District Man Sentenced to 40 Months in Prison in Mortgage Fraud Scheme

Defendant Admitted Obtaining $2.4 Million as a Result of the Fraud

WASHINGTON—Akinola George, 42, of Washington, D.C., was sentenced today to a prison term of 40 months after earlier pleading guilty to conspiracy to commit bank fraud and mail fraud for his role in a mortgage fraud scheme.

The sentencing was announced by U.S. Attorney Ronald C. Machen Jr.; Daniel S. Cortez, Inspector in Charge, Washington Division, U.S. Postal Inspection Service; William P. White, Commissioner of the District of Columbia Department of Insurance, Securities and Banking; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, and Kenneth R. Taylor, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Housing and Urban Development.

George pled guilty in September 2011 in the U.S. District Court for the District of Columbia and was sentenced by the Honorable Reggie B. Walton. Judge Walton ordered that George begin serving his prison time immediately. He noted that George’s “elaborate scheme” caused a significant amount of loss. As part of his plea agreement, George agreed to forfeiture of $2.4 million. He also must pay restitution in the amount of $2,021,346 to victims of his crime.

According to a statement of offense, signed by the defendant, from October 2004 to April 2008, George, with the assistance of others, defrauded banks and other lenders of money through false statements and misrepresentations. George used about 22 sales of residential real estate properties (all but two sales were for property in the District of Columbia) to fraudulently obtain mortgage loans. Loan documents in support of these mortgages listed false employers and false salaries for the buyers, exaggerated the assets available to the buyers to pay back the loans and make a cash contribution, and incorrectly listed the buyers’ intent to occupy the houses.

During the settlement of the sales transactions, thousands of lender dollars were siphoned off through fake “renovation” invoices and misrepresentations on the settlement documents. Through this process, George fraudulently obtained approximately $2.4 million, even though he was not the seller on any of the properties. George used some of this money to pay for the assistance of others in the conspiracy, to share with other co-conspirators, and to pay for bogus “down payments” for the buyers, as well as other items. For many properties in the District of Columbia, a co-conspirator acting as the settlement agent submitted the signed Deed or Deed of Trust to the District of Columbia’s Recorder of Deeds, with the instructions that after recordation, the documents be mailed back to the title company, which did occur. After closing, the co-conspirators failed to continue to pay the mortgages on some of the properties. The lenders were forced to foreclose and resell the properties at a loss of more than $2 million.

In announcing the sentence, U.S. Attorney Machen, Inspector in Charge Cortez, Commissioner White, Assistant Director McJunkin, and Special Agent in Charge Taylor commended the efforts of those who worked on the case from the Postal Inspection Service, the District of Columbia Department of Insurance, Securities and Banking, the FBI’s Washington Field Office, the Office of Inspector General of the Department of Housing and Urban Development, and the Metropolitan Police Department.

They also praised those who worked on the case from the U.S. Attorney’s Office, including Forensic Accountant Crystal Boodoo, Paralegal Specialist Sarah Reis, Assistant U.S. Attorney Diane Lucas, who assisted in forfeiture, and Assistant U.S. Attorney Virginia Cheatham, who is prosecuting the case.

Illinois Resident Pleads Guilty to Mailing Threats to Metro-Atlanta Area Schools

ATLANTA—VALTREZ STEWART, 29, of Oak Lawn, Illinois, pleaded guilty today in federal district court to mailing threats to Atlanta area schools.

Unites States Attorney Sally Quillian Yates said, “School should be a place where students are safe. All threats to harm schools, students, teachers, and school personnel will be taken seriously by law enforcement, regardless of whether the threat later is revealed to be a hoax perpetrated by a person with selfish, ulterior motives.”

According to United States Attorney Yates, the charges, and other information presented in court: STEWART mailed threats to at least four different schools between January 28, 2011, and February 2, 2011. The threats contained collages of newspaper and magazine clippings of words and numbers. The messages claimed, in part, that a bomb would detonate at the school killing at least 20 people, and promised brutal murders if money was not paid to certain individuals by a certain date. STEWART pleaded guilty to mailing the threats to Northview High School, Marietta High School, Stephenson Middle School, and Meadowcreek High School, all in the Atlanta metro area. Further investigation revealed that STEWART made the threats in hopes of getting law enforcement agencies to begin contacting and investigating people who STEWART personally disliked and sought to have targeted for making the deadly threats.

STEWART was indicted in July 2011. Today he pleaded guilty to four counts of mailing threatening communications. He could receive a maximum sentence of 20 years in prison and a fine of up to $250,000. In determining the actual sentence, the court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Sentencing is scheduled for March 28, 2012, at 10:00 a.m., before United States District Judge Willis B. Hunt.

This case is being investigated by task force officers of the Federal Bureau of Investigation.

Assistant United States Attorney Tracia M. King is prosecuting the case.

For further information, please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is Justice.gov/usao/gan.

Former ANC Commissioner Pleads Guilty to Fraud; Admits Misuse of More Than $28,000 in Government Funds

Community Leader Used Money for Personal Expenses

WASHINGTON—William Shelton, 42, a community leader in Northeast Washington, pled guilty today to a federal charge of access device fraud for using more than $28,000 in District of Columbia government funding, intended for the community, for his own personal expenses.

The guilty 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; and Charles J. Willoughby, Inspector General for the District of Columbia.

Shelton pled guilty in the U.S. District Court for the District of Columbia. The Honorable Beryl A. Howell scheduled sentencing for May 4, 2012. The charge carries a maximum statutory penalty of 10 years in prison, as well as a potential fine and order of restitution. Under federal sentencing guidelines, the parties have agreed that the applicable range would be six to 12 months in prison and a fine of up to $20,000. Under the plea agreement, Shelton must pay $28,526 in restitution to the District of Columbia government and forfeit proceeds of his crime.

According to a statement of offense signed by the government as well as the defendant, Shelton is the former chairman of the Advisory Neighborhood Commission (ANC) in Ward 5B of the District of Columbia. The D.C. government provides funds to ANCs each year to serve public purposes in the specific ANC area and to help pay for the functioning of the ANC office. Each ANC is permitted to establish a checking account, and any expenditures must be signed by at least two officers of the ANC, one of whom must be the treasurer or chairperson.

Shelton obtained a debit card for the ANC’s bank account, and knowingly used it for personal expenses with the intent to defraud the ANC.

From August 2010 through March 2011, Shelton used the debit card to make approximately 120 cash withdrawals, obtaining $27,129.85 in ANC funds. In addition, between February 2010 and February 2011, he used the debit card to pay directly for a total of $1,396.36 in purchases. None of the withdrawals or direct purchases were approved by the ANC or recorded in its books and records as required by law. All of the money was used by Shelton for personal expenditures.

“With today’s guilty plea, William Shelton became the latest city official to be held accountable for ripping off D.C. taxpayers,” said U.S. Attorney Machen. “There is no excuse for using the public treasury as a personal slush fund. We will continue our aggressive press against public officials who abuse the trust we place in them.”

“Mr. Shelton violated the trust of taxpayers by using government money for his own personal use,” said Assistant Director McJunkin. “His illegal conduct is deeply disappointing to our citizens and to the vast majority of elected officials who carry out their duties in an honest and ethical manner.”

“Today’s plea is demonstrative of how the Office of the Inspector General not only works to safeguard the interests of the District and its citizenry, but how it continues to work together with the Office of the United States Attorney in this worthy and rewarding endeavor,” stated Inspector General Willoughby. “I am and will continue to be proud of the role that the Office of the Inspector General plays in this regard.”

In announcing the guilty plea, U.S. Attorney Machen, Assistant Director McJunkin and Inspector General Willoughby praised the work of those who investigated the case, including the special agents of the FBI’s Washington Field Office and Special Agent Alexander H. Zion II, of the Office of the Inspector General. They also commended the efforts of those who worked on the case for the U.S. Attorney’s Office, including Paralegal Shanna Hays, Legal Assistant Krishawn Graham, Assistant U.S. Attorney Scott Sroka of the Asset Forfeiture and Money Laundering Section, and Assistant U.S. Attorney Bridget M. Fitzpatrick, of the Fraud and Public Corruption Section, who is prosecuting the matter.

Federal Judge Sentences Birmingham Man to Five Years in Prison for Mortgage Fraud Scheme

BIRMINGHAM—A federal judge on Thursday sentenced a Birmingham man to five years in prison for a mortgage fraud scheme in which he sold three houses that he did not own, announced U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Patrick Maley and the inspectors general of the departments of Housing and Urban Development and the Social Security Administration.

U.S. District Judge Sharon Lovelace Blackburn sentenced DARRYL COBB, 54, on two counts of mail fraud in connection to the scheme. Cobb pleaded guilty to the charges in August. The judge also ordered Cobb to pay restitution of $262,861 and to forfeit $262,861 to the government as proceeds of his illegal activity.

“Mortgage fraud is a considerable problem that plagues our communities and damages our country,” Vance said. “We will continue to work tirelessly to uncover, investigate and prosecute any individual committing mortgage fraud. We want to send the clear message that if you lie on mortgage documents, you will be held accountable for your fraud.”

According to Cobb’s plea agreement with the government, his scheme was uncovered after the owner of a home in the 7900 block of 4th Avenue South complained to Birmingham police that someone was living in the house, which should have been vacant. The owner had gotten the house in a will from a deceased parent.

The person living in the house said they had bought it from Cobb. Further investigation showed Cobb had filed false documents in Jefferson County court and with a mortgage company claiming to be the rightful owner of the property, according to the plea agreement. Records searches determined Cobb had conducted two other fraudulent transactions using identical methods to obtain control over two other properties, which he then sold under the false pretense that he was the rightful owner and seller.

Those Birmingham houses are located in the 2700 block of Wood Drive and the 7500 block of 4th Avenue South.

The FBI and inspector general’s offices for both HUD and the Social Security Administration investigated the case. Assistant U.S. Attorney Patrick Carney prosecuted the case.

Camp Buehring, Kuwait Postmaster Convicted of Stealing $565,000 in Money Orders

HOUSTON—Delmus Eugene Scott, Jr., 34, of Humble, Texas, has pleaded guilty to one count of theft of government money, United States Attorney Kenneth Magidson announced today. Scott was the former custodian of public effects (COPE), which is the equivalent to a postmaster in the United States.

Scott was employed by a contractor of the U.S. Department of Defense responsible for providing postal services to U.S. military personnel deployed in Kuwait. Scott’s responsibilities included conducting and reporting financial transactions at the Army Post Office (APO) on a daily basis, to include the procurement and sale of U.S. Postal Service money orders. As the COPE, Scott had full autonomy to order blank money orders directly from the U.S. Postal Service distribution center.

Scott’s guilty plea today follows his indictment on July 27, 2011, at which time he was charged with one count of theft of government money resulting from a complaint into large deposits of postal money orders into bank accounts in Humble. Investigation determined Scott stole a total of 565 postal money orders, each valued at $1,000, with $181,000 clearing the Federal Reserve. Agents recovered the remaining $384,000 in postal money orders before they could be negotiated.

Further investigation determined that Scott mechanically imprinted the fraudulent amounts on the postal money orders using a money order imprinter exclusive to the Camp Buehring APO, under his custody and control, misrepresenting that they had been properly paid. Scott later deposited $90,000 in fraudulent postal money orders into his personal bank account and directed an additional $91,000 in fraudulent postal money order deposits to his fiancé’s bank account.

U.S. District Judge Sim Lake, who accepted his guilty plea today, has set sentencing for April 19, 2012, at which time he faces a maximum penalty of 10 years’ imprisonment and/or a $250,000 fine.

This case was investigated by the U.S. Postal Inspection Service with the assistance of the Major Procurement Fraud Unit in Kuwait, Department of Defense, U.S. Army Criminal Investigation Command, and the FBI and is being prosecuted by Special Assistant United States Attorney Tammie Y. Moore.

Jury Convicts Former Titusville Man of Child Pornography Offenses

ERIE, PA—After deliberating approximately three hours, a federal jury found Craig Alan Finley guilty of four counts of violating federal laws relating to the sexual exploitation of children, United States Attorney David J. Hickton announced today.

Finley, 34, was tried before Senior United States District Judge Maurice B. Cohill, Jr. in Erie, Pennsylvania.

According to Assistant United States Attorney Christian A. Trabold, who prosecuted the case, the evidence presented at trial established that Finley used his cell phone to produce videos of himself sexually assaulting a 10-year-old male. These videos were then distributed on the Internet. The evidence also revealed that Finley received and was in possession of over 30,000 images and movies depicting minors, many younger than 10 years of age, engaged in sexually explicit conduct. Finley also distributed his enormous collection of child pornography to others on the Internet.

Launched in February 2006, Project Safe Childhood is a nationwide initiative designed to protect children from online exploitation and abuse. Led by the U.S. Attorneys’ Offices, 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 identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

Judge Cohill scheduled sentencing for May 8, 2012 at 3:30 p.m. The law provides for a total sentence of 80 years in prison, a fine of $1,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based on the seriousness of the offenses and the criminal history, if any, of the defendant.

The Federal Bureau of Investigation and the Pennsylvania State Police conducted the investigation that led to the prosecution of Finley.

Erie Man Admits Transporting Cocaine from Detroit to Erie

ERIE, PA—A resident of Erie, Pennsylvania pleaded guilty in federal court to a charge of violating federal drug laws, United States Attorney David J. Hickton announced today.

Ronald Wesley Thomas, 62, pleaded guilty to one count before Senior United States District Judge Maurice B. Cohill, Jr.

In connection with the guilty plea, the court was advised that Thomas transported a kilogram of cocaine from Detroit, Michigan to Erie, Pennsylvania in June 2008.

Judge Cohill scheduled sentencing for March 5, 2012 at 2:30 p.m. The law provides for a total sentence of forty years in prison, a fine of $2,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.

Pending sentencing, the court continued Thomas on bond.

Assistant United States Attorney Marshall J. Piccinini is prosecuting this case on behalf of the government.

The EAGLE task force, which is comprised of members of the Federal Bureau of Investigation, the Pennsylvania State Police, and the Erie Police Department, conducted the investigation that led to the prosecution of Thomas.

Bridgeport Man Sentenced to Federal Prison for Possessing Child Pornography

David B. Fein, United States Attorney for the District of Connecticut, announced that RAMON PAUL FERNANDEZ, 37, of Bridgeport, was sentenced today by United States District Judge Robert N. Chatigny in Hartford to 12 months and one day of imprisonment, followed by 10 years of supervised release for possessing child pornography.

According to court documents and statements made in court, on September 19, 2009, a Milford Police detective assigned to the Connecticut Computer Crimes Task Force connected to a peer-to-peer Internet file-sharing network in an effort to identify individuals distributing child pornography. The investigation revealed that images of child pornography had been sent from an Internet Protocol (IP) address assigned to an account holder at an apartment in Ansonia where FERNANDEZ sometimes resided. On December 18, 2009, law enforcement officers executed a federal search and seizure warrant at the apartment and seized a desktop computer. During an interview, FERNANDEZ acknowledged that he used a peer-to-peer program to download images of child pornography.

Subsequent forensic analysis of the hard drive of the seized computer confirmed the existence of child pornography images and videos.

On April 6, 2011, FERNANDEZ pleaded guilty to one count of possession of child pornography.

This case was investigated by the Federal Bureau of Investigation and the Connecticut Computer Crimes Task Force, which includes federal, state, and local law enforcement agencies, including the Milford Police Department. The case was prosecuted by Assistant United States Attorney Deborah R. Slater.

The Connecticut Computer Crimes Task Force investigates crimes occurring over the Internet, including computer intrusion, Internet fraud, copyright violations, Internet threats, and harassment and online crimes against children. The task force also provides computer forensic review services for participating agencies. The task force is housed in the main FBI office in New Haven. For more information about the task force, please contact the FBI at 203-777-6311.

U.S. Attorney Fein noted that this prosecution is part of the U.S. Department of Justice’s Project Safe Childhood Initiative, which is aimed at protecting children from sexual abuse and exploitation. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

To report cases of child exploitation, please visit Cybertipline.com.

Orange County Couple Pleads Guilty to Federal Fraud Charges for Bilking Banks Out of Nearly $5 Million

SANTA ANA, CA—A Newport Coast couple pleaded guilty this morning to defrauding a consortium of seven banks, including Bank of America, in connection with a $130 million line of credit.

Thomas Chia Fu, 63, and his wife, Cheri L. Shyu (also known as Cheri Fu), 60, owned Anaheim-based Galleria USA, Inc., which imported home decor items manufactured in China. The Fus obtained a $130 million revolving line of credit for Galleria from a consortium of seven banks. In connection with that revolving line of credit, the couple overstated by tens of millions of dollars the accounts receivables of the company—lies they told the banks in order to continue borrowing funds under the revolving line of credit, according to plea agreements filed in this case. The Fus also admitted to falsifying in Galleria’s computer system the accounts receivable amounts by a factor of 10 or more times the actual amount purchased to support the exaggerated numbers and hide Galleria’s true financial status.

The banks suffered an estimated loss of $4.7 million on the revolving line of credit from October 2008 to July 2009.

The Fus pleaded guilty this morning before United States District Judge Cormac J. Carney. Cheri Fu is scheduled to be sentenced by Judge Carney on July 9, and Thomas Fu is scheduled to be sentenced on July 30.

At sentencing, the Fus each face a statutory maximum sentence of 30 years in federal prison.

This case was investigated by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Federal Bureau of Investigation, and the United States Secret Service.

“In 2008, American taxpayers stepped up to help our nation’s banks, while the Fus concocted a scheme to swindle them,” said Christy Romero, Deputy Special Inspector General for SIGTARP. “Today, the Fus pled guilty to using a false second set of books to defraud seven banks, including TARP recipients Bank of America and United Commercial Bank, out of loans that resulted in millions of dollars in bank losses. Defrauding institutions that received TARP funds is simply defrauding American taxpayers. SIGTARP will aggressively uncover and investigate fraud, waste and abuse related to TARP and actively support the prosecution of these crimes to ensure accountability and justice.”

SIGTARP investigates fraud, waste, and abuse in connection with the Troubled Asset Relief Program (TARP). To report suspected illicit activity involving TARP, call the SIGTARP Hotline at 1-877-SIG-2009 (1-877-744-2009).

CONTACT: Assistant United States Attorney Jeannie M. Joseph (714) 338-3576

Two Women Plead Guilty to Health Care Fraud Conspiracy and Related Offenses

CHARLOTTE, NC—Two women charged with health care fraud related offenses have pled guilty to the charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

U.S. Attorney Tompkins is joined in making today’s announcement by Attorney General Roy Cooper, who oversees the North Carolina Medicaid Investigations Unit (MIU); Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region; Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; Sheriff Kevin L. Auten of the Rowan County Sheriff’s Office; Russell F. Nelson, Special Agent in Charge of the United States Secret Service (USSS), Charlotte Field Division; Donnie Varnell, Special Agent in Charge of the Diversion and Environmental Crimes Unit of the North Carolina State Bureau of Investigation (NC SBI); and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department (CMPD).

Today, Wendy Gibson (a/k/a Wendy Fitzgerald), 40, of Charlotte, pled guilty to one count of health care fraud conspiracy, one count of paying and receiving illegal kickbacks, and one count of conspiracy to distribute controlled substances. Gibson’s co-defendant, Karen Wills (a/k/a Karen Boykin and Karen Jackson), 43, of Salisbury, entered a guilty plea to the same charges and to one additional count of health care fraud conspiracy on January 12, 2012. The defendants were charged by a criminal bill of indictment on August 17, 2011.

According to filed documents and statements made in court, from around 2008 to January 2011, Wills and others participated in a scheme to defraud Medicare and Medicaid by submitting false and fraudulent claims for medical services which were medically unnecessary, not provided, or both, including but not limited to, electromyography (“EMG”) and anorectal manometry (“AM”) procedures. As a result of this scheme, Medicare and Medicaid paid over $400,000 in reimbursement payments on the fraudulent claims. Court documents indicate that around August 2008, Wills and others became aware of the investigation into this fraudulent billing scheme. In an effort to conceal the fraud, Wills created several false EMG and AM reports and placed them in patient files. As part of her guilty plea, Willis admitted that the amount of loss intended to be caused by the scheme was in excess of $400,000 but less than $1,000,000.

Wills and Gibson also pled guilty to charges of conspiring to pay and receive illegal kickbacks. According to the indictment, from around January 2008 to around 2009, Wills, Gibson, and others engaged in an illegal kickback scheme involving power wheelchairs. According to plea documents, Wills used her position with her employer’s company to submit fictitious referrals for patients to receive medically unnecessary power wheelchairs from Gibson’s employer’s company. In some instances, Wills forged a physician’s signature on required qualification documents, while Gibson tracked and directed payment to those referrals. As part of their plea agreements, the defendants admitted to concealing the illegal kickback payments by falsely representing on invoices and checks that the payments were for nursing and billing services. This scheme resulted in payments for the medically unnecessary equipment from Medicare and Medicaid in excess of $300,000.

Wills and Gibson also pled guilty to charges of conspiracy to distribute controlled substances and to commit health care fraud. In pleading guilty to that charge, Wills admitted that she forged a physician’s signature on prescription pads she misappropriated from her employer, and issued fraudulent prescriptions in Gibson’s name. The prescriptions were written for controlled substances including oxycodone and hydrocodone/acetaminophen pills. In her plea, Gibson admitted that she used her health insurance prescription benefit program to pay for the fraudulent prescriptions resulting in payments in over $30,000 for these fraudulent prescriptions. Wills and Gibson obtained and illegally distributed approximately 3,000 oxycodone pills, and approximately 5,000 hydrocodone/acetaminophen pills.

At sentencing, Gibson and Wills face a maximum statutory sentence of 10 years in prison on the health care fraud conspiracy and a $250,000 fine, and five years in prison and a $25,000 fine for the illegal kickbacks charge. They also face 20 years in prison and a $1 million fine for the conspiracy to distribute controlled substances. Wills also faces a penalty of 10 years of imprisonment and a $250,000 fine for the additional charge of health care fraud conspiracy. Wills has been in federal custody on these charges since August 2011, and Gibson remains on bond. A sentencing date has not been set.

The investigation into Wills and Gibson was handled by HHS-OIG, MIU, FBI, USSS, NC SBI, CPMD, and Rowan County Sheriff’s Office. The prosecution is being handled by Assistant U.S. Attorney Kelli Ferry of the U.S. Attorney’s Office in Charlotte.

The investigation and charges are the work of the Western District’s joint Health Care Fraud Task Force. The Task Force is a multi-agency team of experienced federal and state investigators and prosecutors, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing of all whistle blower complaints, and the creation of investigative teams so that individual agencies may focus their unique areas of expertise on investigations.

The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.

If you suspect Medicare or Medicaid fraud please report it by phone at 1-800-447-8477 (1-800-HHS-TIPS), or E-Mail at HHSTips@oig.hhs.gov.

American Samoa Department of Education Official Convicted by Federal Jury in District of Columbia of Witness Tampering and Obstruction of Justice

WASHINGTON—Paul Solofa, the director of the school lunch program for the government of the U.S. Territory of American Samoa, was convicted today in relation to his efforts to obstruct a federal grand jury and law enforcement investigation into a bribery scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

After a four-day trial, a federal jury in the District of Columbia found Solofa, 50, guilty of one count of witness tampering and one count of obstruction of justice.

According to evidence presented at trial, in approximately early 2008, federal authorities began conducting an investigation into allegations of cash bribes and kickbacks paid by vendors to officials of the American Samoa Government in connection with the government’s purchase of school bus parts and services.

According to the trial evidence, Solofa met on April 3, 2009, with a school bus parts vendor who told Solofa that the FBI was interested in interviewing the vendor regarding the bus parts investigation. Solofa, in a recorded meeting, allegedly told the vendor, “They cannot do anything with cash. Nothing. They cannot do anything with cash. They cannot track down you on cash. Because even if you say you gave me cash I’ll tell them ‘no.’ They cannot take your word on cash. Because that’s hearsay. So you know, but the best thing for you to do is ‘nope, I never give them any cash, I never’—because that will open up the whole operation . . . You get what I am saying. All you do is just tell them ‘no, yes, no, yes,’ period.”

In addition, according to the evidence presented at trial, Solofa met on April 14, 2009, with the same bus parts vendor, who told Solofa that a grand jury subpoena requiring production of specific documents and records, some of which related to Solofa and to the bus parts kickback scheme, would be issued shortly. After discussing how to respond, Solofa told the vendor that, as for documents he did not want to produce, “ [t]he only way to do it with those copies is burn it. That way, they won’t see it, and you won’t worry that they might see it, you know. . . . Just burn it, and nobody has a copy.”

Solofa faces a maximum penatly of 20 years in prison and a $250,000 fine on the witness tampering charge and 10 years in prison and a $250,000 fine on the obstruction of justice charge. Sentencing is scheduled for April 27, 2012.

This case is being prosecuted by Principal Deputy Chief Raymond N. Hulser and Trial Attorney Daniel A. Petalas of the Criminal Division’s Public Integrity Section. The case is being investigated by the FBI in Hawaii; the Office of the Inspector General for the U.S. Department of Education; and the Office of the Inspector General for the U.S. Department of the Interior.

Jacksonville Man Found Guilty of Production of Child Pornography and Making False Statements to FBI

JACKSONVILLE, FL—U.S. Attorney Robert E. O’Neill announced today that a federal jury has found Alberto Martinez Riquene (44, Jacksonville) guilty of using a minor to produce a video of child pornography and of making false statements in connection with matters being investigated by the Federal Bureau of Investigation. Riquene faces up to 30 years in federal prison for the production charge, and up to 10 years in federal prison for making false statements. Riquene is in the custody of the United States Marshals Service pending his sentencing hearing.

According to testimony and evidence presented at trial, between February 24, 2010 and March 31, 2010, Riquene engaged in commercial sex acts on five to 10 occasions with a 15-year-old minor female at Riquene’s residence in Jacksonville. This minor child had become addicted to crack cocaine, and was introduced to prostitution by other individuals as a way to obtain more crack cocaine. On one such occasion, while the minor child and Riquene were engaged in a commercial sex act at his residence, Riquene made a video recording of the minor child engaged in sexually explicit conduct.

According to court records, on July 28, 2010, a special agent with the Federal Bureau of Investigation and three Jacksonville Sheriff’s Office detectives interviewed Riquene at his residence. Riquene acknowledged that he knew the minor child. However, when asked about his relationship with the minor child, Riquene falsely stated that the minor child had never been in his bedroom or in any part of his house, he had never had sex with her, and he had never touched her.

According to testimony and evidence presented at trial, law enforcement officers subsequently received information that the minor child had used Riquene’s computer to access her Myspace account while she was at Riquene’s residence. The FBI then obtained two search warrants for the computer media at the residence. Forensic analysis revealed that the minor child’s Myspace account had been accessed using Riquene’s computer. In addition, several videos were discovered on Riquene’s computer hard disk drive, including a video depicting the minor child and Riquene engaged in sexually explicit conduct.

This case was investigated by the Federal Bureau of Investigation and the Jacksonville Sheriff’s Office. It is being prosecuted by Assistant United States Attorneys Mac D. Heavener, Diidri W. Robinson, and D. Rodney Brown.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the 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 locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov. For more information about Internet safety education, please visit www.projectsafechildhood.gov and click on the tab “other resources.”

Founders of McGinn, Smith & Co., Inc. Indicted on Fraud and Tax Charges

Defendants Timothy M. McGinn and David L. Smith Alleged to Have Engaged in Mail, Wire, and Securities Fraud and to Have Filed False Income Tax Returns

ALBANY, NY—United States Attorney Richard S. Hartunian; Victor W. Lessoff, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation, New York Field Office; and Clifford C. Holly, Special Agent in Charge, Federal Bureau of Investigation, Albany Division, announced that a grand jury sitting in the Northern District of New York returned an indictment today charging TIMOTHY M. McGINN, age 63, of Clifton Park, New York, and DAVID L. SMITH, age 66, of Saratoga Springs, New York, with (1) one count of conspiracy to commit mail and wire fraud, in violation of Title 18, United States Code, Section 1349; (2) 17 counts of mail and wire fraud, in violation of Title 18, United States Code, Sections 1341 & 1343; (3) six counts of securities fraud, in violation of Title 15, United States Code, Sections 78j(b) & 78ff and Title 18, United States Code, Section 2; and (4) three counts each of filing a false income tax return, in violation of Title 26, United States Code, Section 7206(1).

Count one charges the defendants with conspiracy to commit mail and wire fraud. The indictment alleges that the purpose of the conspiracy was to mislead investors regarding the safekeeping and use of investor money raised by 17 trusts and one corporation, the risks of the trust offerings, the performance of the underlying income streams, the source of investor payments, and the improper diversion of investor money in order to obtain money from investors and enrich themselves. As a result of the defendant’s conduct, the investors were not aware that the defendants had diverted approximately $4.1 million in connection with transactions related to the trusts for their own benefit and the benefit of another person. If the defendants are convicted of count one, the maximum potential penalties they face include imprisonment for 30 years, to be followed by supervised release for five years, and a fine of the greater of $1,000,000 or twice the gross pecuniary gain or loss.

Counts two through 18 charge the defendants with mail and wire fraud. The maximum potential penalty for each of Counts two through 18 is imprisonment for 30 years, supervised release for five years, and a fine of the greater of $1,000,000 or twice the gross pecuniary gain or loss. Counts two through six and eight through 11 relate to the Firstline Series B Trusts, which raised money from investors in connection with a loan of $2.4 million to Firstline Security, Inc., a company that generated alarm contracts. The Indictment alleges that the defendants knew that Firstline was facing litigation with its dealer, but did not disclose that to investors, or tell them when Firstline filed for bankruptcy and defaulted on loans. Instead, the defendants directed that investors receive $2 million of lulling payments by transferring money from other entities controlled by McGinn and Smith, and their firm sold approximately $600,000 of one of the Firstline investments without any disclosure of the bankruptcy or defaults.

Counts seven and 12 relate to the Integrated Excellence Trusts, for which the defendants raised about $1.2 million from investors in connection with a loan to benefit Integrated Excellence, Inc., which generated alarm contracts. The Indictment alleges that the defendant knew that the payments received from the loan were not sufficient to pay investors, but they directed that investors receive lulling payments by transferring money from other entities controlled by McGinn and Smith.

Counts 13 through 16 and 18 are wire fraud charges related to the misuse of investor money held in escrow accounts. Counts 13 and 14 involve the diversion of approximately $142,000 of investor money from an escrow account to make payments to investors in other trusts. Counts 15, 16, and 18 involve approximately $115,000 that McGinn and Smith took directly from escrow accounts holding investor funds. These transactions violated their duties as officers and owners of the company acting as the trustee for the Trusts, and they failed to disclose these transactions to investors.

Count 17 is a wire fraud charge related to approximately $230,000 McGinn took from McGinn Smith Transaction Funding Corp. between August 22, 2008 and July 8, 2009. McGinn repaid $100,000 of the money. When Smith discovered that McGinn had taken this money, he directed that a false accounting entry be made to conceal it.

Counts 19 through 24 relate to the failure to disclose improperly diverted fees to investors in violation of federal securities laws. Counts 19 and 20 relate to $100,000 in fees paid in connection with TDM Verifier Trust 08, and counts 21 through 24 relate to approximately $855,000 in fees paid in connection with Fortress Trust 08. All of these transaction fees were paid with investor money. The maximum potential penalty for each of Counts 19 through 24 is imprisonment for 20 years, supervised release for three years, and a fine of $5,000,000.

Counts 25 through 30 are tax charges arising from the failure of McGinn and Smith to declare the improperly diverted money on their personal tax returns for 2006 through 2008. McGinn and Smith later described the money as “loans,” but did not list them as such on personal financial statements. When the Financial Industry Regulatory Authority, Inc. (“FINRA”) discovered the false loan accounting entries for the diverted money, the defendants misled FINRA by directing the creation of backdated promissory notes. The maximum potential penalty for each of Counts 25 through 30 is imprisonment for three years, supervised release for one year, and a fine of $100,000.

The Indictment includes allegations for forfeiture of $8 million in proceeds of the offenses charged.

McGINN and SMITH are expected to be arraigned tomorrow, January 27, 2012, at 2:00 p.m. before the Honorable Randolph F. Treece, United States Magistrate Judge at the Federal Courthouse in Albany. The investigation is ongoing.

This case is being investigated by the Internal Revenue Service, Criminal Investigation and the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorneys Elizabeth C. Coombe and Rick Belliss.

The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty.

Owner and Employee of Miami Home Health Company Plead Guilty in $22 Million Health Care Fraud Scheme

The owner and an employee of a Miami health care agency each pleaded guilty for their participation in a $22 million home health Medicare fraud scheme, the Department of Justice, the FBI and the Department of Health and Human Services (HHS) announced yesterday.

Marietha Morales, 38, pleaded guilty on Jan. 24, 2012, before U.S. District Judge Seitz to one count of conspiracy to commit health care fraud and Eduardo Saborit-Dominguez, 48, pleaded guilty yesterday before Judge Seitz to one count of conspiracy to violate the Anti-Kickback Statute. Sentencing for both defendants is scheduled for May 23, 2012. The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years.

According to the court documents, Morales was the president and Saborit-Dominguez was an employee of Prime Home Health Services Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries.

According to plea documents, Morales conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services. Morales and her co-conspirators paid kickbacks and bribes to patient recruiters in return for these recruiters providing patients to Prime Home Health, as well as prescriptions, plans of care and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Saborit-Dominguez distributed the kickbacks and bribes to co-conspirator patient recruiters and knew that the payment of kickbacks and bribes was in violation of federal criminal laws. Morales used these prescriptions, plans of care and medical certifications to fraudulently bill the Medicare program for home health care services, which Morales knew was in violation of federal criminal laws.

According to plea documents, at Prime Home Health, nurses and office staff falsified patient files for Medicare beneficiaries to make it appear that such beneficiaries qualified for home health care and therapy services from Prime Home Health. Morales admitted that she knew the beneficiaries did not actually qualify for and did not receive such services. Morales knew that these files were falsified so that the Medicare program could be billed for medically unnecessary therapy and home health related services.

From approximately February 2005 through April 2011, Morales and her co-conspirators submitted approximately $22 million in false and fraudulent claims to Medicare and Medicare paid approximately $14 million on those claims.

The guilty pleas were announced by U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Assistant Attorney General Lanny A. Breuer of the Criminal Division; John V. Gillies, Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.

This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-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 Miami.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, the HHS 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.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to Stopmedicarefraud.gov.

Drunk Busters of America

The February 2, 2012, episode of American Heroes Radio features a conversation with former Curt Kindschuh the founder of Drunk Busters of America. 

Program Date: February 2, 2012

Program Time: 1500 hours, PACIFIC

Topic: Drunk Busters of America

Listen Live:  

http://www.blogtalkradio.com/lawenforcement/2012/02/02/drunk-busters-of-america 

About the Program

In 1995, Curt Kindschuh started Drunk Busters of America.  Curt and his staff have now worked with over fifteen-thousand customers in 64 countries.  

Curt Kindschuh worked in law enforcement for 18 years, and in 1993 was recognized in the Wisconsin Law Enforcement Officer of the Year Awards for his creative approaches to crime prevention. He was one of the first Drug Abuse Resistance Education (D.A.R.E.) Officers in Wisconsin, and worked for 4 years in 23 schools as a D.A.R.E. Officer. He started the “Shop With a Cop” program, which has since been duplicated in others areas of the United States, and also was a bicycle safety officer. 

A volunteer with Mothers Against Drunk Driving (MADD) from 1990-2002, he worked full time as the Wisconsin State Executive Director of MADD from 1994-1997. Additionally, for 4 years he was a part-time instructor for the Group Dynamics Traffic Safety Program, which is mandatory for 1st time convicted drunk drivers in Wisconsin. Until his commitment to Drunk Busters of America forced him to cut back, he also taught criminal justice classes at a local college. Curt knows and understands impaired driving. He has arrested drunk drivers, investigated fatal crashes, counseled convicted DUI offenders and worked as an advocate for victims of impaired driving crashes.  

Curt completed the National Highway Traffic Safety Administration (NHTSA) certified DWI Detection and Standardized Field Sobriety Testing course, and he is the designer and patent holder for Drunk Busters Impairment Goggles, used worldwide in the fight to stop impaired driving. Curt was a member of the Driving School Association of the Americas (DSAA), American Driver Traffic Safety Education Association (ADTSEA), the Wisconsin D.A.R.E. Officers Association, and the National D.A.R.E. Officers Association. He is a member of the International Association for Driver Education, and he has established a reputation as a creative, innovative, passionate visionary in impaired driving education. Curt has presented at over one-hundred state, national, and international conferences and for hundreds of school districts, universities, and other safety organizations.  

About the Watering Hole

The Watering Hole is police slang for a location cops go off-duty to blow off steam and talk about work and life.  Sometimes funny; sometimes serious; but, always interesting. 

About the Host

Lieutenant Raymond E. Foster was a sworn member of the Los Angeles Police Department for 24 years.  He retired in 2003 at the rank of Lieutenant.  He holds a bachelor’s from the Union Institute and University in Criminal Justice Management and a Master’s Degree in Public Financial Management from California State University, Fullerton; and, has completed his doctoral course work. Raymond E. Foster has been a part-time lecturer at California State University, Fullerton and Fresno; and is currently a Criminal Justice Department chair, faculty advisor and lecturer with the Union Institute and University.  He has experience teaching upper division courses in law enforcement, public policy, law enforcement technology and leadership.  Raymond is an experienced author who has published numerous articles in a wide range of venues including magazines such as Government Technology, Mobile Government, Airborne Law Enforcement Magazine, and Police One.  He has appeared on the History Channel and radio programs in the United States and Europe as subject matter expert in technological applications in law enforcement. 

Listen, call, join us at the Watering Hole:

http://www.blogtalkradio.com/lawenforcement/2012/02/02/drunk-busters-of-america 

Listen from the Archive:

http://www.americanheroesradio.com/drunk_busters.html 

Program Contact Information

Lieutenant Raymond E. Foster, LAPD (ret.), MPA

editor@police-writers.com

909.599.7530

LinkedIn Event:

http://linkd.in/y2EF6v 

Facebook Event:

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Patient Recruiter Sentenced to 30 Months in Prison in Connection with $5.4 Million Medicare Fraud Scheme

WASHINGTON—A Miami resident was sentenced in Detroit today to 30 months in prison for his participation in a $5.4 million Detroit-area Medicare fraud scheme, announced the Department of Justice, FBI and Department of Health and Human Services (HHS).

Santiago Villa-Restrepo, 34, was sentenced by U.S. District Judge Arthur J. Tarnow of the Eastern District of Michigan. In addition to his prison term, Villa-Restrepo was ordered to pay approximately $2.9 million in restitution, jointly and severally with his co-defendants.

Villa-Restrepo pleaded guilty on Nov. 29, 2011, to one count of health care fraud. According to the plea documents, beginning approximately in 2007, Villa-Restrepo paid Medicare patients to undergo medically unnecessary diagnostic tests at three health care clinics owned by co-conspirators. In exchange for cash and other consideration offered by Villa-Restrepo and his co-conspirators, the Medicare beneficiaries signed documents indicating they had received the services billed to Medicare. Medicare was billed $5.4 million for medically unnecessary diagnostic tests by the clinics associated with the scheme.

The sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.

This case is being prosecuted by Assistant U.S. Attorney Philip A. Ross of the Eastern District of Michigan, with assistance from Assistant Chief Benjamin D. Singer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-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 Eastern District of Michigan.

Since their inception in March 2007, the Medicare Fraud Strike Force operations in nine districts have charged more than 1,140 individuals who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to Stopmedicarefraud.gov.

Drug Trafficking Conspiracy Indictment Expanded

ANCHORAGE—United States Attorney Karen L. Loeffler announced today, January 26, 2012, that on January 20, 2012, an Anchorage grand jury expanded a previously charged drug trafficking conspiracy involving Kostas Nikolaos Bairamis, Melissa Dawn Cue, BJ Griffith, William Gilbert, and Justin Clayton Ray Lane to charge three additional defendants: Homer resident Timothy Daniel Cissney, age 33; Christopher Sean Kendrick, age 36, from California; and Aaron O’Kito Dyson, aka “Punchy,” age 37, from Washington. The indictment alleges one count of conspiracy to distribute controlled substances, in violation of 21 U.S.C. §§ 846, 841(a)(1), (b)(1)(C).

According to the indictment presented to the court, defendants conspired to distribute oxycodone and methadone between at least June 17, 2010, and October 5, 2010. Bairamis has been convicted of conspiring to distribute methamphetamine during a different time period and has been sentenced to served 11 years on that separate charge. Both Cue and Griffith have been previously indicted by a grand jury in the District of Nevada. Those charges remain pending.

Assistant United States Attorney Kimberly Sayers-Fay, who presented the case to the grand jury, advised that the maximum penalties for conspiring to distribute oxycodone and methadone are 20 years’ imprisonment, a $1,000,000 fine, three years’ supervised release, and a $100 special assessment.

The Federal Bureau of Investigation and Alaska State Troopers conducted the investigation the led to the indictments in this case.

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

Cincinnati Man Receives 37-Month Sentence for Selling More Than $1 Million in Counterfeit Financial and Tax Preparation Software

CINCINNATI—Brandon C. Davis, 31, of Cincinnati, was sentenced in U.S. District Court to 37 months in federal prison for selling more than $1 million worth of counterfeit financial and tax preparation software through an Internet auction site.

Carter Stewart, U.S. Attorney for the Southern District of Ohio; Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS); Dugan T. Wong, Inspector in Charge, U.S. Postal Inspection Service, Pittsburgh Division; and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the sentence handed down today by Senior U.S. District Judge Herman J. Weber.

Davis pleaded guilty on June 6, 2011 to one count each of mail fraud, copyright infringement, and two counts of filing a false income tax return. His sentence is 37 months for the mail fraud and copyright infringement and 36 months for each of the two counts of filing a false income tax return. Judge Weber ordered the sentences to run concurrently.

According to a court documents, Davis purchased software by download or on a CD, with accompanying label and packaging that was protected by copyright, namely Quicken and Turbo Tax software manufactured by Intuit, Inc. Davis copied each CD of original software multiple times without permission and created counterfeit packaging and labeling for the CDs.

Davis sold the counterfeit Intuit software on eBay, received payment, and then mailed the counterfeit software to the purchaser via the United States Postal Service. Within the packaging, Davis sometimes included a false disclaimer claiming that he was merely acting as a broker for another seller. Davis also falsely represented on the online auctions that he was selling original software, but instead the defendant sold counterfeit software, usually at prices below manufacturer’s suggested retail price.

Davis failed to report the income from the counterfeit software sales when he filed his income tax returns for 2008 and 2009.

“To perpetuate his scheme, [Davis] created 37 different eBay accounts for the illegal sales, typically with false information used to set up the account,” Assistant U.S. Attorney Tim Mangan wrote in a sentencing memorandum filed with the court. “The funds from the sales were processed through… more than 20 different bank accounts controlled by the Defendant. This all stands in contrast to the Defendant’s tax returns, which represented that he made a modest living as an independent photographer.”

Davis was also ordered to pay $80,074.08 in restitution to the IRS, forfeit all computer items used to manufacture and distribute the fake software, as well as forfeiting a 2006 Hummer, and $192,117.31 that U.S. Postal Inspectors seized from his bank accounts. He also has to pay $158,980 in restitution to the software manufacturer.

The case was prosecuted by Assistant U.S. Attorney Timothy S. Mangan of the U.S. Attorney’s Office for the Southern District of Ohio and Trial Attorney Thomas Daugherty of the Criminal Division’s Computer Crime and Intellectual Property Section.

The sentencing announced today is an example of the type of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to Justice.gov/dag/iptaskforce.

New Haven Man Sentenced to Three Years in Federal Prison for Distributing Crack

David B. Fein, United States Attorney for the District of Connecticut, announced that CHARLES NICHOLS, 45, of New Haven, was sentenced today by Senior United States District Judge Ellen Bree Burns in New Haven to 36 months of imprisonment, followed by three years of supervised release, for distributing crack cocaine.

This matter stems from a joint law enforcement investigation conducted by the FBI New Haven Safe Streets Task Force, the DEA New Haven Task Force, the New Haven Police Department, and the Hamden Police Department. Through the use of court-authorized wiretaps, investigating officers identified and dismantled a large drug-trafficking organization that was centered in the Newhallville section of New Haven and Hamden and was responsible for the distribution of crack cocaine and cocaine throughout the Greater New Haven area. According to court documents and statements made in court, for a period of approximately two weeks in August and September 2010, NICHOLS purchased distribution quantities of crack cocaine from other members of the drug trafficking organization, and then redistributed some of the crack to others.

On November 10, 2011, NICHOLS pleaded guilty to one count of conspiring to distribute cocaine base (“crack cocaine”).

Forty-seven individuals have been charged in federal court with various narcotics offenses as a result of this investigation.

This matter was investigated by the Federal Bureau of Investigation’s New Haven Safe Streets Task Force (composed of members of members of the New Haven, Ansonia, Milford, Hamden, and East Haven Police Departments, and the Connecticut State Police and the Connecticut Department of Correction), the Drug Enforcement Administration’s New Haven Task Force (composed of members of the New Haven, West Haven, Meriden, Ansonia, Hamden, and Branford Police Departments), along with substantial participation by members of the New Haven and Hamden Police Departments. The United States Marshals Service also has assisted the investigation.

The investigation was funded in significant part by the United States Attorney’s Office Organized Crime Drug Enforcement Task Force and supported by the Office’s Project Safe Neighborhoods and Anti-Gang programs.

This matter is being prosecuted by Assistant United States Attorneys Christopher M. Mattei and Robert M. Spector.

Lancaster Man Pleads Guilty to Federal Child Pornography Offense

Defendant Downloaded and Shared 800-1,000 Files of Child Pornography

DALLAS—Terry Don Jackson, 55, of Lancaster, Texas, pleaded guilty this afternoon before U.S. District Judge Jorge A. Solis to an information charging one count of transporting and shipping child pornography, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. Jackson, who remains on bond, faces a statutory sentence of not less than five years, nor more than 20 years in federal prison, up to a $250,000 fine and up to a lifetime of supervised release. Sentencing is set for April 25, 2012, before Judge Solis.

According to documents filed in the case, Jackson admitted using the Internet and peer-to-peer file-sharing software to share and transmit images of child pornography to undercover agents on at least four separate occasions in 2010. When FBI agents executed a federal search warrant at his home in March 2011, they seized his computer which he used to facilitate his possession, receipt and distribution of child pornography. When interviewed, Jackson admitted that he has downloaded and shared approximately 800-1,000 files of child pornography, including images of children as young as 8 to 10 years old, engaged in sexual acts, and that he had approximately 100 “friends” with whom he was sharing files. He admitted knowing that some of the images and videos included images of prepubescent minors and material that portrayed sadistic and/or masochistic conduct.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice, to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. 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 Projectsafechildhood.gov

The investigation is being conducted by the FBI and the Plano, Texas Police Department. Assistant U.S. Attorney Lisa J. Miller is in charge of the prosecution.