Former U.S. Army Corps of Engineers Manager Pleads Guilty in Alleged $20 Million Bribery and Kickback Scheme

Scam Involved Steering of Government Contracts; Contractor Also Pleads Guilty to Charges Today

WASHINGTON—Michael A. Alexander, 55, a former program manager for the U.S. Army Corps of Engineers, pled guilty today to federal charges of bribery and conspiracy to commit money laundering in a scheme that allegedly involved more than $20 million in bribes and kickback payments and the planned steering of a $780 million government contract.

The plea was announced by U.S. Attorney Ronald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Peggy E. Gustafson, Inspector General for the Small Business Administration (SBA); Robert E. Craig, Special Agent in Charge of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS); Eric Hylton, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI), and James K. Podolak, Director of the U.S. Army Criminal Investigation Command’s (CID) Major Procurement Fraud Unit (MPFU).

Alexander, of Woodbridge, Va., pled guilty before the Honorable Emmet G. Sullivan in the U.S. District Court for the District of Columbia. A sentencing date has not been set. The bribery charge carries a statutory maximum of 15 years in prison and the conspiracy charge carries up to 20 years of incarceration. The charges also carry potential fines, an order of restitution, and forfeiture of a money judgment for $1.25 million and specific property including cash, real property, bank account funds, and jewelry. As part of his plea agreement, Alexander agreed to cooperate in the government’s ongoing investigation.

At a separate and related hearing earlier today, also before Judge Sullivan, Robert L. McKinney, 51, pled guilty to bribery. McKinney was the president of Alpha Technology Group, one of the companies involved in the contracting scam. Alpha Technology Group was not one of the companies referenced in the original indictment returned against Alexander and others on September 16, 2011. A sentencing date for McKinney also has not been set.

As part of his plea agreement, McKinney agreed to forfeit about $245,000, representing the illegal proceeds he retained from the crime. He also agreed to cooperate in the government’s ongoing investigation.

***

“Today’s bribery and money laundering pleas relate to one of the largest procurement fraud scandals in our nation’s history and demonstrate this office’s steadfast commitment to holding accountable unscrupulous government officials, as well as the contractors who entice them with bribes and kickbacks,” said U.S. Attorney Machen. “Protecting the American taxpayer is one of our highest priorities and we will remain vigilant in the pursuit of those both inside and outside of the government who attempt to cheat the system and loot the public treasury.”

“Bribery and kickbacks have no place in government contracting,” said Assistant Director in Charge McJunkin. “The FBI and our partner agencies will continue to pursue those who engage in such criminal activity, as we work to protect federal funds and American taxpayers. We ask anyone with information about government fraud to contact the FBI.”

“Today’s announcement demonstrates the resolve of law enforcement to aggressively identify and prosecute individuals considering defrauding the federal government by deceit and bribery,” said SBA Inspector General Gustafson. “There are severe consequences associated with this form of criminal conduct, as this case uniquely demonstrates. The SBA OIG will relentlessly pursue fraud in government contracting programs to eliminate corruption, promote fair competition, and serve the American taxpayer.”

“Corruption of this nature recklessly deprives the hard-working men and women of the Defense Department of critical resources,” said Special Agent in Charge Craig. “Moreover, it undermines the public’s trust and confidence in Government. DCIS will continue to work tirelessly with our law enforcement partners to combat fraud and corruption within the procurement process and seek to ensure that those who engage in this type of criminal behavior are brought to justice.”

“The United States Army will not tolerate fraud or corruption or tolerate those who do,” said Director Podolak. “We will continue to diligently root out anyone involved in this type of illegal activity and our commitment to working shoulder to shoulder with other law enforcement agencies and the Department of Justice in this endeavor is stronger than ever. During the last 10 years alone, Army CID Special Agents have been instrumental in recovering and returning $2.1 billion dollars to the United States Treasury and the Army from fraudulent practices involving contractors.”

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Alexander worked for the Army Corps of Engineers from 1979 until the time of his arrest, in October 2011. According to a statement of offense signed by Alexander, he was a program manager with the Directorate of Contingency Operations. In that position, Alexander had authority, among other things, to obtain funding for Army Corps of Engineers projects, including money for projects and programs placed through federal government contracts. He also was responsible for developing requirements for projects and programs. Alexander produced and actively managed a $54 million budget.

The scheme involved the Army Corps of Engineers and two contracts: the Technology for Infrastructure, Geospatial, and Environmental Requirements (TIGER) contract and the Contingency Operations Readiness Engineering & Support (CORES) contract.

The TIGER contract was used by authorized federal government agencies and departments to purchase products and services. It is what is known as an Indefinite Delivery/Indefinite Quantity contract. Authorized agencies and departments are not required to obtain three separate bids or to compare the TIGER contract to another contract before submitting an invoice for products and services through the TIGER contract.

The CORES contract was a planned contract, envisioned as an alternative or potential replacement to the TIGER contract. As planned, the CORES contract would be a five-year contract with an award potential for all contracts placed under it of up to $780 million. The CORES contract has not been issued for solicitation to potential prime contractors.

In his guilty plea, Alexander admitted to carrying out a bribery scheme with others. They included Kerry F. Khan, a colleague, who was then a program manager with the Army Corps of Engineers; Harold F. Babb, the former director of contracts at Eyak Technology LLC (EyakTek), an Alaska Native-owned small business; Alex N. Cho, the former chief technology officer of Nova Datacom, LLC, a provider of information assurance and security services to federal agencies and commercial companies, and McKinney, the president of Alpha Technology Group, Inc., a provider of program management services.

According to the statement of offense, in or around 2006, Alexander and Khan agreed to work together to obtain government contracts for corrupt contractors who would reward them with bribes. Khan had authority, among other things, to place orders for products and services for the Army Corps of Engineers through government contracts, including the TIGER contract, and to certify that the work on the contracts had been completed.

From May 2007 through October 2008, the Army Corps of Engineers awarded contracts and sub-contracts to Alpha Technology, totaling about $1,877,000. McKinney paid Khan a portion of the money that was received, and Khan provided Alexander with $99,100.

From May 2007 through October 2011, the Army Corps of Engineers awarded contracts and sub-contracts to Nova Datacom totaling more than $45 million.

All told, Alexander admitted receiving directly and indirectly about $1,150,000 of money and things of value from Nova Datacom and Cho. This included nearly $300,000 in checks and cash; $750,000 in wire transfers to an associate of Alexander’s in South Korea for the purchase of, among other things, a coffee shop called Seven Monkeys in Seoul; about $27,000 for the purchase of two designer watches for a member of Alexander’s family; employment of a family member at Nova Datacom, and other miscellaneous payments. Cho also promised Alexander future employment at Nova Datacom and $320,000 in additional payments. Indeed, on the morning of October 4, 2011, the date of his arrest, Alexander was expecting Cho to deliver a $20,000 payment to him.

In addition to these activities involving the TIGER contract, according to the statement of offense, Khan, Alexander, Babb and Cho agreed to steer the award of the CORES contract to Nova Datacom. This scheme was thwarted by the arrests of Alexander and others last fall.

Khan, 54, formerly of Alexandria, Va., Khan’s son, Lee Khan, 31, formerly of Fairfax, Va., and Babb, 60, formerly of Sterling, Va., were indicted along with Alexander on one count of conspiracy to commit bribery and wire fraud and aiding and abetting and causing an illegal act to be done, as well as one count of conspiracy to commit money laundering. Khan and Alexander also were indicted on one count of receipt of a bribe by a public official, and Babb was indicted on one count of unlawful kickbacks. Khan, Khan’s son, and Babb have pleaded not guilty to all charges in the case and are awaiting trial. Khan, Lee Khan, Babb, and Alexander have been in custody since their arrests in October.

Cho, 40, of Great Falls, Va., pled guilty in September 2011 to one count of conspiracy to commit bribery, money laundering, and wire fraud, and to defraud the United States, and one count of bribery. Another former Nova Datacom employee, Theodoros Hallas, 40, of Potomac, Md., the company’s former executive vice president, pled guilty to one count of conspiracy to commit wire fraud in October 2011. No sentencing date has been set for Cho or Hallas.

As part of his guilty plea today, McKinney signed a separate statement of offense that admitted that Alpha Technology had submitted fictitious and fraudulently inflated invoices that led to more than $1.8 million of payments to the firm. Some materials and services were provided, but, McKinney admitted, more than $850,000 of the expenses were fraudulent. Of this, he said, Alpha Technology kept about $245,395, and the rest allegedly was passed on to Khan directly and through a company controlled by another one of Khan’s family members.

To date, the United States has seized for forfeiture or recovered approximately $7.2 million in bank account funds, cash, and repayments, 16 real properties, five luxury cars, and multiple pieces of fine jewelry.

***

In announcing today’s developments, U.S. Attorney Machen, Assistant Director McJunkin, Inspector General Gustafson, Special Agent in Charge Craig, Acting Special Agent in Charge Hylton, and Director Podolak thanked those who investigated the case from the FBI’s Washington Field Office; the Office of the Inspector General for the Small Business Administration; the Department of Defense’s Defense Criminal Investigative Service; the Defense Contract Audit Agency; the Washington Field Office of the Internal Revenue Service-Criminal Investigation; and the Army Criminal Investigation Command. They also expressed thanks to the U.S. Marshals Service for its assistance on the forfeiture matter.

They also praised the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michael K. Atkinson and Bryan Seeley of the Fraud and Public Corruption Section and Assistant U.S. Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section. Finally, they expressed thanks for assistance provided by former Special Assistant U.S. Attorney Christopher Dana; Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Shanna Hays, Taryn McLaughlin, Sarah Reis, Christopher Samson, and Nicole Wattelet, and Legal Assistants Jared Forney and Krishawn Graham.

CBP Officers and Border Patrol Agents at the Hidalgo Port of Entry Seize AK47 Style Rifle and Magazine During an Outbound Enforcement Operation

Hidalgo, Texas – U.S. Customs and Border Protection (CBP) officers and Border Patrol agents conducting outbound enforcement operations at the Hidalgo Port of Entry seized an AK-47-style rifle and magazine.

CBP officers and Border Patrol agents conducting outbound enforcement operations at the Hidalgo Port of Entry seized an AK-47-style rifle and magazine. 

On February 10, 2012, CBP officers and Border Patrol agents working outbound enforcement operations at the Hidalgo International Bridge came in contact with a maroon Ford Crown Victoria as it attempted to exit the United States and enter Mexico. The vehicle driver, identified as a 23-year-old Mexican citizen from Reynosa, Tamaulipas, Mexico was referred to secondary for further inspection. During the examination the driver attempted to flee toward Mexico but was quickly subdued by CBP officers and agents. In secondary, a search of the Ford resulted in the discovery of an AK-47 assault-type rifle and magazine hidden within the vehicle.

CBP officers seized the weapon and vehicle. The case has been referred to U.S. Immigration and Customs Enforcement-Homeland Security Investigations (ICE-HSI) special agents for further investigation.

“Hidalgo CBP officers and Border Patrol agents working together on outbound enforcement prevented this assault rifle from being exported out of the U.S. and imported into Mexico in violation of federal law. I commend our officers and agents for their outstanding contribution to the seizure of this weapon and high capacity magazine,” said Efrain Solis, Port Director, Hidalgo/Pharr/Anzalduas Port of Entry.

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.

Bogus “FBI Funds Notifications” E-Mails

The Baltimore FBI office is receiving a large number of telephone calls concerning e-mails supposedly from the FBI Director, the Baltimore Special Agent in Charge, or other top Bureau officials. These e-mails claim that you are the “rightful beneficiary” of large sums of money wired from the Central Bank of Nigeria but intercepted by the FBI and that you can release the funds by obtaining your “Diplomatic Immunity Seal of Transfer” through the Baltimore FBI office. The e-mails also threaten legal action against you, including arrest and detention, if you do not comply.

These e-mails are not from the FBI and entirely fraudulent. Please do not respond to them or contact our office. Instead, please report this scam to the Internet Crime Complaint Center at www.ic3.gov.

Below is an example of one of these e-mails (and note the many grammatical errors):

ATTENTION BENEFICIARY:

This is to officially inform you that it has come to our notice; the Federal Bureau Investigation (FBI) that the sum of $8.3 Million U.S Dollars is here in the United State of America in your name wired to you from the Central Bank of Nigeria but was intercepted by the Federal Bureau of Investigations (FBI) in Baltimore (Maryland) U.S.A. That is why we have decided to contact you directly to acquire the proper verifications and proof from you to show that you are the rightful owner of the fund, because the above mentioned amount is a huge amount of money, we want to make sure that money you are about to receive is legal and we need to verify that you are not involved in any terrorist movement and money laundry.

It has already been confirmed in your name, your funds and all other legal documents are right now in our custody in WASHINGTON D.C UNITED STATES OF AMERICA, waiting to be released to you, we have verified and Investigated that you are the rightful beneficiary to claim the funds, all we need from you is verification and proof by providing to this office the Hard Copy of your Diplomatic Immunity Seal of Transfer (DIST) due to the huge amount of money.

As a matter of national security, we are to serve and to protect the UNITED STATES OF AMERICA. The only advice we can give to you as at this time is to provide the required document so that your funds will be release to you, this funds are rightfully yours. If you do not have this documents in your possession, which I don’t think you do not have, You can obtain it from the FBI Special Agent in Charge in Baltimore (Maryland) here in the United States, using the following information:

Richard A. McFeely

FBI SPECIAL AGENT IN CHARGE

INVESTIGATIONS DEPARTMENT

BALTIMORE (MARYLAND) U.S.A

E-mail: investigationsunit@usa.com

PHONE: 410-265-8080 (Voice)

410-277-6677 (Fax)

We have done our verification on your FBI Identification Record and checked your criminal records, the only documents remaining now is the Diplomatic Immunity Seal Of Transfer(DIST) to “certisy” to us that the money you are about to receive is free from Terrorism and Money Laundry act and it is rightfuly yours.

You are to scan and forward the documents to us immediately if you have it with you, but if you don’t have it, you can get it from the FBI Special Agent in charge in Baltimore (Maryland) here in the States, you are to contact the Federal Bureau of Investigation (FBI) in Baltimore (Maryland) to obtain the above required document.

An FBI Identification Record and Diplomatic Immunity Seal of Transfer (DIST) are often referred to as a Criminal History Record or Rap Sheet, is a listing of certain information taken from fingerprint submissions retained by the FBI in connection with arrests and, in some instances, federal employment, citizenship, or military service.

An individual may request a copy of his or her own FBI Identification Record for personal review or to challenge information on the Record. Other reasons an individual may request a copy of his or her own Identification Record may include international adoption or to certify a requirement to live or work in a foreign country ( i.e., Diplomatic Immunity Seal Of Transfer, letter of good conduct, criminal history background, etc.).

NOTE: We have asked for the above documents to be made available the most complete and up-to date records possible for no criminal justice purposes before your fund could be released to you. You are here by advice to Contact the FBI in Baltimore (Maryland), through the e-mail address above to inquire from them on how you are going to get the required document if not in your possession at present.

You are to do this immediately if you really want your fund to be released to you and also if you do not want any legal action to be taken on you. We have already informed the FBI in Baltimore (Maryland) about the present situation, so go ahead and contact the FBI Special Agent in charge immediately.

Your fund is now in our custody and will only be released to you upon the confirmation of your Diplomatic Immunity Seal of Transfer (DIST) documents, after that the fund will be released to you immediately without any delay.

WARNING: Failure to produce the above requirement in the next 48 hours, legal action will be taken immediately by arresting and detaining you, justificatory and if found guilty, you will be jailed for ancillary support to terrorist, drug trafficker and money launderer. I believe you know this is a serious offense in the United States of America today. The F.B.I will not stop at any length in tracking down and persecuting any criminal who indulges in this criminal acts.

CONTACT HIM IMMEDIATELY FOR HIS ASSISTANCE IN GETTING YOU A DIPLOMATIC IMMUNITY SEAL OF TRANSFER (DIST) AND GET BACK TO US, SO THAT YOUR FUNDS CAN BE AUTHORIZED FOR FINAL RELEASED TO YOU.

FBI DIRECTOR

ROBERT S. MULLER

Man Who Received Child Pornography Sentenced

Defendant Who Received and Possessed Thousands of Child Pornography Images Sentenced to 120 Months in Prison

ALBANY, NY—United States Attorney Richard S. Hartunian, Clifford C. Holly, Special Agent in Charge, Federal Bureau of Investigation, Albany Division, and Joseph D’Amico, Superintendent of New York State Police, announced that LOGAN KLOTZ, age 30, of Troy, New York, was sentenced by United States District Court Judge Thomas J. McAvoy, in Federal District Court in Albany, on his guilty plea to one count of receiving child pornography. KLOTZ was sentenced to 120 months of imprisonment. Following his term of imprisonment, KLOTZ will be placed on supervised release for 15 years. KLOTZ was also ordered to: (1) have no unsupervised contact with minors; and (2) register with the New York State Sex Offender Registry Program.

In December 2010, investigators received information that KLOTZ was using a peer-to-peer computer file-sharing program to obtain child pornography. On December 15, 2010, investigators executed a search warrant at KLOTZ’s residence in Troy, New York and seized a computer and a hard drive that were used by KLOTZ to obtain, download, and save child pornography images. KLOTZ pled guilty on July 26, 2011, to receiving child pornography via the Internet.

This case was investigated by the Federal Bureau of Investigation and the New York State Police.

Strong and Thriving Partnerships

By Tracy Russo

The following post appears courtesy Laurie Robinson, Assistant Attorney General for the Office of Justice Programs (OJP).

Last week at the National District Attorneys Association (NDAA) Capital Conference, I was honored to receive the prestigious NDAA President’s Award and to deliver one of my last speeches as Assistant Attorney General.  The occasion provided me the opportunity to reflect on the Department of Justice’s productive partnership with state and local prosecutors.

The elected prosecutor plays an indispensable leadership role, embodying the will of the community to address its most pressing crime and justice problems.  In an era of diminishing resources and growing public safety responsibilities, that role is more important than ever.  I am proud that the Office of Justice Programs (OJP) continues to provide these professionals with the tools they need to do their jobs more effectively and efficiently.

Through our Bureau of Justice Assistance (BJA), we have awarded almost $18.5 million to state and local prosecutors’ offices to support mortgage fraud investigation and prosecution, joining our work to a Department- and Administration-wide effort to fight this crime.  NDAA has been a key training and technical assistance partner and is helping to develop a mortgage fraud training curriculum for prosecutors.

Prosecutors are also on the front line in our fight against child abuse and exploitation.  OJP’s Office of Juvenile Justice and Delinquency Prevention and NDAA’s National Center for Prosecution of Child Abuse have worked closely together to train and assist thousands of professionals who investigate and prosecute these cases.  Last year alone, we provided training to more than 12,500 people.

And prosecutors are central to reducing the influence of gangs.  With support from BJA, NDAA published a guide for prosecutors on the use of civil gang injunctions and has disseminated several thousand copies to jurisdictions across the nation.  As a result of a site visit to Ogden, Utah conducted under the auspices of this project, prosecutors won an injunction against the Ogden Trece gang that resulted in a 40 percent decline in gang graffiti and a drop in overall gang crime of 10 percent from the previous year.

These are among the many areas in which OJP is supporting the work of state and local prosecutors.  As I depart OJP at the end of February and hand over leadership to my Principal Deputy Assistant Attorney General, Mary Lou Leary – herself a former prosecutor – I am satisfied that, thanks to strong partnerships with organizations such as NDAA, we will continue to make important gains in public safety.

CBP Launches Border Radio Pilot

AM Radio System Installed to Inform Land Border Crossers

Washington– U.S. Customs and Border Protection today announced the installation of a pilot AM radio broadcast system, aimed to better inform the border crossing public. CBP has installed AM radio frequency transmitters at two ports of entry on the southwest border, Ysleta in El Paso, Texas and Lincoln-Juarez in Laredo, Texas in order to communicate important border crossing information to travelers.

CBP has transformed the way it does business at land ports of entry over the last few years and one of the key elements is the concept of active lane management. This concept allows infrastructure enhancements such as improved license plate readers and radio frequency identification (RFID) technology coupled with new Ready Lanes, light emitting diode (LED) signage and Trusted Traveler lanes (NEXUS, SENTRI, FAST) to facilitate the entry process for travelers.

Furthering this concept CBP believes an informed and educated traveler is an efficient traveler.

CBP is always looking for new and effective ways to communicate with the traveling public and the model of the AM transmitter, used by many highway and traffic authorities, hopes to prove an effective tool for CBP.

Information broadcast will include reminders of document requirements and how to use high-tech travel cards, information about CBP’s Trusted Traveler Programs, basic border crossing rules and regulations, and will allow the ability for each port of entry to update with emergency travel information or updates.

While in a pilot phase, CBP will monitor the effectiveness of this new tool in a few locations on the northern and southern borders. Analysis of the pilot will inform further system installations and messaging.

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.

Massachusetts Man Sentenced to 60 Months in Prison for Participating in International Child Pornography Ring

WASHINGTON – A Massachusetts man was sentenced today in Los Angeles to 60 months in prison, followed by 20 years of supervised release, for conspiracy to distribute child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California and Assistant Director in Charge Steve Martinez of the FBI’s Los Angeles Field Office.

Joseph Tierney, 24, of Wellesley, Mass., was sentenced by U.S. District Judge Virginia A. Phillips.  Tierney pleaded guilty in August 2011 to one count of conspiracy to distribute child pornography. 

Today’s sentencing is the result of an international investigation into the “Lost Boy” online bulletin board.  The Lost Boy bulletin board, according to court documents and proceedings, was dedicated to men who have a sexual interest in young boys and was established to provide a forum to trade child pornography.

Federal authorities, working in conjunction with a coalition of international law enforcement agencies, shut down the Lost Boy bulletin board approximately three years ago.  As a result of the investigation, 16 named defendants were charged in the United States and arrested for their roles in the bulletin board.  To date, 15 defendants have pleaded guilty or have been convicted at trial and one defendant passed away.  Six additional men have been charged with child molestation as a result of the investigation, which also led to the identification of 27 domestic victims of child abuse, some of whom were portrayed in images posted to the Lost Boy bulletin board.

According to court documents and proceedings, law enforcement authorities discovered the Lost Boy bulletin board after receiving information from Eurojust, the judicial cooperation arm of the European Union.  Eurojust provided U.S. law enforcement with leads obtained from Norwegian and Italian authorities indicating that a North Hollywood, Calif., man was communicating with an Italian national about child pornography and how to engage in child sex tourism in Romania.  Acting on the information from Europe, the FBI executed search warrants that led to the discovery of the Lost Boy network.  Further investigation revealed that Lost Boy had 35 members, 16 of whom were U.S. nationals.  Other members of the network were located in countries around the world, including Belgium, Brazil, Canada, France, Germany, New Zealand and the United Kingdom. 

According to court documents, Lost Boy had a thorough vetting process for new members, who were required to post child pornography to join the organization.  Once accepted, members were required to continue posting child pornography to remain in good standing and to avoid removal from the board.  According to court documents, Lost Boy members advised each other on techniques to evade detection by law enforcement, which included using screen names to mask identities and encrypting computer data.

International law enforcement efforts involving European law enforcement, the Brazilian Federal Police and other agencies have identified child molestation suspects in South America, Europe and New Zealand.  Three suspects in Romania, one in France and another in Brazil have been charged, and offenders have been convicted in Norway and the United Kingdom.  Law enforcement efforts have also identified dozens of child victims located in Norway, Romania, Brazil and other nations.

The investigation into the Lost Boy bulletin board was led by the FBI and the U.S. Postal Inspection Service, in conjunction with the Los Angeles-based Sexual Assault Felony Enforcement (SAFE) Team.  The High Technology Investigative Unit of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division, along with Eurojust, have provided invaluable assistance during the investigation. 

The case is being prosecuted by Assistant U.S. Attorneys Joey L. Blanch and Yvonne Garcia of the Central District of California and CEOS Trial Attorney Andrew McCormack.

North Charleston Man Sentenced on Drugs and Gun Charges

Columbia, South Carolina — United States Attorney Bill Nettles stated today that Willie Mitchell, age 35, of North Charleston, South Carolina, was sentenced in federal court in Charleston for being a felon in possession of a firearm and possessing with intent to distribute crack cocaine. United States District David C. Norton sentenced Mitchell to 188 months imprisonment, followed by 6 years of supervised release.

Evidence presented at the change of plea hearing established that on December 21, 2009, the North Charleston Police Department executed a search warrant at Mitchell’s residence, where they found approximately six grams of cocaine base and a loaded handgun. Mitchell’s criminal history includes numerous prior convictions for drug and weapons offenses.

The case was investigated by agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the North Charleston Police Department, and was prosecuted as part of the joint federal, state and local Project CeaseFire initiative, which aggressively prosecutes firearm cases. Assistant United States Attorney Nick Bianchi of the Charleston office handled the prosecution of the case.

CBP Highlights Recent Trade Successes

Washington— U.S. Customs and Border Protection’s (CBP) commitment to streamlining and modernizing trade practices to benefit trade partners around the world has resulted in many successful accomplishments in the past year. CBP plays a unique role in securing and facilitating international trade today and this responsibility is crucial to maintaining U.S. economic competitiveness.

“CBP is fully committed to facilitating and modernizing the trade process,” said David V. Aguilar, CBP acting commissioner. “We can and will be a force for increased economic competitiveness for our nation.”

CBP remains committed to working with the trade community in partnership to further the successes and opportunities of the trade process. CBP has, in conjunction with the trade industry, worked to devise and test programs and processes that streamline work in ways that will benefit security and regulatory functions while strengthening the economic vitality of our nation, businesses and workers.

Programs such as the Customs and Trade Partnership Against Terrorism (C-TPAT) have grown from seven participating partners to more than 10,200 Certified Partners worldwide, showcasing how the greater efficiency that accompanies the increased predictability of moving goods can provide major cost savings for businesses. In addition to C-TPAT, ongoing efforts to protect America from the trade in counterfeit and pirated goods during fiscal year 2011 resulted in 24,792 seizures, a 24 percent increase over 2010.

CBP is continuing efforts to strengthen trade facilitation. For example, in the near future a notice of proposed rulemaking for the in-bond process will be published in the Federal Register. This rule proposes various changes to in-bond regulations enhancing CBP’s relationship with trade partners and building on its already successful trade processes. The public will have 60 days from publication to submit comments.

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.

FBI and San Diego Police Seek Public’s Assistance to Identify Chase Bank Robber

The FBI and the San Diego Police Department are seeking the public’s assistance to identify the unknown male responsible for robbing the Chase Bank, located at 4415 Imperial Avenue, San Diego, California, on Monday, February 6, 2012.

On Monday, February 6, 2012, at approximately 4:10 p.m., the Chase Bank, located at 4415 Imperial Avenue, San Diego, California, was robbed by an unknown male using a demand note. The robber threatened to be armed with a weapon, but a weapon was not observed. After receiving a sum of money the robber exited the bank and was last seen getting into the driver side of silver PT Cruiser.

Witnesses describe the robber as follows:

Sex:  Male

Race:  White
Age: Late 40s to early 50s
Height: Approximately 5’8” to 5’9” tall
Weight: Approximately 160-170 lbs.
Build: Slim
Hair/Coloring: Small beard patch under bottom lip
Clothing: “Stussy” brand beanie cap, green hooded zip up sweat jacket, eyeglasses with plastic rectangular shaped lenses and blue jean shorts

Anyone with information concerning this robbery is asked to contact the FBI at telephone number (858) 565-1255 (san.diego@ic.fbi.gov) or Crime Stoppers at (888) 580-TIPS (8477). You may remain anonymous by calling the FBI or Crime Stoppers.

CBP Stops Three Juvenile Drug Smugglers This Week

El Paso, Texas – U.S. Customs and Border Protection (CBP) officers working at El Paso area ports of entry made 17 drug busts this week, seizing 1,648 pounds of marijuana and small amounts of cocaine and heroin. Three of the marijuana busts involved people age 17 or younger.

“The number of juvenile drug smugglers we apprehended this week is greater than we typically see. Usually we average about three to four cases per month,” said Christopher Saindon, Acting CBP El Paso Director of Field Operations. “Parents should take note and talk to their children about the criminal consequences and dangers associated with drug smuggling.”

The most recent case occurred at the Ysleta port of entry on Wednesday when CBP officers discovered 22 pounds of marijuana hidden in a vehicle driven by a 16-year-old El Paso boy. He was arrested by El Paso County constables.

CBP officers working at the Columbus port of entry found two pounds of marijuana hidden in the back pack of a 14-year-old boy from Palomas, Mexico, on February 7. He was arrested by Border Operations Task Force officers.

On February 4, CBP officers working at the Bridge of the Americas located a little more than three pounds of marijuana attached to the body of a 17-year-old El Paso boy. No arrests have been made in that case.

CBP officers working in the El Paso area routinely recorded between 100-150 juvenile drug-smuggling apprehensions a decade ago. During fiscal year 2010 the number dropped to 40. A number of CBP outreach efforts including “Operation Detour” have helped reduce the incidence of juvenile drug-smuggling activity.

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.

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, ICE Release Report on 2011 Counterfeit Seizures

Washington – Theft of American intellectual property is a serious crime, and U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement announced today that their vigorous, ongoing efforts to protect America from the trade in counterfeit and pirated goods during fiscal year 2011 resulted in 24,792 seizures, a 24 percent increase over 2010.

Many fake goods seriously threaten the health and safety of American consumers and our national security. With this in mind, CBP and ICE continued to step up enforcement against these dangerous products resulting in a 44 percent increase in the number of seizures of health and safety products that could have harmed Americans. The value of these seizures soared to more than $60 million due to increases in pharmaceutical and perfume seizures.

Despite the significant increase in the number of seizures, the domestic value for seizures in fiscal year 2011 decreased by five percent to $178.9 million and the manufacturer’s suggested retail price declined slightly to $1.1 billion. This is primarily due to a shift toward using international mail, express courier and consolidated shipping services to import counterfeit and pirated goods.

“The growth of websites selling counterfeit goods directly to consumers is one reason why CBP and ICE have seen a significant increase in the number of seizures at mail and express courier facilities,” said Acting CBP Commissioner David V. Aguilar. “Although these websites may have low prices, what they do not tell consumers is that the true costs to our nation and consumers include lost jobs, stolen business profits, threats to our national security, and a serious risk of injury to consumers.”

“I'm very proud of the unrelenting efforts of the ICE-led National Intellectual Property Rights Coordination Center and our law enforcement partners," said ICE Director John Morton. "IP enforcement is a high priority for ICE and CBP because the trade in counterfeit and pirated goods robs Americans of jobs and puts their safety at risk, costs legitimate businesses billions of dollars in revenue, and fuels criminal activity. In fiscal year 2012, ICE and CBP will continue to focus on keeping these goods off the streets and bring those responsible for producing and distributing them to justice."

China continues to be the number one source country for counterfeit and pirated goods seized, accounting for 62 percent or $124.7 million of the total domestic value of seizures.

For the first time since FY 2005, footwear was not the top commodity seized in fiscal year 2011. Consumer electronics were the top commodity seized, and approximately one-third of this category was represented by IPR infringing cellular phones.

The top 10 categories of IPR-infringing products seized were pharmaceuticals, health/personal care, eyewear/parts, critical technology components, electronic articles, cigarettes, perfumes/colognes, batteries, exercise equipment and transportation/parts.

As the federal agency responsible for the management, control and protection of U.S. borders, CBP is on the frontline of IPR enforcement. The men and women of CBP protect our nation’s economy, the safety of its people, and our national security against harm from counterfeit and pirated goods. The continued vigilance of CBP personnel protects U.S. citizens and businesses every day.

As the largest investigative arm of the Department of Homeland Security, ICE Homeland Security Investigations plays a leading role in targeting criminal organizations responsible for producing, smuggling, and distributing counterfeit products. ICE HSI focuses not only on keeping counterfeit products off our streets, but also on dismantling the criminal organizations behind such illicit activity.

The National Intellectual Property Rights Coordination Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. The IPR Center uses the expertise of its 19 member agencies to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.

FBI, San Diego Police, and San Diego Sheriff’s Department Seek Public’s Assistance to Identify Serial Bank Robber

Latest Robbery: Home Bank of California Bank

The FBI, San Diego Police, and San Diego Sheriff’s Department are seeking the public’s assistance to identify the unknown male believed responsible for three bank robberies dating back to January 17, 2012. The latest robbery was on Monday, February 6, 2012, with the robbery of the Home Bank of California, 875 Garnet Avenue, San Diego, California.

On Monday, February 6, 2012, at approximately 9:10 a.m., the Home Bank of California, located at 875 Garnet Avenue, San Diego, California, was robbed by an unknown male who threatened to be armed with a weapon. The robber made a verbal demand for cash and simulated he had a weapon by lifting his shirt. After receiving a sum of money the robber walked out of the bank. No weapon was observed and no injuries reported.

This same individual is believed to be responsible for robbing the Pacific Western Bank, located at 9955 Mission Gorge Road, San Diego, California, on Tuesday, January 17, 2012 and Monday, January 23, 2012.

Witnesses describe the robber as follows:

Sex: Male

Race: White
Age: Approximately 40 years old
Height: Approximately 6’0””tall
Weight: Approximately 180 lbs.
Build: Medium
Eyes: Unknown
Hair/Coloring: Grey scruffy beard
Clothing: White tee shirt, blue jeans, navy blue jacket with zipper, and baseball hat

Anyone with information concerning this robbery is asked to contact the FBI at telephone number (858) 565-1255 (san.diego@ic.fbi.gov) or Crime Stoppers at (888) 580-TIPS (8477).You may remain anonymous by calling the FBI or Crime Stoppers.

Brockton Man Sentenced on Narcotics Offense

BOSTON—A Brockton man was sentenced today in federal court on a distribution of cocaine base charge.

Frank Miranda, 33, was sentenced today by U.S. District Court Judge George A. O’Toole, Jr., to 92 months in prison to be followed by six years of supervised release after Miranda pled guilty on Sep. 14, 2011, to one count of distribution of over five grams of cocaine base. Had the case proceeded to trial, the evidence would have proven that on or about July 9, 2009 Miranda sold six grams of crack cocaine in Brockton to an undercover cooperating witness in exchange for $350.

United States Attorney Carmen M. Ortiz; Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation-Boston Field Division; Plymouth County District Attorney Timothy J. Cruz; Colonel Marian McGovern, Superintendent of the Massachusetts State Police; and Chief William K. Conlon of the Brockton Police Department made the announcement today. The case was being prosecuted by Assistant U.S. Attorney Suzanne Sullivan of Ortiz’s Major Crimes Unit.

Toy Company Owner Sentenced for Defrauding Bank and Investors Out of Approximately $9 Million

MINNEAPOLIS—Earlier today in federal court in St. Paul, the owner of a toy company was sentenced for defrauding a bank and 42 investors out of approximately $9 million. United States District Court Judge Paul A. Magnuson sentenced Sandra Lee Calkins, age 67, formerly of Eden Prairie, to 66 months in prison on one count of bank fraud in connection to her crime. Calkins, the owner of Princess Soft Toys, Inc., was charged on April 29, 2011, and pleaded guilty on May 26, 2011.

In her plea agreement, Calkins admitted that between January of 2008 and March 5 of 2010, she falsified financial statements regarding her company in order to renew a $3.25 million line of credit at Central Bank. Calkins, who handled the financial affairs for the company, admittedly included in those statements false information relative to revenue and net assets. As a consequence of the fraud, the credit line was renewed, and Calkins made multiple draws against it totaling $3,575,000. Central Bank suffered a loss of approximately $1.6 million.

Calkins also admitted that between January of 2008 and 2010, she defrauded individuals into investing or loaning money to Princess Soft Toys through false financial statements or other misrepresentations. The total losses to individual investors exceeded $7 million.

This case was the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. It was prosecuted by Assistant U.S. Attorney Tim Rank.

New Orleans Man Sentenced to Three Years in Prison for Crimes Involving the Sexual Exploitation of Children

NEW ORLEANS—MICHAEL T. DRURY, age 55, a resident of New Orleans, was sentenced today by U.S. Judge Martin L.C. Feldman to a term of 36 months in prison, followed by a 10-year period of supervised release and a $5,000 fine, after previously pleading guilty to felony crimes involving the sexual exploitation of children, announced United States Attorney Jim Letten.

According to court documents, DRURY was found to be in possession of computers that contained dozens of images depicting the sexual victimization of minor children. The images depicted children less than 18 years of age, some of whom were less than 12 years of age, engaged in sexually explicit conduct.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

This case was investigated by special agents from the Federal Bureau of Investigation. The prosecution of this case was handled by Assistant United States Attorney Jordan Ginsberg.

Arrest Made in “Wicker Park Bandit” Investigation

A suspect in a string of as many as 10 bank robberies in and around Chicago’s Wicker Park neighborhood was arrested late last night, announced Robert D. Grant, Special Agent in Charge of the Chicago office of the Federal Bureau of Investigation (FBI).  Mr. Grant was joined in making this announcement by Garry F. McCarthy, Superintendent of the Chicago Police Department (CPD) and Cook County Sheriff Thomas Dart.

SIMEON HARRIS, age 27, of 2631 South Indiana, was arrested Tuesday evening, without incident, by members of the Chicago FBI’s Violent Crimes Task Force (VCTF) outside his residence. HARRIS was named in a criminal complaint filed last week in U.S. District Court in Chicago with one count of Bank Robbery, which is a felony offense. HARRIS was charged in the complaint with the January 16 robbery of the North Community Bank branch, located at 448 North Wells Street.

According to the complaint, HARRIS was linked to the January 16 robbery by an eyewitness, who saw him flee after the theft in a maroon-colored SUV with temporary Illinois license plates. A vehicle matching the description given by the witness was impounded by the CPD a few days later, following a traffic stop and drug arrest. Subsequent investigation by VCTF members, including a search of the impounded SUV, developed evidence linking HARRIS to the robbery and the charge announced today.

Though not charged, other robberies attributed to the “Wicker Park Bandit” are as follows:

1.December 13, 2011 - Chase Bank branch, 1700 North Wells

2.December 20, 2011 - North Community Bank branch, 2335 North Clark
3.December 22, 2011 - PNC Bank branch, 4440 North Broadway
4.December 30, 2011 - Chase Bank branch, 1350 North Wells
5.January 6, 2012 - North Community Bank branch, 1555 N. Damen
6.January 6, 2012 - North Community Bank branch, 1600 West Chicago Avenue
7.January 9, 2012 - Chase Bank branch, 1200 North State Parkway
8.January 21, 2012 - Chase Bank branch, 71 West Chicago Avenue
9.January 28, 2012  - Chase Bank branch, 3531 North Western Avenue. 

During all of the robberies, witnesses said that a lone robber entered the bank and approached a teller with a handwritten note asking for cash. He did not show any weapons or make any threats during the robberies and no injuries were reported in any of these incidents.

HARRIS appeared before Magistrate Judge Maria Valdez, earlier today, at which time he was formally charged.  HARRIS was ordered held without bond, pending his next scheduled court appearance. If convicted of the charge filed against him, HARRIS faces a possible sentence of up to 20 years in prison.

This case was investigated by the Chicago FBI’s Violent Crimes Task Force (VCTF), which is comprised of FBI special agents, detectives from the Chicago Police Department, and investigators from the Cook County Sheriff’s Police.

Additional information about this and other Chicago area bank robberies, including downloadable photographs, is available online at the Bandit Tracker Chicago website, www.bandittrackerchicago.com.

The public is reminded that a complaint is not evidence of guilt and that all defendants in a criminal case are presumed innocent until proven guilty in a court of law.

EDITOR’S NOTE: Copies of the criminal complaint are available from the Chicago FBI’s press office at (312) 829-1199.

Conspirator Pleads Guilty in Scheme to Fraudulently Obtain Over $1.399 Million from Baltimore Housing Authority Account

Defendant Provided His Identity to Conspirators to Illegally Transfer Funds Out of Housing Authority’s Bank Account

BALTIMORE—Keith Eugene Daughtry, age 50, of Washington, D.C., pleaded guilty today to conspiring to commit bank fraud in connection with a scheme to fraudulently obtain over $1.399 million from a Baltimore Housing Authority (BHA) bank account in just a few months.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.

According to his guilty plea, Daughtry agreed to provide his identity in a scheme to steal money from the BHA. In May of 2010, a co-conspirator used Daughtry’s identity to obtain a fraudulent driver’s license in Daughtry’s name, but bearing the co-conspirator’s photograph. The conspirators had this fraudulent driver’s license made with the co-conspirator’s photograph so that if law enforcement were to track down Daughtry through the fraudulent license’s use, Daughtry could claim that his identity had been stolen.

On May 25, 2010, the co-conspirator used the fraudulent driver’s license to open a bank account for an entity called Keith Daughtry Contracting LLC. Shortly thereafter, substantial amounts of funds illegally diverted by Daughtry’s conspirators from a BHA bank account were electronically transferred into the Daughtry LLC bank account. These transfers were unlawful because Daughtry LLC had never provided any services to the BHA requiring compensation. Investigators have determined that the conspirators were responsible for transferring at least $1,399,700 stolen from BHA’s account into Daughtry LLC’s account between July and September 2010.

The conspirators then drained these stolen funds from Daughtry LLC’s account by initiating electronic transfers from that account onto debit cards in other individuals’ names, at least one of whose identity had been stolen; through electronic transfers into accounts at other banks; and through in-person cash withdrawals from Daughtry LLC bank accounts and from automated teller machines in the Washington, D.C. area. Daughtry himself withdrew $38,550 from the fraudulent Daughtry LLC account from August 17 to September 9, 2010. Daughtry admits that he is responsible for over $1 million in losses as a result of his participation in the conspiracy.

As part of his plea agreement, Daughtry has agreed to the entry of an order to pay restitution of, and to forfeit, at least $1,399,700.

Daughtry faces a maximum sentence of 30 years in prison and a fine of $1 million or twice the gross gain or loss. U.S. District Judge William D. Quarles, Jr. scheduled his sentencing for May 22, 2012 at 1:00 p.m.

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.

United States Attorney Rod J. Rosenstein thanked the FBI for its work in the investigation and praised Assistant U.S. Attorney Sujit Raman, who is prosecuting the case.

Sun Prairie Woman Pleads Guilty to Filing False Tax Return

MADISON, WI—John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced that Cheryl A. McNamee, 47, Sun Prairie, Wis., pled guilty today before U.S. District Judge Barbara B. Crabb to willfully filing a 2009 tax return in which she falsely omitted $94,867 of income.

During the plea hearing, McNamee admitted that she had written 56 unauthorized checks to herself—totaling $94,867—from her employer, Hexagon Title, Sun Prairie. McNamee also agreed that her total unreported income between 2002 and 2009 was $595,473.

In her plea agreement, McNamee agreed to pay restitution of $469,413 to the owners of Hexagon Title and an additional $126,060 to First American Title Company.

McNamee will be sentenced before Judge Crabb at 1:00 p.m. on April 18, 2012. She faces a maximum penalty of three years in federal prison.

The charges followed an investigation by the Internal Revenue Service-Criminal Investigation Division and Federal Bureau of Investigation. The prosecution of the case has been handled by Assistant U.S. Attorney Timothy M. O’Shea.

Assistant Administrator of Houston Hospital Indicted for Alleged Role in $116 Million Medicare Fraud Scheme

WASHINGTON—An assistant administrator of a Houston hospital was arrested today on charges related to his alleged participation in a $116 million Medicare fraud scheme involving false claims for mental health treatment, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

An indictment filed in the Southern District of Texas and unsealed today charges Mohammed Khan, 62, of Houston, with one count of conspiracy to commit health care fraud, one count of conspiracy to pay and receive illegal health care kickbacks and five counts of paying or offering to pay health care kickbacks. Khan is expected to make his initial appearance in federal court today in Houston.

“The indictment against Mr. Kahn alleges that he used his position as a hospital assistant administrator to submit millions in false claims to the Medicare program,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “According to the charges, he paid kickbacks to patient recruiters, owners of group homes and assisted living facilities and beneficiaries so that he could fill his hospital with patients for whom he could bill the government for medically unnecessary services or services that were never provided. We will continue aggressively to pursue individuals who attempt to enrich themselves at the expense of the Medicare program.”

“The defendant charged in this indictment is accused of stealing precious Medicare resources by billing for services that were medically unnecessary or never provided,” said Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office. “Our health care fraud efforts have never been more collaborative and aggressive. We will continue to work with our law enforcement partners to protect patients and fight against health care fraud.”

According to the indictment, Khan, as the assistant administrator of a Houston hospital, allegedly operated a scheme to defraud Medicare beginning in 2008 and continuing until his arrest today. Khan allegedly caused the submission of false and fraudulent claims for partial hospitalization program (PHP) services to Medicare through the hospital. A PHP is a form of intensive outpatient treatment for severe mental illness.

The indictment alleges that Khan paid kickbacks to owners and operators of group care homes and assisted living facilities and to patient recruiters in exchange for delivering ineligible Medicare beneficiaries to the hospital’s PHPs. The indictment alleges that Khan also paid kickbacks to Medicare beneficiaries who attended the hospital’s PHPs. These kickbacks included cigarettes, food, and coupons redeemable for items available at the hospital’s “country stores.” Khan and his co-conspirators submitted or caused to be submitted approximately $116 million in claims to Medicare for PHP services purportedly provided by the hospital to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided.

Today’s charges were announced by Assistant Attorney General Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent in Charge Morris of the FBI’s Houston Field Office; Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG); the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU); Special Agent in Charge Lucy R. Cruz of the Internal Revenue Service (IRS) Houston Field Office; Joseph J. Del Favero, Special Agent in Charge of the Chicago Field Office of the Railroad Retirement Board, Office of Inspector General (RRB-OIG); and Scott Rezendes, Special Agent in Charge of Field Operations of the Office of Personnel Management, Office of Inspector General (OPM-OIG).

The case is being prosecuted by Trial Attorney Laura M.K. Cordova, Attorney Allan Medina, Assistant Chief William Pericak and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, MFCU, IRS, RRB-OIG and OPM-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants who collectively have falsely billed the Medicare program for more than $3.2 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.