FBI Agent, Detective for KCK Police Receive Guardian of Justice Awards

TOPEKA—Two law enforcement officers who led major federal drug trafficking investigations are the winners of this year’s Guardian of Justice Awards, U.S. Attorney Barry Grissom said today.

Grissom presented the awards to FBI Special Agent Tim Swanson and Kansas City, Kansas Police Detective Pamela Bennett during a meeting Wednesday of the Kansas Association of Chiefs of Police in Topeka.

Swanson led Operation Camera Shy, which targeted crack cocaine traffickers who took over a two-block area of Kansas City, Kansas. Bennett led an investigation of a heroin trafficking organization that operated in Johnson, Wyandotte, Leavenworth, and Franklin Counties.

“Outstanding work by both of these investigators led to successful prosecutions,” Grissom said. “Tim Swanson and Pamela Bennett are shining examples of how dedicated and resourceful law enforcement officers are helping keep Kansans safe.”

The Guardian of Justice Awards recognize the contribution of state and local law enforcement officers, as well as federal agents, who worked on significant cases and successful prosecutions by the U.S. Attorney’s Office in the past year.

Operation Camera Shy targeted a drug trafficking organization led by Antonio Quinn and his brothers, Steven Quinn and Marcus Quinn. They were among 17 defendants convicted. The investigation began after neighborhood residents complained about drug activity near Northwest Middle School in Kansas City, Kansas School officials and parents were so concerned that they arranged for children to be bused to and from school so they would not have to walk through the area where drug trafficking was concentrated.

The other investigation targeted a heroin trafficking organization led by defendant Verdale Handy. In that case, two heroin users died and five were seriously injured from overdoses. The majority of the Handy organization’s customers were teens to young adults who became addicted to oxycodone and then graduated to buying heroin. During the investigation, Handy shot another member of the conspiracy who he believed was cooperating with the government. Nine defendants, including Handy, were convicted.

Assistant U.S. Attorney David Zabel and Assistant U.S. Attorney Tris Hunt prosecuted Operation Camera Shy and nominated Swanson for the award. Assistant U.S. Attorney Sheri McCracken prosecuted the Handy case and nominated Bennett.

Indictment: False Promises, Fraudulent Reports Raised $132 Million from Investors

WICHITA, KS—Federal prosecutors in Kansas have filed a 42-page indictment alleging that a group of men swindled investors out of $132 million with false promises and fraudulent reports, U.S. Attorney Barry Grissom said today.

The 67-count indictment alleges that from 2004 to 2008 a team of seven men executed a scheme in which they distributed false and fraudulent brochures, joint venture agreements, application agreements, reports, updates, profit and loss statements, and other documents designed to entice investors with false promises of high returns on investments in companies that leased drilling rigs and related businesses.

Charged in the indictment are:

■Michael J. McNaul, 58, formerly of Hutchinson, Kansas;

■Dale C. Lucas, 62, Wichita;

■Russell W. Kilgariff, 63, Preston, Kansas;

■Lloyd F. Nunns, 68, Hutchinson;

■Greggory A. Krause, 62, Hutchinson;

■Steven L. Tallman, 58, Owasso, Oklahoma; and

■Fredie J. Hembree, 57, Hutchinson.

All seven defendants are charged in the first count of the indictment with conspiracy to commit mail fraud. McNaul is charged in every count in the indictment, which also includes 20 counts of mail fraud, 38 counts of wire fraud, seven counts of money laundering, and one count of bank fraud.

The indictment alleges the scheme began with the creation of two companies: Mid Continent Manufacturing, LLC, and Tr-State Production. Tri-State Production was in the business of purchasing, refurbishing, and leasing oil and natural gas drilling rigs and associated equipment. Mid Continent served as the management company for Tri-State. As the scheme grew, new businesses were created including Consolidated Leasing Joint Ventures, Consolidated Management, Alliance Leasing Joint Ventures, Garner Management LLC, and others.

The indictment alleges:

■The conspirators worked together to execute the scheme by mailing prospective investors documents that contained false and fraudulent representations and promises, and after the defendants had obtained money from investors they sent investors false and fraudulent reports, updates and profit and loss statements.

■The conspirators used investor funds to pay a $300,000 settlement with the Colorado Securities Commission, which they fraudulently failed to disclose to investors.

■The conspirators made false claims to potential investors, telling them they would be paid every quarter, they would receive a 25 to 40 percent annual return and that the companies were already seeing returns in the 15 to 40 percent range.

Upon conviction, the alleged crimes carry the following penalties:

■Conspiracy to commit mail fraud: A maximum penalty of 20 years in federal prison and a fine up to $250,000.

■Mail fraud: A maximum penalty of 20 years and a fine up to $250,000 on each count.

■Wire fraud: A maximum penalty of 20 years and a fine up to $250,000 on each count.

■Money laundering: A maximum penalty of 10 years and a fine up $250,000 on each count.

■Bank fraud: A maximum penalty of 30 years and a fine up to $250,000.

The FBI investigated. Assistant U.S. Attorney Alan Metzger is prosecuting.

OTHER INDICTMENTS

Costel Neicu, 32, a citizen of Romania, is charged with one count of using a forged passport and one count of aggravated identity theft. The crimes are alleged to have occurred March 1, 2012, in Ellis County, Kansas.

If convicted, he faces a maximum penalty of 10 years in federal prison and a fine up to $250,000 on the passport charge and a mandatory two years to run consecutive to the underlying sentence and a fine up to $250,000 on the identity theft charge.

The Kansas Highway Patrol and Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) investigated. Assistant U.S. Attorney Lanny Welch is prosecuting.

Leonardo Velasquez-Villa, 32, is charged with one count of money laundering and one count of possession with intent to distribute 120 pounds of marijuana. The crimes are alleged to have occurred June 16, 2012, in Sedgwick County, Kansas.

If convicted, he faces a maximum penalty of 20 years and a fine up to $250,000 on each count. The Wichita Police Department investigated. Assistant U.S. Attorney Debra Barnett is prosecuting.

Caldee Jordan, Jr., 60, Wichita, Kansas, is charged with one count of possession with intent to distribute heroin. The crime is alleged to have occurred July 27, 2012, in Sedgwick County.

If convicted, he faces a maximum penalty of 20 years and a fine up to $1 million. The Wichita Police Department investigated. Assistant U.S. Attorney David Lind is prosecuting.

Adan Villezacas Palacios, 28, Phoneix, Arizona, is charged with one count of possession with intent to distribute methamphetamine. The crime is alleged to have occurred Aug. 28, 2012, in Ellis County, Kansas.

If convicted, he faces a penalty of not less than 10 years and not more than life in federal prison and a fine up to $10 million. The Kansas Highway Patrol investigated. Assistant U.S. Attorney David Lind is prosecuting.

Christopher J. Grover, 42, Garden City, Kansas, is charged with one count of possession with intent to distribute crack cocaine. The crime is alleged to have occurred June 2, 2012, in Finney County, Kansas.

If convicted, he faces a maximum penalty 20 years and a fine up to $1 million. The Drug Enforcement Administration, the Garden City Police Department and the Finney County Sheriff’s Office investigated. Assistant U.S. Attorney Mona Furst is prosecuting.

Donald James Smith, 43, Wichita, Kansas, and Lisa Diane Boylen, 33, Wichita, Kansas, are charged with one count of conspiracy to commit credit card fraud. In addition, Robert Lowell Killough, 42, Wichita, Kansas, is charged with aiding and abetting credit card fraud. Smith also is charged with two counts of credit card fraud, two counts of identity theft, and two counts of aggravated identity theft. The crimes are alleged to have occurred at various times from May to July 2012 in Sedgwick County, Kansas.

Upon conviction, the crimes carry the following penalties:

■Conspiracy: A maximum penalty of 15 years and a fine up to $250,000.

■Credit card fraud: A maximum penalty of 15 years and a fine up to $250,000 on each count.

■Identity theft: A maximum penalty of five years and a fine up to $250,000.

■Aggravated identity theft: A mandatory two years to be served consecutively to the underlying sentence and a fine up to $250,000 on each count.

The U.S. Secret Service investigated. Assistant U.S. Attorney David Lind is prosecuting.

Brian J. Anderson., 35, Colwich, Kansas, is charged with one count of impersonating a U.S. Marshal. The crime is alleged to have occurred June 9, 2012, in Wichita, Kansas.

If convicted, he faces a maximum penalty of three years in federal prison and a fine up to $250,000. The U.S. Marshals Service investigated. Assistant U.S. Attorney Alan Metzger is prosecuting.

In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.

Former Topeka Bank Vice President Sentenced for Bank Fraud

TOPEKA, KS—A former vice president at Heritage Bank in Topeka has been sentenced to 30 months in federal prison for bank fraud, U.S. Attorney Barry Grissom said today. The judge also ordered her to pay $712,144 in restitution.

Jennifer Hughes-Boyles, 40, Topeka, Kansas, pleaded guilty to one count of bank fraud. In her plea, she admitted that the crime took place in 2011 while she was a vice president of Heritage Bank, located at 3024 SW Wanamaker Road in Topeka. Her duties included residential and commercial lending, consumer lending, and foreclosed properties transactions.

Bank officials began investigating when they noticed that from March 14, 2011 to May 9, 2011, Hughes-Boyles originated more than $2 million in real estate loans in spite of economic conditions at the time. Bank officials also noticed changes in her lifestyle during that time, including the purchase of a late model Corvette.

An audit determined that Hughes-Boyles was providing false documentation to the bank’s loan committee by fabricating or altering credit scores on loan applications. In one instance, Hughes-Boyles purchased a duplex that was in foreclosure for $180,000. On the same day, she resold the property to a buyer she had qualified for a loan at Heritage Bank. The new buyer purchased the property for $325,000. In reality, though, the new buyer did not make a down payment to Hughes-Boyles, which was a violation of the bank’s rules and created the false appearance that the new buyer had equity in the transaction.

Grissom commended the FBI, the Shawnee County District Attorney’s Office, Assistant U.S. Attorney Christine Kenney, and Assistant U.S. Attorney Richard Hathaway for their work on the case.

Topeka Man Sentenced to Six Years for Receiving and Distributing Child Pornography

WICHITA, KS—A Topeka man has been sentenced to 72 months in federal prison for possessing and distributing child pornography, U.S. Attorney Barry Grissom said today.

Jacob Lee Grigsby, 22, Topeka, Kansas, pleaded guilty to one count of distributing child pornography and one count of possessing child pornography. At sentencing, prosecutors told the judge that in 2010 an FBI agent in Virginia used the Internet to download child pornography from Grigbsy’s computer. Grigbsy obtained the child pornography using Limewire, a peer-to-peer file sharing program. Investigators executed a search warrant at Grigsby’s home in Topeka. They found images of child pornography with victims as young as infants.

Grissom commended the FBI and Assistant U.S. Attorney Jason Hart for their work on the case.

Former Non-Profit Executive Charged with Health Care Fraud

TOPEKA, KS—A former executive with a Topeka-based non-profit corporation has been charged with scheming to steal more than $2 million in Medicaid funds, U.S. Attorney Barry Grissom said today.

Jason Sellers, 43, Lyndon, Kansas, is charged in a criminal complaint filed today in U.S. District Court in Topeka with one count of wire fraud.

“Health care fraud drives up the cost for all patients and consumers,” Grissom said. “In partnership with the state, my office is working to protect and strengthen the entire health care system.”

The complaint alleges that while Sellers was chief financial officer of Kansas Health Solutions he diverted Medicaid funds to Advanced Business Consulting, which was a shell company he created. Sellers fraudulently billed Kansas Health Solutions for information technology services ostensibly performed by the sham business. He also billed Kansas Health Solutions for sports equipment and uniforms for sports teams with which he associated, as well as computer equipment for the local school, for him, and for his family.

From about 2007 to 2011, Sellers was involved with several Topeka area sports teams. He served as the boys’ basketball coach at a local school. He also worked with the United States Speciality Sports Association as manager of a USSSA baseball team and assistant coach of a USSSA softball team. In addition to billing Kansas Health Solutions for sports equipment and uniforms for sports teams, Sellers used some of the stolen money to build and furnish a $375,000, 3,755-sq.ft. home on 11 acres in Lyndon, Kansas.

Medicaid funds are state and federal monies that were administered in Kansas by the Kansas Health Policy Authority and the Kansas Department of Health And Environment, Division of Healthcare Finance. In order to manage community-based mental health services for Medicaid recipients, Kansas Medicaid contracted with Kansas Health Solutions in Topeka. Kansas Health Solutions was responsible for overseeing a provider network that provided all community-based health services covered under the contract with Kansas Medicaid.

If convicted, Sellers faces a maximum penalty of 20 years in federal prison and a fine up to $250,000. The U.S. Department of Health and Human Service, the FBI, and the Kansas Attorney General’s office investigated. Assistant U.S. Attorney Tanya Treadway is prosecuting.