TOP STORY: HSI helps secure the Republican and Democratic National Convention

For the past year, U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) special agents prepared for the 2012 Republican and Democratic National Conventions in conjunction with their counterparts at the U.S. Secret Service, the lead federal law enforcement agency for these events.

"Most don't realize that securing a four-day event like the RNC takes months of preparation," said Susan McCormick, special agent in charge of HSI Tampa.

With a presidential nominee, and several high-profile elected officials in attendance, law enforcement agencies had to secure the entire area surrounding the both events. Individuals had to have specific credentials and undergo several checkpoint inspections when entering and exiting these areas.

During the RNC, HSI special agents were assigned to a variety of teams to support convention security. One group of HSI special agents was assigned to the Tampa International Airport, while others provided security for dignitaries attending the event. Many HSI special agents worked in undercover capacities within the Tampa Bay Times Forum, the location where most of the activities took place, and surrounding area. They were there as a precautionary measure in case any disruptions took place within the venue.

"If you scanned the area, you wouldn't see our agents," said McCormick. "I can confidently assure you, we were there, often working around the clock."

If an incident occurred, it was immediately prioritized and entered into a computer system that law enforcement representatives could access. From there, incident information was disseminated to the public through a joint information center, which was staffed by public affairs representatives from local, state and federal agencies.

At the DNC, HSI Charlotte special agents provided security for delegates, family members and visitors, ensured the safety of attendees at the various event venues and staffed the command center. Additionally, HSI Charlotte was the lead in the human trafficking operation, whose mission was to identify any potential sex trafficking victims, according to Delbert Richburg, special agent in charge of HSI Charlotte.

Both the 2012 RNC and DNC, fortunately, took place with very few incidents. McCormick and Richburg attribute this to effective planning, professionalism and coordination amongst law enforcement agencies.

"We could have had a very different outcome, but we were prepared. We were well equipped to handle a variety of scenarios with the ultimate mission of ensuring the safety of the convention's attendees," McCormick added.

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.

Husband and Wife Indicted in Mortgage Fraud Scheme

BUFFALO, NY—U.S. Attorney William J. Hochul, Jr. announced today that Timothy McCabe, 47, and Theresa Morales, 48, both of Hypoluxo, Florida, were indicted by a federal grand for bank fraud. The charge carries a maximum penalty of 30 years in prison, a $1,000,000 fine, or both.

Assistant U.S. Attorneys Maura K. O’Donnell and Kathleen A. Lynch, who are handling the case, stated that according to the indictment, the defendants submitted a fraudulent loan application to a financial institution, JPMorgan Chase Bank, to obtain a $560,000 mortgage on a property in Lewiston, New York. The defendants, who are husband and wife, provided false information in the loan application as to employment, salary, and residency. The defendants conduct resulted in foreclosure on the property.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and with state and local partners to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The indictment is the result of an investigation by the Mortgage Fraud Task Force of WNY which includes agents and personnel from the United States Secret Service, under the direction of Special Agent in Charge Tracy Gast; the Federal Bureau of Investigation, under the direction of Special Agent in Charge Christopher M. Piehota; the U.S. Postal Inspection Service, under the direction of Inspector in Charge Robert Bethel; the Housing and Urban Development Office of Inspector General, under the direction of Cary Rubenstein, Special Agent in Charge, New York Region; and the Internal Revenue Service, under the direction of Acting Special Agent in Charge Toni Weirauch. The Mortgage Fraud Task Force of WNY is led by the U.S. Attorney’s Office and also includes Veterans Affairs Office of Inspector General and the U.S. Bankruptcy Trustee.

Billerica Woman Charged with Advance Fee Scam

BOSTON—A Billerica woman was charged today in federal court with wire fraud and money laundering in connection with a bogus bank guaranty program.

Diane Glatfelter, 46, was charged with six counts of wire fraud and one count of money laundering.

The indictment alleges that in 2007 and 2008, Glatfelter engaged in a scheme to entice individuals to pay up-front fees to secure large capital loans which he could not deliver. The indictment charges that one individual paid $125,000 in fees to procure a $20 million loan that never occurred and that Glatfelter used the money for various purposes other than to secure any funding.

If convicted, Glatfelter faces up to 20 years in federal prison on each of the wire fraud counts and up to 10 years in prison on the money laundering charge, to be followed by three years of supervised release, and a $250,000 fine.

United States Attorney Carmen M. Ortiz; Steven D. Ricciardi, Special Agent in Charge of the U.S. Secret Service; Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation’s Boston Field Division; and William P. Offord, Special Agent in Charge of Internal Revenue Service, Criminal Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Sandra S. Bower of Ortiz’s Economic Crimes Unit.

The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Hacker Sentenced to Seven Years in Prison for Role in Two Hacking Schemes Involving a Total of More Than 240,000 Stolen Credit Card Numbers

WASHINGTON – Aleksandr Suvorov, of Estonia, was sentenced today to seven years in prison for his role in two separate hacking schemes involving a total of more than 240,000 stolen credit card numbers.

 The sentence was announced today by Assistant Attorney General Lanny A. Breuer for the Criminal Division, U.S. Attorney for the Eastern District of New York Loretta E. Lynch, U.S. Attorney for the Southern District of California Laura E. Duffy and Director of the U.S. Secret Service Mark Sullivan.

 Suvorov, 28, was sentenced by U.S. District Judge Sandra J. Feuerstein in Central Islip, N.Y.   Suvorov was an accomplice to Albert Gonzalez, one of the most prolific identity thieves ever prosecuted by the U.S. government.

 Suvorov pleaded guilty in May 2009 to a wire fraud conspiracy charge, filed in the Eastern District of New York, for hacking into the national restaurant chain Dave & Buster’s and stealing more than 80,000 credit card numbers.  In addition, Suvorov pleaded guilty in November 2011 to a trafficking in unauthorized access devices charge, originally filed in the Southern District of California, related to the sale of more than 160,000 stolen credit card numbers to an undercover agent with the U.S. Secret Service.  The cases were consolidated in the Eastern District of New York for sentencing.  In addition to his prison term, Suvorov was ordered to pay $675,000 in restitution and to satisfy a $300,000 asset forfeiture judgment stemming from the New York charges.

 “Mr. Suvorov participated in a scheme to sell thousands of credit card numbers stolen from unsuspecting consumers,” said Assistant Attorney General Breuer.  “Computer hackers like Mr. Suvorov victimize businesses and individuals, posing a serious threat to their financial security.  Today’s sentence sends a clear message that cyber criminals operating abroad will suffer severe consequences for their crimes.”

 “Suvorov reached across an ocean to victimize thousands of Americans,” said U.S. Attorney Lynch.  “That ocean was no protection from the reach of U.S. law enforcement, whose coordinated efforts put a stop to Suvorov and his cohorts’ criminal scheme.  He will now serve his sentence in the country of his victims.  Computer hackers and identity thieves who prey on innocent American consumers, businesses and financial institutions will find no refuge from U.S. criminal justice in any corner of the globe.”

 “This international criminal enterprise thought that they could traffic in stolen credit card information from abroad, but due to the coordinated efforts of the United States Secret Service and the Justice Department, they were wrong,” said U.S. Attorney Duffy.  “The agents of the San Diego field office of the United States Secret Service are to be commended for their investigative work in dismantling this organization.”

 “This case demonstrates the potential for criminals to inflict significant damage to our nation’s financial sector, but this investigation and the resulting sentences should serve as a warning to cyber criminals that law enforcement will continue to pursue them wherever they are,” said U.S. Secret Service Director Sullivan.  “The Secret Service, in conjunction with its many law enforcement partners across the United States and around the world, continues to successfully combat these crimes by adapting our investigative methodologies.  We realize our success in this investigation is due to the cooperation of these partners in more than a dozen international law enforcement agencies.”

 According to court documents, in the New York case, Suvorov, Albert Gonzalez and a third co-conspirator devised a scheme to gain unauthorized access into the computer systems of Dave & Buster’s Inc. for the purposes of installing malicious software and extracting credit card information of the Dave & Buster’s patrons.  Gonzalez, who was in Miami, sent the software, known as a “packet sniffer,” to a co-conspirator in Ukraine.  A packet sniffer is malicious software designed, in this case, to collect credit card information.  The co-conspirator in Ukraine then provided the packet sniffer to Suvorov in Estonia.  Suvorov, working with another individual, gained unauthorized access to 11 Dave & Buster’s restaurants throughout the United States, one of which was in Islandia, N.Y., and installed the packet sniffer.  Suvorov and his co-conspirators ultimately obtained data from 81,005 credit cards.

 Gonzalez was sentenced in March 2010 to 20 years in prison for his role in the Dave & Buster’s hack, as well as hacks into a major payment processor and several retail networks.  The other co-conspirator was arrested in Turkey on related identity theft charges, and was sentenced there to 30 years in prison. 

 In the California case, Suvorov and an accomplice conspired to sell more than 160,000 stolen credit card numbers to a buyer in San Diego who was an undercover agent with the U.S. Secret Service.  Suvorov provided the stolen credit card numbers to an accomplice, who in turn sold them to the undercover agent.

 The New York case was prosecuted by Assistant U.S. Attorney William Campos of the Eastern District of New York and Trial Attorneys James Silver and Evan Williams of the Criminal Division’s Computer Crime & Intellectual Property Section (CCIPS) and was investigated by the U.S. Secret Service Criminal Investigative Division Cyber Investigations Branch.  Former CCIPS Assistant Deputy Chief Howard Cox and Senior Counsel Kimberly Peretti also contributed significantly to the investigation and prosecution of this case.  The California case was prosecuted by Assistant U.S. Attorney Orlando Gutierrez of the Southern District of California and investigated by the U.S. Secret Service San Diego Field Office.  The Office of International Affairs in the Criminal Division provided significant assistance.

Las Vegas Top Stories: Man Who Fraudulently Purchased Over 20 Houses in Las Vegas Area Convicted of Federal Mortgage Fraud Charges

LAS VEGAS—A Las Vegas man who recruited straw buyers and used fictitious identities to purchase more than 20 houses in the Las Vegas area in order to obtain millions of dollars of cash from the loan proceeds was convicted by a jury today of conspiracy and fraud charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

Following a seven-day trial, Tarl Brandon, 46, of Las Vegas, was convicted of three counts of conspiracy and 15 counts of wire fraud. Brandon was convicted in three separate cases, which were joined for trial. Brandon faces up 30 years in prison on two conspiracy counts and 20 years in prison on each of the remaining 16 counts, as well as up to $1 million in fines on two counts and $250,000 in fines on the remaining 16 counts. Sentencing is scheduled for September 12, 2012 before U.S. District Judge Kent J. Dawson.

Brandon was resident agent and a managing member of KTB Construction Company, an LLC formed in Nevada. Between June 2004 and March 2008, Brandon and his co-conspirators paid persons to act as straw buyers to apply for mortgage loans to purchase real estate in Las Vegas. Brandon and his co-conspirators also created false identities for their straw buyers. In most instances, they had the straw buyers apply for mortgages for more than one house at a time and concealed from the lenders that they were purchasing more than one property. To induce the lenders to fund the loans, Brandon caused the loan applications and supporting documentation to include false and fraudulent information concerning the straw buyers’ income, assets, employment, and intent to occupy the home. Once the financial institutions funded the loans, the escrow companies made disbursements to Brandon’s shell company, KTB Construction, and paid commissions and fees to co-conspirators who worked in the real estate industry as loan officers. After buying the houses, Brandon failed to make payments on the mortgages and allowed most of them to go into foreclosure. Using this scheme, Brandon engaged in more than 20 different fraudulent mortgage transactions, resulting in total losses to the financial institutions of approximately $8 million.

Three co-defendants pleaded guilty, two of whom testified for the government at trial.

The investigation was led by the FBI and other agencies of the Southern Nevada Mortgage Fraud Task Force, including the U.S. Postal Inspection Service, Office of the Inspector General for the Department of Housing and Urban Development, the U.S. Secret Service, the Las Vegas Metropolitan Police Department, the Nevada Attorney General’s Office, and Office of the Inspector General for the Social Security Administration. The case was prosecuted by Assistant United States Attorneys Brian Pugh and Kathryn Newman.