COEUR D’ALENE—Larry James Wolfe, 34, of Plummer, Idaho, was sentenced today for theft from a tribal organization, U.S. Attorney Wendy J. Olson announced. U.S. District Judge Edward J. Lodge ordered Wolfe to serve three years of probation, pay $1,387 in restitution, and perform 80 hours of community service.
According to court documents, on October 20, 2012, Wolfe drove into the Coeur d’Alene Tribal Facilities storage area and stole four tires and four rims valued at approximately $1,300. Wolfe did not have permission to take the property, which belonged to an Indian Tribal Organization.
The case was investigated by Coeur d’Alene Tribal Police and the Federal Bureau of Investigation.
Friday, January 31, 2014
Fort Hall Man Charged with Assault Resulting in Serious Bodily Injury
POCATELLO—U.S. Attorney Wendy J. Olson announced today that Dulton E. Johnson, 23, of Fort Hall, Idaho, pleaded not guilty today to the indictment charging him with assault resulting in serious bodily injury. Johnson was indicted by a federal grand jury in Pocatello on September 10, 2013. Johnson appeared before U.S. Magistrate Judge Ronald E. Bush at the federal courthouse in Pocatello. Trial is set for March 10, 2014, before U.S. District Judge B. Lynn Winmill.
The indictment alleges that Johnson intentionally assaulted another person, which resulted in serious bodily injury, including multiple broken bones.
The charge of assault resulting in serious bodily injury is punishable by up to 10 years in prison, a maximum fine of $250,000, and up to three years of supervised release.
The case was investigated by the Fort Hall Police Department and the Federal Bureau of Investigation.
An indictment is a means of charging a person with criminal activity. It is not evidence. The person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The indictment alleges that Johnson intentionally assaulted another person, which resulted in serious bodily injury, including multiple broken bones.
The charge of assault resulting in serious bodily injury is punishable by up to 10 years in prison, a maximum fine of $250,000, and up to three years of supervised release.
The case was investigated by the Fort Hall Police Department and the Federal Bureau of Investigation.
An indictment is a means of charging a person with criminal activity. It is not evidence. The person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Plummer Man Pleads Guilty to Aggravated Assault
COEUR D’ALENE—Joseph L. James, 30, of Plummer, Idaho, pleaded guilty today in federal court to assault resulting in serious bodily injury, U.S. Attorney Wendy J. Olson announced. James was indicted by a federal grand jury in Coeur d’Alene on November 20, 2013.
According to the plea agreement, James admitted that on April 12, 2013, he hit his then-girlfriend in the face and broke her nose. The case was prosecuted federally because James and the victim are both enrolled members of a federally recognized Indian tribe, and the offense occurred on the Coeur d’Alene reservation.
The charge of assault resulting in serious bodily injury is punishable by up to 10 years in prison, a maximum fine of $250,000, and up to three years of supervised release.
James is scheduled to be sentenced on April 29, 2014, before U.S. District Judge Edward J. Lodge at the federal courthouse in Coeur d’Alene.
This case was jointly investigated by Coeur D’Alene Tribal Police and the Federal Bureau of Investigation.
According to the plea agreement, James admitted that on April 12, 2013, he hit his then-girlfriend in the face and broke her nose. The case was prosecuted federally because James and the victim are both enrolled members of a federally recognized Indian tribe, and the offense occurred on the Coeur d’Alene reservation.
The charge of assault resulting in serious bodily injury is punishable by up to 10 years in prison, a maximum fine of $250,000, and up to three years of supervised release.
James is scheduled to be sentenced on April 29, 2014, before U.S. District Judge Edward J. Lodge at the federal courthouse in Coeur d’Alene.
This case was jointly investigated by Coeur D’Alene Tribal Police and the Federal Bureau of Investigation.
Stow Man Sentenced to 33 Months in Prison on Fraud Charges
A Stow man was sentenced to nearly three years in prison for defrauding his employer of more than $744,000, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Thomas A. Steiger, 45, was sentenced to 33 monthis in prison after previously pleading guilty to six counts of wire fraud and four counts of interstate transportation of property obtained by fraud.
Steiger admitted that he had defrauded his employer, Voith Industrial Services Inc. of Cincinnati. While working for Voith, Steiger was located at the Ford Motor Company Stamping Plant in Walton Hills, Ohio. During 2011-2012, Steiger defrauded his employer by ordering industrial equipment on company invoices and, after receipt, selling the equipment to individuals not related to Voith. Voith lost at least $744,109 as a result of Steiger’s scheme, according to court documents.
Steiger was also orderd to pay $744,109 in restitution.
This case was investigated by the Federal Bureau of Investigation, with assistance from the Walton Hills, Ohio Police Department. The case was prosecuted by Assistant United States Attorney James V. Moroney.
Thomas A. Steiger, 45, was sentenced to 33 monthis in prison after previously pleading guilty to six counts of wire fraud and four counts of interstate transportation of property obtained by fraud.
Steiger admitted that he had defrauded his employer, Voith Industrial Services Inc. of Cincinnati. While working for Voith, Steiger was located at the Ford Motor Company Stamping Plant in Walton Hills, Ohio. During 2011-2012, Steiger defrauded his employer by ordering industrial equipment on company invoices and, after receipt, selling the equipment to individuals not related to Voith. Voith lost at least $744,109 as a result of Steiger’s scheme, according to court documents.
Steiger was also orderd to pay $744,109 in restitution.
This case was investigated by the Federal Bureau of Investigation, with assistance from the Walton Hills, Ohio Police Department. The case was prosecuted by Assistant United States Attorney James V. Moroney.
CEO of Free Truth Enterprises Sentenced to Prison for Tax Fraud and Mortgage Loan Fraud
CINCINNATI, OH—Regina Shields, 41, of Cincinnati, Ohio, was sentenced in US. District Court to 12 months and one day in prison and ordered to pay $202,806 in restitution to the Internal Revenue Service and the lender she defrauded in a mortgage fraud scam.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Kathy A. Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office; and Kevin R. Cornelius, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the sentence handed down today by Chief U.S. District Court Judge Susan J. Dlott.
Shields pleaded guilty in June 2013 to one count of filing a false income tax return and one count of wire fraud. According to court documents, Shields formed a non-profit corporation called Free Truth Enterprises and has served as the president and CEO since 2000. From 2007 through 2010, Shields filed federal income tax returns with the IRS claiming $61,315 in false claims for income tax refunds.
“The mortgage loan offense involves a brazen scheme whereby she bid for and won a sheriff’s auction for a property that was in foreclosure,” Assistant U.S. Attorney Tim Mangan told the court. “She then purported to pay for the property using a check that had insufficient funds. To make matters worse, the defendant then used this temporary appearance of title to apply for a sizable loan from Quicken Loans in excess of $140,000. She then used the proceeds to purchase a luxury car.”
Shields’ sentence includes restitution to the IRS in the amount of $61,315 and restitution in the amount of $141,491 to Title Source Inc. (related to Quicken Loans).
Stewart commended the cooperative investigation by special agents of IRS-Criminal Investigation and the FBI, Assistant United States Attorney Timothy Mangan who prosecuted the case.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Kathy A. Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office; and Kevin R. Cornelius, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the sentence handed down today by Chief U.S. District Court Judge Susan J. Dlott.
Shields pleaded guilty in June 2013 to one count of filing a false income tax return and one count of wire fraud. According to court documents, Shields formed a non-profit corporation called Free Truth Enterprises and has served as the president and CEO since 2000. From 2007 through 2010, Shields filed federal income tax returns with the IRS claiming $61,315 in false claims for income tax refunds.
“The mortgage loan offense involves a brazen scheme whereby she bid for and won a sheriff’s auction for a property that was in foreclosure,” Assistant U.S. Attorney Tim Mangan told the court. “She then purported to pay for the property using a check that had insufficient funds. To make matters worse, the defendant then used this temporary appearance of title to apply for a sizable loan from Quicken Loans in excess of $140,000. She then used the proceeds to purchase a luxury car.”
Shields’ sentence includes restitution to the IRS in the amount of $61,315 and restitution in the amount of $141,491 to Title Source Inc. (related to Quicken Loans).
Stewart commended the cooperative investigation by special agents of IRS-Criminal Investigation and the FBI, Assistant United States Attorney Timothy Mangan who prosecuted the case.
Five Central Ohio Men Charged with Cocaine Trafficking
COLUMBUS—A cooperative investigation by federal, state, and local law enforcement in Columbus and Franklin County, Ohio, has led to the indictments of five people on federal drug trafficking charges.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Kathy Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS); Kevin Cornelius, Special Agent in Charge, Federal Bureau of Investigation (FBI); Franklin County Sheriff Zach Scott; and Columbus Police Chief Kim Jacobs announced the charges today following the arrest of the final defendant named in a superseding indictment returned January 16.
Named in the indictment are:
The five will be arraigned before U.S. Magistrate Judge Norah McCann King today at 2 p.m.
The superseding indictment also seeks forfeiture of three houses allegedly purchased with proceeds of illegal activities and forfeiture of cash and jewelry representing the proceeds of the crime.
Officers arrested Jordan on January 29. Jackson was arrested on January 21, and all have been ordered held without bond. According to evidence presented at a detention hearing on December 10, more than 20 kilograms of cocaine were seized during execution of a search warrant at Totten’s house. Beavers was released on bond. Judge Michael Watson will set a trial date for the defendants.
U.S. Attorney Stewart commended the cooperative investigation by the IRS, FBI, Columbus Police, and Franklin County Sheriff, as well as the cooperation of the DEA, which provided information vital to the investigation, and Assistant U.S. Attorneys Kevin Kelley and David DeVillers, who are prosecuting the case.
Charges contained in an indictment are allegations. All defendants should be presumed innocent until and unless proven guilty in court.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Kathy Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS); Kevin Cornelius, Special Agent in Charge, Federal Bureau of Investigation (FBI); Franklin County Sheriff Zach Scott; and Columbus Police Chief Kim Jacobs announced the charges today following the arrest of the final defendant named in a superseding indictment returned January 16.
Named in the indictment are:
- William Totten, 51, Canal Winchester
- Andre Broom, 47, Columbus
- Christafer L. Jackson, 31, Pickerington
- Donald A. Jordan, 51, Columbus
- Lawrence G. Beavers, 46, Springfield
The five will be arraigned before U.S. Magistrate Judge Norah McCann King today at 2 p.m.
The superseding indictment also seeks forfeiture of three houses allegedly purchased with proceeds of illegal activities and forfeiture of cash and jewelry representing the proceeds of the crime.
Officers arrested Jordan on January 29. Jackson was arrested on January 21, and all have been ordered held without bond. According to evidence presented at a detention hearing on December 10, more than 20 kilograms of cocaine were seized during execution of a search warrant at Totten’s house. Beavers was released on bond. Judge Michael Watson will set a trial date for the defendants.
U.S. Attorney Stewart commended the cooperative investigation by the IRS, FBI, Columbus Police, and Franklin County Sheriff, as well as the cooperation of the DEA, which provided information vital to the investigation, and Assistant U.S. Attorneys Kevin Kelley and David DeVillers, who are prosecuting the case.
Charges contained in an indictment are allegations. All defendants should be presumed innocent until and unless proven guilty in court.
More Than Two Dozen Arrested in Crackdown on Evansville-Area Criminal Organization
EVANSVILLE—United States Attorney Joseph H. Hogsett, joined by Vanderburgh County Prosecutor Nicholas Hermann, Sheriff Eric Williams, and Evansville Police Chief Billy Bolin, announced this afternoon the early-morning arrest of 22 Evansville-area residents in a city-wide crackdown on drug trafficking and other gang-related activities. This joint federal-local investigation is part of the U.S. Attorney’s ongoing Violent Crime Initiative.
“The allegations in this case describe a dangerous gang that for years peddled violence and drugs across the city of Evansville,” Hogsett said. “These charges also serve as a reminder that if you are involved in organized crime in this city, if you assist these groups in any way, you too will wake up one morning soon to the sound of law enforcement at your door.”
Today’s arrests center around a local criminal street gang that operated under the name 300 Wag Block, which is a reference to the 300 block of Waggoner Avenue in Evansville. According to the federal indictment, the gang has been responsible for numerous acts of violence and the local distribution of drugs, including cocaine. The indictment describes a complex series of code words that were used by gang members to describe their criminal activities.
The federal indictment alleges a pattern of criminal behavior that stretched over four years. All told, eight defendants have been charged with offenses that include conspiring to distribute crack cocaine and multiple counts of possessing and distributing drugs, as well as numerous federal firearm offenses related to illegally possessing firearms in the course of these drug trafficking activities.
The indictment also alleges specific instances of gang-related violence in Vanderburgh County. This includes the June 2012 assault of an individual in a local parking lot, the firing of weapons at individuals on Florida Street in October 2013, and a series of recorded gang meetings that took place late last year. The indictment describes the collective criminal histories of the defendants, which include multiple local convictions related to violent acts and drug trafficking.
Those eight defendants charged federally include:
This case was the result of a collaborative investigation involving the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Drug Enforcement Administration; the Federal Bureau of Investigation’s Safe Streets Task Force; and the United States Marshals Service, as well as the Vanderburgh County Sheriff’s Office and the Evansville Police Department.
According to Assistant U.S. Attorney Matthew P. Brookman, who is prosecuting the federal case for the government, all the defendants could be sentenced to decades in federal prison. Due to extensive criminal histories, some of the defendants could face life imprisonment without the possibility of parole. Under federal law, the defendants would be required to serve at least 85 percent of their sentence within a correctional facility if they are found guilty.
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.
“The allegations in this case describe a dangerous gang that for years peddled violence and drugs across the city of Evansville,” Hogsett said. “These charges also serve as a reminder that if you are involved in organized crime in this city, if you assist these groups in any way, you too will wake up one morning soon to the sound of law enforcement at your door.”
Today’s arrests center around a local criminal street gang that operated under the name 300 Wag Block, which is a reference to the 300 block of Waggoner Avenue in Evansville. According to the federal indictment, the gang has been responsible for numerous acts of violence and the local distribution of drugs, including cocaine. The indictment describes a complex series of code words that were used by gang members to describe their criminal activities.
The federal indictment alleges a pattern of criminal behavior that stretched over four years. All told, eight defendants have been charged with offenses that include conspiring to distribute crack cocaine and multiple counts of possessing and distributing drugs, as well as numerous federal firearm offenses related to illegally possessing firearms in the course of these drug trafficking activities.
The indictment also alleges specific instances of gang-related violence in Vanderburgh County. This includes the June 2012 assault of an individual in a local parking lot, the firing of weapons at individuals on Florida Street in October 2013, and a series of recorded gang meetings that took place late last year. The indictment describes the collective criminal histories of the defendants, which include multiple local convictions related to violent acts and drug trafficking.
Those eight defendants charged federally include:
- Maleek Davis, a/k/a “Skinny” or “Pluto Dollas,” age 21
- Mykale Davis, a/k/a “Kales,” age 22
- Tiackquien Douglas, a/k/a “TT,” age 21
- Gerald Butler, a/k/a “Boogie,” age 23
- Luther Lawton, a/k/a “Lut Lut” or “LL,” age 21
- Duwan McKinney, a/k/a “Mula” or “Shorty,” age 27
- Lusta Johnson, age 21
- D’Mariea Fox, age 23
This case was the result of a collaborative investigation involving the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Drug Enforcement Administration; the Federal Bureau of Investigation’s Safe Streets Task Force; and the United States Marshals Service, as well as the Vanderburgh County Sheriff’s Office and the Evansville Police Department.
According to Assistant U.S. Attorney Matthew P. Brookman, who is prosecuting the federal case for the government, all the defendants could be sentenced to decades in federal prison. Due to extensive criminal histories, some of the defendants could face life imprisonment without the possibility of parole. Under federal law, the defendants would be required to serve at least 85 percent of their sentence within a correctional facility if they are found guilty.
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.
Four Individuals Indicted for Drug Trafficking on the High Seas
TAMPA—U.S. Attorney A. Lee Bentley, III announced today that a federal grand jury returned an indictment charging Linberto Gallardo-Gonzalez (42); Uriel Julio Tapia (35); Miguel Vasquez-Barrios (37), all of Colombia, South America; and Miguel Angel Sori-Ortiz (41, Dominican Republic), with conspiracy to possess with intent to distribute five kilograms or more of cocaine while on board a vessel subject to the jurisdiction of the United States; and aiding and abetting each other and other persons to possess with intent to distribute five kilograms or more of cocaine while on board a vessel subject to the jurisdiction of the United States. Each faces a mandatory minimum sentence of 10 years up to a maximum penalty of life in federal prison for each count.
On January 22, 2014, Gallardo-Gonzalez, Tapia, Vasquez-Barrios, and Sori-Ortiz were detained during the interdiction of a go-fast boat traveling at a high rate of speed and carrying 2,500 pounds of cocaine worth an estimated $37 million wholesale value. The cocaine was seized in a historic multi-national counterdrug operation south of the Dominican Republic. This interdiction marks the first time a U.S. Coast Guard (USCG) Law Enforcement Detachment Team (LEDET) and helicopter embarked on board a foreign flagged military vessel in support of counterdrug operations. The USCG LEDET team and helicopter were operating aboard the British Royal Fleet Auxiliary (RFA) Wave Knight. The Coast Guard helicopter launched from the RFA Wave Knight when the 25-foot go-fast boat was detected with four individuals and suspicious packages on board, traveling at a high rate of speed. The helicopter crew arrived on scene and attempted to signal the go-fast boat in an effort to stop it. Ultimately, the crew resorted to firing disabling shots to stop the vessel’s engine. During the pursuit, the four individuals on board were observed jettisoning multiple packages overboard. After the vessel was stopped, a USCG LEDET team arrived at the scene and detained the four individuals aboard the boat and retrieved 45 bales of cocaine from the debris field, where the packages had been thrown overboard.
The four crewman detained on the go-fast vessel were brought to Middle District of Florida, Tampa Division for prosecution. They appeared before a United States Magistrate Judge to be advised of the charges against them and for a bond hearing. They were detained pending the resolution of the case.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless and until proven guilty.
This case was investigated by OCDETF’s Panama Express Strike Force, composed of agents and analysts from the Federal Bureau of Investigation, Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, United States Coast Guard Investigative Service, and Joint Interagency Task Force South. It is being prosecuted by Assistant United States Attorney Maria Chapa Lopez.
The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
On January 22, 2014, Gallardo-Gonzalez, Tapia, Vasquez-Barrios, and Sori-Ortiz were detained during the interdiction of a go-fast boat traveling at a high rate of speed and carrying 2,500 pounds of cocaine worth an estimated $37 million wholesale value. The cocaine was seized in a historic multi-national counterdrug operation south of the Dominican Republic. This interdiction marks the first time a U.S. Coast Guard (USCG) Law Enforcement Detachment Team (LEDET) and helicopter embarked on board a foreign flagged military vessel in support of counterdrug operations. The USCG LEDET team and helicopter were operating aboard the British Royal Fleet Auxiliary (RFA) Wave Knight. The Coast Guard helicopter launched from the RFA Wave Knight when the 25-foot go-fast boat was detected with four individuals and suspicious packages on board, traveling at a high rate of speed. The helicopter crew arrived on scene and attempted to signal the go-fast boat in an effort to stop it. Ultimately, the crew resorted to firing disabling shots to stop the vessel’s engine. During the pursuit, the four individuals on board were observed jettisoning multiple packages overboard. After the vessel was stopped, a USCG LEDET team arrived at the scene and detained the four individuals aboard the boat and retrieved 45 bales of cocaine from the debris field, where the packages had been thrown overboard.
The four crewman detained on the go-fast vessel were brought to Middle District of Florida, Tampa Division for prosecution. They appeared before a United States Magistrate Judge to be advised of the charges against them and for a bond hearing. They were detained pending the resolution of the case.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless and until proven guilty.
This case was investigated by OCDETF’s Panama Express Strike Force, composed of agents and analysts from the Federal Bureau of Investigation, Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, United States Coast Guard Investigative Service, and Joint Interagency Task Force South. It is being prosecuted by Assistant United States Attorney Maria Chapa Lopez.
The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
Plant City Woman Sentenced to Prison in Stolen Identity Refund Fraud Scheme
TAMPA—U.S. District Judge Susan C. Bucklew today sentenced Jennifer Meier Hunt to two years and six months in federal prison for committing stolen identity refund fraud. As part of her sentence, the court also entered a forfeiture money judgment in the amount of $97,238, representing the proceeds of the tax fraud.
Hunt pleaded guilty to one count of theft of government property and one count of aggravated identity theft on June 25, 2013.
According to court documents, in April 2011, a confidential informant told agents from the Federal Bureau of Investigation (FBI) that certain employees of a Tampa-based professional staffing company were filing fraudulent income tax returns using TurboTax.com. Three individuals involved in the conspiracy were then identified by agents, supervisors of the staffing company, and Turbo Tax. On May 19, 2011, federal search warrants were executed at the residences of these three individuals. The investigation subsequently revealed that between February 2, 2011 and May 2, 2011, Hunt used stolen identities to electronically file 75 fraudulent federal income tax returns in order to obtain refunds to which she was not entitled. The value of the refunds that would have resulted from the filed returns totaled approximately $187,687. Although some of the returns were rejected by the Internal Revenue Service, 47 of the fraudulent returns were accepted, resulting in the issuance of $97,238 in tax refunds to debit cards under the control of Hunt. None of the victims of the fraudulently iled tax returns, which included a number of deceased individuals, had authorized Hunt to open or use a debit card in their name. Neither had anyone authorized the conspirators to file a tax return on his or her behalf.
This case was investigated by the FBI and the Internal Revenue Service-Criminal Investigation. It is being prosecuted by Assistant United States Attorney and Senior Litigation Counsel Donald L. Hansen.
Hunt pleaded guilty to one count of theft of government property and one count of aggravated identity theft on June 25, 2013.
According to court documents, in April 2011, a confidential informant told agents from the Federal Bureau of Investigation (FBI) that certain employees of a Tampa-based professional staffing company were filing fraudulent income tax returns using TurboTax.com. Three individuals involved in the conspiracy were then identified by agents, supervisors of the staffing company, and Turbo Tax. On May 19, 2011, federal search warrants were executed at the residences of these three individuals. The investigation subsequently revealed that between February 2, 2011 and May 2, 2011, Hunt used stolen identities to electronically file 75 fraudulent federal income tax returns in order to obtain refunds to which she was not entitled. The value of the refunds that would have resulted from the filed returns totaled approximately $187,687. Although some of the returns were rejected by the Internal Revenue Service, 47 of the fraudulent returns were accepted, resulting in the issuance of $97,238 in tax refunds to debit cards under the control of Hunt. None of the victims of the fraudulently iled tax returns, which included a number of deceased individuals, had authorized Hunt to open or use a debit card in their name. Neither had anyone authorized the conspirators to file a tax return on his or her behalf.
This case was investigated by the FBI and the Internal Revenue Service-Criminal Investigation. It is being prosecuted by Assistant United States Attorney and Senior Litigation Counsel Donald L. Hansen.
Bureau of Prisons Inmate Sent Back to Prison for Indecent Exposure by Sexually Gratifying Himself
DENVER—Todd A. Lawton, age 31, an inmate who was housed at the United States Penitentiary (USP) in Florence, Colorado, at the time of his crime, was sentenced on Monday, January 27, 2014, by U.S. District Court Judge Philip A. Brimmer to serve one year and a day in federal prison for indecent exposure, the Department of Justice announced. Lawton will also have to register as a sex offender. The defendant appeared at the sentencing hearing in the custody of the United States Marshals. He was remanded at the conclusion of the sentencing hearing.
Lawton was indicted by a federal grand jury in Denver on June 3, 2013. He pled guilty to two counts of indecent exposure on October 16, 2013. He was sentenced on January 27, 2014. According to the stipulated facts contained in the plea agreement, between May 21, 2012 and January 22, 2013, Lawton on multiple occasions would stand on the toilet or another object in his cell in order to make his groin area visible through the cell door window to those near his cell. Then he would sexually gratify himself when female medical or food service staff approached. He was ordered many times to cease his lewd behavior but failed to comply with correctional staff orders.
The defendant was being incarcerated in USP Florence for various crimes while incarcerated: federal inmate possessing contraband—weapon and assault on a federal officer. He was first incarcerated for distribution of cocaine, robbery, and carrying a pistol without a license, all out of the District of Columbia. Lawton was released from the Federal Bureau of Prison custody on July 18, 2013, but was picked up by U.S. Marshals Deputies to appear before a U.S. Magistrate Judge on the indecent exposure charge. Lawton was later ordered to be detained without bond pending a resolution of his case.
“This case involved calculated acts of sexual intimidation aimed at female medical and food service staff at the United States Penitentiary at Florence,” said U.S. Attorney John Walsh. “This case and sentence reflects our commitment to protect Prison staff—and also other prison inmates—from sexual abuse of whatever form.”
This case was investigated by the Federal Bureau of Prisons Special Investigative Services Department at USP Florence.
Lawton was prosecuted by Assistant U.S. Attorney David Tonini.
Lawton was indicted by a federal grand jury in Denver on June 3, 2013. He pled guilty to two counts of indecent exposure on October 16, 2013. He was sentenced on January 27, 2014. According to the stipulated facts contained in the plea agreement, between May 21, 2012 and January 22, 2013, Lawton on multiple occasions would stand on the toilet or another object in his cell in order to make his groin area visible through the cell door window to those near his cell. Then he would sexually gratify himself when female medical or food service staff approached. He was ordered many times to cease his lewd behavior but failed to comply with correctional staff orders.
The defendant was being incarcerated in USP Florence for various crimes while incarcerated: federal inmate possessing contraband—weapon and assault on a federal officer. He was first incarcerated for distribution of cocaine, robbery, and carrying a pistol without a license, all out of the District of Columbia. Lawton was released from the Federal Bureau of Prison custody on July 18, 2013, but was picked up by U.S. Marshals Deputies to appear before a U.S. Magistrate Judge on the indecent exposure charge. Lawton was later ordered to be detained without bond pending a resolution of his case.
“This case involved calculated acts of sexual intimidation aimed at female medical and food service staff at the United States Penitentiary at Florence,” said U.S. Attorney John Walsh. “This case and sentence reflects our commitment to protect Prison staff—and also other prison inmates—from sexual abuse of whatever form.”
This case was investigated by the Federal Bureau of Prisons Special Investigative Services Department at USP Florence.
Lawton was prosecuted by Assistant U.S. Attorney David Tonini.
First Savings Bank Robbery Solved
The FBI’s Violent Crimes Task Force worked aggressively with the El Paso Police and Sheriff’s Department, as well as the Las Cruces Police Department and the Dona Ana County Sherriff’s Office, to successfully solve the First Savings Bank Robbery from Monday afternoon.
Rick Edward Sanchez, 36 years old and unemployed, was arrested without incident at approximately 3 p.m. yesterday afternoon. The FBI followed up on numerous anonymous tips received from the public after the bank robbery and was able to successfully solve the first bank robbery of 2014 within 27 hours of the occurrence. Sanchez will go before Judge Torres this afternoon for his initial appearance, where he will be charged with one count of bank robbery.
Rick Edward Sanchez, 36 years old and unemployed, was arrested without incident at approximately 3 p.m. yesterday afternoon. The FBI followed up on numerous anonymous tips received from the public after the bank robbery and was able to successfully solve the first bank robbery of 2014 within 27 hours of the occurrence. Sanchez will go before Judge Torres this afternoon for his initial appearance, where he will be charged with one count of bank robbery.
Virginia Man Pleads Guilty to Home Invasion
CHARLESTON, WV—United States Attorney Booth Goodwin announced today that Robert L. Barcliff, 29, of Wytheville, Virginia, pleaded guilty in federal court in Charleston, West Virginia, to home invasion armed robbery. On April 22, 2012, Barcliff, Keith Glenn, Robert Jared Smith, and William Seltzer rushed a Marmet, West Virginia apartment thought to be occupied by drug dealers from Detroit, Michigan. Barcliff and Smith, dressed in dark clothing, stormed the apartment at gunpoint, stole drug money, and then ran into hiding. Barcliff and his gang targeted drug dealers because they were thought to be unlikely to report the robberies to police for fear of implicating themselves in drug crimes. Other similar home invasion robberies were committed in Charleston and surrounding communities, but the crime spree also extended to Virginia, Pennsylvania, and Tennessee.
“Some of these robberies occurred in neighborhoods where families live and where children play outside—places where decent people have every right to expect to be safe and free from this type of violent behavior,” said U.S. Attorney Goodwin. “But when prescription and other types of illegal drugs are involved, criminal behavior is unpredictable and can be dangerous. Be assured, my office is committed to ensuring that these kind of offenders are identified, investigated, and prosecuted to the fullest extent of the law, so that people can be safe in their homes.”
Glenn, Smith, and Seltzer have all entered guilty pleas in federal court for charges related to this investigation and are awaiting sentencing.
Barcliff faces a up to life imprisonment when he is sentenced on May 7, 2014, by United States District Court Judge Thomas E. Johnston.
The South Charleston Police Department, Charleston Police Department, and the Federal Bureau of Investigation conducted the investigation. Assistant United States Attorneys Monica D. Coleman and Philip H. Wright are in charge of the prosecution.
“Some of these robberies occurred in neighborhoods where families live and where children play outside—places where decent people have every right to expect to be safe and free from this type of violent behavior,” said U.S. Attorney Goodwin. “But when prescription and other types of illegal drugs are involved, criminal behavior is unpredictable and can be dangerous. Be assured, my office is committed to ensuring that these kind of offenders are identified, investigated, and prosecuted to the fullest extent of the law, so that people can be safe in their homes.”
Glenn, Smith, and Seltzer have all entered guilty pleas in federal court for charges related to this investigation and are awaiting sentencing.
Barcliff faces a up to life imprisonment when he is sentenced on May 7, 2014, by United States District Court Judge Thomas E. Johnston.
The South Charleston Police Department, Charleston Police Department, and the Federal Bureau of Investigation conducted the investigation. Assistant United States Attorneys Monica D. Coleman and Philip H. Wright are in charge of the prosecution.
Lawyer Charged with Stealing Client Funds
PHILADELPHIA—Gomer Thomas Williams, 54, of Philadelphia, Pennsylvania, was charged today by information with one count of wire fraud in connection with a scheme to defraud clients of the legal firm where he worked. Williams was an attorney and associate with the Philadelphia law firm, Spector Gadon & Rosen (Spector). According to the information, between 2007 and 2012, Williams defrauded four of his trust and estate clients of approximately $503,361 by diverting funds from his clients’ accounts to his personal accounts and by overbilling his clients for legal work that was not performed.
For the trusts, Williams was the trustee, and, for the estates, Williams was the administrator and/or executor. Williams exercised complete control over the victim-clients’ funds, including controlling their checking accounts. The information alleges that he abused his fiduciary position in transferring funds from their accounts to pay his own personal expenses, including his mortgage.
If convicted, Williams faces a potential advisory sentencing guideline range of 33 to 41 months in prison, a $100 special assessment, a possible fine, and up to three years of supervised release.
The case was investigated by the FBI and is being prosecuted by First Assistant United States Attorney Louis D. Lappen.
For the trusts, Williams was the trustee, and, for the estates, Williams was the administrator and/or executor. Williams exercised complete control over the victim-clients’ funds, including controlling their checking accounts. The information alleges that he abused his fiduciary position in transferring funds from their accounts to pay his own personal expenses, including his mortgage.
If convicted, Williams faces a potential advisory sentencing guideline range of 33 to 41 months in prison, a $100 special assessment, a possible fine, and up to three years of supervised release.
The case was investigated by the FBI and is being prosecuted by First Assistant United States Attorney Louis D. Lappen.
Carlsbad Man Pleads Guilty to Hobbs Act Robbery
ALBUQUERQUE—Phillip Jacob Castaneda, 28, of Carlsbad, New Mexico, entered a guilty plea this morning in federal court in Las Cruces to violating the Hobbs Act by robbing a business engaged in interstate commerce, announced by Acting U.S. Attorney Steven C. Yarbrough, 5th Judicial District Attorney Janetta B. Hicks, Special Agent in Charge Carol K.O. Lee of the Albuquerque Division of the FBI, and Carlsbad Police Chief Kent Waller.
Castaneda was arrested on federal charges on August 30, 2013, on a criminal complaint alleging that he and a juvenile accomplice robbed the Check ‘n Go store located at 2521 S. Canal Street in Carlsbad at gunpoint on June 5, 2013. According to the complaint, Castaneda, who was armed with a firearm, went behind the teller counter in the store and removed money from the tellers’ drawers while the juvenile remained near the front of the store and acted as a lookout. Castaneda and the juvenile were arrested on state charges by officers of the Carlsbad Police Department after witnesses positively identified Castaneda and the juvenile as the robbers.
Today, Castaneda entered a guilty plea to a felony information charging him with violating the Hobbs Act by robbing a business engaged in interstate commerce. In his plea agreement, Castaneda admitted robbing the Check ‘n Go in Carlsbad at gunpoint on June 5, 2013. He also admitted threatening the store’s employees with a firearm.
Castaneda has been in federal custody since his arrest in August 2013, and he remains detained pending his sentencing hearing, which has yet to be scheduled. At sentencing, Castaneda faces a maximum penalty of 20 years in federal prison.
Under the terms of his plea agreement, Castaneda is required to enter a guilty plea in a related state case pending in the 5th Judicial District Court in Eddy County, New Mexico, after he is sentenced in this federal case. The sentences imposed in the two cases will run concurrently under the terms of Castaneda’s plea agreement.
The federal and state cases against Castaneda were investigated by the Roswell Resident Agency of the FBI and the Carlsbad Police Department. The federal case is being prosecuted by Assistant U.S. Attorney Luis A. Martinez of the U.S. Attorney’s Las Cruces Branch Office, and the state case is being prosecuted by Chief Deputy District Attorney Davis R. Ruark.
Castaneda was arrested on federal charges on August 30, 2013, on a criminal complaint alleging that he and a juvenile accomplice robbed the Check ‘n Go store located at 2521 S. Canal Street in Carlsbad at gunpoint on June 5, 2013. According to the complaint, Castaneda, who was armed with a firearm, went behind the teller counter in the store and removed money from the tellers’ drawers while the juvenile remained near the front of the store and acted as a lookout. Castaneda and the juvenile were arrested on state charges by officers of the Carlsbad Police Department after witnesses positively identified Castaneda and the juvenile as the robbers.
Today, Castaneda entered a guilty plea to a felony information charging him with violating the Hobbs Act by robbing a business engaged in interstate commerce. In his plea agreement, Castaneda admitted robbing the Check ‘n Go in Carlsbad at gunpoint on June 5, 2013. He also admitted threatening the store’s employees with a firearm.
Castaneda has been in federal custody since his arrest in August 2013, and he remains detained pending his sentencing hearing, which has yet to be scheduled. At sentencing, Castaneda faces a maximum penalty of 20 years in federal prison.
Under the terms of his plea agreement, Castaneda is required to enter a guilty plea in a related state case pending in the 5th Judicial District Court in Eddy County, New Mexico, after he is sentenced in this federal case. The sentences imposed in the two cases will run concurrently under the terms of Castaneda’s plea agreement.
The federal and state cases against Castaneda were investigated by the Roswell Resident Agency of the FBI and the Carlsbad Police Department. The federal case is being prosecuted by Assistant U.S. Attorney Luis A. Martinez of the U.S. Attorney’s Las Cruces Branch Office, and the state case is being prosecuted by Chief Deputy District Attorney Davis R. Ruark.
Thursday, January 30, 2014
Defendant Pleads Guilty to Submitting False Claims to the Federal Government
GRAND RAPIDS, MI—U.S. Attorney Patrick A. Miles, Jr. announced today that James Francis Ortman, 58, of Maple Rapids, Michigan, pled guilty to a felony information filed on January 8, 2014, that charged him with submitting false claims to the U.S. Department of Housing and Urban Development (HUD) in conjunction with grants awarded to him in 2008 and 2009. The grants were administered by the city of St. Johns and the Michigan State Housing Development Authority (MSHDA).
“When used appropriately, HUD grants encourage development and new job opportunities in our local communities,” said U.S. Attorney Miles. “This office will vigorously pursue those who seek to line their own pockets by diverting from their intended purpose scarce grant monies that are funded by the hard-working taxpayers of this district.”
Ortman admitted at his change of plea hearing before United States Magistrate Judge Ellen S. Carmody that in 2008, the cty of St. Johns awarded him a federal grant as part of a Downtown Façade Project for his building located at the corner of North Clinton and East Walker streets. In order to receive the grant, Ortman represented to the city that the façade improvements would cost $416,999 and that the project would ultimately create four permanent jobs for low and moderate-income persons. The grant provided that if the project truly cost that amount, and if Ortman invested $216,999 of his own funds into the project, HUD would fund the remaining cost of $200,000. Ortman admitted at the hearing that he did not invest his own funds as represented and that he submitted false documents to the federal government to make it appear as if his actual costs equaled the projected amount. As a result, he received the full amount of the grant ($200,000), when he should have received less than half of this amount.
Ortman further admitted that he committed fraud in conjunction with a Rental Rehabilitation Grant that the city awarded to him in 2009. The terms of that grant required Ortman to construct apartments for income-qualified individuals in various buildings that he owned in St. Johns. Ortman admitted that he submitted claims for grant payments to the federal government for work that he did not actually complete and that he diverted those grant payments to other business ventures that were in financial trouble. As a result, many of the income-based apartments were never completed. Ortman caused a combined loss of over $200,000 to the federal government in conjunction with the façade and rental rehabilitation grants.
“HUD’s Office of Inspector General, working with the U.S. Attorney’s Office, will relentlessly hunt for predators who, despite their best efforts to conceal their theft, have swindled the taxpayer and hurt Michigan’s neediest families,” said Barry McLaughlin, Special Agent in Charge, HUD-OIG Region V. “Theft of HUD grant funding amounts to stealing from hard-working taxpayers,” added Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “The FBI, in concert with our law enforcement partners, remains dedicated to pursuing those who selfishly misappropriate public funds intended for the public good.”
Ortman is awaiting his sentencing hearing, at which time Ortman will face a maximum term of imprisonment of five years, a fine of up to $250,000, and will be ordered to pay restitution to HUD. The Detroit Office of the U.S. Department of Housing and Urban Development-Office of Inspector General, along with the Lansing Resident Agency of the FBI, investigated the case. The prosecution of the case is being handled by Assistant U.S. Attorney Ronald M. Stella.
“When used appropriately, HUD grants encourage development and new job opportunities in our local communities,” said U.S. Attorney Miles. “This office will vigorously pursue those who seek to line their own pockets by diverting from their intended purpose scarce grant monies that are funded by the hard-working taxpayers of this district.”
Ortman admitted at his change of plea hearing before United States Magistrate Judge Ellen S. Carmody that in 2008, the cty of St. Johns awarded him a federal grant as part of a Downtown Façade Project for his building located at the corner of North Clinton and East Walker streets. In order to receive the grant, Ortman represented to the city that the façade improvements would cost $416,999 and that the project would ultimately create four permanent jobs for low and moderate-income persons. The grant provided that if the project truly cost that amount, and if Ortman invested $216,999 of his own funds into the project, HUD would fund the remaining cost of $200,000. Ortman admitted at the hearing that he did not invest his own funds as represented and that he submitted false documents to the federal government to make it appear as if his actual costs equaled the projected amount. As a result, he received the full amount of the grant ($200,000), when he should have received less than half of this amount.
Ortman further admitted that he committed fraud in conjunction with a Rental Rehabilitation Grant that the city awarded to him in 2009. The terms of that grant required Ortman to construct apartments for income-qualified individuals in various buildings that he owned in St. Johns. Ortman admitted that he submitted claims for grant payments to the federal government for work that he did not actually complete and that he diverted those grant payments to other business ventures that were in financial trouble. As a result, many of the income-based apartments were never completed. Ortman caused a combined loss of over $200,000 to the federal government in conjunction with the façade and rental rehabilitation grants.
“HUD’s Office of Inspector General, working with the U.S. Attorney’s Office, will relentlessly hunt for predators who, despite their best efforts to conceal their theft, have swindled the taxpayer and hurt Michigan’s neediest families,” said Barry McLaughlin, Special Agent in Charge, HUD-OIG Region V. “Theft of HUD grant funding amounts to stealing from hard-working taxpayers,” added Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “The FBI, in concert with our law enforcement partners, remains dedicated to pursuing those who selfishly misappropriate public funds intended for the public good.”
Ortman is awaiting his sentencing hearing, at which time Ortman will face a maximum term of imprisonment of five years, a fine of up to $250,000, and will be ordered to pay restitution to HUD. The Detroit Office of the U.S. Department of Housing and Urban Development-Office of Inspector General, along with the Lansing Resident Agency of the FBI, investigated the case. The prosecution of the case is being handled by Assistant U.S. Attorney Ronald M. Stella.
Man Pleads Guilty to Child Exploitation Charge
CONCORD, NH—Eric Morrison, 22, pled guilty in United States District Court for the District of New Hampshire to one count of sexual exploitation of children, announced United States Attorney John P. Kacavas.
The investigation began in 2013 when the Manchester Police received information from the United States Air Force, Office of Special Investigations, that the defendant, a member of the United States Air Force stationed at Kadena Air Base in Okinawa, Japan, was communicating with Erin Upham, a resident of Manchester. Specifically, the U.S. Air Force Special Agents informed the Manchester Police that the defendant’s communication was of a sexual nature and involved a minor child.
Search warrants were obtained for various electronic items belonging to Morrison and Upham and a forensic examination of the items revealed digital images of a minor child engaged in sexually explicit conduct. On June 19, 2013, a federal grand jury indicted both Morrison and Upham for conspiracy to produce child pornography. Morrison faces a minimum term of 15 years in prison and is scheduled to be sentenced on May 8, 2014.
The charge was the result of an investigation by the United States Air Force, Office of Special Investigations; the Federal Bureau of Investigation; and the Manchester and Derry Police Departments and is being prosecuted under Project Safe Childhood, a nationwide initiative by the U.S. Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case is being prosecuted by Assistant United States Attorney Helen White Fitzgibbon who is the U.S. Attorney’s coordinator for Project Safe Childhood.
The investigation began in 2013 when the Manchester Police received information from the United States Air Force, Office of Special Investigations, that the defendant, a member of the United States Air Force stationed at Kadena Air Base in Okinawa, Japan, was communicating with Erin Upham, a resident of Manchester. Specifically, the U.S. Air Force Special Agents informed the Manchester Police that the defendant’s communication was of a sexual nature and involved a minor child.
Search warrants were obtained for various electronic items belonging to Morrison and Upham and a forensic examination of the items revealed digital images of a minor child engaged in sexually explicit conduct. On June 19, 2013, a federal grand jury indicted both Morrison and Upham for conspiracy to produce child pornography. Morrison faces a minimum term of 15 years in prison and is scheduled to be sentenced on May 8, 2014.
The charge was the result of an investigation by the United States Air Force, Office of Special Investigations; the Federal Bureau of Investigation; and the Manchester and Derry Police Departments and is being prosecuted under Project Safe Childhood, a nationwide initiative by the U.S. Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case is being prosecuted by Assistant United States Attorney Helen White Fitzgibbon who is the U.S. Attorney’s coordinator for Project Safe Childhood.
U.S. Indicts Corporate Audit Director on Securities Fraud Charges for Allegedly Profiting $286,000 from Insider Trading
CHICAGO—A certified public accountant who was involved in the auditing process at a publicly traded company based in Chicago was indicted on federal fraud charges for allegedly engaging in insider trading of the company’s securities that made him an illegal profit of more than $286,000 in 2012. The defendant, Steven M. Dombrowski, who was the director of corporate audit for Allscripts Healthcare Solutions Inc., was charged with 16 counts of securities fraud in an indictment that was returned by a federal grand jury yesterday and announced today.
At the same time, the U.S. Securities and Exchange Commission announced that it filed a civil enforcement action involving the insider trading allegations against Dombrowski yesterday in U.S. District Court in Chicago.
Dombrowski, 49, of Chicago, will be arraigned on the criminal charges on a date yet to be determined in Federal Court.
According to the indictment, Dombrowski misused material, non-public information he knew about Allscripts’ performance for the first quarter of 2012 and purchased put options and engaged in short sales of stock through a trading account in his wife’s maiden name that he controlled, which resulted in illegal profits of approximately $286,211. The indictment seeks forfeiture of that amount from Dombrowski.
Dombrowski and the employees he supervised were responsible for auditing and testing the processes and procedures Allscripts used to compute and report its financial performance. Allscripts provides information technology solutions to the health care industry, and its common stock is traded on the NASDAQ stock market under the symbol MDRX.
Between April 10 and April 28, 2012, a quarterly blackout period was in effect at Allscripts. The blackout prohibited certain employees, including Dombrowski, who were given written notice and who had access to material, non-public information, from engaging in insider trading 15 days before the end of a quarter and ending after the second full business day following the company’s quarterly earnings announcement.
Dombrowski allegedly learned in April 2012 through his employment that Allscripts’ first quarter financial results were going to be less favorable than market expectations when they were publicly announced on April 26, 2012. Throughout April, Dombrowski conducted securities transactions that he designed to be profitable if the price of Allscripts stock declined, including purchasing put options and short selling stock, which he knew was prohibited, the indictment alleges. Allscripts’ stock, in fact, declined when its 2012 first quarter announcement revealed lower sales, less revenue, and lower earnings per share than the first quarter of 2011.
After Allscripts stock declined on and after April 26, 2012, Dombrowski allegedly offset his Allscripts securities positions and profited approximately $286,211 from insider trading, the charges allege.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The SEC cooperated in the investigation.
The government is being represented by Assistant U.S. Attorneys Clifford C. Histed and Paul H. Tzur.
Each count of securities fraud carries a maximum penalty of 20 years in prison and a $5 million fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment 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 beyond a reasonable doubt.
At the same time, the U.S. Securities and Exchange Commission announced that it filed a civil enforcement action involving the insider trading allegations against Dombrowski yesterday in U.S. District Court in Chicago.
Dombrowski, 49, of Chicago, will be arraigned on the criminal charges on a date yet to be determined in Federal Court.
According to the indictment, Dombrowski misused material, non-public information he knew about Allscripts’ performance for the first quarter of 2012 and purchased put options and engaged in short sales of stock through a trading account in his wife’s maiden name that he controlled, which resulted in illegal profits of approximately $286,211. The indictment seeks forfeiture of that amount from Dombrowski.
Dombrowski and the employees he supervised were responsible for auditing and testing the processes and procedures Allscripts used to compute and report its financial performance. Allscripts provides information technology solutions to the health care industry, and its common stock is traded on the NASDAQ stock market under the symbol MDRX.
Between April 10 and April 28, 2012, a quarterly blackout period was in effect at Allscripts. The blackout prohibited certain employees, including Dombrowski, who were given written notice and who had access to material, non-public information, from engaging in insider trading 15 days before the end of a quarter and ending after the second full business day following the company’s quarterly earnings announcement.
Dombrowski allegedly learned in April 2012 through his employment that Allscripts’ first quarter financial results were going to be less favorable than market expectations when they were publicly announced on April 26, 2012. Throughout April, Dombrowski conducted securities transactions that he designed to be profitable if the price of Allscripts stock declined, including purchasing put options and short selling stock, which he knew was prohibited, the indictment alleges. Allscripts’ stock, in fact, declined when its 2012 first quarter announcement revealed lower sales, less revenue, and lower earnings per share than the first quarter of 2011.
After Allscripts stock declined on and after April 26, 2012, Dombrowski allegedly offset his Allscripts securities positions and profited approximately $286,211 from insider trading, the charges allege.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The SEC cooperated in the investigation.
The government is being represented by Assistant U.S. Attorneys Clifford C. Histed and Paul H. Tzur.
Each count of securities fraud carries a maximum penalty of 20 years in prison and a $5 million fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment 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 beyond a reasonable doubt.
Raley’s Former Director of Advertising Sentenced for Defrauding His Former Employer
SACRAMENTO, CA—David John Magana, 47, of Newcastle, was sentenced today by United States District Judge John A. Mendez to three years and 11 months in prison and ordered to pay more than $2.9 million in restitution for defrauding Raley’s Family of Fine Stores of more than $3 million, United States Attorney Benjamin B. Wagner announced.
Magana is the third and last defendant to be sentenced in this case. Two other defendants pleaded guilty and were sentenced on December 3, 2013. Jason Allen Smith, 47, of Foresthill, was sentenced to three years and one month in prison and ordered to pay $1.6 million in restitution. Martin Stewart Cullenward, 60, of Cool, was sentenced to three years and five months in prison and ordered to pay $1.4 million in restitution.
According to court documents, from at least as early as May 14, 2007 until September 28, 2010, Magana conspired with Smith and Cullenward to devise several schemes to defraud Raley’s. In one scheme, Magana demanded that a printing company and a paper company pay Cullenward unnecessary commissions in order to keep doing business with Raley’s. Given Magana’s position as director of Advertising, both companies agreed to pay Cullenward, as long as Raley’s reimbursed them. The unnecessary commissions were disguised as additional charges within their regular invoices to Raley’s. Magana approved for payment all of the inflated invoices, and Cullenward paid Magana a kickback after he received the “commissions.”
Magana and Cullenward sold significant quantities of Raley’s paper inventory to third parties at a discounted rate. Much of that paper was stored in a warehouse managed by a logistics company. As Raley’s director of Advertising, Magana had access to the paper in the warehouse. Magana, Smith, and Cullenward advertised the discounted paper by word of mouth and through the Internet and kept most of the proceeds. They falsely reported to Raley’s that the paper had been used in the normal course of business.
Magana and Smith used a company Smith had created legally, Advantage Paper Inc., to supply paper to Raley’s at an inflated price. They met from time to time to determine the ultimate amount Raley’s would pay for paper. The proceeds from the inflated paper purchases were deposited into Advantage Paper’s bank accounts and later split with Magana. At times, Smith paid Magana a portion of the fraud proceeds in cash. In other instances, he paid for bills on Magana’s behalf.
“Mr. Magana, along with his co-conspirators, carefully crafted a scheme to take control of millions of dollars of company money for personal gain,” said IRS-Criminal Investigation Acting Special Agent in Charge Shannon Hodges. “Not only did he defraud his employer, but the everyday customer. Those who line their pockets with profits from these schemes should know they will not go undetected and will be held accountable.”
“In this particular case, Magana intentionally abused his trusted position without concern for the potentially catastrophic impact of his actions on the company, its employees, and customers,” said Special Agent in Charge Monica M. Miller of the Sacramento Division of the FBI. “Our agents continue to identify and investigate greed‑based crimes like these to ensure that those who take advantage of their positions and the public will face justice.”
“Raley’s is deeply rooted in family. For years, David Magana was a member of that family,” said Kevin Konkel, Raley’s senior vice president, operations. “The criminal actions he took against Raley’s, at the same time our company battled a harsh economic reality, deeply hurt us. Simply put, David wasn’t there for his Raley’s family. Instead, he was taking advantage of us.”
This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation. Assistant United States Attorney Michael M. Beckwith is prosecuting the case.
Magana is the third and last defendant to be sentenced in this case. Two other defendants pleaded guilty and were sentenced on December 3, 2013. Jason Allen Smith, 47, of Foresthill, was sentenced to three years and one month in prison and ordered to pay $1.6 million in restitution. Martin Stewart Cullenward, 60, of Cool, was sentenced to three years and five months in prison and ordered to pay $1.4 million in restitution.
According to court documents, from at least as early as May 14, 2007 until September 28, 2010, Magana conspired with Smith and Cullenward to devise several schemes to defraud Raley’s. In one scheme, Magana demanded that a printing company and a paper company pay Cullenward unnecessary commissions in order to keep doing business with Raley’s. Given Magana’s position as director of Advertising, both companies agreed to pay Cullenward, as long as Raley’s reimbursed them. The unnecessary commissions were disguised as additional charges within their regular invoices to Raley’s. Magana approved for payment all of the inflated invoices, and Cullenward paid Magana a kickback after he received the “commissions.”
Magana and Cullenward sold significant quantities of Raley’s paper inventory to third parties at a discounted rate. Much of that paper was stored in a warehouse managed by a logistics company. As Raley’s director of Advertising, Magana had access to the paper in the warehouse. Magana, Smith, and Cullenward advertised the discounted paper by word of mouth and through the Internet and kept most of the proceeds. They falsely reported to Raley’s that the paper had been used in the normal course of business.
Magana and Smith used a company Smith had created legally, Advantage Paper Inc., to supply paper to Raley’s at an inflated price. They met from time to time to determine the ultimate amount Raley’s would pay for paper. The proceeds from the inflated paper purchases were deposited into Advantage Paper’s bank accounts and later split with Magana. At times, Smith paid Magana a portion of the fraud proceeds in cash. In other instances, he paid for bills on Magana’s behalf.
“Mr. Magana, along with his co-conspirators, carefully crafted a scheme to take control of millions of dollars of company money for personal gain,” said IRS-Criminal Investigation Acting Special Agent in Charge Shannon Hodges. “Not only did he defraud his employer, but the everyday customer. Those who line their pockets with profits from these schemes should know they will not go undetected and will be held accountable.”
“In this particular case, Magana intentionally abused his trusted position without concern for the potentially catastrophic impact of his actions on the company, its employees, and customers,” said Special Agent in Charge Monica M. Miller of the Sacramento Division of the FBI. “Our agents continue to identify and investigate greed‑based crimes like these to ensure that those who take advantage of their positions and the public will face justice.”
“Raley’s is deeply rooted in family. For years, David Magana was a member of that family,” said Kevin Konkel, Raley’s senior vice president, operations. “The criminal actions he took against Raley’s, at the same time our company battled a harsh economic reality, deeply hurt us. Simply put, David wasn’t there for his Raley’s family. Instead, he was taking advantage of us.”
This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation. Assistant United States Attorney Michael M. Beckwith is prosecuting the case.
Canadian Fugitive Sentenced in Oregon in Eco-Terrorism Case Involving Bureau of Land Management in Lassen County
SACRAMENTO, CA—Yesterday, eco–terrorist and longtime fugitive Rebecca Jeanette Rubin was sentenced to five years in prison for three indictments in three federal districts. On November 29, 2012, Rubin, a Canadian citizen, surrendered herself to the FBI at the international border in Blaine, Washington, to face her federal charges in Oregon, Colorado, and the Eastern District of California. United States District Judge Ann Aiken in Portland, Oregon sentenced Rubin in the District of Oregon and ordered her to pay $13.9 million in restitution. Rubin was charged in three Animal Liberation Front arson case spanning the Western States; one was in Oregon, and the other two were transferred to Oregon.
On April 6, 2006, Rubin was indicted in the Eastern District of California on charges of conspiracy, arson, and using a destructive device in the October 15, 2001 fire at the BLM Litchfield Wild Horse and Burro Corrals near Susanville. According to court documents, the conspirators used five-gallon plastic buckets containing a mixture of gasoline and heavy petroleum distillate and sophisticated delayed igniters with redundant dual timers. The igniter was placed between matches surrounding a road flare. The road flare was on a lid above the bucket of fuel and served to ignite it. BLM suffered losses of $207,500, including destruction of a 135’ by 35’ barn.
This case, which was transferred to the District of Oregon for plea and sentencing, was investigated by the FBI and the ATF and prosecuted by former Assistant U.S. Attorney R. Steven Lapham.
On May 18, 2006, in the District of Oregon, Rubin was charged with being part of a conspiracy with 12 other people involving 20 acts of arson, spanning five years (1996-2001) and five Western states, committed by self-proclaimed members of the Earth Liberation Front (ELF) and the Animal Liberation Front (ALF). The Colorado federal indictment charged Rubin with eight counts of arson in the October 19, 1998 fires that destroyed two lodges and other buildings at the Vail ski area in Eagle County, Colorado.
In August 2007, 10 other defendants received prison terms ranging from 13 years to three years after pleading guilty in U.S. District Court in Eugene to conspiracy and multiple counts of arson. Several other defendants remain at large.
On April 6, 2006, Rubin was indicted in the Eastern District of California on charges of conspiracy, arson, and using a destructive device in the October 15, 2001 fire at the BLM Litchfield Wild Horse and Burro Corrals near Susanville. According to court documents, the conspirators used five-gallon plastic buckets containing a mixture of gasoline and heavy petroleum distillate and sophisticated delayed igniters with redundant dual timers. The igniter was placed between matches surrounding a road flare. The road flare was on a lid above the bucket of fuel and served to ignite it. BLM suffered losses of $207,500, including destruction of a 135’ by 35’ barn.
This case, which was transferred to the District of Oregon for plea and sentencing, was investigated by the FBI and the ATF and prosecuted by former Assistant U.S. Attorney R. Steven Lapham.
On May 18, 2006, in the District of Oregon, Rubin was charged with being part of a conspiracy with 12 other people involving 20 acts of arson, spanning five years (1996-2001) and five Western states, committed by self-proclaimed members of the Earth Liberation Front (ELF) and the Animal Liberation Front (ALF). The Colorado federal indictment charged Rubin with eight counts of arson in the October 19, 1998 fires that destroyed two lodges and other buildings at the Vail ski area in Eagle County, Colorado.
In August 2007, 10 other defendants received prison terms ranging from 13 years to three years after pleading guilty in U.S. District Court in Eugene to conspiracy and multiple counts of arson. Several other defendants remain at large.
Fort Mojave Man Sentenced to 35 Years in Prison for Second-Degree Murder, Child Abuse, and Assault
PHOENIX, AZ—On January 27, 2014, Matthew Smith, 31, of Mohave Valley, Arizona, was sentenced by U.S. District Judge Paul G. Rosenblatt to 35 years in federal prison followed by five years of supervised release. The court also ordered Smith to pay $250,193 in restitution. Smith pleaded guilty on August 15, 2013, to second-degree murder, child abuse, and assault resulting in serious bodily injury.
Between July 8, 2012 and July 11, 2012, on the Fort Mojave Indian reservation, Smith punched his stepchild in the abdomen and assaulted the child multiple times. The child died due to multiple blunt force traumas and other injuries. During the same period of time, Smith also assaulted another of his stepchildren and left the child for approximately two days without food or water. The second child was hospitalized for a significant period of time and survived but sustained serious permanent injuries. In investigating the death and assault to Smith’s two stepchildren, law enforcement officers observed that another of Smith’s children had a visibly distorted arm. Investigators determined that, during the same July time period as the homicide and assault, Smith had assaulted this third child, who suffered a broken arm.
The investigation preceding the indictment was conducted by the Federal Bureau of Investigation and the Fort Mojave Police Department. The prosecution was handled by Jennifer E. Green and Sharon K. Sexton, Assistant U.S. Attorneys, District of Arizona, Phoenix.
Between July 8, 2012 and July 11, 2012, on the Fort Mojave Indian reservation, Smith punched his stepchild in the abdomen and assaulted the child multiple times. The child died due to multiple blunt force traumas and other injuries. During the same period of time, Smith also assaulted another of his stepchildren and left the child for approximately two days without food or water. The second child was hospitalized for a significant period of time and survived but sustained serious permanent injuries. In investigating the death and assault to Smith’s two stepchildren, law enforcement officers observed that another of Smith’s children had a visibly distorted arm. Investigators determined that, during the same July time period as the homicide and assault, Smith had assaulted this third child, who suffered a broken arm.
The investigation preceding the indictment was conducted by the Federal Bureau of Investigation and the Fort Mojave Police Department. The prosecution was handled by Jennifer E. Green and Sharon K. Sexton, Assistant U.S. Attorneys, District of Arizona, Phoenix.
Member of 10th Street Gang Sentenced on RICO Conspiracy Charge
BUFFALO, NY—U.S. Attorney William J. Hochul, Jr. announced today that Melvin Medina, 29, of Buffalo, New York, who was convicted of Racketeer Influenced Corrupt Organizations (RICO) conspiracy, was sentenced to 78 months in prison by U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorney Joseph M. Tripi, who is handling the case, stated that the defendant was a member of the 10th Street Gang. Between 2000 and 2010, Medina possessed firearms and sold crack cocaine and marijuana in the territory controlled by the 10th Street Gang as a part of his participation in the gang’s activities.
The defendant is among 44 10th Street Gang members and associates charged in this case. A total of 28 have been convicted.
The sentencing is the culmination of an investigation on the part of investigators of the New York State Police, under the direction of Major Michael Cerretto; the Buffalo Police Department, under the direction of Commission Daniel Derenda; and special agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Brian P. Boetig.
Assistant U.S. Attorney Joseph M. Tripi, who is handling the case, stated that the defendant was a member of the 10th Street Gang. Between 2000 and 2010, Medina possessed firearms and sold crack cocaine and marijuana in the territory controlled by the 10th Street Gang as a part of his participation in the gang’s activities.
The defendant is among 44 10th Street Gang members and associates charged in this case. A total of 28 have been convicted.
The sentencing is the culmination of an investigation on the part of investigators of the New York State Police, under the direction of Major Michael Cerretto; the Buffalo Police Department, under the direction of Commission Daniel Derenda; and special agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Brian P. Boetig.
Hudson County Man Sentenced to More Than Eight Years in Prison for Sexually Abusing Sleeping Woman on Domestic Flight
NEWARK—Hudson County, N.J., man was sentenced today to 97 months in prison for sexually abusing a sleeping woman aboard a flight from Phoenix to Newark Liberty International Airport in August 2012, U.S. Attorney Paul J. Fishman announced.
Bawer Aksal, 49, of North Bergen, New Jersey, was previously convicted of one count of sexual abuse and one count of abusive sexual contact following a five-day trial before U.S. District Judge Jose L. Linares. Judge Linares imposed the sentence today in Newark federal court.
According to documents filed in this case and the evidence presented at trial:
Aksal was a passenger on a United Airlines flight from Phoenix to Newark on August 20, 2012, sitting in the middle seat in a row of three. Neither Aksal, the victim seated by the window, nor the passenger in the aisle seat knew one other. Before the plane took off, the victim texted a friend complaining about Aksal’s arm encroaching into her seating area.
About one hour before landing, the aisle passenger looked to his right and saw Aksal with his body against the victim’s, his arms around her back and beneath a sweater draped over her. The victim awoke to find Aksal’s hands inside her shirt and shorts and struggled out of his grasp. The aisle passenger observed her jolting awake, and he and the victim both gathered their belongings and headed to the back of the plane to report what happened to the flight attendants.
Aksal was detained upon arrival in Newark and arrested by FBI agents.
In addition to the prison term, Judge Linares sentenced Aksal to serve three years of supervised release and ordered him to pay restitution to the victim for her medical expenses. Aksal is required to register as a sex offender.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and the Port Authority Police Department, under the direction of Superintendent Michael A. Fedorko, with the investigation.
The government is represented by Assistant U.S. Attorneys Danielle Alfonzo Walsman and Robert Frazer of the U.S. Attorney’s Office Criminal Division in Newark.
The federal government has exclusive jurisdiction over all sexual abuse cases that occur in American airplanes, as such events are outside the jurisdiction of any state.
Bawer Aksal, 49, of North Bergen, New Jersey, was previously convicted of one count of sexual abuse and one count of abusive sexual contact following a five-day trial before U.S. District Judge Jose L. Linares. Judge Linares imposed the sentence today in Newark federal court.
According to documents filed in this case and the evidence presented at trial:
Aksal was a passenger on a United Airlines flight from Phoenix to Newark on August 20, 2012, sitting in the middle seat in a row of three. Neither Aksal, the victim seated by the window, nor the passenger in the aisle seat knew one other. Before the plane took off, the victim texted a friend complaining about Aksal’s arm encroaching into her seating area.
About one hour before landing, the aisle passenger looked to his right and saw Aksal with his body against the victim’s, his arms around her back and beneath a sweater draped over her. The victim awoke to find Aksal’s hands inside her shirt and shorts and struggled out of his grasp. The aisle passenger observed her jolting awake, and he and the victim both gathered their belongings and headed to the back of the plane to report what happened to the flight attendants.
Aksal was detained upon arrival in Newark and arrested by FBI agents.
In addition to the prison term, Judge Linares sentenced Aksal to serve three years of supervised release and ordered him to pay restitution to the victim for her medical expenses. Aksal is required to register as a sex offender.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and the Port Authority Police Department, under the direction of Superintendent Michael A. Fedorko, with the investigation.
The government is represented by Assistant U.S. Attorneys Danielle Alfonzo Walsman and Robert Frazer of the U.S. Attorney’s Office Criminal Division in Newark.
The federal government has exclusive jurisdiction over all sexual abuse cases that occur in American airplanes, as such events are outside the jurisdiction of any state.
Morris County Man Convicted of Armed Bank Robbery
NEWARK—A Morris County, New Jersey man has been found guilty of robbing a bank at gunpoint, U.S. Attorney Paul J. Fishman announced today.
Rahman Fulton, 35, of Randolph, New Jersey, was convicted by a jury January 28, 2014, after a two-week trial before U.S. District Judge Stanley R. Chesler in Newark federal court. The jury deliberated three hours before returning guilty verdicts on one count of bank robbery and one count of using a firearm in furtherance of the bank robbery.
According to documents filed in this case and the evidence at trial:
Fulton was charged with robbing the PNC bank in Randolph May 25, 2012. Fulton entered the bank wearing a black cloth mask covering his head and face and holding a handgun. He demanded and received money from a bank teller. The bank teller slipped a GPS tracking device into the money she handed over to Fulton. The GPS data placed the tracking device in Fulton’s bedroom minutes after the robbery. He later lied to the police about his whereabouts during the robbery and made other incriminating statements to his girlfriend and girlfriend’s sister, including a call just 10 minutes after the robbery to someone that worked across the street from the bank asking them if they had heard about the robbery.
Fulton faces a maximum potential penalty of 20 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense on the bank robbery conviction and a mandatory consecutive seven years in prison on the weapons conviction. Sentencing is scheduled for May 13, 2014.
U.S. Attorney Paul J. Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to the charge. He also thanked the Randolph Township Police Department and Morris County Prosecutor’s Office for their contributions to the case.
The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro and Elizabeth Harris of the U.S. Attorney’s Office General Crimes Unit in Newark.
Rahman Fulton, 35, of Randolph, New Jersey, was convicted by a jury January 28, 2014, after a two-week trial before U.S. District Judge Stanley R. Chesler in Newark federal court. The jury deliberated three hours before returning guilty verdicts on one count of bank robbery and one count of using a firearm in furtherance of the bank robbery.
According to documents filed in this case and the evidence at trial:
Fulton was charged with robbing the PNC bank in Randolph May 25, 2012. Fulton entered the bank wearing a black cloth mask covering his head and face and holding a handgun. He demanded and received money from a bank teller. The bank teller slipped a GPS tracking device into the money she handed over to Fulton. The GPS data placed the tracking device in Fulton’s bedroom minutes after the robbery. He later lied to the police about his whereabouts during the robbery and made other incriminating statements to his girlfriend and girlfriend’s sister, including a call just 10 minutes after the robbery to someone that worked across the street from the bank asking them if they had heard about the robbery.
Fulton faces a maximum potential penalty of 20 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense on the bank robbery conviction and a mandatory consecutive seven years in prison on the weapons conviction. Sentencing is scheduled for May 13, 2014.
U.S. Attorney Paul J. Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to the charge. He also thanked the Randolph Township Police Department and Morris County Prosecutor’s Office for their contributions to the case.
The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro and Elizabeth Harris of the U.S. Attorney’s Office General Crimes Unit in Newark.
Coin Dealer Formerly from Hackensack Admits Filing a False Federal Income Tax Return
NEWARK, NJ—A former Hackensack, New Jersey dealer in ancient coins today admitted filing a false federal income tax return for the 2006 tax year, U.S. Attorney Paul J. Fishman announced.
Gantcho Zagorski, 60, pleaded guilty today before U.S. District Judge Esther Salas in Newark federal court to one count of aiding and assisting in the filing of a false tax return.
According to documents filed in this case and statements made in court:
Zagorski owned and operated a business that sold ancient coins to domestic and international customers, primarily on the online auction site eBay, from his residence in Hackensack, New Jersey. Zagorski; his wife; and, at times, his daughter operated the coin-selling business under the names “Diana Coins,” “Paganecoins,” and “Diana Coins LLC.”
Zagorski admitted he provided his tax preparer with false and fraudulent information by substantially understating the amount of gross receipts and sales earned by his business and then caused to be filed with the IRS a false federal income tax return for 2006. Zagorski admitted the 2006 tax return claimed gross receipts and sales of $310,901 when, in fact, the business had generated more than $600,000 in gross receipts and sales for that year.
The tax count to which Zagorski pleaded guilty carries a maximum potential penalty of three years in prison and a $250,000 fine. Sentencing is scheduled for May 12, 2014.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, Newark Field Office; Department of Homeland Security, Homeland Security Investigations, New York, under the direction of Special Agent in Charge James T. Hayes, Jr.; and the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorneys Maureen Nakly and Leslie Schwartz of the U.S. Attorney’s Office in Newark.
Gantcho Zagorski, 60, pleaded guilty today before U.S. District Judge Esther Salas in Newark federal court to one count of aiding and assisting in the filing of a false tax return.
According to documents filed in this case and statements made in court:
Zagorski owned and operated a business that sold ancient coins to domestic and international customers, primarily on the online auction site eBay, from his residence in Hackensack, New Jersey. Zagorski; his wife; and, at times, his daughter operated the coin-selling business under the names “Diana Coins,” “Paganecoins,” and “Diana Coins LLC.”
Zagorski admitted he provided his tax preparer with false and fraudulent information by substantially understating the amount of gross receipts and sales earned by his business and then caused to be filed with the IRS a false federal income tax return for 2006. Zagorski admitted the 2006 tax return claimed gross receipts and sales of $310,901 when, in fact, the business had generated more than $600,000 in gross receipts and sales for that year.
The tax count to which Zagorski pleaded guilty carries a maximum potential penalty of three years in prison and a $250,000 fine. Sentencing is scheduled for May 12, 2014.
U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, Newark Field Office; Department of Homeland Security, Homeland Security Investigations, New York, under the direction of Special Agent in Charge James T. Hayes, Jr.; and the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorneys Maureen Nakly and Leslie Schwartz of the U.S. Attorney’s Office in Newark.
Wednesday, January 29, 2014
Ho-Hum Bandit Pleads Guilty to Seven Bank Robberies
United States Attorney Laura E. Duffy announced that Adam Lynch pled guilty this afternoon in federal court in San Diego to seven counts of bank robbery. Lynch, dubbed the “Ho Hum Bandit” for his reportedly nonchalant manner in robbing banks, committed a string of bank robberies in San Diego beginning in February 2010. Lynch entered his guilty plea before U.S. Magistrate Judge David H. Bartick.
As described in his plea agreement, Lynch committed his first bank robbery on February 27, 2010, robbing a U.S. Bank in San Diego. He thereafter went on a spree of robberies in the area, committing his seventh on June 5, 2010. He robbed the same bank branch twice within the space of a week. Typically, Lynch would commit the robbery by walking up to the counter, passing a note to the teller, identifying himself as being armed, and demanding cash. He did not physically injure any of the bank personnel. Lynch’s robberies in San Diego were the start, but not the end, of his career. On May 6, 2013, in Denver, Lynch was convicted of four counts of bank robbery, based on robberies he committed in the Denver area in August 2010, December 2010, and March 2011; as well as a robbery he committed in Cheyenne, Wyoming, in November 2010. For those offenses, on April 19, 2013, Lynch was sentenced by a federal judge to 64 months in prison.
Lynch has been in custody since his arrest on April 21, 2011, and is set for sentencing on April 28, 2014, before U.S. District Judge Roger T. Benitez.
Defendant in Case Number: 14-CR-0182-BEN
Adam Lynch
Summary of Charges
Bank robbery in violation of Title 18, United States Code, Section 2113(a)
Maximum penalties per count: 20 years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment.
Investigating Agency
Federal Bureau of Investigation
As described in his plea agreement, Lynch committed his first bank robbery on February 27, 2010, robbing a U.S. Bank in San Diego. He thereafter went on a spree of robberies in the area, committing his seventh on June 5, 2010. He robbed the same bank branch twice within the space of a week. Typically, Lynch would commit the robbery by walking up to the counter, passing a note to the teller, identifying himself as being armed, and demanding cash. He did not physically injure any of the bank personnel. Lynch’s robberies in San Diego were the start, but not the end, of his career. On May 6, 2013, in Denver, Lynch was convicted of four counts of bank robbery, based on robberies he committed in the Denver area in August 2010, December 2010, and March 2011; as well as a robbery he committed in Cheyenne, Wyoming, in November 2010. For those offenses, on April 19, 2013, Lynch was sentenced by a federal judge to 64 months in prison.
Lynch has been in custody since his arrest on April 21, 2011, and is set for sentencing on April 28, 2014, before U.S. District Judge Roger T. Benitez.
Defendant in Case Number: 14-CR-0182-BEN
Adam Lynch
Summary of Charges
Bank robbery in violation of Title 18, United States Code, Section 2113(a)
Maximum penalties per count: 20 years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment.
Investigating Agency
Federal Bureau of Investigation
Pastor Sentenced to Federal Prison for Wire Fraud in Connection with $5 Million Ponzi Scheme
DENVER—Pastor Charles Lawrence Kennedy, Jr., age 71, of Tampa, Florida, was sentenced last week by U.S. District Court Judge Christine M. Arguello to serve one year and a day in federal prison for one count of wire fraud, federal law enforcement announced. Following his prison sentence, Kennedy was ordered to serve three years on supervised release. He was also ordered to pay restitution of approximately $315,000 to the victims of his crime. Kennedy appeared at the sentencing hearing free on bond and was ordered to report to a facility designated by the U.S. Bureau of Prisons on a certain date.
Kennedy was indicted by a federal grand jury in Denver on March 22, 2012, along with co-defendants Stanley Wayne Anderson of Arvada, Colorado, and Edwin Alexander Smith of Denver, Colorado. Smith pled guilty to one count of wire fraud on August 27, 2013. Smith is scheduled to be sentenced by Judge Arguello on February 4, 2014. Anderson has a change of plea hearing scheduled for February 6, 2014.
According to the facts contained in the indictment, as well as the stipulated facts contained in the plea agreement, beginning in October 2005 and continuing through December 2008, Anderson, Smith, and Kennedy, together with each other, and aiding and abetting other persons known and unknown to the grand jury, devised a scheme to defraud investors.
Anderson and Smith resided in Colorado and conducted business through CFO-5 LLC and Trinity International Enterprises Inc, two companies they controlled. Trinity had no business operations apart from soliciting investment funds related to an investment program. Anderson was the chairman and chief executive officer of CFO-5 and Trinity. Smith was the secretary of CFO-5 and president of Trinity. Kennedy resided in Florida, where he worked as a pastor and conducted business through a company identified as Keys to Life Corporation. Kennedy, through a formal partnership with Trinity, assisted Anderson and Smith in soliciting investment funds.
They solicited investors’ funds for use in an investment program where significant profits would supposedly be generated through the trading of European medium term notes (MTN program), when, in fact, the MTN program did not exist. Furthermore, they represented that their MTN program would pay nearly immediate returns in amounts ranging from 200 to 1000 percent.
They raised approximately $5 million from approximately 100 investors nationwide over the course of the scheme. The investors’ funds were not used to trade in financial instruments but were instead misappropriated by Anderson, Smith, and Kennedy for unauthorized uses. Investors, with the exception of those who received Ponzi scheme-like payments (money taken from one investor to compensate another) lost their total investments. Anderson and Smith generally commingled and deposited investors’ funds into bank accounts controlled by Anderson and Smith.
Kennedy began soliciting investments in December 2005 from fellow pastors and members of their congregations through his company Keys to Life Corporation and falsely promised that for every $1,000 invested, the minimum return would be $1,000,000, which would be paid within 90 days. From December 2005 through April 2006, Kennedy collected $460,000 from nine investors and forwarded only $145,000 to Trinity for use in the investment pool and as a result has agreed to pay $315,000 in restitution. Kennedy in fact took a portion of investor funds for his own personal benefit.
“When a person abuses his position of trust to take fraudulent financial advantage of the people who trust him, he will face criminal consequences,” said U.S. Attorney John Walsh. “Pastor Kennedy will spend a year of his life in prison to reflect on his criminal conduct.”
“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,” said Stephen Boyd, Special Agent in Charge for IRS-Criminal Investigation, Denver Field Office. “Those individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable.”
“The investigation of investment fraud is an FBI priority,” said FBI Denver Division Special Agent in Charge Thomas P. Ravenelle. “We are confident the outcome of this case will deter others who seek to defraud innocent investors.”
“The defendants’ position of trust as a Religious Leader gave him the opportunity to prey on vulnerable victims causing them emotional and financial harm,” said Adam P. Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division. “It is important we stop this victimization and bring these perpetrators to justice.”
This case was investigated by the Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service.
This case is being prosecuted by Assistant U.S. Attorney Timothy Neff.
Kennedy was indicted by a federal grand jury in Denver on March 22, 2012, along with co-defendants Stanley Wayne Anderson of Arvada, Colorado, and Edwin Alexander Smith of Denver, Colorado. Smith pled guilty to one count of wire fraud on August 27, 2013. Smith is scheduled to be sentenced by Judge Arguello on February 4, 2014. Anderson has a change of plea hearing scheduled for February 6, 2014.
According to the facts contained in the indictment, as well as the stipulated facts contained in the plea agreement, beginning in October 2005 and continuing through December 2008, Anderson, Smith, and Kennedy, together with each other, and aiding and abetting other persons known and unknown to the grand jury, devised a scheme to defraud investors.
Anderson and Smith resided in Colorado and conducted business through CFO-5 LLC and Trinity International Enterprises Inc, two companies they controlled. Trinity had no business operations apart from soliciting investment funds related to an investment program. Anderson was the chairman and chief executive officer of CFO-5 and Trinity. Smith was the secretary of CFO-5 and president of Trinity. Kennedy resided in Florida, where he worked as a pastor and conducted business through a company identified as Keys to Life Corporation. Kennedy, through a formal partnership with Trinity, assisted Anderson and Smith in soliciting investment funds.
They solicited investors’ funds for use in an investment program where significant profits would supposedly be generated through the trading of European medium term notes (MTN program), when, in fact, the MTN program did not exist. Furthermore, they represented that their MTN program would pay nearly immediate returns in amounts ranging from 200 to 1000 percent.
They raised approximately $5 million from approximately 100 investors nationwide over the course of the scheme. The investors’ funds were not used to trade in financial instruments but were instead misappropriated by Anderson, Smith, and Kennedy for unauthorized uses. Investors, with the exception of those who received Ponzi scheme-like payments (money taken from one investor to compensate another) lost their total investments. Anderson and Smith generally commingled and deposited investors’ funds into bank accounts controlled by Anderson and Smith.
Kennedy began soliciting investments in December 2005 from fellow pastors and members of their congregations through his company Keys to Life Corporation and falsely promised that for every $1,000 invested, the minimum return would be $1,000,000, which would be paid within 90 days. From December 2005 through April 2006, Kennedy collected $460,000 from nine investors and forwarded only $145,000 to Trinity for use in the investment pool and as a result has agreed to pay $315,000 in restitution. Kennedy in fact took a portion of investor funds for his own personal benefit.
“When a person abuses his position of trust to take fraudulent financial advantage of the people who trust him, he will face criminal consequences,” said U.S. Attorney John Walsh. “Pastor Kennedy will spend a year of his life in prison to reflect on his criminal conduct.”
“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,” said Stephen Boyd, Special Agent in Charge for IRS-Criminal Investigation, Denver Field Office. “Those individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable.”
“The investigation of investment fraud is an FBI priority,” said FBI Denver Division Special Agent in Charge Thomas P. Ravenelle. “We are confident the outcome of this case will deter others who seek to defraud innocent investors.”
“The defendants’ position of trust as a Religious Leader gave him the opportunity to prey on vulnerable victims causing them emotional and financial harm,” said Adam P. Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division. “It is important we stop this victimization and bring these perpetrators to justice.”
This case was investigated by the Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service.
This case is being prosecuted by Assistant U.S. Attorney Timothy Neff.
Long Island Couple Involved in Decade-Long Mortgage Fraud Scheme in Bridgeport Sentenced to Prison
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that Winston Shillingford, 56, and his wife, Marleen Shillingford, 47, of Nesconset, New York, were sentenced today by U.S. District Judge Alvin W. Thompson in Hartford to prison terms of 48 months and 36 months, respectively, for operating a multi-million-dollar mortgage fraud scheme that involved more than 40 properties in Bridgeport, Connecticut. Both defendants will serve three years of supervised upon their release from prison.
According to court documents and statements made in court, the Shillingfords were involved in the operation of Waikele Properties Corp., a real estate company with offices in Bridgeport and Garden City, New York. From approximately 2001 to August 2011, the Shillingfords, Robert Ilunga, and others conspired to obtain fraudulent mortgages for the purchase of more than 40 multi-family properties in Bridgeport. As part of the scheme, the Shillingfords and their co-conspirators purchased existing multi-family houses and vacant parcels of land and erected new houses on them to sell. The co-conspirators recruited individuals to purchase the properties, acted as the buyers’ real estate agent, and assisted the buyers in applying for residential mortgage loans to purchase the houses. The co-conspirators then prepared loan applications for the buyers that included fraudulent information concerning, among other things, the buyers’ employment, income, assets, and liabilities; previous property ownership; and intention to make the properties their primary residences. The co-conspirators also provided fraudulent supporting documentation with the loan applications, including false letters from fictitious employers, false earnings statements, and fraudulent bank records.
After the loans were approved, the illicit proceeds of the scheme were wired into the Waikele Properties bank account and then transferred to members of the conspiracy. Some of the proceeds also were used to continue the mortgage fraud scheme.
Contrary to the representations made on the loan applications, several straw purchasers never occupied the houses as their primary residences and subsequently defaulted on the loans.
The parties have agreed that victim financial institutions suffered losses of between $2.5 million and $7 million as a result of this scheme. A restitution order will be issued after further court proceedings.
In October 2011, Winston and Marleen Shillingford each pleaded guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering.
Robert Ilunga, of Naugatuck, pleaded guilty to the same charges and is scheduled to be sentenced on January 31.
This investigation is being conducted by the Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, the U.S. Department of Housing and Urban Development’s Office of Inspector General, and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
This case is being prosecuted by Assistant U.S. Attorneys Douglas P. Morabito and David T. Huang
According to court documents and statements made in court, the Shillingfords were involved in the operation of Waikele Properties Corp., a real estate company with offices in Bridgeport and Garden City, New York. From approximately 2001 to August 2011, the Shillingfords, Robert Ilunga, and others conspired to obtain fraudulent mortgages for the purchase of more than 40 multi-family properties in Bridgeport. As part of the scheme, the Shillingfords and their co-conspirators purchased existing multi-family houses and vacant parcels of land and erected new houses on them to sell. The co-conspirators recruited individuals to purchase the properties, acted as the buyers’ real estate agent, and assisted the buyers in applying for residential mortgage loans to purchase the houses. The co-conspirators then prepared loan applications for the buyers that included fraudulent information concerning, among other things, the buyers’ employment, income, assets, and liabilities; previous property ownership; and intention to make the properties their primary residences. The co-conspirators also provided fraudulent supporting documentation with the loan applications, including false letters from fictitious employers, false earnings statements, and fraudulent bank records.
After the loans were approved, the illicit proceeds of the scheme were wired into the Waikele Properties bank account and then transferred to members of the conspiracy. Some of the proceeds also were used to continue the mortgage fraud scheme.
Contrary to the representations made on the loan applications, several straw purchasers never occupied the houses as their primary residences and subsequently defaulted on the loans.
The parties have agreed that victim financial institutions suffered losses of between $2.5 million and $7 million as a result of this scheme. A restitution order will be issued after further court proceedings.
In October 2011, Winston and Marleen Shillingford each pleaded guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering.
Robert Ilunga, of Naugatuck, pleaded guilty to the same charges and is scheduled to be sentenced on January 31.
This investigation is being conducted by the Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, the U.S. Department of Housing and Urban Development’s Office of Inspector General, and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
This case is being prosecuted by Assistant U.S. Attorneys Douglas P. Morabito and David T. Huang
Branford Man Sentenced to Four Years in Prison for Defrauding Investors of More Than $5 Million
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that Juan Jose Alvarez de Lugo Azpurua, 54, of Branford, was sentenced today by Senior U.S. District Judge Warren W. Eginton in Bridgeport to 48 months of imprisonment, followed by three years of supervised release, for operating a real estate investment scheme that defrauded individuals of more than $5 million.
According to court documents and statements made in court, Alvarez de Lugo, who held himself out as the president of multiple successful businesses specializing in real estate development programs, represented to victim investors that his business was acquiring houses from the city of New Haven and from local banks. Investors were told that invested funds would be used to remodel the houses, which would then be sold. At times, Alvarez de Lugo represented to victim investors that he was working jointly with New Haven on the Livable City Initiative, and he stated that the remodeled homes would be used and occupied by low income families that secured financing from a local bank and state of Connecticut agencies. Alvarez de Lugo also told investors that he was developing a senior housing facility in New Haven. He also provided investors with promissory notes and other documentation that promised to pay investors interest of 20 percent per year and a full return of principal in one year.
Alvarez de Lugo has admitted that these representations were false and that he did not invest his victims’ money as promised. He did not own and develop the large number of properties he represented to investors, and he had no relationship with the city of New Haven or the state of Connecticut.
Between approximately 2005 and 2010, Alvarez de Lugo defrauded approximately 30 victims of more than $5 million. He spent investment money on his own personal expenses, including improving his Branford residence with a swimming pool and backyard patio and to pay his children’s school and college tuition.
Alvarez de Lugo was ordered to pay restitution in the amount of $5,161,083.
Alvarez de Lugo has been detained since his arrest on January 18, 2013. On September 18, 2013, he pleaded guilty to one count of wire fraud.
Alvarez de Lugo’s three companies, Arquin Decoraciones LLC, Arquin Development LLC, and Juko Investments LLC, and the investment instruments he provided were never registered with the Securities and Exchange Commission or Connecticut Department of Banking.
This matter was investigated by the Federal Bureau of Investigation, with the assistance of the State of Connecticut Department of Banking. The case was prosecuted by Assistant U.S. Attorney Michael S. McGarry.
According to court documents and statements made in court, Alvarez de Lugo, who held himself out as the president of multiple successful businesses specializing in real estate development programs, represented to victim investors that his business was acquiring houses from the city of New Haven and from local banks. Investors were told that invested funds would be used to remodel the houses, which would then be sold. At times, Alvarez de Lugo represented to victim investors that he was working jointly with New Haven on the Livable City Initiative, and he stated that the remodeled homes would be used and occupied by low income families that secured financing from a local bank and state of Connecticut agencies. Alvarez de Lugo also told investors that he was developing a senior housing facility in New Haven. He also provided investors with promissory notes and other documentation that promised to pay investors interest of 20 percent per year and a full return of principal in one year.
Alvarez de Lugo has admitted that these representations were false and that he did not invest his victims’ money as promised. He did not own and develop the large number of properties he represented to investors, and he had no relationship with the city of New Haven or the state of Connecticut.
Between approximately 2005 and 2010, Alvarez de Lugo defrauded approximately 30 victims of more than $5 million. He spent investment money on his own personal expenses, including improving his Branford residence with a swimming pool and backyard patio and to pay his children’s school and college tuition.
Alvarez de Lugo was ordered to pay restitution in the amount of $5,161,083.
Alvarez de Lugo has been detained since his arrest on January 18, 2013. On September 18, 2013, he pleaded guilty to one count of wire fraud.
Alvarez de Lugo’s three companies, Arquin Decoraciones LLC, Arquin Development LLC, and Juko Investments LLC, and the investment instruments he provided were never registered with the Securities and Exchange Commission or Connecticut Department of Banking.
This matter was investigated by the Federal Bureau of Investigation, with the assistance of the State of Connecticut Department of Banking. The case was prosecuted by Assistant U.S. Attorney Michael S. McGarry.
Norwich Resident Sentenced to 30 Months in Prison for Role in Mortgage Fraud Scheme
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that Marc Jean, 44, a citizen of Haiti residing in Norwich, was sentenced today by U.S. District Judge Alvin W. Thompson in Hartford to 30 months of imprisonment, followed by three years of supervised release, for his role in an extensive mortgage fraud scheme.
According to court documents and statements made in court, between 2006 and 2010, Syed Babar of New London orchestrated a scheme to obtain millions of dollars in residential real estate loans through the use of sham sales contracts, false loan applications, and fraudulent property appraisals. The scheme involved nearly 30 properties in Connecticut, most of which ended up in foreclosure, and resulted in a loss of more than $4 million to various private lenders and to the Federal Housing Administration, which insured many of the loans that were fraudulently obtained.
Jean conspired with Babar and others and was paid tens of thousands of dollars for acting as a straw buyer in a total of four residential property sales in New London, New Britain, and Meriden. At Babar’s direction, Jean accepted deposits of proceeds from the conspiracy into his bank account in order to show that he made more money than he actually did and that he had cash available for the real estate transactions. In connection with the fraudulent real estate transactions, Jean provided fictitious documentation and made false statements to lenders, including that he intended to occupy the property as his primary residence, that he earned income from a rental property, that he had provided cash for the transaction, and that he was a U.S. citizen.
The loss suffered by the lenders for the four properties was more than $725,000. Judge Thompson ordered Jean to pay restitution in the amount of $688,852.74.
On July 9, 2013, Jean pleaded guilty to one count of conspiracy to commit bank fraud and wire fraud.
Fifteen individuals have been convicted in connection with this scheme. On November 28, 2011, Syed Babar was sentenced to 120 months of imprisonment.
This matter was investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development, Office of Inspector General. The case was prosecuted by Assistant U.S. Attorneys Eric Glover, Susan Wines, and Liam Brennan.
According to court documents and statements made in court, between 2006 and 2010, Syed Babar of New London orchestrated a scheme to obtain millions of dollars in residential real estate loans through the use of sham sales contracts, false loan applications, and fraudulent property appraisals. The scheme involved nearly 30 properties in Connecticut, most of which ended up in foreclosure, and resulted in a loss of more than $4 million to various private lenders and to the Federal Housing Administration, which insured many of the loans that were fraudulently obtained.
Jean conspired with Babar and others and was paid tens of thousands of dollars for acting as a straw buyer in a total of four residential property sales in New London, New Britain, and Meriden. At Babar’s direction, Jean accepted deposits of proceeds from the conspiracy into his bank account in order to show that he made more money than he actually did and that he had cash available for the real estate transactions. In connection with the fraudulent real estate transactions, Jean provided fictitious documentation and made false statements to lenders, including that he intended to occupy the property as his primary residence, that he earned income from a rental property, that he had provided cash for the transaction, and that he was a U.S. citizen.
The loss suffered by the lenders for the four properties was more than $725,000. Judge Thompson ordered Jean to pay restitution in the amount of $688,852.74.
On July 9, 2013, Jean pleaded guilty to one count of conspiracy to commit bank fraud and wire fraud.
Fifteen individuals have been convicted in connection with this scheme. On November 28, 2011, Syed Babar was sentenced to 120 months of imprisonment.
This matter was investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development, Office of Inspector General. The case was prosecuted by Assistant U.S. Attorneys Eric Glover, Susan Wines, and Liam Brennan.
Cyber Criminal Pleads Guilty to Developing and Distributing Notorious SpyEye Malware
ATLANTA—Aleksandr Andreevich Panin, a Russian national also known as “Gribodemon” and “Harderman,” has pleaded guilty to conspiracy to commit wire and bank fraud for his role as the primary developer and distributor of the malicious software known as “SpyEye,” which, according to industry estimates, has infected more than 1.4 million computers in the United States and abroad.
“As several recent and widely reported data breaches have shown, cyber attacks pose a critical threat to our nation’s economic security,” said United States Attorney Sally Quillian Yates. “Today’s plea is a great leap forward in our campaign against those attacks. Panin was the architect of a pernicious malware known as SpyEye that infected computers worldwide. He commercialized the wholesale theft of financial and personal information. And now he is being held to account for his actions. Cyber criminals be forewarned—you cannot hide in the shadows of the Internet. We will find you and bring you to justice.”
“Given the recent revelations of massive thefts of financial information from large retail stores across the country, Americans do not need to be reminded how devastating it is when cyber criminals surreptitiously install malicious codes on computer networks and then siphon away private information from unsuspecting consumers,” said Acting Assistant Attorney General Mythili Raman. “Today, thanks to the tireless work of prosecutors and law enforcement agents, Aleksandr Panin has admitted to his orchestration of this criminal scheme to use SpyEye to invade the privacy of Americans by infecting their computers through a dangerous botnet. As this prosecution shows, cyber criminals—even when they sit on the other side of the world and attempt to hide behind online aliases—are never outside the reach of U.S. law enforcement.”
Ricky Maxwell, Acting Special Agent in Charge, FBI Atlanta Field Office, stated, “This investigation highlights the importance of the FBI’s focus on the top echelon of cyber criminals. The apprehension of Mr. Panin means that one of the world’s top developers of malicious software is no longer in a position to create computer programs that can victimize people around the world. Botnets such as SpyEye represent one of the most dangerous types of malicious software on the Internet today, which can steal people’s identities and money from their bank accounts without their knowledge. The FBI will continue working with partners domestically and internationally to combat cyber crime.”
According to United States Attorney Yates, the charges, and other information presented in court, SpyEye is a sophisticated malicious computer code that is designed to automate the theft of confidential personal and financial information, such as online banking credentials, credit card information, usernames, passwords, PINs, and other personally identifying information. The SpyEye virus facilitates this theft of information by secretly infecting victims’ computers, enabling cyber criminals to remotely control the infected computers through command and control (C2) servers. Once a computer is infected and under their control, cyber criminals can remotely access the infected computers, without authorization, and steal victims’ personal and financial information through a variety of techniques, including web injects, keystroke loggers, and credit card grabbers. The victims’ stolen personal and financial data is then surreptitiously transmitted to the C2 servers, where it is used to steal money from the victims’ financial accounts.
Panin was the primary developer and distributor of the SpyEye virus. Operating from Russia from 2009 to 2011, Panin conspired with others, including co-defendant Hamza Bendelladj, an Algerian national also known as “Bx1,” to develop, market, and sell various versions of the SpyEye virus and component parts on the Internet. Panin allowed cyber criminals to customize their purchases to include tailor-made methods of obtaining victims’ personal and financial information, as well as marketed versions that targeted information about specific financial institutions including banks and credit card companies. Panin advertised the SpyEye virus on online, invite-only criminal forums. He sold versions of the SpyEye virus for prices ranging from $1,000 to $8,500. Panin is believed to have sold the SpyEye virus to at least 150 “clients,” who, in turn, used them to set up their own C2 servers. One of Panin’s clients, “Soldier,” is reported to have made over $3.2 million in a six-month period using the SpyEye virus.
According to industry estimates, the SpyEye virus has infected more than 1.4 million computers in the United States and abroad, and it was the preeminent malware toolkit used from approximately 2009 to 2011. Based on information received from the financial services industry, more than 10,000 bank accounts have been compromised by SpyEye infections in 2013 alone. Some cyber criminals continue to use SpyEye today, although its effectiveness has been limited since software makers have added SpyEye to malicious software removal programs.
In February 2011, pursuant to a federal search warrant, the FBI searched and seized a SpyEye C2 server allegedly operated by Bendelladj in the Northern District of Georgia. That C2 server controlled more than 200 computers infected with the SpyEye virus and contained information from numerous financial institutions.
In June and July 2011, FBI covert sources communicated directly with Panin, who was using his online nicknames Gribodemon and Harderman, about the SpyEye virus. FBI sources then purchased a version of SpyEye from Panin that contained features designed to steal confidential financial information, initiate fraudulent online banking transactions, install keystroke loggers, and initiate distributed denial of service (DDoS) attacks from computers infected with the SpyEye malware.
On December 20, 2011, a Northern District of Georgia grand jury returned a 23-count indictment against Panin, who had yet to be fully identified, and Bendelladj. The indictment charged one count of conspiracy to commit wire and bank fraud, 10 counts of wire fraud, one count of conspiracy to commit computer fraud, and 11 counts of computer fraud. A superseding indictment was subsequently returned identifying Panin by his true name.
Bendelladj was apprehended at Suvarnabhumi Airport in Bangkok, Thailand, on January 5, 2013, while he was in transit from Malaysia to Algeria. Bendelladj was extradited from Thailand to the United States on May 2, 2013. His charges are currently pending in the Northern District of Georgia.
Panin was arrested by U.S. authorities on July 1, 2013, when he flew through Hartsfield-Jackson Atlanta International Airport.
The investigation also has led to the arrests by international authorities of four of Panin’s SpyEye clients and associates in the United Kingdom and Bulgaria.
On January 28, 2014, Panin pleaded guilty to conspiring to commit wire and bank fraud. Sentencing for Panin is scheduled for April 29, 2014, before United States District Judge Amy Totenberg.
The case is being investigated by special agents of the Federal Bureau of Investigation.
Assistant United States Attorney Scott Ferber of the Northern District of Georgia, Trial Attorney Ethan Arenson of the Criminal Division’s Computer Crime and Intellectual Property Section, and Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section are prosecuting the case. Former Assistant United States Attorney Nicholas Oldham also participated in the prosecution while with the Criminal Division.
Valuable assistance was provided by the Criminal Division’s Office of International Affairs and the following international law enforcement agencies: the United Kingdom’s National Crime Agency, the Royal Thai Police-Immigration Bureau, the National Police of the Netherlands-National High Tech Crime Unit (NHTCU), Dominican Republic’s Departamento Nacional de Investigaciones (DNI), the Cybercrime Department at the State Agency for National Security-Bulgaria, and the Australian Federal Police (AFP).
Valuable assistance also was provided by the following private sector partners: Trend Micro’s Forward-looking Threat Research (FTR) Team, Microsoft’s Digital Crimes Unit, Mandiant, Dell SecureWorks, Trusteer, and the Norwegian Security Research Team known as Underworld.no.
For further information, please contact the U.S. Attorney’s Public Affairs 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.
“As several recent and widely reported data breaches have shown, cyber attacks pose a critical threat to our nation’s economic security,” said United States Attorney Sally Quillian Yates. “Today’s plea is a great leap forward in our campaign against those attacks. Panin was the architect of a pernicious malware known as SpyEye that infected computers worldwide. He commercialized the wholesale theft of financial and personal information. And now he is being held to account for his actions. Cyber criminals be forewarned—you cannot hide in the shadows of the Internet. We will find you and bring you to justice.”
“Given the recent revelations of massive thefts of financial information from large retail stores across the country, Americans do not need to be reminded how devastating it is when cyber criminals surreptitiously install malicious codes on computer networks and then siphon away private information from unsuspecting consumers,” said Acting Assistant Attorney General Mythili Raman. “Today, thanks to the tireless work of prosecutors and law enforcement agents, Aleksandr Panin has admitted to his orchestration of this criminal scheme to use SpyEye to invade the privacy of Americans by infecting their computers through a dangerous botnet. As this prosecution shows, cyber criminals—even when they sit on the other side of the world and attempt to hide behind online aliases—are never outside the reach of U.S. law enforcement.”
Ricky Maxwell, Acting Special Agent in Charge, FBI Atlanta Field Office, stated, “This investigation highlights the importance of the FBI’s focus on the top echelon of cyber criminals. The apprehension of Mr. Panin means that one of the world’s top developers of malicious software is no longer in a position to create computer programs that can victimize people around the world. Botnets such as SpyEye represent one of the most dangerous types of malicious software on the Internet today, which can steal people’s identities and money from their bank accounts without their knowledge. The FBI will continue working with partners domestically and internationally to combat cyber crime.”
According to United States Attorney Yates, the charges, and other information presented in court, SpyEye is a sophisticated malicious computer code that is designed to automate the theft of confidential personal and financial information, such as online banking credentials, credit card information, usernames, passwords, PINs, and other personally identifying information. The SpyEye virus facilitates this theft of information by secretly infecting victims’ computers, enabling cyber criminals to remotely control the infected computers through command and control (C2) servers. Once a computer is infected and under their control, cyber criminals can remotely access the infected computers, without authorization, and steal victims’ personal and financial information through a variety of techniques, including web injects, keystroke loggers, and credit card grabbers. The victims’ stolen personal and financial data is then surreptitiously transmitted to the C2 servers, where it is used to steal money from the victims’ financial accounts.
Panin was the primary developer and distributor of the SpyEye virus. Operating from Russia from 2009 to 2011, Panin conspired with others, including co-defendant Hamza Bendelladj, an Algerian national also known as “Bx1,” to develop, market, and sell various versions of the SpyEye virus and component parts on the Internet. Panin allowed cyber criminals to customize their purchases to include tailor-made methods of obtaining victims’ personal and financial information, as well as marketed versions that targeted information about specific financial institutions including banks and credit card companies. Panin advertised the SpyEye virus on online, invite-only criminal forums. He sold versions of the SpyEye virus for prices ranging from $1,000 to $8,500. Panin is believed to have sold the SpyEye virus to at least 150 “clients,” who, in turn, used them to set up their own C2 servers. One of Panin’s clients, “Soldier,” is reported to have made over $3.2 million in a six-month period using the SpyEye virus.
According to industry estimates, the SpyEye virus has infected more than 1.4 million computers in the United States and abroad, and it was the preeminent malware toolkit used from approximately 2009 to 2011. Based on information received from the financial services industry, more than 10,000 bank accounts have been compromised by SpyEye infections in 2013 alone. Some cyber criminals continue to use SpyEye today, although its effectiveness has been limited since software makers have added SpyEye to malicious software removal programs.
In February 2011, pursuant to a federal search warrant, the FBI searched and seized a SpyEye C2 server allegedly operated by Bendelladj in the Northern District of Georgia. That C2 server controlled more than 200 computers infected with the SpyEye virus and contained information from numerous financial institutions.
In June and July 2011, FBI covert sources communicated directly with Panin, who was using his online nicknames Gribodemon and Harderman, about the SpyEye virus. FBI sources then purchased a version of SpyEye from Panin that contained features designed to steal confidential financial information, initiate fraudulent online banking transactions, install keystroke loggers, and initiate distributed denial of service (DDoS) attacks from computers infected with the SpyEye malware.
On December 20, 2011, a Northern District of Georgia grand jury returned a 23-count indictment against Panin, who had yet to be fully identified, and Bendelladj. The indictment charged one count of conspiracy to commit wire and bank fraud, 10 counts of wire fraud, one count of conspiracy to commit computer fraud, and 11 counts of computer fraud. A superseding indictment was subsequently returned identifying Panin by his true name.
Bendelladj was apprehended at Suvarnabhumi Airport in Bangkok, Thailand, on January 5, 2013, while he was in transit from Malaysia to Algeria. Bendelladj was extradited from Thailand to the United States on May 2, 2013. His charges are currently pending in the Northern District of Georgia.
Panin was arrested by U.S. authorities on July 1, 2013, when he flew through Hartsfield-Jackson Atlanta International Airport.
The investigation also has led to the arrests by international authorities of four of Panin’s SpyEye clients and associates in the United Kingdom and Bulgaria.
On January 28, 2014, Panin pleaded guilty to conspiring to commit wire and bank fraud. Sentencing for Panin is scheduled for April 29, 2014, before United States District Judge Amy Totenberg.
The case is being investigated by special agents of the Federal Bureau of Investigation.
Assistant United States Attorney Scott Ferber of the Northern District of Georgia, Trial Attorney Ethan Arenson of the Criminal Division’s Computer Crime and Intellectual Property Section, and Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section are prosecuting the case. Former Assistant United States Attorney Nicholas Oldham also participated in the prosecution while with the Criminal Division.
Valuable assistance was provided by the Criminal Division’s Office of International Affairs and the following international law enforcement agencies: the United Kingdom’s National Crime Agency, the Royal Thai Police-Immigration Bureau, the National Police of the Netherlands-National High Tech Crime Unit (NHTCU), Dominican Republic’s Departamento Nacional de Investigaciones (DNI), the Cybercrime Department at the State Agency for National Security-Bulgaria, and the Australian Federal Police (AFP).
Valuable assistance also was provided by the following private sector partners: Trend Micro’s Forward-looking Threat Research (FTR) Team, Microsoft’s Digital Crimes Unit, Mandiant, Dell SecureWorks, Trusteer, and the Norwegian Security Research Team known as Underworld.no.
For further information, please contact the U.S. Attorney’s Public Affairs 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.
Corrections Officer Arrested on Methamphetamine Distribution Charges
At 11:00 a.m. on Sunday, January 26, 2014, Marc Damas, age 45, of Oahu, was arrested by special agents from the Honolulu FBI, along with investigators from the Hawaii Department of Public Safety Internal Affairs Division and Sheriff Division. Mr. Damas was arrested at the Halawa Correctional Facility where he was employed as an adult corrections officer.
Mr. Damas was charged via criminal complaint with one count of violating Title 21, United States Code Section 846: conspiracy to distribute and possess with intent to distribute five grams or more of methamphetamine. The statutory maximum penalty for this crime is 40 years in prison.
Following his arrest, Mr. Damas was transported to the Honolulu FBI Division in Kapolei for processing and then to the Federal Detention Center, where he will spend the night awaiting his initial appearance in U.S. District Court. The arraignment will likely be at 2:00 p.m. on Monday, January 27, 2014, in the courtroom of U.S. Magistrate Judge Barry M. Kurren.
The Honolulu FBI conducted the underlying investigation leading to this indictment in coordination with the state of Hawaii Department of Public Safety and the IRS-Criminal Investigative Division.
Honolulu FBI Special Agent in Charge Vida Bottom said, “Both the FBI and the Department of Public Safety will continue to work together to ensure the integrity of Hawaii’s correctional facilities. We recognize that the vast majority of adult corrections officers are dedicated public servants who put their lives on the line every day for the greater good. However, when allegations of corruption arise among prison employees, we will work with prison management to investigate wrongdoing and bring the corrupt to justice.”
Please remember that a criminal complaint is merely an allegation and that the defendant is innocent unless and until being found guilty in court.
Mr. Damas was charged via criminal complaint with one count of violating Title 21, United States Code Section 846: conspiracy to distribute and possess with intent to distribute five grams or more of methamphetamine. The statutory maximum penalty for this crime is 40 years in prison.
Following his arrest, Mr. Damas was transported to the Honolulu FBI Division in Kapolei for processing and then to the Federal Detention Center, where he will spend the night awaiting his initial appearance in U.S. District Court. The arraignment will likely be at 2:00 p.m. on Monday, January 27, 2014, in the courtroom of U.S. Magistrate Judge Barry M. Kurren.
The Honolulu FBI conducted the underlying investigation leading to this indictment in coordination with the state of Hawaii Department of Public Safety and the IRS-Criminal Investigative Division.
Honolulu FBI Special Agent in Charge Vida Bottom said, “Both the FBI and the Department of Public Safety will continue to work together to ensure the integrity of Hawaii’s correctional facilities. We recognize that the vast majority of adult corrections officers are dedicated public servants who put their lives on the line every day for the greater good. However, when allegations of corruption arise among prison employees, we will work with prison management to investigate wrongdoing and bring the corrupt to justice.”
Please remember that a criminal complaint is merely an allegation and that the defendant is innocent unless and until being found guilty in court.
Two Detained on Federal Drug Trafficking Charges as Rhode Island FBI Safe Streets Task Force Seizes Two Kilos of Cocaine
PROVIDENCE, RI—Jose E. Lopez Mauricio, aka “Flaco,” 28, of Warwick, Rhode Island, and Jorge Guzman-Rivera, 28, of New Bedford, Massachusetts, have been ordered detained in federal custody on drug trafficking charges following their arrests and the seizure of two kilos of cocaine by the Rhode Island FBI Safe Street Task Force, announced United States Attorney Peter F. Neronha and Vincent B. Lisi, Special Agent in Charge of the Boston Field Office of the FBI.
According to an affidavit in support of criminal complaints and a search arrest warrant in this matter, in February 2013, the FBI Safe Streets Task Force began an investigation into the alleged drug trafficking activities of Jose Mauricio. According to the affidavit, between February 2013 and January 2014, an individual cooperating with law enforcement, and while under the surveillance of law enforcement, allegedly effected five drug transactions for varying amounts of heroin and crack cocaine. It is also alleged that in November 2013, while under the surveillance of law enforcement, the individual allegedly effected the purchase of two firearms from Mauricio.
According to the affidavit, it is alleged that in January 2014, Mauricio offered to sell two kilos of cocaine to the individual. The two spoke via telephone on numerous occasions and met in person to allegedly arrange for the sale of the two kilos of cocaine for $70,000. During at least one meeting that occurred outside a Providence residence, an individual was observed by law enforcement watching the meeting from inside the residence from a third floor window.
According to the affidavit, when an undercover FBI agent and a Providence Police Department Narcotics Unit undercover officer, posing as associates of the cooperating witness, returned to the residence to allegedly purchase the two kilos of cocaine, Mauricio exited the building to meet them. As Mauricio exited the building, he was detained by FBI Safe Streets Task Force agents. At the same time, agents entered a rear door of the building and made entry into the third floor apartment. Inside the apartment agents encountered and detained Jorge Guzman-Rivera, the individual observed by law enforcement watching from the window. Agents also discovered and seized two kilos of cocaine.
Jose Mauricio has been detained on one count each of possession with the intent to distribute heroin and possession with the intent to distribute 28 grams or more of cocaine. Jorge Guzman-Rivera has been detained on one count each of conspiracy to possess with the intent to distribute cocaine and possession with the intent to distribute cocaine.
A criminal complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant U.S. Attorney William J. Ferland.
The Rhode Island FBI Safe Streets Task Force, composed of law enforcement agents and officers the FBI, Rhode Island State Police, and the Providence, Cranston, and Woonsocket Police Departments, enhances the effectiveness of federal, state, and local law enforcement resources through a well-coordinated initiative seeking the most effective avenues to investigate, prosecute, and incarcerate dangerous offenders.
The mission of the FBI Safe Streets Task Force is to identify and target for prosecution criminal enterprise groups responsible for drug trafficking, money laundering, alien smuggling, crimes of violence such as murder and aggravated assault, robbery, and violent street gangs, as well as to intensely focus on the apprehension of dangerous fugitives where there is or may be a federal investigative interest.
According to an affidavit in support of criminal complaints and a search arrest warrant in this matter, in February 2013, the FBI Safe Streets Task Force began an investigation into the alleged drug trafficking activities of Jose Mauricio. According to the affidavit, between February 2013 and January 2014, an individual cooperating with law enforcement, and while under the surveillance of law enforcement, allegedly effected five drug transactions for varying amounts of heroin and crack cocaine. It is also alleged that in November 2013, while under the surveillance of law enforcement, the individual allegedly effected the purchase of two firearms from Mauricio.
According to the affidavit, it is alleged that in January 2014, Mauricio offered to sell two kilos of cocaine to the individual. The two spoke via telephone on numerous occasions and met in person to allegedly arrange for the sale of the two kilos of cocaine for $70,000. During at least one meeting that occurred outside a Providence residence, an individual was observed by law enforcement watching the meeting from inside the residence from a third floor window.
According to the affidavit, when an undercover FBI agent and a Providence Police Department Narcotics Unit undercover officer, posing as associates of the cooperating witness, returned to the residence to allegedly purchase the two kilos of cocaine, Mauricio exited the building to meet them. As Mauricio exited the building, he was detained by FBI Safe Streets Task Force agents. At the same time, agents entered a rear door of the building and made entry into the third floor apartment. Inside the apartment agents encountered and detained Jorge Guzman-Rivera, the individual observed by law enforcement watching from the window. Agents also discovered and seized two kilos of cocaine.
Jose Mauricio has been detained on one count each of possession with the intent to distribute heroin and possession with the intent to distribute 28 grams or more of cocaine. Jorge Guzman-Rivera has been detained on one count each of conspiracy to possess with the intent to distribute cocaine and possession with the intent to distribute cocaine.
A criminal complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant U.S. Attorney William J. Ferland.
The Rhode Island FBI Safe Streets Task Force, composed of law enforcement agents and officers the FBI, Rhode Island State Police, and the Providence, Cranston, and Woonsocket Police Departments, enhances the effectiveness of federal, state, and local law enforcement resources through a well-coordinated initiative seeking the most effective avenues to investigate, prosecute, and incarcerate dangerous offenders.
The mission of the FBI Safe Streets Task Force is to identify and target for prosecution criminal enterprise groups responsible for drug trafficking, money laundering, alien smuggling, crimes of violence such as murder and aggravated assault, robbery, and violent street gangs, as well as to intensely focus on the apprehension of dangerous fugitives where there is or may be a federal investigative interest.
Former Treasurer of Mayetta Fire District Pleads Guilty to Embezzlement
TOPEKA, KS—The former treasurer of the Mayetta Rural Fire District #1 pleaded guilty Monday to embezzling from the district, U.S. Attorney Barry Grissom said. In his plea, the defendant agreed to an order that he pay $427,042 in restitution.
Richard P. Bontrager, 67, Holton, Kansas, pleaded guilty to one count of embezzlement. In his plea, he admitted that in 2008, he began embezzling from the fire district by issuing checks with the forged signatures of members of the board of the fire district. The checks were made payable to R&S Services, a fictitious entity Bontrager created so he could deposit the fraudulent checks into his own account at Denison State Bank. From 2008 to 2012, he made approximately $427,042 in unauthorized transfers from the fire district’s accounts.
In addition, without the knowledge of the board of the fire district, he falsified loan documents to obligate the fire district to monthly lease payments on a Polaris Ranger UTV and a 1988 Chevrolet 1-ton brush truck. He created false board minutes to make it appear the board had approved the lease payments.
Sentencing is set for April 14. He faces a maximum penalty of 10 years in federal prison and a fine up to $250,000. The Jackson County Sheriff’s Office and the FBI investigated. Assistant U.S. Attorney Richard Hathaway is prosecuting.
Richard P. Bontrager, 67, Holton, Kansas, pleaded guilty to one count of embezzlement. In his plea, he admitted that in 2008, he began embezzling from the fire district by issuing checks with the forged signatures of members of the board of the fire district. The checks were made payable to R&S Services, a fictitious entity Bontrager created so he could deposit the fraudulent checks into his own account at Denison State Bank. From 2008 to 2012, he made approximately $427,042 in unauthorized transfers from the fire district’s accounts.
In addition, without the knowledge of the board of the fire district, he falsified loan documents to obligate the fire district to monthly lease payments on a Polaris Ranger UTV and a 1988 Chevrolet 1-ton brush truck. He created false board minutes to make it appear the board had approved the lease payments.
Sentencing is set for April 14. He faces a maximum penalty of 10 years in federal prison and a fine up to $250,000. The Jackson County Sheriff’s Office and the FBI investigated. Assistant U.S. Attorney Richard Hathaway is prosecuting.
Chillicothe Couple Indicted for Filing False Tax Returns Related to Wife’s $4 Million Theft
KANSAS CITY, MO—Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Chillicothe, Missouri, husband and wife were indicted by a federal grand jury today for filing a false income tax return by not claiming the income from a wire fraud scheme in which the wife embezzled nearly $4 million from her employer, Burdg, Dunham & Associates Construction Corp. in Hamilton, Missouri.
Donna M. Preszler, 60, and her husband, Terrance W. Preszler, 63, both of Chillicothe, were charged in a 21-count indictment returned by a federal grand jury in Kansas City, Missouri. Today’s superseding indictment replaces a federal indictment that was returned on June 20, 2013, and adds the husband as a defendant in one count of making a false income tax return.
Donna Preszler was employed at Burdg, Dunham & Associates (BDA) from 2001 until June 2012, working as an accounting manager since 2004. BDA is a general contractor specializing in retail construction of malls, strip centers, family life centers, and other stand-alone projects. BDA serves customers in all 50 states, Puerto Rico, and Canada, primarily building for national retail organizations.
The indictment alleges that Preszler embezzled $3,912,000 in a wire fraud scheme from June 30, 2006 through June 15, 2012. Preszler allegedly used her employer’s accounting software to create payroll data files that contained unauthorized false and fictitious payments to her bank accounts and others.
Today’s indictment alleges that Donna and Terrance Preszler failed to report the fraudulently obtained funds on their federal income tax returns for tax years 2007 through 2012. During that time, according to the indictment, the Preszlers should have paid $1,236,690 in taxes on their unreported fraudulent income from BDA.
For example, according to today’s indictment, the Preszlers claimed their income in 2012 was only $46,863. Including the embezzled funds, the indictment says, their income was actually $851,863, and they should have paid an additional $253,641 in taxes.
The federal indictment charges Donna Preszler with six counts of wire fraud and 14 counts of money laundering.
Donna Preszler allegedly utilized her role as accounting manager to add false and fictitious non-taxable pay, such as expense reimbursements to herself. Over a six-year period, the indictment says, Donna Preszler transferred approximately $3,912,000 in false and fictitious payments to herself and her family.
Donna Preszler also added false and fictitious overtime hours and overtime pay to her weekly payroll, the indictment says. Donna Preszler allegedly initiated approximately $76,000 in unauthorized overtime payments to herself from November 2004 through June 2006, which were subject to BDA withholding income taxes.
Donna Preszler concealed her transfers by password protecting her payroll information, creating false and fictitious expense accounts, and otherwise manipulating BDA’s payroll and accounting records.
The indictment also contains a forfeiture allegation, which would require Preszler to forfeit to the government any property derived from the proceeds of the alleged violations, including a money judgment of $3,912,000, two residential lots, two 14kt diamond rings, 10 vehicles (a 2007 Ford Taurus, a 2007 Mazda CX-7, a 2011 Nissan Versa, a 2010 Nissan 370Z, a 2011 Ford F150, a 2010 Ford F150, a 2010 Ford Escape, a 2012 Ford Explorer, and a 2012 Nissan Rogue), three 2011 Yamaha ATVs, and several bank accounts and funeral trust accounts. Most of those items have been seized by law enforcement agents.
Dickinson cautioned that the charges contained in this indictment are simply accusations and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Jess E. Michaelsen. It was investigated by the FBI.
This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available online at http://www.justice.gov/usao/mow/index.html.
Donna M. Preszler, 60, and her husband, Terrance W. Preszler, 63, both of Chillicothe, were charged in a 21-count indictment returned by a federal grand jury in Kansas City, Missouri. Today’s superseding indictment replaces a federal indictment that was returned on June 20, 2013, and adds the husband as a defendant in one count of making a false income tax return.
Donna Preszler was employed at Burdg, Dunham & Associates (BDA) from 2001 until June 2012, working as an accounting manager since 2004. BDA is a general contractor specializing in retail construction of malls, strip centers, family life centers, and other stand-alone projects. BDA serves customers in all 50 states, Puerto Rico, and Canada, primarily building for national retail organizations.
The indictment alleges that Preszler embezzled $3,912,000 in a wire fraud scheme from June 30, 2006 through June 15, 2012. Preszler allegedly used her employer’s accounting software to create payroll data files that contained unauthorized false and fictitious payments to her bank accounts and others.
Today’s indictment alleges that Donna and Terrance Preszler failed to report the fraudulently obtained funds on their federal income tax returns for tax years 2007 through 2012. During that time, according to the indictment, the Preszlers should have paid $1,236,690 in taxes on their unreported fraudulent income from BDA.
For example, according to today’s indictment, the Preszlers claimed their income in 2012 was only $46,863. Including the embezzled funds, the indictment says, their income was actually $851,863, and they should have paid an additional $253,641 in taxes.
The federal indictment charges Donna Preszler with six counts of wire fraud and 14 counts of money laundering.
Donna Preszler allegedly utilized her role as accounting manager to add false and fictitious non-taxable pay, such as expense reimbursements to herself. Over a six-year period, the indictment says, Donna Preszler transferred approximately $3,912,000 in false and fictitious payments to herself and her family.
Donna Preszler also added false and fictitious overtime hours and overtime pay to her weekly payroll, the indictment says. Donna Preszler allegedly initiated approximately $76,000 in unauthorized overtime payments to herself from November 2004 through June 2006, which were subject to BDA withholding income taxes.
Donna Preszler concealed her transfers by password protecting her payroll information, creating false and fictitious expense accounts, and otherwise manipulating BDA’s payroll and accounting records.
The indictment also contains a forfeiture allegation, which would require Preszler to forfeit to the government any property derived from the proceeds of the alleged violations, including a money judgment of $3,912,000, two residential lots, two 14kt diamond rings, 10 vehicles (a 2007 Ford Taurus, a 2007 Mazda CX-7, a 2011 Nissan Versa, a 2010 Nissan 370Z, a 2011 Ford F150, a 2010 Ford F150, a 2010 Ford Escape, a 2012 Ford Explorer, and a 2012 Nissan Rogue), three 2011 Yamaha ATVs, and several bank accounts and funeral trust accounts. Most of those items have been seized by law enforcement agents.
Dickinson cautioned that the charges contained in this indictment are simply accusations and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Jess E. Michaelsen. It was investigated by the FBI.
This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available online at http://www.justice.gov/usao/mow/index.html.
Louisiana Man Sentenced for Orange, Texas Bank Robbery
BEAUMONT, TX—A 50-year-old Cameron, Louisiana man has been sentenced to federal prison for bank robbery in the Eastern District of Texas, announced U.S. Attorney John M. Bales.
Allen Keith Miller pleaded guilty on August 28, 2013, to bank robbery and was sentenced to 57 months in federal prison on January 24, 2014, by U.S. District Judge Marcia Crone.
According to information presented in court, on June 25, 2013, Miller entered the Capital One Bank branch office located on 16th Street in Orange, Texas, wearing a blonde wig, baseball cap, long-sleeved shirt, tan pants, and a black knee brace. Miller approached a bank teller and presented a hand-written note advising that the bank was being robbed. Miller also advised that he was armed, although a weapon was not displayed. Media outlets broadcasted footage of the bank robbery, and Miller was identified by citizens. Miller was stopped by law enforcement officers in Louisiana, at which time items from the robbery, including the wig, baseball cap, clothing, and knee brace, were located in Miller’s vehicle. Miller was indicted by a federal grand jury on July 11, 2013, and charged with bank robbery.
Miller has also been ordered to pay restitution in the amount of $963.
This case was investigated by the Federal Bureau of Investigation and the Orange Police Department and prosecuted by Assistant U.S. Attorney John Craft.
Allen Keith Miller pleaded guilty on August 28, 2013, to bank robbery and was sentenced to 57 months in federal prison on January 24, 2014, by U.S. District Judge Marcia Crone.
According to information presented in court, on June 25, 2013, Miller entered the Capital One Bank branch office located on 16th Street in Orange, Texas, wearing a blonde wig, baseball cap, long-sleeved shirt, tan pants, and a black knee brace. Miller approached a bank teller and presented a hand-written note advising that the bank was being robbed. Miller also advised that he was armed, although a weapon was not displayed. Media outlets broadcasted footage of the bank robbery, and Miller was identified by citizens. Miller was stopped by law enforcement officers in Louisiana, at which time items from the robbery, including the wig, baseball cap, clothing, and knee brace, were located in Miller’s vehicle. Miller was indicted by a federal grand jury on July 11, 2013, and charged with bank robbery.
Miller has also been ordered to pay restitution in the amount of $963.
This case was investigated by the Federal Bureau of Investigation and the Orange Police Department and prosecuted by Assistant U.S. Attorney John Craft.
Six in Custody in Houston Armored Car Robbery Cases
HOUSTON—Seven men from Houston have been charged in two separate and unrelated cases involving the robbery or attempted robbery of armored cars operating in and around Houston, announced United States Attorney Kenneth Magidson, along with Special Agent in Charge Stephen L. Morris of the FBI.
“The arrests in these cases underscore our commitment to vigorously prosecuting in federal court those that perpetrate violent robberies of armored cars and clearly endanger innocent lives,” said Magidson.
Dezmond Lacraig Edwards, 24, and Allen Bernard Roundtree, 27, were taken into custody late yesterday without incident. They are charged along with James Van-Gerald Johnson, 30, who was previously arrested, with robbing a Loomis armored car on December 6, 2013, at the University of Houston Student Center. During the course of the arrests, authorities recovered several firearms, including three assault rifles; narcotics; cash; and other items. The defendants were charged in a sealed indictment returned January 23, 2014, and unsealed this morning as they made their initial appearance before U.S. Magistrate Judge Frances Stacy. They have been ordered held in custody pending a detention hearing set for January 30, 2014, at 10:00 a.m.
Also charged is Ronald Dean Richards (pictured below), 23, who is considered a fugitive and a warrant remains outstanding for his arrest. Anyone with information about his whereabouts is asked to contact the FBI at 713-693-5000 or Crime Stoppers at 713-222-TIPS. Crime Stoppers will offer a reward up to $5,000 for any information leading to his location and arrest. In addition, beginning today, Richards will be featured on Clear Channel Outdoor’s Houston-area digital billboards. Clear Channel Outdoor is donating the space as a public service to the community.
In the second, unrelated case, William Hendrick Williams, 27; Stephen Carter, 29; and Bobby Gray, 27; are charged for their involvement in the October 7, 2013, attempted robbery of a Garda Cash Logistics armored truck at the Chase Bank at 19747 N. U.S. 59 in Humble, Texas. Williams and Carter were taken into custody on Friday, January 24, 2014, at which time they made their initial appearance. They are set to appear again in court before Judge Stacy today at 2:00 p.m. Gray is currently in state custody and is expected to appear on the federal charges January 30, 2014.
“Our citizens shouldn’t have to worry about violent offenders opening fire at busy shopping centers or our university campuses. These violent robberies are putting guards and innocent bystanders in grave danger, and they will not be tolerated,” said Morris. “The FBI will continue to work tirelessly with our law enforcement partners to ensure justice in every one of these cases.”
Loomis Armored U.S. Inc. and Garda Cash Logistics, who operated the trucks during the alleged robbery and robbery attempt, maintain offices throughout the United States and were engaged in the business of secured armored transport of United States currency in interstate commerce and in picking up and delivering United States currency to financial institutions and check cashing businesses, both of which are industries which affect interstate commerce.
On December 6, 2013, Johnson, Richards, and Roundtree allegedly drove to the University of Houston Student Center. Johnson, who was armed with a pistol, jumped out and forced the pregnant driver out of the Loomis truck, according to the allegations. The messenger, who was filling the ATM inside the student center, tried to stop Johnson and fired his service weapon. According to the indictment, his attempt was unsuccessful, and Johnson was able to abscond with the vehicle, which was loaded with money. Johnson, Richards, and Roundtree allegedly used a stolen vehicle as their switch vehicle and then loaded all the cash they obtained into two more vehicles they had planted at a prearranged location across from the University of Houston Campus.
Johnson was apprehended as he was leaving town, at which time he had cash, a new car, and jewelry and was also carrying a firearm matching the description of the one used during the robbery.
The four men are charged with conspiracy to interfere with commerce by robbery and with interference with commerce by robbery. In addition, Johnson was further charged with brandishing a firearm during a crime of violence.
In the second matter, Williams, Carter, and Gray are charged with their involvement in the October 7, 2013 attempted robbery of a Garda Cash Logistics armored truck. The indictment alleges Carter drove the others to the location where they all waited for the armored car to arrive. It is alleged that the guard, who was filling the ATM, retrieved money from the armored car, at which time Williams demanded money and shot him several times in the back. Gray allegedly attempted to retrieve the money, but both guards returned fire and the defendants fled. The guard was critically wounded but is continuing to recover.
Williams, Carter, and Gray are all charged with one count of conspiracy to interfere with commerce by robbery and one count of interference with commerce by robbery and aiding and abetting. Williams is also charged with discharging a firearm during the commission of a crime of violence.
The conspiracy charge and the convictions for interference with commerce by robbery both carry as possible punishment up to 20 years in prison, as well as a possible $250,000 fine. Williams also faces at least an additional 10 years in federal prison and up to life for discharging a firearm during the commission of the Garda attempted robbery, which must be served consecutively to the other terms imposed. For brandishing a firearm during the commission of the Loomis robbery, Johnson faces a seven-year consecutive term to any underlying sentence for the robbery offenses.
Both cases are being investigated by the FBI’s Bank Robbery Task Force, which includes members from the FBI, Houston Police Department, and the Harris County Sheriff’s Office. Additional assistance was provided in the respective cases by University of Houston Police Department; Texas Rangers; Humble Police Department; Bureau of Alcohol, Tobacco, Firearms, and Explosives; Customs and Border Protection; the Gulf Coast Regional Task Force; and Crime Stoppers. The Loomis and Garda armored cases are being prosecuted by Assistant United States Attorney Megan Paulson and Jennie Basile, respectively.
“The arrests in these cases underscore our commitment to vigorously prosecuting in federal court those that perpetrate violent robberies of armored cars and clearly endanger innocent lives,” said Magidson.
Dezmond Lacraig Edwards, 24, and Allen Bernard Roundtree, 27, were taken into custody late yesterday without incident. They are charged along with James Van-Gerald Johnson, 30, who was previously arrested, with robbing a Loomis armored car on December 6, 2013, at the University of Houston Student Center. During the course of the arrests, authorities recovered several firearms, including three assault rifles; narcotics; cash; and other items. The defendants were charged in a sealed indictment returned January 23, 2014, and unsealed this morning as they made their initial appearance before U.S. Magistrate Judge Frances Stacy. They have been ordered held in custody pending a detention hearing set for January 30, 2014, at 10:00 a.m.
Also charged is Ronald Dean Richards (pictured below), 23, who is considered a fugitive and a warrant remains outstanding for his arrest. Anyone with information about his whereabouts is asked to contact the FBI at 713-693-5000 or Crime Stoppers at 713-222-TIPS. Crime Stoppers will offer a reward up to $5,000 for any information leading to his location and arrest. In addition, beginning today, Richards will be featured on Clear Channel Outdoor’s Houston-area digital billboards. Clear Channel Outdoor is donating the space as a public service to the community.
In the second, unrelated case, William Hendrick Williams, 27; Stephen Carter, 29; and Bobby Gray, 27; are charged for their involvement in the October 7, 2013, attempted robbery of a Garda Cash Logistics armored truck at the Chase Bank at 19747 N. U.S. 59 in Humble, Texas. Williams and Carter were taken into custody on Friday, January 24, 2014, at which time they made their initial appearance. They are set to appear again in court before Judge Stacy today at 2:00 p.m. Gray is currently in state custody and is expected to appear on the federal charges January 30, 2014.
“Our citizens shouldn’t have to worry about violent offenders opening fire at busy shopping centers or our university campuses. These violent robberies are putting guards and innocent bystanders in grave danger, and they will not be tolerated,” said Morris. “The FBI will continue to work tirelessly with our law enforcement partners to ensure justice in every one of these cases.”
Loomis Armored U.S. Inc. and Garda Cash Logistics, who operated the trucks during the alleged robbery and robbery attempt, maintain offices throughout the United States and were engaged in the business of secured armored transport of United States currency in interstate commerce and in picking up and delivering United States currency to financial institutions and check cashing businesses, both of which are industries which affect interstate commerce.
On December 6, 2013, Johnson, Richards, and Roundtree allegedly drove to the University of Houston Student Center. Johnson, who was armed with a pistol, jumped out and forced the pregnant driver out of the Loomis truck, according to the allegations. The messenger, who was filling the ATM inside the student center, tried to stop Johnson and fired his service weapon. According to the indictment, his attempt was unsuccessful, and Johnson was able to abscond with the vehicle, which was loaded with money. Johnson, Richards, and Roundtree allegedly used a stolen vehicle as their switch vehicle and then loaded all the cash they obtained into two more vehicles they had planted at a prearranged location across from the University of Houston Campus.
Johnson was apprehended as he was leaving town, at which time he had cash, a new car, and jewelry and was also carrying a firearm matching the description of the one used during the robbery.
The four men are charged with conspiracy to interfere with commerce by robbery and with interference with commerce by robbery. In addition, Johnson was further charged with brandishing a firearm during a crime of violence.
In the second matter, Williams, Carter, and Gray are charged with their involvement in the October 7, 2013 attempted robbery of a Garda Cash Logistics armored truck. The indictment alleges Carter drove the others to the location where they all waited for the armored car to arrive. It is alleged that the guard, who was filling the ATM, retrieved money from the armored car, at which time Williams demanded money and shot him several times in the back. Gray allegedly attempted to retrieve the money, but both guards returned fire and the defendants fled. The guard was critically wounded but is continuing to recover.
Williams, Carter, and Gray are all charged with one count of conspiracy to interfere with commerce by robbery and one count of interference with commerce by robbery and aiding and abetting. Williams is also charged with discharging a firearm during the commission of a crime of violence.
The conspiracy charge and the convictions for interference with commerce by robbery both carry as possible punishment up to 20 years in prison, as well as a possible $250,000 fine. Williams also faces at least an additional 10 years in federal prison and up to life for discharging a firearm during the commission of the Garda attempted robbery, which must be served consecutively to the other terms imposed. For brandishing a firearm during the commission of the Loomis robbery, Johnson faces a seven-year consecutive term to any underlying sentence for the robbery offenses.
Both cases are being investigated by the FBI’s Bank Robbery Task Force, which includes members from the FBI, Houston Police Department, and the Harris County Sheriff’s Office. Additional assistance was provided in the respective cases by University of Houston Police Department; Texas Rangers; Humble Police Department; Bureau of Alcohol, Tobacco, Firearms, and Explosives; Customs and Border Protection; the Gulf Coast Regional Task Force; and Crime Stoppers. The Loomis and Garda armored cases are being prosecuted by Assistant United States Attorney Megan Paulson and Jennie Basile, respectively.
Leader of Group from New York Charged with Offering to Sell Women Sentenced to 36 Months’ Imprisonment
NORFOLK, VA—Prince Lee, 21, of New York, was sentenced today to 36 months in prison, followed by five years of supervised release, for conspiracy to transport persons for prostitution.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Royce E. Curtin, Special Agent in Charge of the FBI’s Norfolk Field Office; and James Cervera, Chief of Police, Virginia Beach Police Department, made the announcement after sentencing by United States District Judge Raymond A. Jackson.
Lee pleaded guilty on October 3, 2013. According to court documents, on May 15, 2013, Prince Lee and a young woman posted an advertisement on craigslist.com in Hampton Roads offering to sell the woman as a “sex slave” for $10,000. The Virginia Beach Police Department was monitoring the site and came across the advertisement and responded. An undercover officer spoke with Prince Lee, and Lee agreed to sell three women for approximately $225,000. They agreed to meet in Virginia Beach on June 1, 2013. Prince Lee and co-defendant Henry Olson recruited Jane Doe 1, a 30-year-old also from New York, and told the woman she would receive $10,000 just to “hang out” with a friend of Prince Lee’s in Virginia. After much persuasion, she agreed. Co-defendant Arielle Pierre and Prince Lee also recruited Jane Doe 2 to spend a few hours with the man. Neither of the women was told that they were being “sold” to the man. Lee, Olson, Pierre, and two others drove with the Jane Does from New York and arrived in Virginia Beach on the morning of June 1, 2013. Under observation by the police, Lee and Pierre were seen yelling at and grabbing the Jane Doe 2, trying to force the woman to remain and go to the “date.” Jane Doe 2 eventually ran into a nearby hotel, where employees hid her in the back room. Prince Lee also threatened to desert Jane Doe 1 in Virginia and throw away her car keys if she did not go forward with the plan. In the afternoon of June 1, the undercover officer arrived for the “date,” and all defendants were arrested. Pierre was sentenced on January 8, 2014, to 12 months in jail. Olson is scheduled to be sentenced on January 29, 2014.
This case was investigated by the Virginia Beach Police Department and Federal Bureau of Investigation. Assistant United States Attorney Elizabeth Yusi prosecuted 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.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Royce E. Curtin, Special Agent in Charge of the FBI’s Norfolk Field Office; and James Cervera, Chief of Police, Virginia Beach Police Department, made the announcement after sentencing by United States District Judge Raymond A. Jackson.
Lee pleaded guilty on October 3, 2013. According to court documents, on May 15, 2013, Prince Lee and a young woman posted an advertisement on craigslist.com in Hampton Roads offering to sell the woman as a “sex slave” for $10,000. The Virginia Beach Police Department was monitoring the site and came across the advertisement and responded. An undercover officer spoke with Prince Lee, and Lee agreed to sell three women for approximately $225,000. They agreed to meet in Virginia Beach on June 1, 2013. Prince Lee and co-defendant Henry Olson recruited Jane Doe 1, a 30-year-old also from New York, and told the woman she would receive $10,000 just to “hang out” with a friend of Prince Lee’s in Virginia. After much persuasion, she agreed. Co-defendant Arielle Pierre and Prince Lee also recruited Jane Doe 2 to spend a few hours with the man. Neither of the women was told that they were being “sold” to the man. Lee, Olson, Pierre, and two others drove with the Jane Does from New York and arrived in Virginia Beach on the morning of June 1, 2013. Under observation by the police, Lee and Pierre were seen yelling at and grabbing the Jane Doe 2, trying to force the woman to remain and go to the “date.” Jane Doe 2 eventually ran into a nearby hotel, where employees hid her in the back room. Prince Lee also threatened to desert Jane Doe 1 in Virginia and throw away her car keys if she did not go forward with the plan. In the afternoon of June 1, the undercover officer arrived for the “date,” and all defendants were arrested. Pierre was sentenced on January 8, 2014, to 12 months in jail. Olson is scheduled to be sentenced on January 29, 2014.
This case was investigated by the Virginia Beach Police Department and Federal Bureau of Investigation. Assistant United States Attorney Elizabeth Yusi prosecuted 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.
Former Portsmouth Sheriff’s Office Sergeant Sentenced on Conspiracy and Bribery Charges
WASHINGTON—A former sergeant of the Portsmouth Sheriff’s Office (PSO) was sentenced to serve 15 months in prison today for accepting bribes in exchange for favors and referrals.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Acting U.S. Attorney Dana J. Boente of the Eastern District of Virginia made the announcement.
Melvin Hike, 65, of Portsmouth, Virginia, was sentenced by U.S. District Judge Arenda L. Wright Allen of the Eastern District of Virginia. Hike was also sentenced to serve three years of supervised release and to pay a $10,000 fine.
On October 8, 2013, Hike pleaded guilty to conspiracy and federal programs bribery. According to court documents, throughout the relevant time period of 2008 to 2012, Hike was a PSO sergeant assigned to the warrant squad. Ulysses Stephenson, aka “Tugger,” was a bail bondsman based in Portsmouth whose income depended on the number of arrestee clients he served. At various times between 2008 and 2012, Stephenson gave Hike cash payments and other items of value, and in exchange, Hike referred arrestees to Stephenson as prospective clients. Stephenson previously pleaded guilty to conspiracy and federal programs bribery in connection with bribing Hike, and he was sentenced to 30 months in prison on November 2, 2012.
This case was investigated by the FBI. The case was prosecuted by Trial Attorneys Monique Abrishami and Peter Mason of the Criminal Division’s Public Integrity Section and Special Assistant U.S. Attorney Amy E. Cross of the Eastern District of Virginia.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Acting U.S. Attorney Dana J. Boente of the Eastern District of Virginia made the announcement.
Melvin Hike, 65, of Portsmouth, Virginia, was sentenced by U.S. District Judge Arenda L. Wright Allen of the Eastern District of Virginia. Hike was also sentenced to serve three years of supervised release and to pay a $10,000 fine.
On October 8, 2013, Hike pleaded guilty to conspiracy and federal programs bribery. According to court documents, throughout the relevant time period of 2008 to 2012, Hike was a PSO sergeant assigned to the warrant squad. Ulysses Stephenson, aka “Tugger,” was a bail bondsman based in Portsmouth whose income depended on the number of arrestee clients he served. At various times between 2008 and 2012, Stephenson gave Hike cash payments and other items of value, and in exchange, Hike referred arrestees to Stephenson as prospective clients. Stephenson previously pleaded guilty to conspiracy and federal programs bribery in connection with bribing Hike, and he was sentenced to 30 months in prison on November 2, 2012.
This case was investigated by the FBI. The case was prosecuted by Trial Attorneys Monique Abrishami and Peter Mason of the Criminal Division’s Public Integrity Section and Special Assistant U.S. Attorney Amy E. Cross of the Eastern District of Virginia.
Former Virginia Governor and Former First Lady Indicted on Public Corruption and Related Charges
RICHMOND—A federal grand today returned a 14-count indictment against former Virginia Governor Robert F. McDonnell and former First Lady Maureen G. McDonnell for allegedly participating in a scheme to violate federal public corruption laws.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Mythili Raman, Acting Assistant Attorney General for the Justice Department’s Criminal Division; Jeffrey C. Mazanec, Special Agent in Charge of the FBI’s Richmond Field Office; Richard Weber, Chief of the Internal Revenue Service-Criminal Investigation (IRS-CI); and Colonel W. Steven Flaherty, Virginia State Police Superintendent, made the announcement.
The indictment, returned in the Eastern District of Virginia, charges Robert McDonnell and Maureen McDonnell, both 59 and of Glen Allen, Virginia, with one count of conspiracy to commit honest-services wire fraud; three counts of honest-services wire fraud; one count of conspiracy to obtain property under color of official right; six counts of obtaining property under color of official right; and one count of making false statements to a federal credit union. Robert McDonnell is also charged with an additional count of making a false statement to a financial institution, and Maureen McDonnell is charged with one count of obstruction of an official proceeding.
“I thank the Assistant U.S. Attorneys, FBI, Virginia State Police, and the Internal Revenue Service-Criminal Investigation for their exceptional efforts in the investigation of this case,” said Acting U.S. Attorney Boente. “We will continue to work tirelessly with our law enforcement partners to investigate and prosecute public corruption.”
“Today’s charges represent the Justice Department’s continued commitment to rooting out public corruption at all levels of government,” said Acting Assistant Attorney General Raman. “Ensuring that elected officials uphold the public’s trust is one of our most critical responsibilities.”
“One of the most important investigative responsibilities with which the FBI is tasked is ensuring that the integrity of our elected public officials has not been compromised,” said FBI SAC Mazanec. “The Richmond Division of the FBI and our law enforcement partners have diligently worked this lengthy, detailed, and sensitive matter. I want to thank all those who have worked very hard and with great care on this investigation.”
“The state police and FBI agents assigned to this case have devoted an extensive amount of time and effort to this matter,” said Colonel Flaherty. “They are to be commended for their professionalism, objectivity, and dedication to duty in conducting this highly complex and sensitive investigation.”
“Public officials hold positions of trust and must accept the transparency and accountability that our laws require and their constituents expect,” said IRS-CI Chief Weber. “IRS-CI stands committed to investigating those officials. This case should serve as a strong warning to those who might consider similar behavior. No one is above the law, and everyone is accountable for their misdeeds.”
According to the indictment, from April 2011 through March 2013, the McDonnells participated in a scheme to use the former governor’s official position to enrich themselves and their family members by soliciting and obtaining payments, loans, gifts, and other things of value from Star Scientific, a Virginia-based corporation, and “JW,” then Star Scientific’s chief executive officer. The McDonnells obtained the things of value in exchange for the former governor performing official actions on an as-needed basis to legitimize, promote, and obtain research studies for Star’s products, including the dietary supplement Anatabloc®.
As alleged in the indictment, the McDonnells obtained from JW more than $135,000 in direct payments as gifts and loans, thousands of dollars in golf outings, and numerous other things of value. As part of the alleged scheme, the official actions that Robert McDonnell performed included arranging meetings for JW with Virginia government officials, hosting and attending events at the Governor’s Mansion designed to encourage Virginia university researchers to initiate studies of Star’s products and to promote Star’s products to doctors for referral to their patients, contacting other Virginia government officials as part of an effort to encourage Virginia state research universities to initiate studies of Star’s products, and promoting Star’s products and facilitating its relationships with Virginia government officials.
The indictment further alleges that the McDonnells attempted to conceal the things of value received from JW and Star to hide the nature and scope of their dealings with JW from the citizens of Virginia by, for example, routing things of value through family members and corporate entities controlled by the former governor to avoid annual disclosure requirements. Moreover, the indictment alleges that on October 3, 2012, Robert McDonnell sent loan paperwork to a lender that did not disclose the loans from JW, and, on February 1, 2013, the McDonnells signed loan paperwork submitted to another lender that did not disclose the loans. Similarly, the indictment alleges that on February 15, 2013, Maureen McDonnell was questioned by law enforcement about the loans and made false and misleading statements regarding the defendants’ relationship with JW. Three days later, on February 18, 2013, Robert McDonnell is alleged to have sent loan paperwork to one of the previously mentioned lenders disclosing the loans from JW. Additionally, after her interview with law enforcement, Maureen McDonnell allegedly wrote a handwritten note to JW in which she falsely attempted to make it appear that she and JW had previously discussed and agreed that she would return certain designer luxury goods rather than keep them permanently, all as part of an effort to obstruct, influence, and impede the investigation.
An indictment is merely an accusation, and the defendants are presumed innocent unless and until proven guilty.
If convicted, the McDonnells could each face a maximum statutory sentence of 20 years in prison and a fine of the greater of $250,000 or twice the gross gain or loss on the conspiracy to commit honest-services wire fraud count, the honest-services wire fraud counts, the conspiracy to obtain property under color of official right count, and the obtaining property under color of official right counts; a maximum statutory sentence of 30 years in prison and a fine of the greater of $1,000,000 or twice the gross gain or loss on the false statement counts; and a maximum statutory sentence of 20 years in prison and a fine of the greater of $250,000 or twice the gross gain or loss on the obstruction of an official proceeding count.
The case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry, Jessica D. Aber, and Ryan S. Faulconer of the U.S. Attorney’s Office for the Eastern District of Virginia and Deputy Chief David V. Harbach, II of the Criminal Division’s Public Integrity Section. The case is being investigated by the FBI, IRS-CI and the Virginia State Police.
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.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Mythili Raman, Acting Assistant Attorney General for the Justice Department’s Criminal Division; Jeffrey C. Mazanec, Special Agent in Charge of the FBI’s Richmond Field Office; Richard Weber, Chief of the Internal Revenue Service-Criminal Investigation (IRS-CI); and Colonel W. Steven Flaherty, Virginia State Police Superintendent, made the announcement.
The indictment, returned in the Eastern District of Virginia, charges Robert McDonnell and Maureen McDonnell, both 59 and of Glen Allen, Virginia, with one count of conspiracy to commit honest-services wire fraud; three counts of honest-services wire fraud; one count of conspiracy to obtain property under color of official right; six counts of obtaining property under color of official right; and one count of making false statements to a federal credit union. Robert McDonnell is also charged with an additional count of making a false statement to a financial institution, and Maureen McDonnell is charged with one count of obstruction of an official proceeding.
“I thank the Assistant U.S. Attorneys, FBI, Virginia State Police, and the Internal Revenue Service-Criminal Investigation for their exceptional efforts in the investigation of this case,” said Acting U.S. Attorney Boente. “We will continue to work tirelessly with our law enforcement partners to investigate and prosecute public corruption.”
“Today’s charges represent the Justice Department’s continued commitment to rooting out public corruption at all levels of government,” said Acting Assistant Attorney General Raman. “Ensuring that elected officials uphold the public’s trust is one of our most critical responsibilities.”
“One of the most important investigative responsibilities with which the FBI is tasked is ensuring that the integrity of our elected public officials has not been compromised,” said FBI SAC Mazanec. “The Richmond Division of the FBI and our law enforcement partners have diligently worked this lengthy, detailed, and sensitive matter. I want to thank all those who have worked very hard and with great care on this investigation.”
“The state police and FBI agents assigned to this case have devoted an extensive amount of time and effort to this matter,” said Colonel Flaherty. “They are to be commended for their professionalism, objectivity, and dedication to duty in conducting this highly complex and sensitive investigation.”
“Public officials hold positions of trust and must accept the transparency and accountability that our laws require and their constituents expect,” said IRS-CI Chief Weber. “IRS-CI stands committed to investigating those officials. This case should serve as a strong warning to those who might consider similar behavior. No one is above the law, and everyone is accountable for their misdeeds.”
According to the indictment, from April 2011 through March 2013, the McDonnells participated in a scheme to use the former governor’s official position to enrich themselves and their family members by soliciting and obtaining payments, loans, gifts, and other things of value from Star Scientific, a Virginia-based corporation, and “JW,” then Star Scientific’s chief executive officer. The McDonnells obtained the things of value in exchange for the former governor performing official actions on an as-needed basis to legitimize, promote, and obtain research studies for Star’s products, including the dietary supplement Anatabloc®.
As alleged in the indictment, the McDonnells obtained from JW more than $135,000 in direct payments as gifts and loans, thousands of dollars in golf outings, and numerous other things of value. As part of the alleged scheme, the official actions that Robert McDonnell performed included arranging meetings for JW with Virginia government officials, hosting and attending events at the Governor’s Mansion designed to encourage Virginia university researchers to initiate studies of Star’s products and to promote Star’s products to doctors for referral to their patients, contacting other Virginia government officials as part of an effort to encourage Virginia state research universities to initiate studies of Star’s products, and promoting Star’s products and facilitating its relationships with Virginia government officials.
The indictment further alleges that the McDonnells attempted to conceal the things of value received from JW and Star to hide the nature and scope of their dealings with JW from the citizens of Virginia by, for example, routing things of value through family members and corporate entities controlled by the former governor to avoid annual disclosure requirements. Moreover, the indictment alleges that on October 3, 2012, Robert McDonnell sent loan paperwork to a lender that did not disclose the loans from JW, and, on February 1, 2013, the McDonnells signed loan paperwork submitted to another lender that did not disclose the loans. Similarly, the indictment alleges that on February 15, 2013, Maureen McDonnell was questioned by law enforcement about the loans and made false and misleading statements regarding the defendants’ relationship with JW. Three days later, on February 18, 2013, Robert McDonnell is alleged to have sent loan paperwork to one of the previously mentioned lenders disclosing the loans from JW. Additionally, after her interview with law enforcement, Maureen McDonnell allegedly wrote a handwritten note to JW in which she falsely attempted to make it appear that she and JW had previously discussed and agreed that she would return certain designer luxury goods rather than keep them permanently, all as part of an effort to obstruct, influence, and impede the investigation.
An indictment is merely an accusation, and the defendants are presumed innocent unless and until proven guilty.
If convicted, the McDonnells could each face a maximum statutory sentence of 20 years in prison and a fine of the greater of $250,000 or twice the gross gain or loss on the conspiracy to commit honest-services wire fraud count, the honest-services wire fraud counts, the conspiracy to obtain property under color of official right count, and the obtaining property under color of official right counts; a maximum statutory sentence of 30 years in prison and a fine of the greater of $1,000,000 or twice the gross gain or loss on the false statement counts; and a maximum statutory sentence of 20 years in prison and a fine of the greater of $250,000 or twice the gross gain or loss on the obstruction of an official proceeding count.
The case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry, Jessica D. Aber, and Ryan S. Faulconer of the U.S. Attorney’s Office for the Eastern District of Virginia and Deputy Chief David V. Harbach, II of the Criminal Division’s Public Integrity Section. The case is being investigated by the FBI, IRS-CI and the Virginia State Police.
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.
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