Former Anchorage Man Pleads Guilty to Fraud and Money Laundering in Scheme to Swindle Investors

ANCHORAGE—U.S. Attorney Karen L. Loeffler announced that Donald Lee Smith, 59, of Muldrow, Oklahoma, pled guilty in federal court today, admitting that he fraudulently obtained over $300,000 from victims in Alaska during 2007 and 2008. Smith pled guilty to one count of wire fraud and one count of money laundering in connection with the scheme. In a factual statement filed with the court, Smith admitted that he obtained $311,000 from the victims by making intentionally false misrepresentations about investment opportunities. Smith admitted that he obtained the funds from his investors and lenders without telling him that he was using a substantial portion of their money to gamble in casinos rather than invest in properties. According to the admissions in court, the victims transferred funds from Anchorage to Oklahoma, which the defendant then withdrew and transferred to other accounts, knowing the money was criminally derived.

Smith was indicted by a federal grand jury in December 2011 and originally charged with 12 counts of mail and wire fraud and one count of money laundering. Smith lived in Alaska when the scheme began but then moved to Oklahoma, according to court documents.

Senior United States District Court Judge H. Russell Holland set sentencing for October 12, with a possibility of extending the date to afford Smith the opportunity to begin making restitution. Smith faces a maximum prison term of 20 years for wire fraud and 10 years for money laundering and a maximum fine of twice the amount stolen or laundered.

This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation.

Juneau Man Charged with Conspiracy to Distribute Meth

ANCHORAGE—U.S. Attorney Karen L. Loeffler announced that Darrell W. Dawson, 43, a resident of Juneau, Alaska, was arraigned before U.S. Magistrate Judge Leslie Longenbaugh on an indictment for drug conspiracy to distribute and to possess with the intent to distribute methamphetamine.

According to the indictment, Dawson was involved in a conspiracy to distribute and to possess with the intent to distribute methamphetamine on or about January 2011 to on or about July 7, 2012.

Assistant U.S. Attorney Jack S. Schmidt, who presented the case to the grand jury, indicated that the law provides for a maximum total sentence of 40 years in prison, a fine of $4,000,000, or both for the drug conspiracy charge. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history of the defendant.

Judge Longenbaugh ordered Dawson be detained in federal custody pending trial. The court set a trial date of September 11, 2012, for the defendant.

The Federal Bureau of Investigation, United States Postal Inspection Service, Drug Enforcement Administration, United States Coast Guard Investigative Service, Alaska State Troopers, and the Juneau Police Department Metro Drug Unit conducted the investigation leading to the indictment in this case.

An indictment is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

Superseding Indictment Charges 11 People in $19 Million Tax Fraud and Identity Theft Conspiracy

ANCHORAGE—U.S. Attorney Karen L. Loeffler and Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division announced that 11 defendants were charged in a 90-count superseding indictment returned today in connection with their alleged roles in a scheme to use stolen Puerto Rican identities to file tax returns and obtain fraudulent income tax refunds. This second superseding indictment adds tax fraud, identity theft, and other financial counts to previous charges, including conspiracy to distribute cocaine, cocaine distribution, and international money laundering.

“Today’s indictment is a clear warning that anyone who steals the identities of innocent taxpayers and uses the information for personal profit will be aggressively pursued, investigated, and prosecuted in Alaska or throughout the United States,” Ms. Loeffler said. “This case is an example of how interagency cooperation and teamwork can successfully bring down an entire organized criminal conspiracy.”

The indictment charges that between January 2010, and March 2012, the defendants engaged in a conspiracy to defraud the United States by filing false tax returns and claiming millions of dollars in tax refunds to which they were not entitled.

To accomplish their tax refund scheme, the indictment alleges that the conspirators obtained the names and Social Security numbers of individuals from the Commonwealth of Puerto Rico. They then fabricated individual income tax returns in those names claiming that they were owed thousands of dollars in refunds to which they were not entitled.

To facilitate the submission of false tax returns, the indictment alleges that three of the defendants obtained laptop computers that were loaded with individual names, Social Security numbers, and other identity information. Altogether, the three laptop computers contained over 2,600 stolen identities and identified approximately $19 million in fraudulent refund claims. The indictment further alleges that, in some cases, one or more of the defendants obtained the physical addresses used on the tax returns by stealing mail from mailboxes in and around the Anchorage area.

In other cases, it is alleged that one or more of the defendants contacted conspirators in locations such as New Jersey and Puerto Rico and requested that fraudulently obtained tax refund checks be sent to Anchorage under false names.

The indictment also alleges that the defendants negotiated the refund checks at banks in Anchorage. The indictment further charges one bank employee with assisting other defendants in opening bank accounts in false names and negotiating forged U.S. Treasury checks.

In order to negotiate the tax refund checks, the defendants allegedly used false identification documents. They allegedly obtained these documents by using the names, dates of birth, and Social Security numbers of other individuals in applications made to the Alaska Department of Motor Vehicles. The defendants are charged with opening numerous bank accounts in the various stolen identities. The defendants involved in the tax scheme, all of whom were citizens of either the Dominican Republic or Mexico, are alleged to have falsely claimed to be United States citizens on their applications for these false documents.

The indictment also charges various defendants with submitting false claims for refund, possessing stolen mail, making false claims of U.S. citizenship, committing passport fraud, making false statements to banks and credit unions, and passing forged U.S. Treasury checks, as well as aggravated identity theft. The fraud charges each carry maximum penalties of between two and 30 years of imprisonment, in addition to the five-year mandatory minimum prison term required upon conviction on the drug charges.

“The charges brought forth today against these 11 individuals serve as another reminder that IRS-Criminal Investigation is aggressively pursuing those who choose to defraud the government and disrupt the lives of innocent taxpayers,” stated Richard Weber, Chief, IRS-Criminal Investigation.

“These criminals illegally posed as U.S. citizens and exploited our financial system for personal gain,” said Brad Bench, Special Agent in Charge of HSI Seattle, who oversees investigations in Alaska. “By pooling our unique resources, legal authorities, and expertise, HSI and the IRS were able to dismantle a significant scheme to defraud the people of the United States.”

“Drug traffickers’ greed clearly has no limits, as evidenced by this investigation,” said Acting Special Agent in Charge Douglas James of the Drug Enforcement Administration. “The DEA is proud of its partnership with the Anchorage Police Department, who brought this case to their federal counterparts, exposing this multi-faceted criminal organization.”

The case is being jointly prosecuted by Assistant U.S. Attorneys Thomas C. Bradley and James Barkeley of the U.S. Attorney’s Office for the District of Alaska and Trial Attorney Stephanie Carowan Courter of the U.S. Department of Justice Tax Division. The initial charges arose out of an investigation begun by the Drug Enforcement Administration (DEA) and Anchorage Police Department (APD). The new charges were further investigated by the Internal Revenue Service Criminal Investigation (IRS-CI), U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the U.S. Postal Inspection Service (USPIS), and the U.S. State Department’s Diplomatic Security Service. Additional assistance was provided by the U.S. Attorney’s Offices for the District of New Jersey, the Eastern District of Pennsylvania, and the Southern District of New York.

Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites, including the Federal Trade Commission, Justice Department, Social Security Administration, and IRS.

This case was investigated and prosecuted under the purview of the Organized Crime and Drug Enforcement Task Force, which is made up of personnel from the U.S. Attorney’s Office; Federal Bureau of Investigation; Drug Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; ICE-Homeland Security Investigations; Internal Revenue Service–Criminal Investigations; U.S. Marshals Service; U.S. Postal Inspection Service; U.S. Coast Guard; and the Anchorage Police Department.

An indictment is merely a formal accusation. Defendants are presumed innocent until proven guilty in a court of law.

Anchorage Felon Pleads Guilty to Firearm Possession

ANCHORAGE, AK—U.S. Attorney Karen L. Loeffler announced today that an Anchorage man pled guilty in federal court in Anchorage to a charge of felon in possession of a firearm and ammunition.

Mack Rashad Wood, 23, appeared before United States District Court Judge Timothy M. Burgess today and pled guilty to one count of felon in possession of a firearm and ammunition.

According to Special Assistant U.S. Attorney Erin White Bradley, on January 5, 2011, members of law enforcement heard shots fired in the area of Thompson Avenue and Bliss Street. When they responded to the scene, they found Wood in possession of a 9mm semi-automatic pistol and a loaded magazine.

Wood remains in custody pending sentencing, which is scheduled to take place on August 27, 2012.

Ms. Loeffler commends the FBI Safe Streets Task Force and the Anchorage Police Department for the investigation leading to the successful prosecution of Wood. SAUSA Bradley is a prosecutor in the U.S. Attorney’s Office who is funded by the Municipality of Anchorage for the purpose of prosecuting gang-related and violent crime cases.

Anchorage Woman Sentenced to Seven Years in Prison for Running Ponzi Scheme

ANCHORAGE—Acting U.S. Attorney Kevin Feldis announced today that Samantha Delay-Wilson of Anchorage was sentenced in federal court in Anchorage to 84 months in prison on her conviction of defrauding investors and lenders of over $5 million during the course of her more than decade-long Ponzi scheme. The 84-month sentence is to be served in addition to the more than five years Delay-Wilson was sentenced to serve on her separate state fraud convictions.

On June 15, 2012, Samantha Dorothy Delay-Wilson, 65, of Anchorage was sentenced by United States District Court Judge Russell Holland.

According to Assistant U.S. Attorney Aunnie Steward, who prosecuted the case, the following facts provided the basis for Delay-Wilson’s guilty plea:

Delay-Wilson carried out a Ponzi scheme for over a decade, defrauding 14 individuals by making false representations and promises and by providing false documents to victims regarding investments she would make on their behalf and regarding her assets and credentials. Delay-Wilson guaranteed investors a high-rate of return and made false claims regarding how she was going to invest the victims’ money, making different claims to different victims. She told victims she would invest their money in a global investment fund, European sub-prime loans, and an investment banking service company, when, in fact, she used the victims’ money for her personal expenses, to fund her lavish lifestyle, and to pay out earlier investors.

Acting U.S. Attorney Kevin Feldis stated, “The Department of Justice takes fraudulent investment schemes very seriously and works to deter this type of conduct through prosecution. Today’s prison sentence demonstrates that those who prey on the trust of others and defrauds investors will be caught and punished.” Investment schemes happen, even in Alaska, and we all need to be alert to such fraud.”

Mary Rook, Special Agent in Charge of the FBI in Alaska, stated, “Part of the FBI’s mission is to identify, deter, and disrupt significant financial crime targeting individuals, businesses, and industries within the United States. Financial crimes often leave the victims in financial ruin from which it may take years to recover.”

“It can be devastating when the financial well-being of an individual falls into the wrong hands through trickery and deceit,” said Kenneth J. Hines, the IRS Special Agent in Charge of Alaska. “Victims of financial fraud schemes like this suffer emotional pain as well as a devastating financial loss.”

Judge Holland commented that the scheme lasted “an amazing length of time” because of Delay-Wilson’s ability to manipulate people. Judge Holland also noted that the offense was aggravated by the fact that the money defrauded from several of the victims was their retirement money.

Mr. Feldis commended the Internal Revenue Service Criminal Investigations, the Federal Bureau of Investigation, and the Anchorage Police Department for the investigation that led to the successful prosecution of Delay-Wilson.

Boston Doctor Sentenced for Traveling to Engage in Sex with a Minor

ANCHORAGE—United States Attorney Karen L. Loeffler announced that John Mark Felton, 48 a U.K. citizen who most recently resided in Boston, Massachusetts, was sentenced on April 5, 2012 in federal court in Anchorage to 252 months’ imprisonment and a lifetime of supervised release. Felton pled guilty to traveling within the intent to engage in illicit sexual conduct, in violation of 18 U.S.C. § 2423(b). Chief United States District Court Judge Ralph Beistline imposed the sentence on Felton.

Assistant United States Attorney Kimberly Sayers-Fay prosecuted the case against Felton. Sayers-Fay advised that Felton, a British citizen, is a trained physician who was working and living in Boston. In 2008, Felton encountered an undercover Homeland Security Investigations agent in an Internet Relay Chat (IRC) channel dedicated to discussing sex with young boys. In his first chat with the undercover agent, Felton proposed traveling to Alaska to have sex with the undercover’s 5-year-old grandson. Thereafter, there was more than a year lag in communications. Then, on September 18, 2009, the undercover HSI agent received a message from Felton stating that he “missed our horny chats about our shared interests.” Felton once again raised the prospect of traveling to Alaska to rape the 5-year-old, stating, “You just say the word and I’d come.” Following further conversations, on November 16, 2009, Felton arrived in Anchorage from Boston, having traveled that distance in order to facilitate his planned sexual abuse and rape of a boy whom he then believed to be 6 years old.

Subsequent investigation revealed that Felton’s sexual interest in children was longstanding. Felton began acquiring child sexual exploitation images in the U.K. in the 1990s and later brought his collection with him when he moved to the United States. At the time of his arrest, Felton’s collection of child sexual exploitation images included 1,276 images and at least 71 videos of boys and girls being sexually abused. In IRC chat logs that Felton preserved, Felton admitted to molesting a 15-year-old boy and “messing with younger” children. The court noted, however, that there was no solid evidence that Felton had had prior contact sexual offenses with prepubescent children and that the polygraph results on this point were conflicting.

At the sentencing, Felton himself gave credence to the “spiral of sexual abuse” as described by Dr. Joe Sullivan. Felton commented that conversing in the IRC chat rooms dedicated to sexual abuse of children normalized the behavior and thereby diminished his guilt and fear concerning it. Felton commented that he thought such IRC chatrooms should be banned for that reason.

In announcing the 21-year sentence of imprisonment, Judge Beistline noted that Felton’s many humanitarian accomplishments as a doctor were strikingly at odds with the crime he attempted to commit: raping a 5-year-old child. The court observed that Felton was a sort of “Jekyll and Hyde” character who had done much for society while simultaneously planning to prey on its most vulnerable. Felton acknowledged this incongruity, although he was at a loss to explain it.

In imposing the sentence, Judge Beistline stated that he appreciated the psychological risk assessment of Felton prepared by Dr. Sullivan. Judge Beistline credited Dr. Sullivan’s belief that Felton “probably” would have gone through with the crime if he had not been prevented, as well as Sullivan’s conclusion that Felton was a good candidate for rehabilitation if he obtains intensive sex offender treatment in a quality program. Judge Beistline’s sentence strongly recommended that Felton be placed in a prison where such treatment is offered.

As part of his sentence, Felton agreed to pay $20,000 to an Alaska non-profit that deals with child victims of sexual abuse and to pay $5,000 to the victim depicted in the “Vicky” series of child sexual exploitation images that were among Felton’s collection.

Because he is a citizen of the United Kingdom, Felton may pursue transfer to a U.K. prison pursuant to an international prisoner transfer treaty between the United States and the United Kingdom.

Ms. Loeffler commends the work of agents with Homeland Security Investigations, whose undercover work culminated in Felton’s conviction, as well as the Federal Bureau of Investigation and Anchorage Police Department, who significantly advanced the investigatory effort.