistant manager in Yazaki’s Toyota Business Unit, director of Yazaki North America in Lexington, and manager of a sales department of Yazaki’s Toyota Business Unit in Japan. According to the plea agreements, which are subject to court approval, Ogawa and Takada have each agreed to serve 15 months in a U.S. prison. Hanamura and Kawai have each agreed to serve two years in a U.S. prison. Each of the four executives has also agreed to pay a $20,000 criminal fine. According to the plea agreements, Yazaki, DENSO, Hanamura, Kawai, Ogawa, and Takada have all agreed to assist the department in its ongoing investigation into the automotive parts industry.
On Nov. 14, 2011, Furukawa Electric Co. Ltd. pleaded guilty and was sentenced to pay a $200 million fine for its role in the wire harnesses price-fixing and bid-rigging conspiracy. Three of Furukawa’s executives also pleaded guilty. The court sentenced two of the executives to 15 and 18 month prison sentences, to be served in the United States. Sentencing of the third executive, who agreed to serve a year and a day in prison in the United States, is scheduled for Feb. 28, 2012.
Yazaki and DENSO are charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million criminal fine for a corporation. Hanamura, Kawai, Ogawa and Takada are also charged with a violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for an individual. The maximum fine for both a company and an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charges arise from an ongoing federal antitrust investigation into bid rigging, price fixing and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information concerning the focus of this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or the FBI’s Detroit Field Office at 313-965-2323.
Winter Storm Fire Safety
A wide range of natural disasters occurs within the United States every year. Natural disasters can have a devastating effect on you and your home. The U.S. Fire Administration encourages you to use the following safety tips to help protect yourself, your family and your home from the potential threat of fire during or after a winter storm. You can greatly reduce your chances of becoming a fire casualty by being able to identify potential hazards and following the outlined safety tips.Some Types of Fire Related Hazards Present During and After a Winter Storm
•Alternative heating devices used incorrectly create fire hazards.•Damaged or downed utility lines can present a fire and life safety hazard.
•Water damaged appliances and utilities can be electrically charged.
•Frozen water pipes can burst and cause safety hazards.
•Leaking gas lines, damaged or leaking gas propane containers, and leaking vehicle gas tanks may explode or ignite.
•Generators are often used during power outages. Generators that are not properly used and maintained can be very hazardous.
Chemical Safety
•Look for combustible liquids like gasoline, lighter fluid, and paint thinner that may have spilled. Thoroughly clean the spill and place containers in a well-ventilated area.•Keep combustible liquids away from heat sources.
Electrical Safety
•If your home has sustained flood or water damage, and you can safely get to the main breaker or fuse box, turn off the power.•Assume all wires on the ground are electrically charged. This includes cable TV feeds.
•Look for and replace frayed or cracked extension and appliance cords, loose prongs, and plugs.
•Exposed outlets and wiring could present a fire and life safety hazard.
•Appliances that emit smoke or sparks should be repaired or replaced.
•Have a licensed electrician check your home for damage.
Gas Safety
•Smell and listen for leaky gas connections. If you believe there is a gas leak, immediately leave the house and leave the door(s) open.•Never strike a match. Any size flame can spark an explosion.
•Before turning the gas back on, have the gas system checked by a professional.
Generator Safety
•Follow the manufacturer's instructions and guidelines when using generators.
•Use a generator or other fuel-powered machines outside the home. CO fumes are odorless and can quickly overwhelm you indoors.•Use the appropriate sized and type power cords to carry the electric load. Overloaded cords can overheat and cause fires.
•Never run cords under rugs or carpets where heat might build up or damage to a cord may go unnoticed.
•Never connect generators to another power source such as power lines. The reverse flow of electricity or 'backfeed' can electrocute an unsuspecting utility worker.
Heating Safety
•Kerosene heaters may not be legal in your area and should only be used where approved by authorities.•Do not use the kitchen oven range to heat your home. In addition to being a fire hazard, it can be a source of toxic fumes.
•Alternative heaters need their space. Keep anything combustible at least 3 feet away.
•Make sure your alternative heaters have 'tip switches.' These 'tip switches' are designed to automatically turn off the heater in the event they tip over.
•Only use the type of fuel recommended by the manufacturer and follow suggested guidelines.
•Never refill a space heater while it is operating or still hot.
•Refuel heaters only outdoors.
•Make sure wood stoves are properly installed, and at least 3 feet away from combustible materials. Ensure they have the proper floor support and adequate ventilation.
•Use a glass or metal screen in front of your fireplace to prevent sparks from igniting nearby carpets, furniture or other combustible items.
and Remember...
•Always use a flashlight - not a candle - for emergency lighting.•Some smoke alarms may be dependent on your home's electrical service and could be inoperative during a power outage. Check to see if your smoke alarm uses a back-up battery and install a new battery at least once a year.
•Smoke alarms should be installed on every level of your home and inside and outside of sleeping areas.
•All smoke alarms should be tested monthly. All batteries should be replaced with new ones at least once a year.
•If there is a fire hydrant near your home, keep it clear of debris for easy access by the fire department.
Federal Court Bars Nevada Man from Promoting Tax Fraud Scheme
California Court Says Promoter’s Theories About Taxing Authority Are Wrong
A federal court has permanently barred David Champion from promoting a tax fraud scheme designed to assist his customers evade federal taxes, the Justice Department announced today. The civil injunction order was signed by Judge Percy Anderson of the U.S. District Court for the Central District of California.
The court determined that Champion promotes a tax fraud scheme based on the frivolous claim that U.S. citizens can choose to opt out of federal income taxation by declaring themselves to be “non-taxpayers.” The court found that Champion promotes the scheme through websites, a radio program and a self-published work entitled Income Tax: Shattering the Myths. According to the government complaint, Champion, who currently resides in Nevada, repeatedly helped his customers evade taxes by establishing sham “pure trusts” to which they transferred their business and personal assets, and he falsely informed his customers that their purported trusts did not need to file income tax returns or pay taxes.
In granting the permanent injunction, Judge Anderson held that Champion’s theories concerning the government’s taxing authority are wrong. Among other things, the injunction order bars Champion from instructing people that they may become “non-taxpayers,” from offering his services to assist others in taking advantage of this false status, and from forming trusts for others.
The government alleged that Champion’s misconduct led to civil and criminal penalties against his customers. The complaint states that Internal Revenue Service (IRS) inquiries into eight of Champion’s customers revealed that he had assisted them in evading payment of approximately $1.4 million in income taxes.
Fitchburg Man Sentenced for Child Pornography Offense
BOSTON—A Fitchburg man was sentenced today in federal court on child pornography charges.
United States Attorney Carmen M. Ortiz and Richard DesLauriers, Special Agent in Charge of the Boston Office of the Federal Bureau of Investigation, made the announcement today. The case was prosecuted by Assistant U.S. Attorneys Mark Grady and David Hennessy of Ortiz’s Worcester Branch Office.
Dennis Bilotta, 69, was sentenced by U.S. District Judge Saylor to 30 months in prison to be followed by six years of supervised release. In October 2011, Bilotta pleaded guilty to possession of child pornography.
Had the case proceeded to trial, the government’s evidence would have proven that an undercover FBI investigation of peer-to-peer file-sharing over the Internet led federal authorities to obtain a search warrant for Bilotta’s home and computer. The execution of that search warrant resulted in the seizure of numerous photographs and videos depicting child pornography.
D&R Car Lot Owners and Manager Indicted
Indictment Alleges a Conspiracy to Defraud KeyBank
PORTLAND, OR—The former owners and manager of D&R Auto Sales, D&R Motors, and D&R Ford/Mercury appeared in federal court this week to face conspiracy charges. The IRS-Criminal Investigations Division, the FBI, and the Post Falls (Idaho) Police Department arrested Roger Spangenberg, 49, of Post Falls, Idaho, after a federal grand jury returned an indictment charging Spangenberg; his brother, David Spangenberg, 52, of Spokane WA; and Steven Johnson, 63, of Aberdeen, WA, with conspiracy to commit bank fraud. The Spangenberg brothers owned the now closed D&R automobile dealerships, formerly located in Hermiston and Enterprise, Oregon, and Steven Johnson served as a manager.
The indictment alleges that from January 2007 through August 2008, the Spangenbergs and Johnson conspired to defraud KeyBank in connection with a Floorplan Line of Credit and Security Agreement, known in the automobile industry as a “flooring loan.” KeyBank extended a line of credit to the D&R dealerships to purchase new inventory, but the Spangenbergs and Johnson failed to repay KeyBank after they sold the inventory. The indictment alleges that the Spangenbergs and Johnson deceived KeyBank into believing the dealerships had not yet sold inventory, including asking customers to return recently purchased automobiles to the dealerships to receive a free service on the day of an audit, and misrepresenting to KeyBank that automobiles not present on the lot were being used as rental cars. The indictment also alleges that the defendants submitted false Vehicle Identification Numbers (VIN) to KeyBank to receive funding for inventory the dealerships never purchased, and that defendants “double floored” vehicles with more than one financial institution. KeyBank suffered a loss of more than $6 million as a result of the alleged fraud.
All defendants pleaded not guilty to all charges. Trial is set for March 27, 2012, before U.S. District Judge Michael H. Simon.
“These defendants left a multi-million-dollar trail of destruction in eastern Oregon,” stated U.S. Attorney S. Amanda Marshall. “Financial fraud results in significant harm both to our financial institutions and our communities, and we will continue to work with our law enforcement and financial institution partners to pursue and prosecute financial fraud aggressively in this district.”
Conspiracy to commit bank fraud carries a maximum sentence of 30 years in prison and a $1,000,000 fine.
Jury Finds St. Augustine Beach Woman Guilty of Conspiracy, Mail Fraud, and Wire Fraud
JACKSONVILLE, FL—U.S. Attorney Robert E. O’Neill announces that a federal jury yesterday found Lydia Cladek (67, St. Augustine Beach) guilty of conspiracy to commit mail and wire fraud, mail fraud, and wire fraud. Cladek was charged in a 14-count indictment on November 19, 2010. She was found guilty on all charges and faces a maximum penalty of 20 years in federal prison for each of the fourteen counts. Cladek’s sentencing hearing will be scheduled for a future date.
This case was investigated by the FBI. It is being prosecuted by Assistant United States Attorneys Jay Taylor and Mac Heavener.
According to testimony and evidence presented at trial, Cladek offered investors the opportunity to “loan” money to Lydia Cladek, Inc. in exchange for a promissory note from the corporation. The notes were secured by car notes that Lydia Cladek, Inc. had purchased in the past. Cladek represented that the assigned notes were genuine and valid, had never been assigned before, and would not be assigned in the future. She also represented that she would use the funds that were loaned by the investors to purchase new car notes. All of these representations were false.
In some cases, the car notes attached as collateral to investor notes had previously been assigned to four or five investors in the past. In many cases, the car notes were then assigned to new victim investors, sometimes in as little as a week.
In addition to making false representations about the quality of the investors’ collateral, evidence also showed that Cladek used new investor funds to pay interest to old investors and to fund her lavish lifestyle. By as early as 2003, Lydia Cladek, Inc. did not have sufficient car notes on hand to provide promised collateral to all investors. By 2005, Cladek had outstanding investor notes of approximately $58 million, but only had car notes on hand for approximately $38 million. By March 31, 2010, the date on which the FBI served a search warrant on Lydia Cladek, Inc., the existing performing car notes owned by Cladek had dwindled to just under $4 million, while the outstanding loans to investors exceeded $90 million.
Cladek used money given to her from investors to maintain lavish real estate holdings, including three vacation homes in Captiva and Sanibel, Florida as well as a luxurious residence in St. Augustine Beach. Cladek maintained her own household “manager” who testified that she purchased much of the custom furnishings and accessories in the home for Lydia Cladek, including a set of sheets costing $2,000.
In order to invest, potential investors had to be personal friends of Cladek or be referred by an existing investor. Cladek obtained many of her investors from her church and other social organizations.
“This case represents personal greed at the highest level,” said U.S. Attorney Robert O’Neill. “We will continue to prosecute those who seek to deprive people of their hard-earned money. The conviction of Lydia Cladek should be a warning to those seeking to take advantage of a trusted business-client relationship, by engaging in fraudulent practices. And it should bring a greater awareness to those seeking to invest their dollars.”
“We are pleased with the jury’s verdict, and hope that Ms. Cladek’s victims can take some comfort in the fact that she has been brought to justice,” stated James Casey, Special Agent in Charge, Federal Bureau of Investigation
Del Rio Sector Border Patrol Agents Continue to Seize Marijuana
Del Rio, Texas – U.S. Border Patrol agents seized over half a million dollars worth of marijuana in two incidents this week.
U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.
Friday, Jan. 20, Eagle Pass North agents working near the Rio Grande River encountered an abandoned green army bag containing more than 62 pounds of marijuana. The narcotics have an approximate street value of $49,680, and were turned over to the Drug Enforcement Administration.
Tuesday, Jan. 24, Del Rio agents performed a vehicle stop on a 2007 Dodge pickup truck and discovered that it contained 579.6 pounds of marijuana worth $463,680. The driver, passenger, vehicle, and narcotics were turned over to the Texas Department of Public Safety.
Border Patrol Agents in Texas Rescue Juvenile
Edinburg, TX ─ U.S. Border Patrol agents from the Rio Grande Valley Sector rescued an illegal alien early this morning, who had fallen victim to the harsh terrain of South Texas.
U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.
Agents rescued the illegal alien after receiving information from the Brooks County Sheriff’s Office about a distressed person, who called 9-1-1 after becoming lost in the brush. Agents were able to locate the illegal alien, who is a male juvenile from Mexico, using GPS coordinates provided by the sheriff’s office. The boy did not require medical attention and will be processed for return to Mexico.
So far this fiscal year, agents in the Rio Grande Valley Sector have rescued more than 60 illegal aliens, whose lives were at risk due to a variety of circumstances. Human smugglers are calloused individuals who are only concerned with making money. They will abandon people who become injured or cannot keep up with the rest of the group. Agents have found more than 20 people this fiscal year, who died while trying to illegally enter the U.S. or while attempting to circumvent a traffic checkpoint.
To report suspicious activity, call the Rio Grande Valley Border Patrol Sector’s toll-free telephone number at (800)-863-9382.
Former Celebrity Security Guard Sentenced to 108 Months for Distributing Oxycodone
ALEXANDRIA, VA—Joseph Emmanuel Mann, 57, of New Carrollton, Md., was sentenced today to 108 months in prison for conspiring to distribute oxycodone.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by United States District T. S. Ellis III.
Mann was convicted by a jury in Alexandria, Va., on Oct. 14, 2011. According to evidence presented in trial, Mann was a former security guard for various celebrities, including Stevie Wonder, Tina Turner, Lionel Richie, and the late Marvin Gaye. From approximately 2003 through 2011, Mann directed a conspiracy to distribute massive quantities of prescription OxyContin80 mg pills throughout the Washington, D.C., metro area. To obtain these prescriptions, Mann wore disguises, including wigs and hats, and used multiple names and dates of birth. By changing his identity, Mann was able to receive high volumes of prescription narcotics on a regular basis from various local pharmacies.
Although Mann’s co-conspirators testified that they had seen him on numerous occasions with a bicycle or on a moped, they also testified that when Mann entered a pharmacy to fill a prescription for OxyContin, he would act as if he was in a lot of pain, wearing neck braces and carrying crutches to feign injury. Mann was seated in a wheel chair throughout trial, despite evidence that no witness had seen him in a wheel chair prior to his arrest on July 12, 2011. Trial evidence showed that Mann distributed more than 20,000 OxyContin 80 mg pills during the eight-year conspiracy, many of which were resold by co-conspirators to addicts throughout Northern Virginia. Witnesses at trial testified that Mann illegally distributed these pills near schools, libraries, restaurants, and on the National Mall.
Oxycodone is a commercially available, pharmaceutical narcotic analgesic that can be used to treat moderate to severe pain. Oxycodone is classified by the Drug Enforcement Administration as a Schedule II controlled substance. A Schedule II controlled substance is identified as one that has a high likelihood of causing addiction. Oxycodone is the active ingredient in OxyContin and Roxicodone brand pills.
This case was investigated by the FBI’s Washington Field Office and is part of an ongoing Organized Crime and Drug Enforcement Task Force (OCDETF) investigation called Operation “Cotton Candy,” which has been focusing on the illegal distribution by numerous doctors, pharmacists, nurses, and patients of pain medication. Prince William County, Fairfax County, Manassas City and the Virginia State Police Departments assisted with the investigation.
Special Assistant United States Attorney Lauren I. Dubick and Assistant United States Attorney Gene Rossi are prosecuting the case on behalf of the United States. A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.
Florida Resident Sentenced to 14 Months in Federal Prison for Obstructing SEC Investigation
NEW HAVEN, CT—Juan Carlos Horna Napolitano, 41, a citizen of both Venezuela and Italy residing in Florida, was sentenced today by U.S. District Judge Stefan R. Underhill in Bridgeport, Conn., to 14 months in prison, followed by two years of supervised release, for conspiring to obstruct a U.S. Securities and Exchange Commission (SEC) investigation of a Connecticut hedge fund advisor, announced David B. Fein, U.S. Attorney for the District of Connecticut.
For more information on the task force, please visit Stopfraud.gov.
“The U.S. Attorney’s Office, FBI and our Connecticut Securities, Commodities and Investor Fraud Task Force are committed to the aggressive investigation and prosecution of individuals who attempt to obstruct the SEC and its critically important mission of protecting investors and the integrity of American capital markets,” said U.S. Attorney Fein.
According to court documents and statements made in court, Francisco Illarramendi of New Canaan, Conn. acted as an investment adviser to certain hedge funds. In approximately 2005 and 2006, one hedge fund he advised lost millions of dollars of the money he was charged with investing. Rather than disclose to his investors the truth about the losses incurred, Illarramendi intentionally chose to conceal this information by engaging in a long-running scheme to defraud and mislead his investors, creditors and the SEC to prevent the truth about the losses from being discovered. As part of the scheme, Illarramendi and others created fraudulent documents, including a fictitious asset verification letter falsely representing that one of the hedge funds, the Short Term Liquidity Fund (STLF), had at least $275 million in credits as a result of outstanding loans, when Illarramendi and others knew it did not have any such credits.
Illarramendi asked Horna to help him document the existence of loans on the books of the STLF in order to mislead the SEC. Horna, in turn, recruited Juan Carlos Guillen Zerpa, the managing partner of a Venezuelan accounting firm, to sign a letter on his accounting firm’s letterhead regarding the list of loans that Illarramendi could use to improve the appearance of the assets of the STLF fund. Illarramendi represented to Horna that Illarramendi would pay him approximately $3.8 million for the creation of the fictitious asset verification letter.
In late 2010, Guillen, who expected to receive approximately $1 million for his participation, agreed to prepare the asset verification letter that would falsely indicate that the STLF had made outstanding loans to Venezuelan companies. Horna then worked with other persons to create a fraudulent list of loans and to incorporate this list in the asset verification letter to be signed by Guillen.
In approximately January 2011, Guillen executed the false asset verification letter and sent it by e-mail to Illarramendi. Thereafter, Horna and Guillen learned that the false asset verification letter had been supplied to the SEC, and that the SEC had initiated a civil action against Illarramendi and others (SEC v. Illarramendi, et al., 3:11-CV-00078). In an effort to deceive and mislead the SEC and to prevent the SEC from learning during the civil action that the asset verification letter was false, Horna, Guillen, Illarramendi and others sought to create fraudulent documentation to falsely support the information contained in the letter. Guillen also participated in a telephone call with representatives of the SEC in January 2011 in which he intentionally misrepresented that the assertions in the asset verification letter about the existence of the hedge funds’ assets were true, when he knew they were false.
Horna maintained control of a Florida bank account in the name of Jeislo Real Estate Investments LLC. In furtherance of the conspiracy, Illarramendi caused two transfers of funds in the total amount of $1.25 million to be made into this bank account. As partial payment for Guillen’s services in this conspiracy, Horna caused $250,000 to be transferred to a third party for the benefit of Guillen.
Today, Judge Underhill ordered Horna to forfeit $935,000, which represents the $1.25 million transferred into the account, minus $315,000 that Guillen has previously forfeited. Horna also was ordered to pay a fine in the amount of $10,000, which will be waived if he pays the full forfeiture amount.
Horna and Guillen were arrested by FBI special agents on March 3, 2011, in Florida. On May 19, 2011, Horna pleaded guilty to one count of conspiracy to obstruct an official proceeding of the SEC.
On Dec. 14, 2011, Guillen, who pleaded guilty to the same charge on May 4, 2011, was sentenced to 14 months in prison.
On March 7, 2011, Illarramendi pleaded guilty to two counts of wire fraud, one count of securities fraud, one count of investment advisor fraud and one count of conspiracy to obstruct justice, to obstruct an official proceeding and to defraud the SEC.
Illarramendi awaits sentencing.
This matter is being investigated by the FBI and is being prosecuted by Senior Litigation Counsel Richard J. Schechter and Assistant U.S. Attorney Paul A. Murphy.
U.S. Attorney Fein also acknowledged the substantial assistance provided by the U.S. Attorney’s Office for the Southern District of Florida.
In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act and embezzlement. The task force includes representatives from the U.S. Attorney’s Office; FBI; Internal Revenue Service—Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; SEC; U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich Police Department and Stamford Police Department.
Citizens are encouraged to report any financial fraud schemes by calling, toll free, 855-236-9740, or by sending an e-mail to ctsecuritiesfraud@ic.fbi.gov.
This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated 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.
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