Federal Grand Jury Indicts Four Men in Separate Bank Robberies

BIRMINGHAM—A federal grand jury today indicted four men in connection to four separate bank robberies in North Alabama, announced U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Richard D. Schwein, Jr.
The four men are charged in three separate indictments filed in U.S. District Court. John David Vansteenis, 28, of Decatur, and Joseph Michael Borden, 52, who was homeless, are charged with the January 25 robbery of a Decatur branch of The People’s Bank. Vansteenis and Borden also face a charge of brandishing a firearm, a Glock Model 27 pistol, during the crime of violence.
Christopher Allan Cooper, 33, of Kentucky, is charged with two bank robberies in Huntsville. He is charged with the December 12 robbery of a Regions Bank branch on Memorial Parkway South and with the January 8 robbery of a Regions Bank branch on Drake Avenue SW.
Christopher Bruce, 35, of McCalla, also was indicted for two bank robberies. Bruce is charged with the November 16 robbery of First Financial Bank on U.S. Highway 11 North in Vance and with the November 26 robbery of West Alabama Bank on Alabama Highway 5 in Woodstock.
The FBI investigated these cases, and the U.S. Attorney’s Office for the Northern District of Alabama is prosecuting them. The Vance and Woodstock Police Departments and the Bibb County Sheriff’s Department assisted in the case involving Bruce. The Huntsville Police Department assisted in the case that led to the charges against Cooper, and the Hartselle and Decatur Police Departments assisted in the case that led to charges against Vansteenis and Borden.
The bank robbery charge carries a maximum sentence of 20 years in prison and a $250,000 fine. The charge of brandishing a firearm during a crime of violence carries a mandatory sentence of seven years in prison, to be served after completion of any other sentence imposed for the crime.
Members of the public are reminded that an indictment contains only charges. A defendant is presumed innocent of the charges, and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.

Cullman Car Dealer Indicted for Violating Legal Protections for Active Duty Service Members

BIRMINGHAM—A federal grand jury Wednesday indicted a Cullman used car dealer for violating federal protections for active duty military service members by refusing to reduce the loan interest rate and repossessing the vehicle he sold to a man who was later deployed overseas with the Alabama National Guard, announced U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Richard D. Schwein, Jr.
A two-count indictment filed in U.S. District Court charges Carl Ralph Nuss, 75, with violating the Servicemembers Civil Relief Act. The act restricts or limits civil actions in the areas of financial management, including rental agreements, security deposits, evictions, installment contracts, credit card interest rates, mortgages, civil judicial proceedings, and income tax payments, against service members called to active duty.
Nuss, owner of North Alabama Wholesale Autos in Cullman, sold a 2002 Ford Sport-Trac in February 2011 to the 22-year-old man. The dealership sold the vehicle for $9,746 and, after a $2,200 down payment, financed the balance at 25 percent interest per year, according to the indictment.
In May 2012, the guardsman, a private first class, was called to active duty in Afghanistan. In July 2012, according to the indictment, Nuss received a letter from the guardsman requesting that the dealership reduce the interest rate on his car loan from 25 percent to 6 percent, as required by the act. Nuss never reduced the interest rate and, two days after receiving the letter, hired two men to repossess the guardsman’s truck. The two men repossessed the vehicle without a court order, in violation of the Servicemembers Civil Relief Act, the indictment says.
The maximum penalty for each count is one year in prison and a $100,000 fine.
The public is reminded that an indictment contains only charges. A defendant is presumed innocent of the charges, and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.

FBI Seeks Suspect in Connection with Series of White-Collar Crimes

Paul David Cardwell is wanted in Wyoming for committing a series of white-collar crimes. On or about February 10, 2011, Cardwell accepted an offer of employment to serve as CEO of Powell Valley HealthCare (PVHC) in Powell, Wyoming. Cardwell started work at PVHC around March 7, 2011. As CEO, he reported to PVHC’s board of directors. He resigned on September 23, 2011. During Cardwell’s six-and-a-half months of employment, Cardwell, together with a co-conspirator, allegedly executed a scheme to defraud PVHC. Through this scheme, Cardwell and his co-conspirator improperly misappropriated PVHC funds, which totaled almost $850,000.
The scheme involved the following: Cardwell allegedly authorized PVHC to make payments to a straw vendor, who kicked back approximately 75 percent of the payments to Cardwell. The payments to the fake company, a purported physician-recruiting firm based in Indiana, were supposedly for physician recruiting services. The payments were simply the means to funnel the paid amounts to the co-conspirator, who kicked approximately 75 percent of the paid funds back to Cardwell and kept 25 percent for himself. None of the misappropriated funds (nearly $850,000) were legitimately earned.
Through investigation, it was discovered that Cardwell and his co-conspirator had allegedly pulled the same scheme while Cardwell was CEO at a hospital in White County, Indiana, from 2001 to 2009. It is believed that at least $800,000 was stolen allegedly, from the hospital, by Cardwell and his co-conspirator. On March 13, 2012, a Wyoming grand jury returned an indictment charging Cardwell and his co-conspirator with conspiracy to commit wire fraud and mail fraud, conspiracy to commit money laundering, wire fraud, and mail fraud. A summons was issued to both men to appear in federal court in Cheyenne, Wyoming, on March 27, 2012.
On this same day, Cardwell and his co-conspirator turned themselves in to law enforcement in Cheyenne, Wyoming, in response to the arrest warrants issued in this matter. On this day, their initial appearance and arraignments were held. Both were released on $50,000 bond with a trial date of June 4, 2012, which was later postponed to September 18, 2012. Among the stipulations made by U.S. Probation and Parole regarding their pre-trial release, both Cardwell and his co-conspirator had to surrender their U.S. Passports and make no attempts to obtain a new passport.
On or about August 29, 2012, Cardwell attempted to obtain a new U.S. passport in his birth name, Paul David Sappington. When Home Land Security was advised, Cardwell’s application was denied. On this same day, an arrest warrant was issued by the United States District Court, for the District of Wyoming, for violation of Cardwell’s pre-trial release.
If you have any information concerning this person, please contact your local FBI office or the nearest American Embassy or Consulate.
Details:

• Name: Paul David Cardwell
• Alias: Paul David Sappington
• Date of Birth Used: July 11, 1966
• Place of Birth: Indiana
• Height: Approximately 5’8” tall
• Weight: Approximately 220 pounds
• NCIC: W025749843
• Build: Hefty
• Hair: Brown
• Eyes: Blue
• Sex: Male
• Race: White
• Nationality: American
• Remarks: Cardwell has ties to Indiana and very close ties to Thailand.

- FBI wanted poster

FBI Top Ten Fugitive Now in Custody

FBI Denver Acting Special Agent in Charge Steve Olson announces the return of FBI Ten Most Wanted Fugitive Edwin Ernesto Rivera Gracias to Denver, Colorado.
Rivera Gracias, wanted in Jefferson County, Colorado, for an August 17, 2011 murder of a long-time family acquaintance of his girlfriend, voluntarily returned to the United States to face charges. In coordination with Salvadoran authorities and the FBI’s San Salvador Legal Attaché Office, the United States sent an aircraft to transport Mr. Rivera Gracias to Denver, Colorado.
Upon landing, Rivera Gracias, accompanied by FBI Denver special agents, was turned over to local authorities for processing. Rivera Gracias has been charged and will have his first appearance in court for state charges.
Although a reward of up to $100,000 had been offered for information leading to the capture of Rivera Gracias, further reward information will not be made public.
“We appreciate the media and public’s assistance in providing useful information following the naming of Rivera Gracias as a Top Ten Fugitive,” said Acting Special Agent in Charge, Steve Olson. “This outcome provides assurance for victims and prosecutors throughout the United States that those who commit egregious crimes will be pursued around the globe.”
The FBI has legal attaché offices in over 70 key cities worldwide, providing coverage for more than 200 countries, territories, and islands. Each office is established through mutual agreement with the host country and is situated in the U.S. embassy or consulate in that nation.
The public is reminded that all persons are considered innocent until proven guilty in a court of law.
- Original story announcing addition of Rivera Gracias to Top Ten list

FBI Seeks Public’s Help to Locate a Suspect Wanted for a Santa Rosa Murder

The FBI and the Santa Rosa Police Department are seeking the public’s help in locating a man charged with allegedly committing a gang-related murder in Santa Rosa, California, on January 15, 2005.
Ricardo (who also goes by Richard) Puentes, Jr., 35, was charged with murder and a federal arrest warrant was issued on March 23, 2005, by the United States District Court for the Northern District of California in San Francisco.
According to the complaint, on January 15, 2005, Puentes, Jr. and two other suspects allegedly knocked on the door of an apartment in Santa Rosa. When a female resident opened the door to allow the three suspects inside, Puentes, Jr. allegedly pulled out a handgun and began shooting. One victim was shot and killed and a second was wounded before the suspects fled.

Puentes, Jr. is a male, Hispanic, 35 years of age, 5’8” to 5’9” tall, and weighs about 190 lbs. He has black hair and brown eyes and has several moles on his face. He also has ties to Meridian, Mississippi, and Everett, Washington.
The FBI can be reached 24 hours a day at 415-553-7400 in the San Francisco area. All calls are confidential.
Members of the media should call Public Affairs Specialist Julianne Sohn at 415-553-7450.
- FBI wanted poster for Puentes, Jr.

FBI Warns of New Fraudulent Credit Card Scheme

Kevin C. Donovan, Acting Special Agent in Charge of the FBI, state of Alaska, advises that Alaskans may be targeted for a new variation of a fraudulent scheme concerning credit cards. Under this new scheme, victims receive a text message on their cell phones stating their cards have been deactivated and to call a 907 area-code number to re-activate. The recording asks for their 16-digit card number, expiration date, CVV code, and PIN.
Mr. Donovan advises that should you receive a text message from an entity regarding your credit card account, delete the message and call the number listed on the back of your credit card. Calling the listed number will allow individuals to determine whether the incoming text message was a valid contact attempt from their credit card company.
Mr. Donovan also advises that the elderly are especially vulnerable to this scheme. The public is encouraged to visit the Internet Crime Complaint Center’s website at www.ic3.gov to learn more about the different schemes targeting the unsuspecting public and how to identify and report such fraudulent schemes.

FBI Warns of Extortion/Hitman Scam

Kevin C. Donovan, Acting Special Agent in Charge of the FBI, state of Alaska, advises that Alaskans may be targeted for an ongoing e-mail-based scheme that threatens death to the recipient by an unknown professional hitman. The fraudster contacts the potential victims via e-mail claiming their team was hired and paid a lot of money by a friend of the victim to kill them. The fraudster demands $10,000 to call off the hit and claims he will provide a tape containing evidence as to who hired him once the amount is paid. The recipient is threatened with murder if they fail to comply. The recipient is also threatened that they are currently being watched by the hitman’s team and that the hitman will kill the recipient’s family if the recipient contacts law enforcement.
Mr. Donovan advises that should you receive a similar extortionate e-mail, you are recommended to contact your local FBI office and file a complaint at the Internet Crime Complaint Center’s website at www.ic3.gov.
Mr. Donovan also advises that the public is encouraged to visit the Internet Crime Complaint Center’s website to learn more about the different schemes targeting the unsuspecting public and how to identify and report such fraudulent schemes.

Former President of the Native Village of Tatitlek Arrested for Theft of Funds from an Indian Tribal Organization

ANCHORAGE—U.S. Attorney Karen L. Loeffler announced today that an Anchorage woman was arrested today on allegations that she misapplied more than $200,000 of funds from the Native Village of Tatitlek for her personal use. Charges include that a $20,000 cash withdrawal of Tatitlek funds that she is alleged to have provided to her brother was also improperly misapplied.
On March 21, 2013, Lori “Sue” Johnson, 45 (married name now Lori Clum) of Anchorage, Alaska, was named in a four-count indictment with three counts of theft from an Indian Tribal Organization. Johnson’s brother, James Kramer, 47, of Valdez, Alaska, was named in one count of the indictment for theft from an Indian Tribal Organization.
The indictment alleges that Lori Johnson was voted out of office as president of the Native Village of Tatitlek in April 2008 but refused to acknowledge the election ousting her and maintained control over the village bank accounts until April 2009. During this time, it is alleged that she paid herself duplicate paychecks, took significant cash withdrawals, and wrote checks to herself totaling over $200,000. This amount included a $28,750 cash withdrawal she deposited into her personal bank account; a check for $19,500 that she wrote to herself and deposited into her personal bank account; and a $20,000 cash withdrawal that she gave to her brother James Kramer that he used for personal expenses.
The Native Village of Tatitlek receives the majority of its funding from federal sources including the Bureau of Indian Affairs, the U.S. Environmental Protection Agency, and the Department of Health and Human Services.
Assistant United States Attorney Aunnie Steward, who presented the case to the grand jury, indicated that the law provides for a maximum sentence of five years in prison, a fine of $250,000, or both on each count. Under the federal sentencing statutes, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendants.
The FBI and the U.S. Environmental Protection Agency Office of Inspector General, with assistance from the IRS Criminal Investigations Division, conducted the investigation leading to the indictment in this case.
An indictment is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

Former Employee of New Jersey Defense Contractor Sentenced to 70 Months in Prison for Exporting Sensitive Military Technology to China

NEWARK—A former New Jersey-based defense contractor employee who was convicted by a federal jury of exporting sensitive U.S. military technology to the People’s Republic of China (PRC), stealing trade secrets, and lying to federal agents was sentenced today to 70 months in prison, New Jersey U.S. Attorney Paul J. Fishman announced.
Sixing Liu, aka, “Steve Liu,” 49, a PRC citizen who had recently lived in Flanders, New Jersey, and Deerfield, Illinois, has been in custody since the September 2012 verdict, based on his risk of flight.
“Instead of the accolades he sought from China, Sixing Liu today received the appropriate reward for his threat to our national security: 70 months in prison,” said U.S. Attorney Fishman. “As an innovation leader, the United States is a target for those seeking to cut corners at the expense of American businesses and consumers. As this sentence shows, the Department of Justice is making great progress in the fight against trade secret theft in order to protect the engines of our nation’s economic recovery.”
The jury convicted Liu of nine of the 11 counts in the second superseding indictment with which he was charged, including six counts of violating the Arms Export Control Act and the International Traffic in Arms Regulations, one count of possessing stolen trade secrets in violation of the Economic Espionage Act of 1996, one count of transporting stolen property in interstate commerce, and one count of lying to federal agents.
In addition to the prison term, Liu was sentenced to serve three years of supervised release and ordered to pay a $15,000 fine. Restitution is to be determined at a later date.
According to documents filed in the case and evidence presented at trial:
In 2010, Liu stole thousands of electronic files from his employer, L-3 Communications, Space and Navigation Division, located in Budd Lake, New Jersey. The stolen files detailed the performance and design of guidance systems for missiles, rockets, target locators, and unmanned aerial vehicles. Liu stole the files to position and prepare himself for future employment in the PRC. As part of that plan, Liu delivered presentations about the technology at several PRC universities, the Chinese Academy of Sciences, and conferences organized by PRC government entities.
On November 12, 2010, Liu boarded a flight from Newark Liberty International Airport to the PRC. Upon his return to the United States on November 29, 2010, agents found Liu in possession of a non-work-issued computer containing the stolen material. The following day, Liu lied to agents of the Department of Homeland Security about the extent of his work on U.S. defense technology, which the jury found to be a criminal false statement.
The U.S. Department of State’s Directorate of Defense Trade Controls later verified that several of the stolen files on Liu’s computer contained export-controlled technical data that relates to defense items listed on the United States Munitions List (USML). Under federal regulations, items and data covered by the USML may not be exported without a license, which Liu did not obtain. The regulations also provide that it is the policy of the United States to deny licenses to export items and data covered by the USML to countries with which the United States maintains an arms embargo, including the PRC.
The jury heard testimony that Liu’s company trained him about the United States’ export control laws and told him that most of the company’s products were covered by those laws.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge David Velazquez; special agents of ICE-Homeland Security Investigations, under the direction of Special Agent in Charge Andrew McLees; and officers of U.S. Customs and Border Protection, under the leadership of Director of New York Field Operations Robert E. Perez, for the investigation leading to the sentence.
The government is represented by Assistant U.S. Attorney L. Judson Welle of the U.S. Attorney’s Office National Security Unit and Assistant U.S. Attorney Gurbir S. Grewal of the Computer Hacking and Intellectual Property Section of the U.S. Attorney’s Office Economic Crimes Unit, both in Newark. The prosecution received valuable support from attorneys of the U.S. Department of Justice’s National Security Division, Counterespionage Section.

Four Police of Puerto Rico Officers Indicted on Federal Civil Rights, Obstruction of Justice, and Perjury Charges

WASHINGTON—A superseding indictment against four Police of Puerto Rico (POPR) officers was announced today by Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division; Rosa Emilia Rodriguez-Velez, U.S. Attorney for the District of Puerto Rico; and Carlos Cases, Special Agent in Charge of the FBI San Juan Field Office.
POPR Lieutenant Erick Rivera Nazario and Officer David Colon Martinez were indicted on civil rights charges alleging that they violated the constitutional rights of Jose Irizarry Perez while he was celebrating the local election results at the Las Colinas housing development in Yauco, Puerto Rico, on November 5, 2008. Rivera was also charged with violating the civil rights of Irizarry Perez’s father, Jose Irizarry Muniz. In addition, Rivera, Colon, Officer Miguel Negron Vazquez, and Sergeant Antonio Rodriguez Caraballo were indicted for obstruction of justice and making false statements to the FBI and a federal grand jury.
According to the 18-count superseding indictment, while Colon held and restrained Irizarry Perez, Rivera and another POPR officer assaulted Irizarry Perez with their hands and a police baton, which resulted in bodily injury to Irizarry Perez. The superseding indictment alleges that Irizarry Perez was thereby deprived of his right to be free from unreasonable seizures by those acting under color of law. Although Irizarry Perez died as a result of injuries he sustained on November 5, 2008, the superseding indictment does not include charges that his death resulted from the defendants’ conduct. Rivera, who was a supervisor at the time of the incident, was also charged with failing to intervene and failing to keep Irizarry Perez and his father from harm when an officer whom Rivera supervised assaulted the victims in Rivera’s presence.
In addition, the superseding indictment alleges that all four of the charged officers made false statements concerning the incident to the FBI and to the federal grand jury which had been investigating the incident. Colon and Negron were also charged with obstruction of justice for submitting false police reports and for providing misleading information to the Puerto Rico prosecutor that initially investigated the matter. Rivera was additionally charged with obstruction of justice for submitting a false police report, and Rodriguez was charged with obstruction of justice for providing misleading information to the Puerto Rico prosecutor.
If convicted, Rivera faces a maximum penalty of 10 years in prison for each of three charged counts of civil rights violations; a maximum of 20 years in prison for one charged count of obstruction of justice by submitting a false police report; and a maximum penalty of five years in prison for one charged count of making a false statement to the FBI and one charged count of making a false declaration to the grand jury.
If convicted, Colon faces a maximum penalty of 10 years in prison for one charged count of a civil rights violation; a maximum of 20 years in prison for one charged count of obstruction of justice by submitting a false police report and two charged counts of providing misleading information to the local prosecutor; and a maximum penalty of five years in prison for one charged count of making a false statement to the FBI and one charged count of making a false declaration to the grand jury.
If convicted, Negron faces a maximum penalty of 20 years in prison for one charged count of obstruction of justice by submitting a false police report and one charged count of providing misleading information to the local prosecutor; and a maximum penalty of five years in prison for one charged count of making a false statement to the FBI and one charged count of making a false declaration to the grand jury.
If convicted, Rodriguez faces a maximum penalty of 20 years in prison for one charged count of obstruction of justice by providing misleading information to the local prosecutor; and a maximum penalty of five years in prison for one charged count of making a false statement to the FBI and one charged count of making a false declaration to the grand jury.
An indictment is merely an accusation, and the defendants are presumed innocent unless proven guilty.
This case is being investigated by the San Juan Division of the FBI and is being prosecuted by Assistant U.S. Attorney Jose A. Contreras from the U.S. Attorney’s Office for the District of Puerto Rico and Senior Litigation Counsel Gerard Hogan and Trial Attorney Shan Patel from the Civil Rights Division of the U.S. Department of Justice.

Puerto Rico Man Faces Life in Prison for Mass Shooting in 2009

WASHINGTON—Alexis Candelario-Santana, 41, faces life in prison following his conviction of murdering eight people and an unborn child and attempting to murder 19 others during a mass shooting at a Puerto Rico pub in 2009, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the District of Puerto Rico Rosa Emilia Rodríguez-Vélez.
On March 8, 2013, Candelari-Santana was convicted of 28 counts of violent crime in aid of racketeering activity, one count of racketeering conspiracy, nine counts of using a firearm in relation to a crime of violence, one count of conspiracy to possess with intent to distribute a controlled substance, and one count of possession of a firearm with a prior conviction. These offenses occurred on October 17, 2009, in what became known as the “La Tombola Massacre.”
The counts of conviction on capital murder charges necessitated a separate penalty phase of the trial. That phase began on Monday, March 15, 2003. On Saturday, March 23, 2013, the jury announced it was unable to reach a unanimous sentencing verdict. As a result, a sentence of life in prison will be imposed. There is no parole in the federal system.
According to the evidence presented at trial, from approximately 1993 through 2003, Candelario-Santana was the leader of the drug trafficking organization that operated principally in Sabana Seca, Toa Baja, Puerto Rico. The organization purchased its drugs in bulk, processed and packaged the drugs, and sold them at Sabana Seca through numerous sellers, runners, and enforcers under Candelario-Santana’s control. The organization sold crack, cocaine, heroin, and marijuana, and members of the organization routinely possessed firearms in order to protect the drug points. In addition, the evidence introduced at trial established that, between 1995 and 2001, Mr. Candelario-Santana either personally killed, or ordered others to kill, 13 individuals whom he viewed as threats to his drug trafficking organization or as being disloyal members of his drug trafficking organization.
In approximately 2002, Candelario-Santana was arrested and charged in the Commonwealth of Puerto Rico with numerous murders. Sometime after Candelario-Santana’s arrest, co-defendant Carmelo Rondón-Feliciano took charge of the organization. Candelario-Santana ran the drug trafficking organization from prison until approximately 2006, when he was marginalized by co-conspirator Wilfredo Semprit-Santana and Rondón-Feliciano. According to evidence presented at trial, Candelario-Santana was infuriated at being removed from power within the drug trafficking organization.
On September 25, 2006, Rondón-Feliciano was arrested and charged in the District of Puerto Rico with federal drug trafficking crimes. These charges stemmed, in part, from Rondón-Feliciano’s distribution of narcotics in Sabana Seca. After Rondón-Feliciano’s arrest, co-conspirator Semprit-Santana took charge of the organization.
In February 2009, Candelario-Santana was released from prison.
On October 17, 2009, Semprit-Santana held the grand opening of a pub he rented called La Tómbola, located in Toa Baja, Puerto Rico. The event was heavily attended, with people congregating inside and outside the establishment. At approximately 11:50 p.m., Candelario-Santana, co-defendant David Oquendo-Rivas, and others drove to La Tómbola. When they arrived, they immediately opened fire on the patrons located outside. Candelario-Santana and Oquendo-Rivas entered La Tómbola and opened fire on the people inside. Nine people and an 8-month unborn child were killed as a result of the gunfire, and 19 other victims were shot and injured. The individuals killed included Candelario-Santana’s godson, Rondón-Feliciano’s stepson, and Candelario-Santana’s cousin. The evidence introduced at trial demonstrated that 335 expended shell-casings were recovered from the La Tombola crime scene. The ballistics evidence established that eight .9 mm semi-automatic pistols, three 40 caliber semi-automatic pistols, two 45 caliber semi-automatic pistols, three AK-47-type assault rifles, and one AR-15-type assault rifle were used at the La Tombola crime scene.
Candelario Santana will be formally sentenced on June 21, 2013.
The case was investigated by FBI and the Puerto Rico Police Department, with the collaboration of U.S. Drug Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Postal Inspection Service; Instituto de Ciencias Forenses; and the Puerto Rico Department of Justice. The case is being prosecuted by First Assistant U.S. Attorney María Dominguez-Victoriano and Assistant U.S. Attorney Marcela Mateo of the U.S. Attorney’s Office for the District of Puerto Rico and Trial Attorney Bruce R. Hegyi of the Criminal Division’s Capital Case Unit.

Richmond Man Indicted for Theft of Generators from American Military Base in Iraq

RICHMOND, VA—Reuben Thomas, 35, of Richmond, Virginia, was indicted today for the theft of two electrical generators from the American Victory Base Complex in Baghdad, Iraq.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Jeffrey C. Mazanec, Special Agent in Charge of the FBI’s Richmond Field Office, made the announcement after the return of the indictment.
Thomas was a civilian employed as a Site Lead Property Book Manager by Honeywell Technologies Solutions Inc., an American company that had a military contract and subcontract with the Department of Defense to assist in its mission at the Camp Victory Base Complex (VBC) in Bagdad, in the Republic of Iraq.
In addition to theft of government property, Thomas was also charged with making a false statement to the FBI. If convicted, he is facing a maximum sentence of 10 years’ imprisonment on count one and five years on count two. He also faces a fine of up to $500,000.
According to the indictment, a shortage of reliable electricity was a chronic, widespread problem in Iraq during the period of occupation by coalition forces following the 2003 invasion. To fulfill its mission, DOD had many contracts to create and import a wide variety of electrical generators into Iraq. Forces opposing the United States also had the same electrical problems, and, therefore, they needed generators as much as the DOD. One such generator purchased by the DOD was a 1.1 megawatt, approximately 20,000-pound, diesel generator manufactured by F. G. Wilson. These generators were typically used as prime power in Iraq, meaning that they supplied continuous electrical power in places where there was no commercial power available. The price per generator was $176,055. DOD stored and maintained many of its generators in a yard on the west side of the VBC.
On June 17, 2009, two of these generators were stolen from the VBC. Count one of the indictment charges Thomas in the theft of those generators.
He is also charged with making a false material statement in connection with the investigation of the thefts. The investigation established that a rough terrain container handler, commonly referred to as a “retch,” was used to lift the generators from the sandy storage yard onto two flatbed trucks. The investigation also determined that the particular retch used in the theft was borrowed from Supply Support Administration (SSA) facility on the east side of the VBC, with the permission of an SSA supervisor. Accordingly, it was material to the investigation to determine the identity of the person who asked the supervisor for permission.
According to the indictment, on September 15, 2010, Thomas falsely represented to an FBI special agent that on June 17, 2009 ,he had not spoken to anyone at the SSA yard on the east side of the VBC to ask for permission to use a retch. In fact, the indictment alleges, Thomas did ask an SSA supervisor for permission to borrow the vehicle.
This case was investigated by the Federal Bureau of Investigation and the Criminal Investigation Division of the United States Army. Assistant United States Attorney David T. Maguire is prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.

Wapato Woman Sentenced to 10 Years in Federal Prison for Shooting Family Member

SPOKANE—Today, Michael C. Ormsby, United States Attorney for the Eastern District of Washington, announced that Kara Lynn Stahi, age 20, of the Yakama Nation Indian Reservation, was sentenced today after having pleaded guilty in December 2012 to discharging a firearm during the commission of a crime of violence. United States District Court Judge Lonny Suko sentenced Stahi to a 10-year term of imprisonment, to be followed by a three-year term of court supervision upon her release from federal prison.
During the court proceedings it was disclosed that, on July 22, 2012, a call was placed to 911 about a shooting on the Yakama Nation Indian Reservation. Yakama Tribal Police officers quickly responded to the scene and discovered an individual with multiple gunshot wounds. The tribal officers also discovered several discharged ammunition casings. The victim was immediately transported to the hospital. A detective with the Yakama Police Department contacted the Federal Bureau of Investigation and a joint investigation began to determine the identity of the shooter.
The subsequent investigation revealed that during the early morning hours of July 22, 2012, Stahi had an argument with a family member. During the argument, James Anthony Lagmay retrieved a loaded firearm. Stahi took the firearm from Lagmay and used it to shoot the family member-victim several times. After the shooting, Lagmay and Stahi, both of whom are previously convicted felons and, therefore, prohibited from possessing firearms, fled the crime scene. Federal arrest warrants were issued for Stahi and Lagmay, who were both arrested in the fall of 2012. Lagmay subsequently pleaded guilty in October 2012 to being a previously convicted felon in possession of ammunition. On January 31, 2013, Lagmay was sentenced to 15-month term of imprisonment, to be followed by a three-year term of court supervision upon release from federal prison.
Michael C. Ormsby said, “This investigation is a superb example of the strong partnership among Tribal and Federal law enforcement personnel. The United States Attorney’s Office; the Federal Bureau of Investigation; the Yakama Tribal Police Department; and the Bureau of Alcohol, Tobacco, Firearms, and Explosives are committed to apprehending and prosecuting criminals who utilize firearms to commit crimes, particularly when the crime is as egregious as the offense committed in this case.”
This investigation was conducted by the Federal Bureau of Investigation, the Yakama Nation Tribal Police Department, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The case was prosecuted by Thomas J. Hanlon, an Assistant United States Attorney for the Eastern District of Washington.

Seattle Man Sentenced to 18 Years in Prison for Plot to Attack Seattle Military Processing Center

SEATTLE—A Seattle man was sentenced today to 18 years in prison in connection with the June 2011 plot to attack a military installation in Seattle, U.S. Attorney Jenny A. Durkan announced. Abu Khalid Abdul-Latif, aka Joseph Anthony Davis, 34, pleaded guilty in December 2012 to conspiracy to murder officers and agents of the United States and conspiracy to use weapons of mass destruction. Abdul-Latif planned to use grenades and machine guns to attack recruits at the Military Entrance Processing Center in a federal office complex in south Seattle. U.S. District Judge James L. Robart imposed 10 years of supervised release, saying this plot “could have done incredible harm if it had gone forward.”
“This defendant planned to attack a military center when there would be the largest possible gathering of new recruits and their families. He targeted young men and women solely because they wanted to serve our country. His goal: to inspire others with a message of hate,” said U.S. Attorney Durkan. “His plot was disrupted by vigilance in our community and good work by law enforcement. I commend the Seattle Police and the FBI for their work and thank the leaders of our Muslim communities who work tirelessly to ensure the acts of extremists are not used to condemn their faith.”
“Countless innocent people targeted by Mr. Abdul-Latif are safe thanks to the vigilance of Seattle’s Muslim community and the dedicated work of law enforcement partners,” said Laura M. Laughlin, Special Agent in Charge of the FBI Seattle Office. “The plot may have been thwarted, but its mere existence and the extremist thinking behind it are despicable. I hope that Mr. Abdul-Latif uses his years in prison to reflect on what it means to be a true member of an American community, built on respect for all.”
“I am pleased with the outcome of this very important joint agency investigation. With support from the Muslim community and the diligent work of Seattle Police detectives and our federal partners, a dangerous man will spend a long time behind bars and our community will be safer for it,” said Seattle Police Chief John Diaz.
The other defendant in the case, Walli Mujahidh, 33, of Los Angeles, is scheduled for sentencing on April 8, 2013.
Law enforcement first became aware of the plot when a citizen alerted them that he/she had been approached by Abdul-Latif about participating in the attack and supplying firearms to the conspirators. The person then agreed to work with law enforcement, which began monitoring Abdul-Latif and Mujahidh. Beginning in early June 2011, the conspirators were captured on audio and videotape discussing a violent assault on the Military Entrance Processing Station (MEPS). The MEPS is where each branch of the military screens and processes enlistees. In addition to housing many civilian and military employees, the building houses a federal daycare center.
In his plea agreement, Abdul-Latif admits that he agreed to carry out the planned attack and that he made plans for Mujahidh to travel to Seattle from Los Angeles to participate in the attack. Mujahidh arrived in Seattle on June 21, 2011. On that same day, during a meeting between Abdul-Latif, Mujahidh, and a person who was working with law enforcement, Abdul-Latif outlined the plan of attacking the MEPS with machine guns and grenades and took steps to purchase weapons and further the plot. In accordance with the defendants’ plan, the next day the person working with police brought three machine guns to a meeting with Abdul-Latif and Mujahidh. The men were arrested after they took possession of the weapons, which had been rendered inoperable by law enforcement.
Prosecutors noted that a lengthy term was necessary to protect the public and urged future monitoring by Federal Probation. “Abdul-Latif undertook his plot in furtherance of his long-standing and deeply felt radical beliefs. To this day, he has not disavowed the radical ideology that inspired his attack plot, nor has he expressed any meaningful remorse for his conduct,” prosecutors wrote in their sentencing memo.
The case was prosecuted by the U.S. Attorney’s Office for the Western District of Washington, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division. The investigation is being conducted by the FBI’s Joint Terrorism Task Force, which has investigators from federal, state, and local law enforcement, and the Seattle Police Department. The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) contributed significant expertise to this investigation.

Federal Grand Jury Returns Indictments

MADISON, WI—A federal grand jury in the Western District of Wisconsin sitting in Madison returned the following indictments today. You are advised that a charge is merely an accusation and that a defendant is presumed innocent until and unless proven guilty.
Eau Claire Man Charged with Gun Crime
Roosevelt L. Spencer, 35, Eau Claire, Wisconsin, is charged with being a felon in possession of a firearm. The indictment alleges that on February 22, 2013, he possessed a loaded .22 caliber semi-automatic handgun.
If convicted, Spencer faces a maximum penalty of 10 years in federal prison. The charge against him is the result of an investigation by the Eau Claire Police Department and Bureau of Alcohol, Tobacco, Firearms, and Explosives. The prosecution of this case has been assigned to Assistant U.S. Attorney Timothy M. O’Shea.
Weston Man Charged with Illegally Possessing a Silencer
Jason Trempe, 30, Weston, Wisconsin, is charged with possessing a firearm, specifically a silencer, which was not registered to him pursuant to federal law. The indictment alleges that he possessed the silencer on November 19, 2012.
If convicted, Trempe faces a maximum penalty of 10 years in federal prison. The charge against him is the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms, and Explosives; Weston Police Department; and Everest Metro Police Department. The prosecution of this case has been assigned to Assistant U.S. Attorney Peter M. Jarosz.
Fitchburg Man Faces Additional Charge
Christian Peterson, 44, Fitchburg, Wisconsin, is charged in a superseding indictment with four counts of bank fraud, four counts of making a false statement to a financial institution, four counts of money laundering, and one count of embezzlement from an employee 401(k) fund. Peterson was charged in an indictment returned by the grand jury on July 11, 2012, with bank fraud, false statements, and money laundering. The superseding indictment adds the embezzlement from an employee 401(k) fund.
During the times material to the counts of the indictment, Peterson operated businesses in Wisconsin and Nevada related to scrap foam and the manufacture of carpet cushion, built and operated a hotel in Wisconsin, and was involved in real estate development in Dane County. The superseding indictment alleges that Peterson misrepresented to banks that loans and a business line of credit were intended for a legitimate business purpose when, in fact, he used all or a portion of each loan and line of credit to gamble at casinos or for personal expenses. The superseding indictment also alleges that Peterson claimed that certain accounts receivable were loans when in fact they were the result of gambling debts.
In the new count, the superseding indictment alleges that he took $29,373.13 of funds from an employee pension benefit plan and then used the money, among other things, to make a $10,000 loan payment for another business venture and to pay his former wife $7,500 in court-ordered alimony.
If convicted, Peterson faces a maximum penalty of 30 years in federal prison on each bank fraud and false statement charge, a maximum penalty of 10 years on each money laundering charge, and a maximum penalty of five years on the embezzlement charge. The charges against him are the result of an investigation by IRS-Criminal Investigation, Federal Bureau of Investigation, and U.S. Department of Labor-Employee Benefits Security Administration. The prosecution of this case has been assigned to Assistant U.S. Attorney Paul W. Connell.
Mexican Citizen Charged with Re-Entering U.S.
Omar Alberto Garcia-Olascuaga, 24, a citizen of Mexico found in Dane County, Wisconsin, is charged with illegally re-entering the United States after previously being deported. The indictment alleges that he was found in the United States on January 24, 2013.
If convicted, Garcia-Olascuaga faces a maximum penalty of 10 years in federal prison. The charge against him is the result of an investigation by U.S. Immigration and Customs Enforcement. The prosecution of this case has been assigned to Assistant U.S. Attorney Timothy M. O’Shea.

Goodwin Charges Former Alpha Employees and Alpha Supplier in a Major False Billing Scheme

CHARLESTON, WV—U.S. Attorney Booth Goodwin today announced charges in connection with a false billing scheme orchestrated by former employees of Alpha Natural Resources (“Alpha”) and certain companies that supplied supplies, equipment, and services to Alpha. Edward Ellis Mullins, 41, of Peytona, West Virginia; Joey R. Phalin, 36, of Crab Orchard, West Virginia; and Nicholas R. Coleman, 29, of Lester, West Virginia, are former local “sourcing agents” for Massey Energy (“Massey”) legacy mines operated along WV Route 3 in Boone and Raleigh counties. Donald Bryan Steele, 43, of Barboursville, West Virginia, is the owner of M&S Hydraulics, a major Alpha supplier with offices in Barboursville and a rebuild shop in Switzer, West Virginia. Each has been charged by information with wire fraud and aiding and abetting. All four have agreed to plead guilty and are cooperating with the ongoing investigation.
An investigation revealed that several mine sourcing agents, generally responsible for ordering goods and services for mining operations from Alpha suppliers, participated in an illegal scheme to obtain goods for their own personal benefit. (Note: A sourcing agent refers to the individual located at each mine site who is responsible for ordering goods and services from vendors to ensure the continuation of mining operations. (Note: A sourcing agent refers to the individual located at each mine site who is responsible for ordering goods and services from vendors to ensure the continuation of mining operations.) The investigation further revealed that the sourcing agents, working in conjunction with the suppliers, hid numerous illegal transactions by creating false invoices. The false invoices, prepared by the supplier, were intended to look like legitimate purchases but were really used to provide cash, gifts, and other things of value to the sourcing agents and other Alpha employees.
“Today’s announcement is the first step in an ongoing criminal investigation,” U.S. Attorney Goodwin said. “People who accept bribes or who cheat their employers by approving fake bills are committing fraud, plain and simple, and my office will prosecute them to the fullest extent of the law.”
“Schemes like this create unfair obstacles for suppliers who want to do business honestly,” Goodwin continued, “and they drive up prices for everyone. There’s no place for that in the American economy.”
Mullins was employed as the sourcing agent for the Shonk Powellton #1 mine, operated by the Elk Run Coal Company, an Alpha subsidiary. Around November 2011, Mullins approached a supplier, who generally provided tires, wheels, and other vehicle-related materials to Massey and now Alpha, about supplying him and other Alpha employees tires and wheels for their personal vehicles. In exchange, Mullins agreed to allow the tire seller to submit false invoices for payment to Alpha reflecting that tires used in the mining operations had been delivered. For its participation, the tire seller was told to “pad” the false invoice. The tire seller immediately provided this information to Alpha corporate security, who, in turn, contacted the FBI and West Virginia State Police. Over the course of the next six months, the criminal investigation revealed that not only Mullins, but other sourcing agents, including Phalin and Coleman, who were employed by another Alpha subsidiary, Marfork Coal Company, were also engaged in the false billing scheme.
Through the sourcing agents’ cooperation and other information, the agents identified an even more prominent supplier involved in the false-billing scheme. In February 2013, the FBI and the state police confronted Steele, the owner of M&S Hydraulics, a major Alpha supplier. The significant evidence uncovered by the FBI and the state police led Steele to agree to cooperate immediately in the investigation.
Mullins, Phalin, Coleman, and Steele each face up to 20 years in prison and a $250,000 fine.
The investigation was conducted by the FBI and the West Virginia State Police with cooperation from Alpha Natural Resource’s internal security team. Assistant United States Attorney Thomas Ryan is in charge of the prosecutions.
In June 2011, Alpha Natural Resources finalized the purchase of Massey, including the mining divisions located along WV Route 3 in Boone and Raleigh Counties.

Staten Island Man Convicted of Making False Statements in a Matter Involving International Terrorism

Abdel Hameed Shehadeh, a United States citizen and former resident of Staten Island, was convicted today of making false statements in a matter involving international terrorism. The jury’s verdict followed a week-long trial in United States District Court in Brooklyn, New York before the Honorable Eric N. Vitaliano. The conviction was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
According to court filings and the evidence introduced at trial, in early 2008 Shehadeh devised a plan to travel to the Federally Administered Tribal Areas of Pakistan in order join al Qaeda or the Taliban. In furtherance of his plan, on June 13, 2008, Shehadeh flew on a one-way airline ticket from John F. Kennedy International Airport to Islamabad, Pakistan. After Pakistani officials denied him entry, Shehadeh told investigators from the FBI’s Joint Terrorism Task Force (JTTF) that he had traveled to Pakistan to visit a university. However, the true purpose of Shehadeh’s trip was to wage violent jihad against United States military forces.
Several weeks after Shehadeh was denied entry to Pakistan, he attempted to enlist in the United States Army at the Times Square recruiting station in Manhattan. Shehadeh’s application was denied when it was discovered that he had concealed his trip to Pakistan on his application. Though Shehadeh claimed that he had tried to enlist for career opportunities and benefits, his true motive was to deploy overseas, where he would commit treason by defecting and fighting alongside insurgent forces. Over the next several months, in subsequent interviews with members of the JTTF, Shehadah continued to lie about the true purpose of his travel. However, in 2010 Shehadah confessed to FBI agents that he had sought to join a jihadist fighting group. Shehadah was arrested in Honolulu, Hawaii, in October 2010.
“Time and again, Shehadeh sought to travel overseas to wage violent jihad against U.S. military forces, going so far as to attempt to infiltrate the U.S. Army,” stated United States Attorney Lynch. “When confronted with his attempts to join a terrorist group and kill American soldiers, he repeatedly lied about his actions and his intentions. Due to the tireless work of our law enforcement partners, the defendant did not succeed in his jihadist goals. We will continue to be vigilant in bringing those who seek to commit terrorist acts to justice.” Ms. Lynch thanked the FBI’s New York and Honolulu Field Offices, as well as the New York City Police Department, for their substantial contributions to the multi-year investigation that led to the defendant’s arrest and conviction.
When sentenced, Shehadeh faces a maximum sentence of 21 years’ imprisonment.
The government’s case was prosecuted by Assistant United States Attorneys Alexander Solomon, David Sarratt, and James Loonam.
Defendant:
Abdel Hameed Shehadeh
Age: 23

James Edward Calloway and Desi Surtane Hansford Indicted for Bribery Concerning a Governmental Program Receiving Federal Funds

Michael J. Moore, United States Attorney for the Middle District of Georgia, announced that on March 12, 2013, a federal grand jury in Macon, Georgia, indicted two city of Forsyth councilmen on public corruption charges. James Edward Calloway, age 60, and Desi Surtane Hansford, age 35, both of Forsyth, Georgia, were charged in the three-count federal indictment with the following charge: bribery concerning a governmental program receiving Federal Funds involving $5,0000 or more, all in violation of Title 18, United States Code, Section 666 (a)(1)(B).
The indictment alleges that the defendants, elected officials, presided over a standing subcommittee responsible for receiving bids and selecting an independent company to administer services for the city of Forsyth. The alleged corruption occurred from December 27, 2012 to March 11, 2013, and involved a solicitation of $20,000 from the defendants to a service provider in exchange for influence regarding a city contract.
Mr. Calloway has been a councilman for more than 20 years. Mr. Hansford has served for six years. The defendants face a maximum penalty of 10 years’ imprisonment, a $250,000 fine, and a period of supervised release for each count.
An indictment is merely an accusation, and each defendant is presumed innocent unless and until they are proven guilty.
The case was initiated and investigated by the Federal Bureau of Investigation, Macon Resident Agency. Assistant United States Attorney Sonja Profit is prosecuting the case for the government. For additional information, please contact Sue McKinney, Public Affairs Specialist, at (478) 621-2602.

Disbarred Lawyer Sentenced for Corrupt Real Estate Transactions

ATLANTA—Neal Landers, 46, of Duluth, Georgia, was sentenced today to two years and three months in prison for using funds taken from real estate transactions he oversaw for his personal use.
“Landers violated the law and the trust of his clients when he used his firm’s escrow account as his own personal piggy bank,” said United States Attorney Sally Quillian Yates.
“The FBI worked diligently in building a solid criminal investigation in this matter and hopes that those victimized by Mr. Landers’ egregious breach of trust can take some solace in today’s sentencing,” said Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office.
According to United States Attorney Yates, the charges, and other information presented in court, beginning in 2007, Landers exploited his position as a real estate closing attorney by misappropriating the funds from real estate closings. Specifically, Landers received money transfers into his escrow account from several real estate closings but did not distribute them as required. He deliberately delayed paying out the funds for weeks and sometimes months rather than promptly disbursing the funds for the recently closed properties. Instead, Landers would use those funds to pay out the parties from previously completed transactions. He also transferred funds, in amounts that far exceeded any closing fees and/or costs, from his escrow account to his business checking account. He then used that money to pay various personal expenses.
United States District Judge Thomas W. Thrash, Jr. sentenced Landers to two years, three months in prison, to be followed by three years of supervised release. He was also ordered to pay more than $850,000 in restitution.
The Georgia Bar disbarred Landers in 2008.
This case was investigated by special agents of the Federal Bureau of Investigation.
Assistant United States Attorney Jeffrey W. Davis prosecuted the case.
For further information please contact the U.S. Attorney’s Public Information Office at USAGAN.Pressemails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.

Two Leaders of Non-Profit Sentenced for Failing to Report Misuse of $392,000 in Grant Money

WASHINGTON—Marshall D. Banks and James Garvin, who helped lead the Langston in the 21st Century Foundation, a non-profit organization that operated youth programs in the District of Columbia, were sentenced today to three years of supervised probation, 80 hours of community service, and ordered to pay full restitution for failing to report and concealing the misappropriation of $392,000 in government grants.
The sentences, in the U.S. District Court for the District of Columbia, were announced by U.S. Attorney Ronald C. Machen, Jr.; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; and Thomas J. Kelly, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Banks and Garvin pled guilty in January 2012 to one count each of misprision of a felony (theft or bribery concerning programs receiving federal funds). They were among five people to plead guilty to charges in an ongoing investigation into activities involving former District of Columbia Council Member Harry L. Thomas, Jr. Thomas pled guilty last year to charges stemming from a scheme in which he used more than $350,000 in taxpayers’ money that was earmarked for the arts, youth recreation, and summer programs for his own personal benefit.
Thomas resigned as a condition of his plea agreement and is now serving a 38-month prison sentence. The Honorable John D. Bates sentenced Banks and Garvin this morning.
The others who have pled guilty include Millicent D. West, the former director and chief executive officer of another non-profit organization that promotes youth opportunities, and Danita C. Doleman, the president of Youth Technology Institute. West and Doleman pled guilty to charges in connection with grant money that was used to pay for an inaugural ball. They are awaiting sentencing.
Banks, 72, and Garvin, 56, had leadership positions with the Langston in the 21st Century Foundation (Langston 21), a non-profit. Banks, of Washington, D.C., was the founder, and Garvin, of Upper Marlboro, Maryland, was a board member. Garvin also is the general manager of the Langston Golf Course in Northeast Washington, a site of some of the non-profit’s activities.
Langston 21 operated youth activities designed to foster educational advancement, including programs at Langston Golf Course, which is located in Ward 5 of the District of Columbia. Garvin worked with Banks, who also was director of the organization.
According to the government’s evidence, Thomas, who represented Ward 5, informed Garvin in 2007 that he wanted to obtain grant funds to conduct activities in the ward. Thomas informed Garvin that Thomas needed a non-profit to act as the recipient of the money. Thomas also stated that a portion of the funds could be dedicated to youth programs at Langston Golf Course.
At Thomas’s request, Garvin asked Banks whether Langston 21 would serve as the non-profit needed by Thomas to receive the grant funds and forward money to Thomas. Banks agreed. Langston 21 then executed a grant agreement for $392,000 with a non-profit public-private partnership that got funding from the District government.
Thomas told Garvin that Team Thomas, an organization he controlled, would be a suitable organization to carry out the grant, which was for youth programs. However, neither Thomas nor Team Thomas was mentioned in the agreement with the public-private partnership.
In January, May, October, and December 2008, the public-private partnership issued quarterly grant payments to Langston 21 to fund youth sports activities. At or about the time of each check, Thomas directed Banks or Garvin to have Langston 21 issue checks to either Team Thomas or another organization, HLT Development, also controlled by Thomas.
Langston 21 received $392,000 in grant funds from the public-private partnership. From that grant money, Banks and Garvin issued checks to Team Thomas and HLT totaling $306,000.
In January 2008, a member of Thomas’s staff, acting on the councilmember’s behalf, e-mailed budget paperwork for the grant to Garvin and an employee of the public-private partnership, as part of the process for the approval of funds to Langston 21. The budget paperwork contained false representations. Based on his review of this paperwork, and from other interactions with Thomas, Garvin determined in or about January 2008 that the grant agreement proposed by Thomas was not legitimate and that Thomas intended to misappropriate for his personal benefit at least some of the money that would be passed through Langston 21.
At the time of the other payments, in May, October, and December 2008, Garvin did not believe that youth sporting events had been conducted to justify the distribution of the grant funds. Yet he, along with Banks, participated in the grant process and thereby concealed Thomas’s misappropriation of funds.
In addition, Banks knew that no D.C. youth were brought to the Langston golf course by Thomas to participate in grant-related activities. Sometime before October 2008, Banks determined that Thomas was not using the grant funds for their designated purposes. Yet he continued to deposit grant funds into Langton 21’s bank account and then write checks to Team Thomas and HLT with the term “youth sports” or “learning center” on the memo lines.
Like Banks, Garvin did not report the improprieties to authorities. By continuing to obtain and receive grant payments, redistribute funds to Team Thomas and HLT, and otherwise participate in the scheme, Garvin and Banks helped to conceal Thomas’s actions.
In announcing the sentences, U.S. Attorney Machen, Assistant Director Parlave, and Special Agent in Charge Kelly commended the work of those who investigated the case for the FBI and IRS-CI. They also expressed appreciation to former Assistant U.S. Attorneys Courtney G. Saleski and Bridget M. Fitzpatrick, who earlier worked on the case, as well as Criminal Investigators Matthew Kutz, Mark Crawford, and Melissa Matthews; Paralegal Specialists Tasha Harris, Diane Hayes, Shanna Hays, Lenissa Edloe, and Monica Johnson; and Legal Assistant Krishawn Graham, all of the U.S. Attorney’s Office.
Finally, they acknowledged the efforts of Assistant U.S. Attorneys Jonathan W. Haray, James E. Smith, Ellen Chubin Epstein; and Matthew Graves of the Fraud and Public Corruption Section in the U.S. Attorney’s Office for the District of Columbia; and Trial Attorney Peter Mason of the Public Integrity Section of the Department of Justice’s Criminal Division, who prosecuted the case

Customs and Border Protection Officer Arrested for Money Laundering

Phoenix FBI Acting Special Agent in Charge Steven R. Hooper announces the arrest of Customs and Border Protection Officer Lauro Tobias, 59, by the FBI’s Southern Arizona Corruption Task Force. Tobias was arrested on Thursday, March 14, 2013, without incident.
Tobias was arrested pursuant to a federal complaint filed with the United States District Court, District of Arizona. The complaint charges Tobias with one count of money laundering. The complaint alleges that on August 31, 2012, Tobias transported a bag containing a large amount of U.S. currency, which he believed to be the proceeds from a narcotics sale, from Las Vegas, Nevada to Phoenix, Arizona.
The investigation was conducted by the Southern Arizona Corruption Task Force, made up of agents from the Federal Bureau of Investigation, Department of Homeland Security Office of Inspector General, the Drug Enforcement Administration, Internal Revenue Service Office of Investigations, U.S. Immigration and Customs Enforcement Office of Professional Responsibility, U.S. Customs and Border Protection Office of Internal Affairs, and the Tucson Police Department. The prosecution is being handled by Assistant U.S. Attorney James Lacey of the United States Attorney’s Office, District of Arizona.
An arrest is not evidence that the defendant committed the crime charged. The defendant is presumed innocent until the government meets its burden in court of proving guilt beyond a reasonable doubt.

Navajo Man Pleads Guilty to Assault and Gun Charges

PHOENIX—Lee Kinder Tso, 50, of Many Farms, Arizona, and a member of the Navajo Nation, pleaded guilty on March 15, 2013, in a federal district court in Phoenix to assault with a dangerous weapon and brandishing a firearm during a crime of violence.
Tso had been charged with four counts of assault and four counts of using a firearm during a crime of violence. On February 3, 2012, Tso used a rifle to shoot two victims on the Navajo Nation Indian Reservation, causing the victims serious physical injury. The victims were hospitalized with one victim being admitted for about two months.
A conviction for assault with a dangerous weapon carries a maximum penalty of 10 years in prison, a $250,000 fine, or both. A conviction for brandishing a firearm during a crime of violence carries a minimum of seven years in prison to life, consecutive to any other prison time imposed, a $250,000 fine, or both.
Sentencing is set before Judge Neil V. Wake on June 3, 2013.
The investigation in this case was conducted by the Federal Bureau of Investigation and the Navajo Nation Police Department. The prosecution is being handled by Jennifer E. Green, Assistant U.S. Attorney, District of Arizona, Phoenix.

Anchorage Man Sentenced to More Than Three Years in Prison for Investor Fraud Scheme

ANCHORAGE—U.S. Attorney Karen L. Loeffler announced today that an Anchorage man was sentenced in federal court in Anchorage for fraudulently obtaining over $300,000 from Alaska victims.
Donald Lee Smith, 61, of Anchorage, was sentenced to just over three years in prison today by Senior U.S. District Court Judge H. Russell Holland, who imposed a term of 37 months in prison, followed by a three-year term of supervised release. Smith was ordered to pay $316,150.58 in restitution, with credit for $25,000 in payments made at the time of sentencing. Two of the victims addressed the court, discussing the financial and emotional impact they suffered because of Smith’s crimes.
Smith pled guilty on August 6, 2012, to engaging in an investment fraud scheme and that he fraudulently obtained over $300,000 from victims in Alaska during 2007 and 2008. Smith pled guilty to one count of wire fraud and one count of money laundering in connection with the scheme. Smith admitted that he obtained over $300,000 from the victims by making intentionally false representations about investment opportunities. Smith admitted that he obtained the funds from his investors and lenders without telling them that he was using a substantial portion of their money to gamble in casinos rather than invest in properties. According to the admissions made in court, the victims transferred funds from Anchorage to Oklahoma, which the defendant then withdrew and transferred money to other accounts, knowing the money was criminally derived.
Smith was indicted by a federal grand jury in December 2011 and was originally charged with 12 counts of mail and wire fraud and one count of money laundering. Smith lived in Alaska when the scheme began but then moved to Oklahoma, according to court documents.
“Defendant Smith took advantage of the trust of his victims. The three-year sentence imposed demonstrates the seriousness of his criminal conduct. We will continue to work with our law enforcement partners to protect victims of financial fraud and rigorously prosecute those who seek to steal the savings of others through fraudulent schemes,” stated U.S. Attorney Karen L. Loeffler.
“I hope that today’s sentence serves to bring some closure to those victims defrauded by Mr. Smith,” said FBI Acting Special Agent in Charge Kevin C. Donovan. “On behalf of the FBI, I would like to thank the U.S. Attorney’s Office and IRS-Criminal Investigation for their unwavering commitment to this investigation and prosecution. Working together, we will continue to pursue those who misrepresent themselves or their intention to defraud innocent victims.”
Ms. Loeffler commends the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation Division for the investigation of this case.

Self-Proclaimed President of Sovereign Citizen Nation Convicted in Alabama of Federal Tax Crimes

WASHINGTON—A federal jury in Montgomery, Alabama found James Timothy Turner, also known as Tim Turner, guilty late Friday of conspiracy to defraud the United States, attempting to pay taxes with fictitious financial instruments, attempting to obstruct and impede the Internal Revenue Service (IRS), failing to file a 2009 federal income tax return, and falsely testifying under oath in a bankruptcy proceeding, the Justice Department, the IRS, and the FBI announced today.
Based on the evidence introduced at trial and court filings, Turner, the self-proclaimed “president” of the so-called sovereign citizen group “Republic for the United States of America” (RuSA), traveled the country in 2008 and 2009 conducting seminars teaching attendees how to defraud the IRS by preparing and submitting fictitious “bonds” to the United States government in payment of federal taxes. Although the evidence at trial revealed the bonds are fictitious and worthless, witnesses testified that Turner used special paper, financial terminologym and elaborate borders in an effort to make them look “real” and more likely to succeed in defrauding the recipient. Turner was convicted of sending a $300 million “bond” in his own name and of aiding and abetting others in sending 15 other “bonds” to the U.S. Treasury Department to pay taxes and other debts.
The evidence at trial also established that Turner taught people how to file retaliatory liens against government officials who interfered with the processing of fictitious “bonds.” Turner filed a purported $17.6 billion maritime lien in Montgomery County, Alabama Probate Court against another individual. Finally, evidence presented at trial demonstrated that the FBI began an investigation after Turner and three other individuals sent demands to all 50 governors in the United States in March 2010 ordering each governor to resign within three days or be “removed.”
“The jury’s verdict in this case sends a message that defrauding the government and others through the use of bogus financial documents will not be tolerated,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. “Disagreement with the law is no excuse for the real harm caused by these self-interested tax defiers.”
“These sovereign citizen groups use these retaliatory tax liens and fraudulent tax schemes as weapons against the United States and its citizens,” stated Acting U.S. Attorney Sandra J. Stewart. “It is only the hard work of law enforcement that can stop these criminals from using these financial weapons. I would like to thank the law enforcement officers who worked vigilantly on this case to bring this criminal to justice.”
“Those who create elaborate schemes and fraudulent tax elimination tactics run a high risk of prosecution,” stated Richard Weber, Chief, IRS-Criminal Investigation. “Mr. Turner’s attempts to thwart the IRS, as well as the assistance and training he provided to others, was not tax planning, it was criminal activity. IRS-Criminal Investigation is committed to vigorously pursuing those who promote illegal financial transactions designed to evade the payment of taxes. For those who would consider similar behavior, let this case be a strong warning that there is no secret formula for evading the payment of taxes, and no one is above the law.”
Turner remains in federal custody pending sentencing. Turner faces a potential maximum prison term of 164 years, a maximum potential fine of $2,350,000, and mandatory restitution.
“The prosecution of individuals who intentionally impede the IRS by submitting fictitious and frivolous documents, in an attempt to avoid paying federal taxes, is a vital element in maintaining public confidence in our tax system,” stated Veronica Hyman-Pillot, Special Agent in Charge of IRS-Criminal Investigation. “Hopefully the verdict will send a message to other individuals like Turner that this conduct will not be tolerated.”
“This joint investigation exemplifies the government’s commitment to investigate and prosecute those, who through tax schemes, attempt to cheat and steal from the government,” stated Stephen Richardson, Special Agent in Charge of the FBI, Mobile Division.
This case was investigated by special agents of the FBI and IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorney Justin Gelfand and Middle District of Alabama Assistant U.S. Attorney Gray Borden.

Ball Cap Bandit Captured in Decatur

BIRMINGHAM—Special Agent in Charge (SAC) Richard D. Schwein, Jr. announced today that Cedrick Lamond Hicks, age 33 of Huntsville, Alabama, was captured without incident after a car stop near the intersection of 14th Street and 6th Avenue SE, Decatur, Alabama, at approximately 3:30 p.m. today. Hicks was not armed at the time of arrest.
Hicks became known as the “Ball Cap Bandit” for wearing a baseball cap during the robberies. In August of last year, the FBI, in cooperation with Lamar Outdoor Advertising, put up electronic billboards in Alabama and Tennessee in an effort to identify Hicks. He is a suspect in the following robberies:

• Peoples Bank—Guntersville, Alabama, August 2, 2012
• Traditions Banks—Priceville, Alabama, August 8, 2012
• Cadence Bank—Albertville, Alabama, September 18, 2012
• First National Bank—Pulaski, Tennesee, September 19, 2012
• Traditions Bank—Cullman, Alabama, November 26, 2012
• Regions Bank—Rogersville, Alabama, November 27, 2012
• Peoples Trust Bank—Hamilton, Alabama, January 7, 2013
• ServisFirst Bank—Huntsville, Alabama, March 6, 2013

Assisting in the capture of Hicks were the United States Marshals Service Gulf Coast Regional Fugitive Task Force and the Decatur Police Department.
SAC Schwein lauded the efforts of those involved. He stated, “I want to express my sincere thanks to the Decatur Police Department and the U.S. Marshals Service for their invaluable assistance in taking Mr. Hicks off the street to face justice.”
“This arrest was a great cooperative effort between all the agencies to bring this matter to a successful conclusion,” said U.S. Marshal Martin Keely.
The public is reminded that suspects are innocent until proven guilty in a court of law. It is the government’s responsibility to prove a defendant guilty beyond a reasonable doubt at trial.

Rockford Man Charged with Fraud Involving Fictitious Money Orders Exceeding $500,000

ROCKFORD, IL—A Rockford, Illinois man was indicted by a federal grand jury today for producing and passing fictitious money orders. Bradley Sherman Hampton, 53, was charged with nine counts of fraudulently producing and passing fictitious financial instruments that appeared to be issued under the authority of the United States Department of the Treasury. The nine fictitious money orders, totaling $547,578, were dated between July 15, 2009 and October 14, 2009.
Hampton is scheduled to appear at the federal courthouse in Rockford on Friday, March 22, 2013, at 11:00 a.m., for arraignment. The arraignment will be conducted by United States Magistrate Judge P. Michael Mahoney.
Each count of producing a fictitious fmancial instrument and each count of passing a fictitious financial instrument carries a penalty of 25 years or more in prison and a maximum fine of $250,000. If convicted, the court must impose a reasonable sentence under the advisory United States Sentencing Guidelines, as well as restitution.
The indictment was announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illionis; Frank Benedetto, Special Agent in Charge of the Chicago Field Office of the U.S. Secret Service, Department of Homeland Security; and Cory B. Nelson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.
Members of the public are reminded that a criminal indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt of the defendant beyond a reasonable doubt.
The government is represented by Assistant U.S. Attorney Michael D. Love.

Former Sanger Bank Employee Pleads Guilty to Embezzling Approximately $250,000 from Bank

FRESNO, CA—Mary Helen Perez, 50, of Sanger, pleaded guilty yesterday to stealing and embezzling approximately $250,000 from a federally insured bank, United States Attorney Benjamin B. Wagner announced.
According to her plea agreement, Perez was employed as the Assistant Customer Service Manager at Westamerica Bank in Sanger and had been an employee of that bank for approximately 29 years. From May 2007 until October 2011, Perez made approximately 78 cash withdrawals from seven customers’ bank accounts without the knowledge or authorization of the account holders. She deliberately targeted customers that she believed trusted her. Perez filled out withdrawal slips on the victims’ bank accounts and either forged their signatures or wrote an “X” on the signature line of the withdrawal slips. Perez spent some of the embezzled funds for personal expenses, but she spent the overwhelming majority of the funds at casinos.
According to court documents, Perez took several steps to hide her embezzlement from the bank and her victims. She told some of the bank customers who questioned her about the unauthorized withdrawals that there would be fees charged for investigating the account discrepancies. Perez also sought to conceal her embezzlement by putting some of the victims’ bank statements on “hold” status so the she would receive them at the bank, where she destroyed them. As part of her plea agreement, Perez agreed to pay back Westamerica Bank the $249,793 it lost as a result of her embezzlement.
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney Christopher Baker is prosecuting the case.
Perez is scheduled to be sentenced on June 10, 2013, before U.S. District Judge Lawrence J. O’Neill. The maximum statutory penalty she faces is 30 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Two Sacramento Men Sentenced for the Second Time in as Many Weeks

SACRAMENTO, CA—United States District Judge Kimberly J. Mueller sentenced two Sacramento men last Wednesday for an investment fraud scheme. Judge Mueller sentenced Ronald Wesley Groves, 71, to 10 years in prison and sentenced Donald Charles Mann, 56, to 17 years and six months in prison. Today, U.S. District Judge John A. Mendez sentenced each of them to one more year in prison, to be served consecutively to last week’s sentence, for retaliating against the prosecutor and FBI agents, United States Attorney Benjamin B. Wagner announced.
According to court documents, on May 31, 2007, were indicted on 18 counts of wire fraud in connection with a fraudulent investment scheme. After their arraignment, they were released from custody on bond. In February 2008, while awaiting trial, Mann filed four fraudulent liens with the California Secretary of State in Sacramento: two liens against all property belonging to the federal prosecutor and one lien each against the properties belonging to the two FBI agents involved in the investment fraud investigation. Each lien claimed that $101.9 million was owed to either Groves or Mann with $100,000 per day in penalties.
In September 2009, Groves and Mann were charged with four counts of retaliation against federal officials by false claim and slander of title and one count of obstruction of justice. They were taken into custody and have remained in custody since then. On December 13, 2011, both defendants pleaded guilty to two counts of retaliation against federal officials.
According to the first indictment, Groves was the co-founder and president of Money Growth Solutions, which operated from April 2005 to April 2006. Mann was the co-founder and secretary/treasurer. During the brief existence of Money Growth Solutions, the defendants raised $4.8 million from 642 investors by promising extremely high rates of return on “international bank trades.” The defendants told investors that these bank trades were a highly secretive investment vehicle known only to a few people around the world.
In June 2011, a jury returned guilty verdicts against Groves and Mann after a nine-day trial. According to evidence presented at their trial, in one program, investors were offered a 10 to one return (1,000 percent) on their investment within a matter of weeks. In a later offering, the defendants promised a 40 to one return (4,000 percent) in the same amount of time. The defendants told investors that while their money was waiting to be placed into a bank trade, it would be maintained in an escrow account that could not be touched for any other purpose. The defendants also told investors that if they were unable to execute a “bank trade,” the investors would receive their entire investment back, plus six percent interest within 12 months. With the exception of a few people who were able to obtain refunds, every MGS investor lost their entire investment.
The federal investigation revealed that by April 2006, of the $4.8 million received, Money Growth Solutions had less than $65,000 remaining in its bank account. Some of that money—$300,000 apiece—went into the pockets of the two defendants. The remainder of the money went to the defendants’ various pet projects, including $300,000 to the coffers of a Liberian presidential candidate and $2.5 million to a Florida company that was supposedly developing a revolutionary battery. The battery company was later determined by the Securities and Exchange Commission to be a scam and its owner was federally indicted.
The two cases were the product of investigations by the Federal Bureau of Investigation. Assistant United States Attorney R. Steven Lapham prosecuted the cases.

Four Indicted Under New Legislation Making It a Crime to Point a Laser at an Aircraft

FRESNO, CA—A federal grand jury in Fresno returned three indictments today charging three men and one woman under new federal legislation that makes it a crime to point the beam of a laser at an aircraft, announced U.S. Attorney Benjamin B. Wagner and Herbert M. Brown, Special Agent in Charge of the FBI’s Sacramento Field Office.
The federal statute used to charge the defendants is part of legislation signed into law last year by President Obama that makes it a federal crime to knowingly aim the beam of a laser pointer at an aircraft. The offense carries a maximum penalty of five years in prison and a $250,000 fine. The indictments mark the first time such charges have been brought in the Eastern District of California, a judicial district that covers 34 counties in the eastern portion of California.
Reports of laser attacks have increased dramatically in recent years as powerful laser devices have become more affordable and widely available to the public. According to the FBI, there were 3,482 aircraft laser strikes reported in the United States in 2012, averaging 10 strikes a day. So far this year, laser strikes have increased up to 11 strikes a day. Laser beams pose a serious safety hazard to flight operations. The focused beams of a laser remain powerful at extended viewing distances and can expose pilots and their crew members and passengers to radiation levels above those considered to be flight safe. Brief exposure to even a relatively low-powered laser beam can cause discomfort and temporary visual impairments such as glare, flash blindness, and after-images. Prolonged exposure to high-powered laser beams has resulted in permanent eye injury.
“Laser strikes on aircraft are extremely dangerous,” said U.S. Attorney Wagner. “Those who target aircraft with lasers should know that it is a federal crime, and it will be prosecuted.”
Laser Strike of Kern County Sheriff Helicopter
Brett Lee Scott, 25, of Bakersfield, was charged with four counts of aiming a laser pointer at Air-1, a Kern County Sheriff helicopter. Scott was also charged with four counts of attempting to interfere with the safe operation of Air-1, an offense that was enacted in 2001 under the U.S. Patriot Act and carries a maximum penalty of 20 years in prison and a $250,000 fine. According to court records, Scott allegedly used two different laser pointers to strike Air-1 with powerful green and purple laser beams multiple times during four separate incidents over a three-month period. As a result of the laser strikes, the pilots suffered flash blindness that lasted a few minutes, causing disorientation. The pilots were able to pinpoint the origin of the beams and, with the help of patrol deputies, identified Scott as a suspect. Scott is scheduled for arraignment on the indictment on Monday, March 25, before a U.S. Magistrate Judge in Fresno. This case is a product of an investigation by the FBI’s Bakersfield Office and Kern County Sheriff’s Office.
Laser Strike of Children’s Hospital and Fresno PD Helicopters
Sergio Patrick Rodriguez, aka Javier Rodrigues, 26, and his girlfriend, Jennifer Lorraine Coleman, 23, both of Clovis, were charged with two counts of aiming a laser pointer at Air George, an emergency transport ambulance of Children’s Hospital Central California, and Air-1, a Fresno Police Department helicopter. They were also charged with conspiring to interfere with the safe operation of the helicopters and two counts of attempting to interfere with their safe operation. According to the indictment, Scott and Coleman deliberately targeted Air George while it was en route to transport a patient to Children’s Hospital. They again targeted Air-1 as it circled their apartment complex, responding to the report of the laser attack on Air George. Rodriguez and Coleman are scheduled for arraignment on March 28. At his initial court appearance, Rodriguez was ordered detained as a flight risk and a danger to the community. He has a further detention hearing on March 26. The case was investigated by the FBI’s Fresno Office, Clovis Police Department, and Fresno Police Department.
Laser Strike of Fresno County Sheriff Helicopter
Charles Conrad Mahaffey, 22, of Clovis, was charged with one count of aiming a laser pointer at Eagle 1, a Fresno County Sheriff helicopter, and one count of attempting to interfere with the safe operation of the helicopter. According to court records, Eagle 1 was assisting ground units on a call when it was struck by a powerful red laser and was forced to call off its enforcement mission. With the help of the Clovis Police Department, the pilot was able to locate the source of the laser and identify Mahaffey as the suspect. He scheduled for arraignment on March 28. The case was investigated by the FBI’s Fresno Office, Clovis Police Department, and Fresno County Sheriff’s Office.
The defendants face a maximum prison term of 20 years as to each charge of interfering with the safe operation of an aircraft and a maximum prison term of five years as to each charge of pointing a laser at an aircraft. Any sentences would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
The allegations in the indictments are only accusations, and all persons are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
Assistant U.S. Attorney Karen A. Escobar is prosecuting these cases.

Former Hedge Fund Manager Recently Arrested in Italy After Being on Run for Five Years Named in Grand Jury Indictment That Alleges Market Manipulation Scam That Caused $200 Million in Losses

LOS ANGELES—A German national who managed a series of hedge funds based in the Cayman Islands has been indicted on federal fraud charges alleging that he oversaw a stock manipulation scheme designed to “pump up” the reported returns of his hedge funds, while self-dealing for his own benefit to the detriment of the funds, in a fraud that caused investors to loss approximately $200 million.
Florian Wilhelm Jürgen Homm, 53, was named in a 10-count indictment that was returned late Tuesday afternoon by a federal grand jury in Los Angeles.
The indictment specifically charges Homm with one count of conspiracy to commit securities fraud, eight counts of securities fraud, and one count of wire fraud. The indictment also contains a forfeiture allegation that would cause Homm, if he is convicted of any of the 10 counts in the indictment, to forfeit to the United States “any and all property, real and personal, which constitutes or is derived from proceeds traceable to” any crime to which he is found guilty.
Homm is currently in custody in Italy after being arrested on March 8 at the Uffizi Gallery in Florence. Homm was arrested pursuant to the United States’ request for his provisional arrest pending extradition, based on a criminal complaint relating to the alleged fraud that had been filed by federal prosecutors in Los Angeles. The indictment filed yesterday in Los Angeles replaces the criminal complaint as the charging document.
Homm was the founder and chief investment officer of Absolute Capital Management Holdings Limited, a Cayman Islands-based investment advisor that managed eight hedge funds from 2004 until September 2007. As part of the alleged scheme, Homm bragged to investors that Absolute Capital was named overall winner for 2006 of the European Hedge Fund Group, by the publication Hedge Fund Review.
Court documents filed in United States District Court in Los Angeles—specifically, the indictment and the affidavit in support of the criminal complaint—allege that Homm directed the hedge funds to buy billions of shares of thinly traded, United States-based “penny stocks.” Homm caused most of the purchases of penny stocks to be made through Hunter World Markets Inc., a broker-dealer in Los Angeles that Homm co-owned. Homm, who at the time of the alleged scheme resided in Palma de Majorca, Spain, also allegedly obtained shares of the penny stock companies through various businesses he controlled.
After the hedge funds invested hundreds of millions of dollars in the illiquid penny stocks, Homm’s co-conspirators used a secret instant messaging system to avoid the scrutiny of regulators and caused the hedge funds to trade the stocks among themselves in “cross-trades” made through the Los Angeles-based broker dealer. The cross-trades served to increase the trading prices of the previously illiquid stocks and, in turn, to boost the net asset values and apparent performance of the hedge funds, in a practice called “portfolio pumping.” This apparent performance improvement at the hedge funds generated additional fees for Homm and Absolute Capital. It also boosted Absolute Capital’s stock price on the London Stock Exchange, Alternative Investment Market, from which Homm profited by selling shares. As part of the stock manipulation scheme, Homm and others also allegedly sold their own shares of the penny stocks to the hedge funds managed by Homm.
The indictment alleges that Homm and several co-conspirators who have not been indicted at this time “fraudulently manipulated these stocks to inflate and/or artificially prop up their prices to exaggerate the purported profitability of the hedge funds holding them.
“This enabled the co-conspirators to sell their own shares of the penny stocks at the inflated prices to the hedge funds. The stock price inflation also served to fraudulently overstate the performance of the hedge funds which, in turn, generated substantial performance fees and other compensation for defendant Homm and his co-conspirators,” according to the indictment.
Folllowing allegations made by a “whistleblower” in 2006, Homm dumped tens of millions of dollars worth of his own shares in Absolute Capital and resigned from the firm in the middle of the night on September 18, 2007. The scheme allegedly netted Homm and his co-schemers more than $53 million via trades made through Hunter World Markets alone.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Each charge of conspiracy to commit securities fraud and securities fraud carry a statutory maximum penalty of 25 years in federal prison. The wire fraud count carries a maximum penalty of 20 years in prison.
The case against Homm is the product of an ongoing investigation by the Federal Bureau of Investigation. Agents in the FBI’s Los Angeles Field Office worked with the FBI’s Legal Attaché Office in Rome and its sub-office in Milan, where agents worked collaboratively with Italian authorities, to secure the apprehension of Homm. The U.S. Department of Justice Attaché in Rome provided substantial assistance.
The Securities and Exchange Commission provided assistance to the FBI’s investigation.
Two years ago, the United States Securities and Exchange Commission filed a civil lawsuit in Los Angeles federal court against Homm and four other defendants, alleging a microcap stock manipulation scheme as part of “portfolio pumping” plot to increase the value of Absolute Capital (see: http://www.sec.gov/litigation/litreleases/2011/lr21865.htm).
Homm recently published a book that was translated into English under the title Rogue Financier: The Adventures of an Estranged Capitalist.

Former Northwest Arkansas Real Estate Developer, Two Attorneys, and Two Other Men Indicted on Bank Fraud, Bankruptcy Fraud, Wire Fraud, and Money Laundering Charges

FAYETTEVILLE, AR—Conner Eldridge, United States Attorney for the Western District of Arkansas; Christopher A. Henry, IRS-Criminal Investigation Special Agent in Charge for the Nashville Field Office; and Randall C. Coleman, FBI Special Agent in Charge, announced today that Brandon L. Barber, age 37, of New York, and four other men were charged with federal crimes stemming from schemes to defraud involving several Northwest Arkansas real estate transactions and Barber’s bankruptcy case. Barber was arrested Wednesday morning in New York, New York. The other individuals charged are K. Vaughn Knight, a 46-year-old Fayetteville attorney; James Van Doren, a 37-year-old New York attorney; Jeff Whorton, age 45, of Johnson, Arkansas; and Brandon Rains, age 31, of Springdale, Arkansas.
A grand jury sitting in Fort Smith, Arkansas, returned two indictments alleging several schemes to defraud banks, creditors, and the Federal Bankruptcy Court. Those schemes, as alleged in the indictments, include: (1) providing false and fraudulent financial information and statements to Legacy National Bank of Springdale in connection with loans to finance the Legacy Condominium building and project in Fayetteville; (2) providing false and fraudulent financial information and statements to Metropolitan National Bank of Little Rock and Enterprise Bank of St. Louis, Missouri, in connection with loans to finance the Bellafont project in Fayetteville; (3) concealing assets and income from creditors and the bankruptcy court by transferring funds to Van Doren and Knight or accounts controlled by them and using those funds for Barber’s personal benefit and expenses; and (4) falsely and fraudulently representing purchase prices for real estate to First Federal Bank of Harrison, Arkansas, to obtain loan amounts exceeding the actual purchase prices and thereby generating excess cash without the bank’s knowledge or approval. The charged conduct generally occurred from 2005 through 2009.
United States Attorney Eldridge commented, “Prosecuting federal crimes involving fraud is an important priority in the Western District of Arkansas and for the Department of Justice. As alleged in the indictment, this case involves schemes to defraud financial institutions and our federal bankruptcy court. We will continue to pursue and prosecute cases involving schemes designed to defraud and deceive.”
“Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money. Individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable. IRS-Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of their money, and we are proud to work with our law enforcement partners by lending our expertise in these complex financial investigations,” stated Special Agent in Charge Henry.
“My office will continue to dedicate agents and financial analysts to investigating corporate fraud cases like this one,” stated FBI Special Agent in Charge Coleman. “This case is a monumental example in Arkansas that the FBI, working closely with our partners, will seek to bring to justice to those persons whom we believe have engaged in fraud for the purposes of personal enrichment.”
As further alleged in the indictments, Barber was involved in residential and commercial real estate development, construction, and sales in Northwest Arkansas. Barber conducted business under several corporate entities that were managed by The Barber Group Inc. From June 2003 to October 2008, entities controlled by or affiliated with Barber secured over $200 million in loans from various financial institutions, including Legacy National Bank of Springdale, Metropolitan National Bank of Little Rock, First Federal Bank of Harrison, and Enterprise Bank of St. Louis.
One of Barber’s entities, Lynnkohn LLC, filed for bankruptcy in August 2008 after Legacy National Bank obtained a $9 million judgment against Barber the previous month. In July 2009, Barber additionally filed for personal Chapter 7 bankruptcy protection. During this time, K. Vaughn Knight served as Barber’s bankruptcy attorney and James Van Doren was a business associate. Before and after the bankruptcy filings, Barber, Knight, and Van Doren worked together to conceal assets from creditors and the court. These assets were hidden with various transactions and by utilizing several bank accounts, including Knight’s client trust account (also known as an IOLTA account).
The indictment further alleges that starting in August 2008, Barber, Jeff Whorton, and Brandon Rains were involved in a conspiracy to defraud First Federal Bank. During this period, the three made false and fraudulent representations to First Federal when they concealed and misrepresented the sales prices of property in order to obtain higher loan amounts and generate excess cash, which they concealed from the bank.
A grand jury sitting in Fort Smith, Arkansas, returned an indictment on March 6, 2013, containing 27 counts and charging Barber, Knight, and Van Doren. The indictment contains five counts of bank fraud, 15 counts of money laundering, four counts of bankruptcy fraud, and one count each of conspiracy to commit bankruptcy fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. Barber was included in all counts of the indictment except for one count of money laundering. Knight was included in one count of conspiracy to commit bankruptcy fraud, two counts of bankruptcy fraud, six counts of money laundering, one count of conspiracy to commit wire fraud, and one count of conspiracy to commit money laundering. Van Doren was included in one count of conspiracy to commit bankruptcy fraud, one count of bankruptcy fraud, one count of conspiracy to commit wire fraud, three counts of money laundering, and one count of conspiracy to commit money laundering
The grand jury returned an indictment charging Barber, Whorton, and Rains on January 16, 2013. This indictment contains one count of conspiracy to commit bank fraud and two counts of money laundering. Barber was named in the charge of conspiracy to commit bank fraud, and Whorton and Rains were included in the bank fraud count and in one count of money laundering each.
The maximum penalties for each crime are: (1) bank fraud—30 years in prison and a $1 million fine; (2) money laundering—10 years in prison and $250,000 fine; (3) conspiracy to commit bankruptcy fraud—five years in prison and a $250,000 fine; (4) bankruptcy fraud by concealment of assets or false statements—five years in prison and a $250,000 fine; (5) conspiracy to commit wire fraud—20 years in prison and a $250,000 fine; (6) conspiracy to commit money laundering—20 years in prison and a $500,000 fine; and (7) conspiracy to commit bank fraud—30 years in prison and $1 million fine.
This case was investigated by the Internal Revenue Service-Criminal Investigation Division and the Federal Bureau of Investigation. United States Attorney Conner Eldridge, First Assistant United States Attorney Wendy Johnson, and United States Attorneys Glen Hines and Benjamin Wulff are prosecuting the case for the United States.
The charges in an indictment are only allegations. A person is presumed innocent unless or until he or she is proven guilty beyond a reasonable doubt in court.