The United States Attorney’s Office for the Middle District of Pennsylvania announced the filing of an indictment in U.S. District Court in Harrisburg today charging Donald Jackson, Jr. age 28, of Harrisburg, Pennsylvania, with possessing with the intent to distribute crack cocaine.
The investigation was conducted by the Harrisburg Police Department and the FBI. The case is being prosecuted by Assistant U.S. Attorney Joseph J. Terz.
Indictments and criminal informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
In this case, the maximum penalty under the federal statute is 20 years’ imprisonment, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the judge is also required to consider and weigh a number of factors, including the nature, circumstances, and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational, and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
Thursday, February 27, 2014
Indictment Charges Philadelphia Man in Multiple Bank Heists
PHILADELPHIA—William Butler, 48, of Philadelphia, Pennsylvania, was charged today by indictment with committing four armed bank robberies at two separate Center City banks in January 2014, announced United States Attorney Zane David Memeger.
According to the indictment, Butler was armed with a knife when he robbed the Republic Bank branch at 1818 Market Street on January 17 and January 27 and the Citizens Bank branch at 1701 John F. Kennedy Boulevard on January 24 and January 28. Butler took just over $11,000 total in the four robberies.
If convicted, Butler faces a maximum possible sentence of 100 years in prison, five years of supervised release, a $1 million fine, and a $400 special assessment.
The case was investigated by Federal Bureau of Investigation and the Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Anita Eve.
An indictment, information or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
According to the indictment, Butler was armed with a knife when he robbed the Republic Bank branch at 1818 Market Street on January 17 and January 27 and the Citizens Bank branch at 1701 John F. Kennedy Boulevard on January 24 and January 28. Butler took just over $11,000 total in the four robberies.
If convicted, Butler faces a maximum possible sentence of 100 years in prison, five years of supervised release, a $1 million fine, and a $400 special assessment.
The case was investigated by Federal Bureau of Investigation and the Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Anita Eve.
An indictment, information or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Resident of Spain Pleads Guilty in Manhattan Federal Court in $16 Million Investment Fraud Scheme
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (FBI), announced today that Anthonie R. Sparrow pled guilty for his role in perpetrating a $16 million investment scheme that victimized hundreds of investors around the world. Sparrow, who was charged in December 2009 and extradited from Spain in August 2013, pled guilty today in Manhattan federal court before U.S. Magistrate Judge Debra Freeman.
Manhattan U.S. Attorney Preet Bharara said, “Anthonie Sparrow engaged in a flagrant fraud, stealing millions of dollars from hundreds of innocent victims around the world, and then fled to Spain to try to avoid the consequences of his crime. His prosecution, possible only through an extradition from Spain, shows this office’s resolve in holding accountable those who victimize innocent investors.”
Assistant Director in Charge George Venizelos said, “Sparrow minted his own destiny by lying to investors and cheating them out of millions of dollars. When the game was up, Sparrow fled to Spain, where he thought he was beyond the reach of the FBI. Today, Sparrow finds himself guilty as charged, agreeing to forfeit all 16 million dollars made in his illicit scheme.”
According to the allegations contained in the indictment and statements made at court proceedings:
From 2002 to January 2005, Sparrow and co-defendant Masroor A. Khan (Khan) orchestrated and carried out an extensive fraudulent coin investment scheme. The defendants solicited victims to invest in rare, collectible coins through Lloyd’s & Associates Asset Management Ltd. (LAM), a purported collectible coin and precious metal business run by Sparrow. The victims were directed to wire funds—purportedly for investments in rare coins—to LAM bank accounts in New York that Sparrow controlled. Khan and Sparrow told the victims that these funds would be used to purchase coins and that the coins would then be held at Pinnacle Depository Service (Pinnacle), a purported coin depository and secure storage area, which was also run by Sparrow.
However, rather than purchase coins with the victims’ funds as the defendants had promised, Sparrow simply diverted the vast majority of the money, totaling approximately $16 million, to a bank account in Cyprus controlled by LAM. To prevent the victims from discovering the theft of their investments, Sparrow maintained a website where victims were given false information about the value of the coins they supposedly owned. Sparrow deliberately discouraged victims from coming to view their coins in person, and, when certain victims insisted on doing so, he staged elaborate ruses to prevent them from seeing more than a few coins.
Beginning in late 2004, victims began to demand the return of their funds. In response, in January 2005, Sparrow closed the New York office of LAM and fled to Spain.
Khan remains a fugitive from the charges contained in the Indictment.
Mr. Bharara praised the outstanding investigative work of the FBI. He also thanked the Spanish National Police for their assistance in the arrest and extradition of Sparrow.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Alexander J. Wilson is in charge of the prosecution.
The pending charges against Khan are merely accusations, and he is presumed innocent unless and until proven guilty.
Manhattan U.S. Attorney Preet Bharara said, “Anthonie Sparrow engaged in a flagrant fraud, stealing millions of dollars from hundreds of innocent victims around the world, and then fled to Spain to try to avoid the consequences of his crime. His prosecution, possible only through an extradition from Spain, shows this office’s resolve in holding accountable those who victimize innocent investors.”
Assistant Director in Charge George Venizelos said, “Sparrow minted his own destiny by lying to investors and cheating them out of millions of dollars. When the game was up, Sparrow fled to Spain, where he thought he was beyond the reach of the FBI. Today, Sparrow finds himself guilty as charged, agreeing to forfeit all 16 million dollars made in his illicit scheme.”
According to the allegations contained in the indictment and statements made at court proceedings:
From 2002 to January 2005, Sparrow and co-defendant Masroor A. Khan (Khan) orchestrated and carried out an extensive fraudulent coin investment scheme. The defendants solicited victims to invest in rare, collectible coins through Lloyd’s & Associates Asset Management Ltd. (LAM), a purported collectible coin and precious metal business run by Sparrow. The victims were directed to wire funds—purportedly for investments in rare coins—to LAM bank accounts in New York that Sparrow controlled. Khan and Sparrow told the victims that these funds would be used to purchase coins and that the coins would then be held at Pinnacle Depository Service (Pinnacle), a purported coin depository and secure storage area, which was also run by Sparrow.
However, rather than purchase coins with the victims’ funds as the defendants had promised, Sparrow simply diverted the vast majority of the money, totaling approximately $16 million, to a bank account in Cyprus controlled by LAM. To prevent the victims from discovering the theft of their investments, Sparrow maintained a website where victims were given false information about the value of the coins they supposedly owned. Sparrow deliberately discouraged victims from coming to view their coins in person, and, when certain victims insisted on doing so, he staged elaborate ruses to prevent them from seeing more than a few coins.
Beginning in late 2004, victims began to demand the return of their funds. In response, in January 2005, Sparrow closed the New York office of LAM and fled to Spain.
* * *
Sparrow, 53, of Estepona, Spain, pled guilty to one count of conspiracy to commit wire fraud and one count of wire fraud. He faces a maximum sentence of 20 years in prison on each count. Sparrow is scheduled to be sentenced by Judge Robert W. Sweet on June 2, 2014, at 4:00 p.m. As part of his guilty plea, Sparrow also agreed to forfeit $16 million to the United States. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.Khan remains a fugitive from the charges contained in the Indictment.
Mr. Bharara praised the outstanding investigative work of the FBI. He also thanked the Spanish National Police for their assistance in the arrest and extradition of Sparrow.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Alexander J. Wilson is in charge of the prosecution.
The pending charges against Khan are merely accusations, and he is presumed innocent unless and until proven guilty.
Liying Lin Found Guilty of Immigration Fraud Offenses Following One-Week Jury Trial in Manhattan Federal Court
Preet Bharara, the United States Attorney for the Southern District of New York, announced that Liying Lin, a/k/a “the Deacon,” was found guilty yesterday in Manhattan federal court of one count of conspiracy to commit immigration fraud and two counts of immigration fraud. Lin was convicted after a seven-day jury trial presided over by U.S. District Judge Robert P. Patterson, Jr. She was acquitted of one count of immigration fraud.
Manhattan U.S. Attorney Preet Bharara said, “As a unanimous jury decided, Liying Lin fraudulently exploited a program designed to provide a safe haven for actual victims of persecution. She coached asylum seekers on how to lie on their applications and in immigration proceedings, even signaling applicants when they deviated from her fraudulent script.”
According to the indictment filed in Manhattan federal court, other court documents, and the evidence admitted at trial:
Lin, a deacon at the Full Gospel Global Mission Church in Flushing, New York, trained applicants for political asylum on what questions about religious beliefs would be asked during these applicants’ asylum interviews and then coached the clients on how to answer. She conducted individual training sessions with certain applicants where she supplied the applicants with false details in support of their fraudulent asylum claims.
Lin also served as a translator during asylum interviews. Lin advised certain clients before their asylum interview that if they gave a wrong answer, she would kick them to alert them of their wrong answer.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation.
The case is being handled by the Office’s Organized Crime Unit. Assistant U.S. Attorneys Brian Blais and Rahul Mukhi are in charge of the prosecution.
Manhattan U.S. Attorney Preet Bharara said, “As a unanimous jury decided, Liying Lin fraudulently exploited a program designed to provide a safe haven for actual victims of persecution. She coached asylum seekers on how to lie on their applications and in immigration proceedings, even signaling applicants when they deviated from her fraudulent script.”
According to the indictment filed in Manhattan federal court, other court documents, and the evidence admitted at trial:
Lin, a deacon at the Full Gospel Global Mission Church in Flushing, New York, trained applicants for political asylum on what questions about religious beliefs would be asked during these applicants’ asylum interviews and then coached the clients on how to answer. She conducted individual training sessions with certain applicants where she supplied the applicants with false details in support of their fraudulent asylum claims.
Lin also served as a translator during asylum interviews. Lin advised certain clients before their asylum interview that if they gave a wrong answer, she would kick them to alert them of their wrong answer.
* * *
Lin, 30, of Flushing, New York, faces a maximum sentence of five years in prison for the conspiracy count and a maximum sentence of 10 years in prison for each of the substantive immigration fraud counts; she is scheduled to be sentenced by Judge Patterson on June 2, 2014. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as the defendant’s sentence will be determined by the judge.Mr. Bharara praised the investigative work of the Federal Bureau of Investigation.
The case is being handled by the Office’s Organized Crime Unit. Assistant U.S. Attorneys Brian Blais and Rahul Mukhi are in charge of the prosecution.
Doctor Admits Taking Bribes in Test Referral Scheme with New Jersey Clinical Lab
NEWARKJ—An internist with a practice in Montclair, New Jersey, admitted today accepting bribes in exchange for test referrals as part of a long-running scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey; its president; and numerous associates, U.S. Attorney Paul J. Fishman announced.
Charles Goldberg, 60, of West Orange, New Jersey, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes.
Including Goldberg, 23 people—12 of them physicians—have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.
According to documents filed in these and related cases and statements made in court:
Goldberg admitted accepting bribes of $1,800 per month through a sham lease agreement with BLS, which identified the waiting room, bathroom, and one examination room in Goldberg’s office as being leased.
The bribery count to which Goldberg pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. He will be sentenced on a date to be determined. As part of his guilty plea, Goldberg agreed to forfeit $58,000, representing the bribes he received from BLS.
The BLS investigation has recovered more than $7 million to date through forfeiture.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty pleas.
The government is represented by Senior Litigation Counsel Andrew Leven, Assistant U.S. Attorney Joseph Minish, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.
U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $535 million in health care fraud and government fraud settlements, judgments, fines, restitution, and forfeiture under the False Claims Act; the Food, Drug, and Cosmetic Act; and other statutes.
Charles Goldberg, 60, of West Orange, New Jersey, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of accepting bribes.
Including Goldberg, 23 people—12 of them physicians—have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.
According to documents filed in these and related cases and statements made in court:
Goldberg admitted accepting bribes of $1,800 per month through a sham lease agreement with BLS, which identified the waiting room, bathroom, and one examination room in Goldberg’s office as being leased.
The bribery count to which Goldberg pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. He will be sentenced on a date to be determined. As part of his guilty plea, Goldberg agreed to forfeit $58,000, representing the bribes he received from BLS.
The BLS investigation has recovered more than $7 million to date through forfeiture.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty pleas.
The government is represented by Senior Litigation Counsel Andrew Leven, Assistant U.S. Attorney Joseph Minish, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.
U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $535 million in health care fraud and government fraud settlements, judgments, fines, restitution, and forfeiture under the False Claims Act; the Food, Drug, and Cosmetic Act; and other statutes.
Wednesday, February 26, 2014
Mexican Drug Supplier Sentenced
COLUMBIA, SC—United States Attorney Bill Nettles stated today that Ismael Juarex Delgado, age 32, of Guerro, Mexico, was sentenced today in federal court in Columbia, South Carolina, for conspiracy to possess with intent to distribute more than five kilograms of cocaine, in violation of Title 21, United States Code, Section 846.
United States District Judge Joseph F. Anderson, Jr. of Columbia sentenced Delgado to 12 years’ imprisonment, followed by 10 years of supervised release. Delgado, an illegal alien, will be deported after serving his active sentence. A $500,000 money judgment was also entered against Delgado.
Delgado was one of over 120 defendants charged in 2009 following a series of court-authorized, FBI-monitored wiretaps over multiple telephones in the Columbia area. The evidence in the case indicated that Delgado, who remained a fugitive on this indictment until his 2013 arrest in Georgia, assisted his brother Israel Juarez Delgado, who was a major supplier of kilogram quantities of cocaine to a number of local drug organizations. Israel Juarez Delgado was previously sentenced to 25 years’ imprisonment.
The case was investigated by agents and officers from the Federal Bureau of Investigation (FBI) Midlands Violent Gang Task Force. Assistant United States Attorney Stacey D. Haynes of the Columbia office prosecuted the case.
United States District Judge Joseph F. Anderson, Jr. of Columbia sentenced Delgado to 12 years’ imprisonment, followed by 10 years of supervised release. Delgado, an illegal alien, will be deported after serving his active sentence. A $500,000 money judgment was also entered against Delgado.
Delgado was one of over 120 defendants charged in 2009 following a series of court-authorized, FBI-monitored wiretaps over multiple telephones in the Columbia area. The evidence in the case indicated that Delgado, who remained a fugitive on this indictment until his 2013 arrest in Georgia, assisted his brother Israel Juarez Delgado, who was a major supplier of kilogram quantities of cocaine to a number of local drug organizations. Israel Juarez Delgado was previously sentenced to 25 years’ imprisonment.
The case was investigated by agents and officers from the Federal Bureau of Investigation (FBI) Midlands Violent Gang Task Force. Assistant United States Attorney Stacey D. Haynes of the Columbia office prosecuted the case.
Columbia Couple Sentenced in Federal Court on Drug Charges
COLUMBIA, SC—United States Attorney Bill Nettles stated today that Ivan B. Moore, a/k/a “AI,” and Shannon Yvette Moore, both of Columbia, South Carolina, were sentenced today in federal court in Columbia, South Carolina. Ivan Moore pled guilty to conspiracy to possess with the intent to distribute five kilograms or more of cocaine and 280 grams or more of cocaine base. Shannon Moore pled guilty to conspiracy to possess with the intent to distribute 500 grams or more of cocaine and 28 grams or more of cocaine base. Chief United States District Judge Terry L. Wooten of Columbia sentenced Ivan Moore to 300 months’ (25 years) incarceration, followed by 10 years of supervised release, and a special assessment of $100. Shannon Moore was sentenced to 120 months’ (10 years) incarceration, followed by four years of supervised release, and a special assessment of $100.
Evidence presented at the change of plea hearing established that Ivan Moore was a large-scale cocaine and crack cocaine dealer in the Columbia area. Moore bought and sold multi-kilograms of cocaine and crack cocaine primarily operating in the Ames Road area of Columbia. His wife, Shannon Moore, helped in his drug business. In addition to selling crack cocaine, Shannon Moore also drove Ivan during some of his drug deals and also traveled to California to make purchases of cocaine to ship back to Columbia to further the conspiracy.
The case was investigated by agents of the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Federal Bureau of Investigation. Assistant United States Attorney William K. Witherspoon of the Columbia office prosecuted the case.
Evidence presented at the change of plea hearing established that Ivan Moore was a large-scale cocaine and crack cocaine dealer in the Columbia area. Moore bought and sold multi-kilograms of cocaine and crack cocaine primarily operating in the Ames Road area of Columbia. His wife, Shannon Moore, helped in his drug business. In addition to selling crack cocaine, Shannon Moore also drove Ivan during some of his drug deals and also traveled to California to make purchases of cocaine to ship back to Columbia to further the conspiracy.
The case was investigated by agents of the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Federal Bureau of Investigation. Assistant United States Attorney William K. Witherspoon of the Columbia office prosecuted the case.
Cambria County Woman Sentenced to Probation with Home Detention for Marijuana Trafficking Scheme
JOHNSTOWN, PA—A resident of Carrolltown, Pennsylvania has been sentenced in federal court to five years’ probation, the first 12 months of which must be served by conditions of home confinement, on her conviction of conspiracy to distribute marijuana, United States Attorney David J. Hickton announced today.
United States District Judge Kim R. Gibson imposed the sentence on Marguerite G. Lowmaster, 67, of Carrolltown, Pennsylvania.
According to information presented to the court, from March 2009 to May 9, 2011, Marguerite G. Lowmaster conspired to distribute and possess with intent to distribute at least 10 kilograms, but less than 20 kilograms, of marijuana. In addition, evidence presented to the court at the time of Marguerite G. Lowmaster’s sentencing reflected that she conspired with George M. Lowmaster and others with the intent to facilitate and promote George M. Lowmaster’s drug distribution organization.
Assistant United States Attorney John J. Valkovci, Jr. prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the joint task force, headed by the Laurel Highlands Resident Agency of the Federal Bureau of Investigation, for the investigation leading to the successful prosecution of Marguerite G. Lowmaster. Other agencies participating on the task force include the Internal Revenue Service-Criminal Investigation, Pennsylvania State Police, Pennsylvania Attorney General’s Office, Cambria County District Attorney’s Office, Carrolltown Police Department, Patton Police Department, Ebensburg Police Department, Portage Police Department, and Paint Township Police Department.
United States District Judge Kim R. Gibson imposed the sentence on Marguerite G. Lowmaster, 67, of Carrolltown, Pennsylvania.
According to information presented to the court, from March 2009 to May 9, 2011, Marguerite G. Lowmaster conspired to distribute and possess with intent to distribute at least 10 kilograms, but less than 20 kilograms, of marijuana. In addition, evidence presented to the court at the time of Marguerite G. Lowmaster’s sentencing reflected that she conspired with George M. Lowmaster and others with the intent to facilitate and promote George M. Lowmaster’s drug distribution organization.
Assistant United States Attorney John J. Valkovci, Jr. prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the joint task force, headed by the Laurel Highlands Resident Agency of the Federal Bureau of Investigation, for the investigation leading to the successful prosecution of Marguerite G. Lowmaster. Other agencies participating on the task force include the Internal Revenue Service-Criminal Investigation, Pennsylvania State Police, Pennsylvania Attorney General’s Office, Cambria County District Attorney’s Office, Carrolltown Police Department, Patton Police Department, Ebensburg Police Department, Portage Police Department, and Paint Township Police Department.
Huntington Woman Sentenced to Federal Prison for Stealing from Homeless Aid Program
HUNTINGTON, WV—A Huntington woman was sentenced today to a year and a day in federal prison for stealing more than $20,000 from a program that assists the homeless, United States Attorney Booth Goodwin announced. Patricia Howard, 54, embezzled the money from the Huntington Housing Authority’s Shelter Care Plus program in 2011 and 2012 while she was an employee of the Authority.
The Shelter Care Plus program receives federal funds to provide housing assistance for homeless people suffering from mental illness, chronic addiction, and AIDS. As an employee of the Huntington Housing Authority, Howard helped handle the Shelter Care Plus program’s finances. Her position enabled her to secretly make transfers of program funds to her personal bank account by disguising them as payments to obtain housing for the homeless. Howard’s scheme netted a total of $23,731, which she was ordered to repay as part of her sentence. Howard admitted her crime to federal law enforcement authorities after being caught.
In an unrelated case, Howard was recently convicted in state court for fraudulently using an access device. She is serving a one- to three-year state sentence for that conviction. Howard will begin serving the federal sentence imposed today after she finishes her time in state custody.
The federal Department of Housing and Urban Development’s Office of Inspector General and the Federal Bureau of Investigation conducted the investigation, assisted by the Huntington Police Department. Assistant United States Attorney Erik S. Goes handled the prosecution. Chief United States District Judge Robert C. Chambers presided over the case and imposed today’s sentence.
The Shelter Care Plus program receives federal funds to provide housing assistance for homeless people suffering from mental illness, chronic addiction, and AIDS. As an employee of the Huntington Housing Authority, Howard helped handle the Shelter Care Plus program’s finances. Her position enabled her to secretly make transfers of program funds to her personal bank account by disguising them as payments to obtain housing for the homeless. Howard’s scheme netted a total of $23,731, which she was ordered to repay as part of her sentence. Howard admitted her crime to federal law enforcement authorities after being caught.
In an unrelated case, Howard was recently convicted in state court for fraudulently using an access device. She is serving a one- to three-year state sentence for that conviction. Howard will begin serving the federal sentence imposed today after she finishes her time in state custody.
The federal Department of Housing and Urban Development’s Office of Inspector General and the Federal Bureau of Investigation conducted the investigation, assisted by the Huntington Police Department. Assistant United States Attorney Erik S. Goes handled the prosecution. Chief United States District Judge Robert C. Chambers presided over the case and imposed today’s sentence.
New Jersey Man Sentenced on Federal Bomb Threat Charge
The United States Attorney’s Office for the Middle District of Pennsylvania announced that William H. Klein, age 47, was sentenced today after pleading guilty to interstate communication with threat to injure charge.
According to United States Attorney Peter J. Smith, on July 5, 2013, Hershey Entertainment and Resorts received a call at approximately 9:52 p.m. in which a male caller stated, “If One Direction plays tomorrow, the stadium will blow up.” The stadium was placed on lockdown before the concert, a bomb sweep was performed, and a bag check was performed on all patrons coming into the stadium.
The call was made from a New Jersey number. Further investigation determined that the number is assigned to a pay phone outside of a 7-Eleven convenience store located in Northfield, New Jersey. Through video surveillance the caller was positively identified as William H. Klein.
On February 25, 2014, the United States District Judge Yvette Kane sentenced Klein to eight months’ imprisonment followed by two years of supervised release with two months to be served on home detention with electronic monitoring.
The United States Attorney’s Office and the Federal Bureau of Investigation stands in close partnership with the local law enforcement community to identify, thoroughly investigate, and prosecute such criminal conduct.
This case was investigated by the Federal Bureau of Investigation and the Derry Township Police Department. Prosecution was handled by Assistant United States Attorney Daryl F. Bloom.
According to United States Attorney Peter J. Smith, on July 5, 2013, Hershey Entertainment and Resorts received a call at approximately 9:52 p.m. in which a male caller stated, “If One Direction plays tomorrow, the stadium will blow up.” The stadium was placed on lockdown before the concert, a bomb sweep was performed, and a bag check was performed on all patrons coming into the stadium.
The call was made from a New Jersey number. Further investigation determined that the number is assigned to a pay phone outside of a 7-Eleven convenience store located in Northfield, New Jersey. Through video surveillance the caller was positively identified as William H. Klein.
On February 25, 2014, the United States District Judge Yvette Kane sentenced Klein to eight months’ imprisonment followed by two years of supervised release with two months to be served on home detention with electronic monitoring.
The United States Attorney’s Office and the Federal Bureau of Investigation stands in close partnership with the local law enforcement community to identify, thoroughly investigate, and prosecute such criminal conduct.
This case was investigated by the Federal Bureau of Investigation and the Derry Township Police Department. Prosecution was handled by Assistant United States Attorney Daryl F. Bloom.
Former Police Officer Admits Guilt in Robbery Plan
PHILADELPHIA—Former Philadelphia Police Officer Jeffrey Walker pleaded guilty today to a scheme in which he planned to rob a drug dealer while on official duty. Walker pleaded to attempted robbery that interferes with interstate commerce and carrying a firearm during and in relation to a crime of violence.
Walker told a cooperating witness (CW) that he wanted the CW to help him identify a drug dealer so that Walker could conduct a car stop for suspected drug violations or plant drugs in the car. On May 21, 2013, the CW informed Walker of a car parked outside a bar on West Girard Avenue. Walker drove up to the car, placed drugs inside the car, and then followed the driver when that person left the bar. When the car was pulled over, Philadelphia Police, including Walker, took the key to the driver’s home. Walker and the CW went to the driver’s home. When they exited the home, Walker was arrested and was in possession of $15,000 that he had taken from the house.
U.S. District Court Judge Eduardo C. Robreno scheduled a sentencing hearing for May 21, 2014. Walker faces an advisory sentencing guideline range of up to 10 years in prison.
The case was investigated by the FBI and Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Anthony Wzorek.
Walker told a cooperating witness (CW) that he wanted the CW to help him identify a drug dealer so that Walker could conduct a car stop for suspected drug violations or plant drugs in the car. On May 21, 2013, the CW informed Walker of a car parked outside a bar on West Girard Avenue. Walker drove up to the car, placed drugs inside the car, and then followed the driver when that person left the bar. When the car was pulled over, Philadelphia Police, including Walker, took the key to the driver’s home. Walker and the CW went to the driver’s home. When they exited the home, Walker was arrested and was in possession of $15,000 that he had taken from the house.
U.S. District Court Judge Eduardo C. Robreno scheduled a sentencing hearing for May 21, 2014. Walker faces an advisory sentencing guideline range of up to 10 years in prison.
The case was investigated by the FBI and Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Anthony Wzorek.
Former Oklahoma Jail Superintendents Convicted of Using Excessive Force Against Inmates
Today, a federal jury in the U.S. District Court for the Eastern District of Oklahoma in Muskogee, Oklahoma, convicted Raymond A. Barnes, 43, and Christopher A. Brown, 32, the former jail superintendent and assistant jail superintendent, respectively, of the Muskogee County Jail (MCJ) on multiple counts of civil rights offenses related to allegations of excessive force on inmates at MCJ on or between August 2009 and May 2011. Brown was also convicted of making material false statements to the FBI.
Both Barnes and Brown were found guilty of conspiring to violate the rights of inmates housed at MCJ by assaulting inmates themselves or by directing other jailers employed by MCJ to do so. Specifically, the defendants did or caused the following to be done: unjustifiably strike, assault, harm, and physically punish inmates at MCJ who were restrained, compliant, and not posing a physical threat; organize “meet and greets,” whereby jailers would scare, punish, and harm incoming inmates from neighboring counties by throwing and slamming the handcuffed inmates to the ground upon their arrival at MCJ; threaten to fire MCJ employees if they reported abusive behavior directly to the sheriff or to outside law enforcement authorities; require and encourage MCJ jailers to write incident reports that falsely justified uses of force and contained misleading or inaccurate accounts of what had occurred when force was used; and perpetuate an environment within MCJ that allowed unlawful beatings and assaults against inmates to continue indefinitely and without consequence.
Both defendants were also convicted of violating the rights of an inmate identified as J.R. when MCJ jailers slammed and threw J.R. head-first to the ground while he was handcuffed. Barnes was additionally convicted of violating the rights of a second inmate, G.T., for similar conduct. Brown was acquitted of violating the rights of G.T.
In addition, Brown was convicted of one count of making material false statements to the FBI. Brown falsely claimed that, during meet and greets, the incoming inmate was ordered out of the transport vehicle and then “gently placed” on the ground. But in fact, Brown knew at the time of his statement to the FBI that during these meet and greets the MCJ jailers routinely threw and slammed inmates to the ground even though the inmates were restrained and posed no physical threat.
“Our constitutional system of government requires this nation’s jailers to abide by the laws they enforce and to protect the constitutional rights of all persons in their custody,” said Acting Assistant Attorney General Jocelyn Samuels of the Civil Rights Division. “Today’s verdict demonstrates that the Department of Justice will vigorously prosecute anyone who abuses their official power to harm the people in their custody.”
The defendants face a statutory maximum penalty of 10 years for each of the civil rights convictions. Brown faces a statutory maximum penalty of five years for making material false statements to the FBI.
This case was investigated by the Muskogee Resident Agency of the Oklahoma City Division of the FBI and prosecuted by Trial Attorneys Fara Gold and Dana Mulhauser of the Civil Rights Division.
Both Barnes and Brown were found guilty of conspiring to violate the rights of inmates housed at MCJ by assaulting inmates themselves or by directing other jailers employed by MCJ to do so. Specifically, the defendants did or caused the following to be done: unjustifiably strike, assault, harm, and physically punish inmates at MCJ who were restrained, compliant, and not posing a physical threat; organize “meet and greets,” whereby jailers would scare, punish, and harm incoming inmates from neighboring counties by throwing and slamming the handcuffed inmates to the ground upon their arrival at MCJ; threaten to fire MCJ employees if they reported abusive behavior directly to the sheriff or to outside law enforcement authorities; require and encourage MCJ jailers to write incident reports that falsely justified uses of force and contained misleading or inaccurate accounts of what had occurred when force was used; and perpetuate an environment within MCJ that allowed unlawful beatings and assaults against inmates to continue indefinitely and without consequence.
Both defendants were also convicted of violating the rights of an inmate identified as J.R. when MCJ jailers slammed and threw J.R. head-first to the ground while he was handcuffed. Barnes was additionally convicted of violating the rights of a second inmate, G.T., for similar conduct. Brown was acquitted of violating the rights of G.T.
In addition, Brown was convicted of one count of making material false statements to the FBI. Brown falsely claimed that, during meet and greets, the incoming inmate was ordered out of the transport vehicle and then “gently placed” on the ground. But in fact, Brown knew at the time of his statement to the FBI that during these meet and greets the MCJ jailers routinely threw and slammed inmates to the ground even though the inmates were restrained and posed no physical threat.
“Our constitutional system of government requires this nation’s jailers to abide by the laws they enforce and to protect the constitutional rights of all persons in their custody,” said Acting Assistant Attorney General Jocelyn Samuels of the Civil Rights Division. “Today’s verdict demonstrates that the Department of Justice will vigorously prosecute anyone who abuses their official power to harm the people in their custody.”
The defendants face a statutory maximum penalty of 10 years for each of the civil rights convictions. Brown faces a statutory maximum penalty of five years for making material false statements to the FBI.
This case was investigated by the Muskogee Resident Agency of the Oklahoma City Division of the FBI and prosecuted by Trial Attorneys Fara Gold and Dana Mulhauser of the Civil Rights Division.
Clifton Insurance Adjuster Charged with Defrauding New Jersey Turnpike Authority and Insurance Companies of More Than $200,000
NEWARK—The owner of a New Jersey-based insurance adjusting company was arrested today for allegedly defrauding the New Jersey Turnpike Authority and certain insurance companies of more than $200,000, U.S. Attorney Paul J. Fishman announced.
Robert Napolitano, 54, of Clifton, New Jersey, the owner of Dawn to Dusk LLC, an insurance adjusting company that investigated and provided adjusting services to property and casualty insurance carriers in New Jersey, was arrested by special agents of the FBI and charged by complaint filed February 19, 2014, and unsealed today with one count of mail fraud. Napolitano is scheduled to make his initial appearance before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court later today.
According to the complaint:
From October 2011 to June 2013, Napolitano obtained by fraud more than $200,000 from the New Jersey Turnpike Authority (NJTA) and certain insurance companies in several ways, including instructing insurance companies whose motorists caused damage to the New Jersey Turnpike to issue checks payable to Dawn to Dusk. After the checks were mailed to Dawn to Dusk, Napolitano did not forward the payments to the NJTA and instead shared the money with his previously charged conspirator, Gerardo A. Blasi, an NJTA claims manager.
Blasi, 55, of Clifton, pleaded guilty December 11, 2013, before U.S. District Judge Kevin McNulty to an information charging him with using the mails to facilitate a scheme and artifice to defraud the NJTA and certain insurance companies in connection with his theft of more than $1.5 million from the authority and the insurance companies. He is scheduled to be sentenced March 19, 2014.
The fraud count with which Napolitano is charged is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine or twice the gross gain or loss from the offense.
U.S. Attorney Fishman credited special agents of the FBI Newark Field Office, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorney David L. Foster of the U.S. Attorney’s Office Special Prosecution’s Division.
Robert Napolitano, 54, of Clifton, New Jersey, the owner of Dawn to Dusk LLC, an insurance adjusting company that investigated and provided adjusting services to property and casualty insurance carriers in New Jersey, was arrested by special agents of the FBI and charged by complaint filed February 19, 2014, and unsealed today with one count of mail fraud. Napolitano is scheduled to make his initial appearance before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court later today.
According to the complaint:
From October 2011 to June 2013, Napolitano obtained by fraud more than $200,000 from the New Jersey Turnpike Authority (NJTA) and certain insurance companies in several ways, including instructing insurance companies whose motorists caused damage to the New Jersey Turnpike to issue checks payable to Dawn to Dusk. After the checks were mailed to Dawn to Dusk, Napolitano did not forward the payments to the NJTA and instead shared the money with his previously charged conspirator, Gerardo A. Blasi, an NJTA claims manager.
Blasi, 55, of Clifton, pleaded guilty December 11, 2013, before U.S. District Judge Kevin McNulty to an information charging him with using the mails to facilitate a scheme and artifice to defraud the NJTA and certain insurance companies in connection with his theft of more than $1.5 million from the authority and the insurance companies. He is scheduled to be sentenced March 19, 2014.
The fraud count with which Napolitano is charged is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine or twice the gross gain or loss from the offense.
U.S. Attorney Fishman credited special agents of the FBI Newark Field Office, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorney David L. Foster of the U.S. Attorney’s Office Special Prosecution’s Division.
Former Director of Finance of New Jersey-Based Toll Global Forwarding Admits Stealing $1.3 Million from the Company
TRENTON, NJ—The former director of finance of the Middlesex County-based integrated logistic services company Toll Global Forwarding today admitted stealing more than $1.3 million from her former employer through an elaborate false invoicing scheme, U.S. Attorney Paul J. Fishman announced.
Karen Sipes, 40, of Brick, New Jersey, pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to an information charging her with wire fraud for her theft from the multi-national company based in Carteret, New Jersey. She was originally charged by complaint in November 2012.
According to documents filed in this case and statements made in court:
While Sipes was employed at Toll Global Forwarding (TGF)—from August 2010 through August 2012—she was responsible for entering vendor transactions and invoices into TGF’s accounts payable accounting system and paying those vendors by preparing checks from TGF. As a result, Sipes had access to and significant control over TGF’s accounts payable accounting and bill payment systems.
In the false invoicing scheme, Sipes identified vendors with a high number of transactions and invoices in TGF’s accounting system. She admitted she would then create and input fake transactions and invoices for them, preparing checks payable to herself.
Sipes also admitted that she identified legitimate vendor transactions and invoices and changed vendors’ names to her name, making those checks payable to herself. She also used TGF checks to pay the credit card bill of a family member and accessed TGF’s accounting system to remove any record of the fraudulent transactions.
The wire fraud count to which Sipes pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. As part of her guilty plea, Sipes is required to pay restitution of $1,335,698.93 to Toll Global Forwarding. Sentencing is scheduled for July 29, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Courtney M. Oliva and Special Assistant U.S. Attorney Thomas S. Kearney of the U.S. Attorney’s Office General Crimes Unit in Newark.
Karen Sipes, 40, of Brick, New Jersey, pleaded guilty before U.S. District Judge Joel A. Pisano in Trenton federal court to an information charging her with wire fraud for her theft from the multi-national company based in Carteret, New Jersey. She was originally charged by complaint in November 2012.
According to documents filed in this case and statements made in court:
While Sipes was employed at Toll Global Forwarding (TGF)—from August 2010 through August 2012—she was responsible for entering vendor transactions and invoices into TGF’s accounts payable accounting system and paying those vendors by preparing checks from TGF. As a result, Sipes had access to and significant control over TGF’s accounts payable accounting and bill payment systems.
In the false invoicing scheme, Sipes identified vendors with a high number of transactions and invoices in TGF’s accounting system. She admitted she would then create and input fake transactions and invoices for them, preparing checks payable to herself.
Sipes also admitted that she identified legitimate vendor transactions and invoices and changed vendors’ names to her name, making those checks payable to herself. She also used TGF checks to pay the credit card bill of a family member and accessed TGF’s accounting system to remove any record of the fraudulent transactions.
The wire fraud count to which Sipes pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. As part of her guilty plea, Sipes is required to pay restitution of $1,335,698.93 to Toll Global Forwarding. Sentencing is scheduled for July 29, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Courtney M. Oliva and Special Assistant U.S. Attorney Thomas S. Kearney of the U.S. Attorney’s Office General Crimes Unit in Newark.
Leader of Massive Real Estate Fraud Scheme Sentenced to 22 Years in Prison for Fraud and Money Laundering
TRENTON, NJ—An Ocean County, New Jersey man was sentenced today to 264 months in prison for running a real estate investment fraud scheme that caused $200 million in losses and laundering the proceeds of the scheme, U.S. Attorney Paul J. Fishman announced.
Eliyahu Weinstein, a/k/a “Eli Weinstein,” a/k/a “Edward Weinstein,” a/k/a “Eddie Weinstein,” 38, of Lakewood, New Jersey, previously pleaded guilty before U.S. District Judge Joel A. Pisano to two counts of an indictment charging him with conspiracy to commit wire fraud and money laundering. Weinstein’s co-defendant, Vladimir Siforov, is charged in the indictment with three counts of wire fraud and remains a fugitive. According to documents filed in this case and statements made in court:
From June 2004 through August 2011, Weinstein orchestrated—with the help of Siforov and others—a real estate investment fraud scheme headquartered in Lakewood that resulted in multi-million-dollar losses to victim investors.
To induce victims to invest, Weinstein and others made various types of materially false and misleading statements and omissions. Weinstein and others told victims that Weinstein’s inside access to certain real estate opportunities allowed him to buy a particular piece of property at a below-market price. Weinstein and others also told victims that their money would be used to purchase a specific property, and the property would be quickly resold—or “flipped”—to a third-party purchaser that Weinstein had lined up. Victims were also told that the victims’ money would be held in escrow until the closing of a purported real estate transaction.
Weinstein bolstered his lies by creating and causing to be created various types of fraudulent documents, including “show checks,” which Weinstein led victims to believe represented Weinstein’s investments in specific transactions but which in fact were never deposited; forged checks, which had actually been negotiated for small amounts but which Weinstein altered so as to appear worth millions of dollars; and various kinds of phony legal documents, including mortgages and deeds.
Weinstein and others initially targeted victims from the Orthodox Jewish community to which Weinstein belonged, exploiting his standing in and knowledge of the customs and practices of this community to further the scheme. Weinstein abused the Orthodox community’s practice of engaging in transactions based on trust, and without paperwork, to obtain money from his victims without substantial written records. He would then falsely represent that specific real estate transactions existed, that the victims’ monies were used to fund those transactions, or that the victims’ profits from those transactions were being “rolled” into new investments. Weinstein also used a portion of the fraud’s proceeds to fund “charitable and religious contributions,” which he used to elevate his reputation within the Orthodox Jewish community.
By 2010, Weinstein had tarnished his reputation in the Orthodox Jewish community due to the massive losses caused by his fraud scheme and found it difficult to obtain more money to further the scheme from within the community. In April 2010, Weinstein and others began soliciting victims from outside of the Orthodox Jewish community, whom they defrauded of additional millions of dollars.
Weinstein also used millions of dollars fraudulently obtained from his victims to fund his own lavish spending, including millions of dollars’ worth of antique Judaica and other artwork; a multi-million-dollar collection of jewelry and watches; gambling in Las Vegas and elsewhere; and Weinstein’s personal expenses, including millions of dollars in credit card bills, millions of dollars in legal bills, and luxury car lease payments.
In addition to the prison term, Judge Pisano sentenced Weinstein to three years of supervised release. Judge Pisano ordered Weinstein to pay restitution of $215.4 million and forfeiture of $215.4 million.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s sentence. He also credited agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for their important contributions to the investigation.
The government is represented by Assistant U.S. Attorneys Zach Intrater, Gurbir S. Grewal, Rachael A. Honig, and Evan Weitz.
The charges and allegations against Siforov are merely accusations, and he is considered innocent unless and until proven guilty.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
Eliyahu Weinstein, a/k/a “Eli Weinstein,” a/k/a “Edward Weinstein,” a/k/a “Eddie Weinstein,” 38, of Lakewood, New Jersey, previously pleaded guilty before U.S. District Judge Joel A. Pisano to two counts of an indictment charging him with conspiracy to commit wire fraud and money laundering. Weinstein’s co-defendant, Vladimir Siforov, is charged in the indictment with three counts of wire fraud and remains a fugitive. According to documents filed in this case and statements made in court:
From June 2004 through August 2011, Weinstein orchestrated—with the help of Siforov and others—a real estate investment fraud scheme headquartered in Lakewood that resulted in multi-million-dollar losses to victim investors.
To induce victims to invest, Weinstein and others made various types of materially false and misleading statements and omissions. Weinstein and others told victims that Weinstein’s inside access to certain real estate opportunities allowed him to buy a particular piece of property at a below-market price. Weinstein and others also told victims that their money would be used to purchase a specific property, and the property would be quickly resold—or “flipped”—to a third-party purchaser that Weinstein had lined up. Victims were also told that the victims’ money would be held in escrow until the closing of a purported real estate transaction.
Weinstein bolstered his lies by creating and causing to be created various types of fraudulent documents, including “show checks,” which Weinstein led victims to believe represented Weinstein’s investments in specific transactions but which in fact were never deposited; forged checks, which had actually been negotiated for small amounts but which Weinstein altered so as to appear worth millions of dollars; and various kinds of phony legal documents, including mortgages and deeds.
Weinstein and others initially targeted victims from the Orthodox Jewish community to which Weinstein belonged, exploiting his standing in and knowledge of the customs and practices of this community to further the scheme. Weinstein abused the Orthodox community’s practice of engaging in transactions based on trust, and without paperwork, to obtain money from his victims without substantial written records. He would then falsely represent that specific real estate transactions existed, that the victims’ monies were used to fund those transactions, or that the victims’ profits from those transactions were being “rolled” into new investments. Weinstein also used a portion of the fraud’s proceeds to fund “charitable and religious contributions,” which he used to elevate his reputation within the Orthodox Jewish community.
By 2010, Weinstein had tarnished his reputation in the Orthodox Jewish community due to the massive losses caused by his fraud scheme and found it difficult to obtain more money to further the scheme from within the community. In April 2010, Weinstein and others began soliciting victims from outside of the Orthodox Jewish community, whom they defrauded of additional millions of dollars.
Weinstein also used millions of dollars fraudulently obtained from his victims to fund his own lavish spending, including millions of dollars’ worth of antique Judaica and other artwork; a multi-million-dollar collection of jewelry and watches; gambling in Las Vegas and elsewhere; and Weinstein’s personal expenses, including millions of dollars in credit card bills, millions of dollars in legal bills, and luxury car lease payments.
In addition to the prison term, Judge Pisano sentenced Weinstein to three years of supervised release. Judge Pisano ordered Weinstein to pay restitution of $215.4 million and forfeiture of $215.4 million.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s sentence. He also credited agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for their important contributions to the investigation.
The government is represented by Assistant U.S. Attorneys Zach Intrater, Gurbir S. Grewal, Rachael A. Honig, and Evan Weitz.
The charges and allegations against Siforov are merely accusations, and he is considered innocent unless and until proven guilty.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
Twenty-Eight Members and Associates of Paterson Bloods Street Gang Charged in Manhattan Federal Court with Distributing Heroin, Crack Cocaine, and Powder Cocaine and with Firearms Offenses
Preet Bharara, the United States Attorney for the Southern District of New York; Aaron T. Ford, the Special Agent in Charge of the Newark Field Office of the Federal Bureau of Investigation (FBI); William Fraher, the Acting Chief of Police of the Paterson Police Department, and Gary F. Giardina, the Chief of Police of the Clifton Police Department, today announced the unsealing of a superseding indictment charging 28 members and associates of the Bloods street gang operating in Passaic County, New Jersey, principally in the city of Paterson, with distribution and possession with the intent to distribute heroin, “crack” cocaine, and powder cocaine. The indictment also charges three of the defendants with brandishing firearms in furtherance of drug trafficking activity and with being felons unlawfully in possession of firearms.
Of the 28 defendants named in the superseding indictment, nine were taken into custody in a weekend sweep. Those nine defendants were presented in Manhattan federal court this afternoon before U.S. Magistrate Judge Debra Freeman and detained. Five other defendants are presently detained in state custody on unrelated charges and will be writted into federal custody. One defendant, Hakim Lowery, remains at large. The other 13 defendants were arrested on earlier occasions on the underlying indictments, and all remain detained.
Manhattan U.S. Attorney Preet Bharara said, “Once again we see the convergence of drugs, guns, and violence that plagues neighborhoods, threatens their inhabitants, and spreads potentially lethal narcotics from city to city and across state lines. To keep our neighborhoods free of illegal drugs and gang violence, we will continue to work closely with our local law enforcement partners to vigorously enforce federal drug and firearms laws.”
FBI Special Agent in Charge Aaron T. Ford said, “Dismantling violent gangs is a continuing priority for the FBI. Our efforts to address gang violence are not new, but we are working with our partners with increased manpower and increased urgency to address current circumstances. Today’s arrests and charges are the result of a successful, long term investigation conducted by the FBI and the Paterson and Clifton Police Departments.”
Paterson Police Department Acting Chief William Fraher said, “It is critically important for cities like Paterson to leverage their existing collaborative relationships with federal and local law enforcement to reduce not only the actual violence in our communities but also reducing the perception of fear which can be just as important.”
Clifton Police Department Chief Gary F. Giardina said, “Problems faced by law enforcement do not stop at the city borders. What is one city’s problem most likely is the next city’s and at times overlaps into the next state. It is for these reasons that it is imperative that agencies work in partnership to be successful. In this case, Clifton Police worked in partnership with the Paterson Police and FBI in order to bring this investigation to a successful conclusion.”
According to the allegations in the superseding indictment unsealed today in Manhattan federal court:
Various “sets” of the Bloods, particularly the Fruit Town Brims and Sex Money Murder, among others, operated in Paterson, often coordinating, collaborating, and working together (defined in the Indictment as the “Paterson Bloods”). Ranking members of the Paterson Bloods would often meet to resolve disputes between their respective “soldier” members of the sets and could direct punishment against non-members. Among these punishments were that individuals were to be assaulted or killed by members of the Paterson Bloods.
The Paterson Bloods operated the drug markets in certain central locations in Paterson, New Jersey, including, in particular: North Main Street from East Main Street to Jefferson Street (an area known as “The Main”); Graham Avenue/Rosa Parks Boulevard from Lyon Street to Franklin Street (“The Boulevard”); Graham Avenue/Rosa Parks Boulevard from 12th Avenue to Hamilton Avenue; 12th Avenue from East 22nd Street to East 24th Street; 10th Avenue from East 26th Street to East 30th Street; Governor Street from Graham Avenue to Summer Street (“Up the Hill”); and Park Avenue from Madison Avenue to East 16th Street. Members of the Paterson Bloods were permitted to sell heroin and “crack” cocaine in these areas. Generally, non-members, outsiders, and rival narcotics dealers were prohibited or prevented from distributing narcotics in areas controlled by the Paterson Bloods. Certain individuals—such as people who had grown up in areas controlled by the Paterson Bloods, people of neutral gang or neighborhood group affiliation, or marijuana dealers who often sold to members of the Paterson Bloods—were permitted to distribute narcotics in areas controlled by the Paterson Bloods but did so without the protection of the members of the Paterson Bloods and at the risk of being robbed by members of the gang. For example, on June 17, 2013, a drug dispute broke out in the area of 12th Avenue and 22nd Street, during which the defendant Rachaun Parker, a member of the Fruit Town Brims set of the Bloods, assisted an individual who was considered a “neutral” from his neighborhood. Members of the Fruit Town Brims, including defendants Hakim Lowery and Jamar Edwards, violently beat Parker for violating the rules of the set.
Members of the Paterson Bloods and their associates committed and conspired, attempted, and threatened to commit acts of violence to protect and expand their drug trafficking operations and to protect fellow members of the gang. These acts included beatings, stabbings, and shootings intended to prevent people not affiliated with the Paterson Bloods from distributing narcotics in areas controlled by the gang, or to dissuade members of rival gangs, such as the Latin Kings, from encroaching on territory controlled by the Paterson Bloods.
Members of the charged narcotics distribution conspiracy agreed to possess and distribute heroin, “crack” cocaine, and cocaine powder in the Bronx, Manhattan, and New Jersey. On at least two occasions, certain defendants, armed with loaded guns, delivered what they believed to be approximately one kilogram of cocaine to an address in the Bronx in return for delivery fees.
Mr. Bharara praised the investigative work of the FBI, the Paterson Police Department, and the Clifton Police Department. The investigation is a result of the Department of Justice’s Organized Crime and Drug Enforcement Task Force program, and it combined the resources and expertise of its member federal agencies in cooperation with local law enforcement.
The Office’s Violent Crimes Unit is overseeing the case. Assistant U.S. Attorneys Justina L. Geraci and Michael D. Maimin are in charge of the prosecution. Assistant U.S. Attorney Carolina A. Fornos is in charge of the asset forfeiture components of the case.
The charges contained in the superseding indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Of the 28 defendants named in the superseding indictment, nine were taken into custody in a weekend sweep. Those nine defendants were presented in Manhattan federal court this afternoon before U.S. Magistrate Judge Debra Freeman and detained. Five other defendants are presently detained in state custody on unrelated charges and will be writted into federal custody. One defendant, Hakim Lowery, remains at large. The other 13 defendants were arrested on earlier occasions on the underlying indictments, and all remain detained.
Manhattan U.S. Attorney Preet Bharara said, “Once again we see the convergence of drugs, guns, and violence that plagues neighborhoods, threatens their inhabitants, and spreads potentially lethal narcotics from city to city and across state lines. To keep our neighborhoods free of illegal drugs and gang violence, we will continue to work closely with our local law enforcement partners to vigorously enforce federal drug and firearms laws.”
FBI Special Agent in Charge Aaron T. Ford said, “Dismantling violent gangs is a continuing priority for the FBI. Our efforts to address gang violence are not new, but we are working with our partners with increased manpower and increased urgency to address current circumstances. Today’s arrests and charges are the result of a successful, long term investigation conducted by the FBI and the Paterson and Clifton Police Departments.”
Paterson Police Department Acting Chief William Fraher said, “It is critically important for cities like Paterson to leverage their existing collaborative relationships with federal and local law enforcement to reduce not only the actual violence in our communities but also reducing the perception of fear which can be just as important.”
Clifton Police Department Chief Gary F. Giardina said, “Problems faced by law enforcement do not stop at the city borders. What is one city’s problem most likely is the next city’s and at times overlaps into the next state. It is for these reasons that it is imperative that agencies work in partnership to be successful. In this case, Clifton Police worked in partnership with the Paterson Police and FBI in order to bring this investigation to a successful conclusion.”
According to the allegations in the superseding indictment unsealed today in Manhattan federal court:
Various “sets” of the Bloods, particularly the Fruit Town Brims and Sex Money Murder, among others, operated in Paterson, often coordinating, collaborating, and working together (defined in the Indictment as the “Paterson Bloods”). Ranking members of the Paterson Bloods would often meet to resolve disputes between their respective “soldier” members of the sets and could direct punishment against non-members. Among these punishments were that individuals were to be assaulted or killed by members of the Paterson Bloods.
The Paterson Bloods operated the drug markets in certain central locations in Paterson, New Jersey, including, in particular: North Main Street from East Main Street to Jefferson Street (an area known as “The Main”); Graham Avenue/Rosa Parks Boulevard from Lyon Street to Franklin Street (“The Boulevard”); Graham Avenue/Rosa Parks Boulevard from 12th Avenue to Hamilton Avenue; 12th Avenue from East 22nd Street to East 24th Street; 10th Avenue from East 26th Street to East 30th Street; Governor Street from Graham Avenue to Summer Street (“Up the Hill”); and Park Avenue from Madison Avenue to East 16th Street. Members of the Paterson Bloods were permitted to sell heroin and “crack” cocaine in these areas. Generally, non-members, outsiders, and rival narcotics dealers were prohibited or prevented from distributing narcotics in areas controlled by the Paterson Bloods. Certain individuals—such as people who had grown up in areas controlled by the Paterson Bloods, people of neutral gang or neighborhood group affiliation, or marijuana dealers who often sold to members of the Paterson Bloods—were permitted to distribute narcotics in areas controlled by the Paterson Bloods but did so without the protection of the members of the Paterson Bloods and at the risk of being robbed by members of the gang. For example, on June 17, 2013, a drug dispute broke out in the area of 12th Avenue and 22nd Street, during which the defendant Rachaun Parker, a member of the Fruit Town Brims set of the Bloods, assisted an individual who was considered a “neutral” from his neighborhood. Members of the Fruit Town Brims, including defendants Hakim Lowery and Jamar Edwards, violently beat Parker for violating the rules of the set.
Members of the Paterson Bloods and their associates committed and conspired, attempted, and threatened to commit acts of violence to protect and expand their drug trafficking operations and to protect fellow members of the gang. These acts included beatings, stabbings, and shootings intended to prevent people not affiliated with the Paterson Bloods from distributing narcotics in areas controlled by the gang, or to dissuade members of rival gangs, such as the Latin Kings, from encroaching on territory controlled by the Paterson Bloods.
Members of the charged narcotics distribution conspiracy agreed to possess and distribute heroin, “crack” cocaine, and cocaine powder in the Bronx, Manhattan, and New Jersey. On at least two occasions, certain defendants, armed with loaded guns, delivered what they believed to be approximately one kilogram of cocaine to an address in the Bronx in return for delivery fees.
* * *
The case is assigned to U.S. District Judge Laura Taylor Swain. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.Mr. Bharara praised the investigative work of the FBI, the Paterson Police Department, and the Clifton Police Department. The investigation is a result of the Department of Justice’s Organized Crime and Drug Enforcement Task Force program, and it combined the resources and expertise of its member federal agencies in cooperation with local law enforcement.
The Office’s Violent Crimes Unit is overseeing the case. Assistant U.S. Attorneys Justina L. Geraci and Michael D. Maimin are in charge of the prosecution. Assistant U.S. Attorney Carolina A. Fornos is in charge of the asset forfeiture components of the case.
The charges contained in the superseding indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Tuesday, February 25, 2014
Four Montgomery Residents Sentenced for Conspiracy to Defraud the United States Department of Education
MONTGOMERY, AL—On February 21, 2014, Bobbie Jean Chilsom, Shawn A. Johnson, Sharon Johnson, and Sara Chilsom, all from Montgomery, were sentenced by United States District Judge Myron S. Thompson for their involvement in a conspiracy to defraud the United States Department of Education and various colleges and universities of financial aid money, announced George L. Beck, Jr., U.S. Attorney for the Middle District of Alabama.
Bobbie Chilsom was sentenced to 24 months of imprisonment followed by three years’ supervised release for mail fraud and was ordered to pay $276,734.27 in restitution. Shawn A. Johnson was sentenced to five years of probation, 12 months home confinement, and 10 weekends in jail for mail fraud and was ordered to pay $222,068.41 in restitution. For her role in the conspiracy, Sharon Johnson was sentenced to five years of probation, 12 months home confinement, and three weekends in jail for conspiracy to commit to defraud the United States. She was also ordered to pay $397,963.22 in restitution. Finally, Sara Chilsom was sentenced to three years of probation for mail fraud and was also ordered to pay $10,845 in restitution.
As a part of this conspiracy, from September 2008 to September 2012, the defendants defrauded the United States Department of Education and colleges and universities of approximately $1,152,994 in Federal Student Assistance (FSA) money. FSA must be used by a student for tuition, fees charged by the institution, books, supplies, transportation, or other educational and living expenses.
The defendants, as well as other individuals they recruited for the scheme, applied for financial aid despite not having a high school diploma or a general education development (GED) certificate. To enable admission to the schools, a false diploma or GED certificate was provided during the enrollment process. As a result of the fraudulent applications for financial aid, the Department of Education paid tuition, enrollment fees, and living expenses for the defendants and other individuals that were not lawful.
Afterwards, the recruited individuals would pay the leaders of the conspiracy a percentage of the funds reserved for living expenses by mailing them debit refund cards or debit refund checks. Evidence further showed that the defendants or the recruited individuals would either not attend or would minimally attend their courses and would minimally participate in completing or would not complete their course work. Ultimately, the financial aid funds they received were used for non-educational purposes, such as the purchase of personal items or to pay for personal expenses.
Including the four defendants sentenced on February 21, 2014, a total of 13 defendants were involved in this conspiracy. Previously sentenced were, Telvin Brown, Sunquesha Gaston, Philanthia Roberts, Printice Johnson, Shirley Johnson, Samuella McMillian, Edmond Lewis Harris, Jr., and Richard Jamar Pinkston, Jr. for mail fraud. Dennis Coleman was sentenced for conspiring to defraud the United States. All defendants are from Montgomery.
The case was investigated by the Department of Education-Office of Inspector General, the United States Secret Service, and the FBI. The case was prosecuted by Assistant United States Attorney Denise O. Simpson.
Bobbie Chilsom was sentenced to 24 months of imprisonment followed by three years’ supervised release for mail fraud and was ordered to pay $276,734.27 in restitution. Shawn A. Johnson was sentenced to five years of probation, 12 months home confinement, and 10 weekends in jail for mail fraud and was ordered to pay $222,068.41 in restitution. For her role in the conspiracy, Sharon Johnson was sentenced to five years of probation, 12 months home confinement, and three weekends in jail for conspiracy to commit to defraud the United States. She was also ordered to pay $397,963.22 in restitution. Finally, Sara Chilsom was sentenced to three years of probation for mail fraud and was also ordered to pay $10,845 in restitution.
As a part of this conspiracy, from September 2008 to September 2012, the defendants defrauded the United States Department of Education and colleges and universities of approximately $1,152,994 in Federal Student Assistance (FSA) money. FSA must be used by a student for tuition, fees charged by the institution, books, supplies, transportation, or other educational and living expenses.
The defendants, as well as other individuals they recruited for the scheme, applied for financial aid despite not having a high school diploma or a general education development (GED) certificate. To enable admission to the schools, a false diploma or GED certificate was provided during the enrollment process. As a result of the fraudulent applications for financial aid, the Department of Education paid tuition, enrollment fees, and living expenses for the defendants and other individuals that were not lawful.
Afterwards, the recruited individuals would pay the leaders of the conspiracy a percentage of the funds reserved for living expenses by mailing them debit refund cards or debit refund checks. Evidence further showed that the defendants or the recruited individuals would either not attend or would minimally attend their courses and would minimally participate in completing or would not complete their course work. Ultimately, the financial aid funds they received were used for non-educational purposes, such as the purchase of personal items or to pay for personal expenses.
Including the four defendants sentenced on February 21, 2014, a total of 13 defendants were involved in this conspiracy. Previously sentenced were, Telvin Brown, Sunquesha Gaston, Philanthia Roberts, Printice Johnson, Shirley Johnson, Samuella McMillian, Edmond Lewis Harris, Jr., and Richard Jamar Pinkston, Jr. for mail fraud. Dennis Coleman was sentenced for conspiring to defraud the United States. All defendants are from Montgomery.
The case was investigated by the Department of Education-Office of Inspector General, the United States Secret Service, and the FBI. The case was prosecuted by Assistant United States Attorney Denise O. Simpson.
Disability Doctor Peter J. Lesniewski Sentenced in Manhattan Federal Court to Eight Years in Prison for His Role in Long Island Railroad Fraud Scheme
Preet Bharara, the United States Attorney for the Southern District of New York, announced that Peter J. Lesniewski, a Board-certified orthopedist, was sentenced today in Manhattan federal court to eight years in prison for his role in the alleged massive fraud scheme in which Long Island Railroad (LIRR) workers claimed to be disabled upon early retirement so that they could receive disability benefits to which they were not entitled. Between 1999 and 2008, Lesniewski provided fraudulent medical narratives in support of the disability applications of at least 230 LIRR employees. In all, over 98 percent of the more than 400 LIRR employees he supposedly treated received disability benefits after seeing Lesniewski. Following a three-week jury trial, Lesniewski was convicted on August 6, 2013, on all 10 counts with which he was charged, including one count of conspiracy to commit mail fraud, wire fraud, and health care fraud; one count of conspiracy to defraud the Railroad Retirement Board (RRB); three counts of health care fraud; and five counts of mail fraud.
Manhattan U.S. Attorney Preet Bharara said, “In perpetrating this elaborate scheme, Dr. Lesniewski compromised both his professional and his personal integrity. Regrettably, Dr. Lesniewski is one of a number of health care professionals whose gross misconduct has depleted the RRB’s funds and diverted benefits from the rightful beneficiaries of its disability program.”
According to the complaint, the superseding indictments, the evidence at trial, and statements made in court:
The LIRR Disability Fraud Scheme
The RRB is an independent U.S. agency that administers benefit programs, including disability benefits, for the nation’s railroad workers and their families. A unique LIRR contract allowed employees to retire at the relatively young age of 50—the age of eligibility has since changed to 55—if they had been employed by the LIRR for at least 20 years. Eligible employees are entitled to receive an LIRR pension, which is a portion of the full retirement payment for which they are eligible at 65. In addition, at full retirement age (between age 60 and age 65 depending on years of service), they are eligible to receive an RRB retirement pension. LIRR workers who retired at 50 with only an LIRR pension would receive less than their prior salary and substantially lower pension payments than those to which they would be entitled at full retirement age. However, LIRR employees who retired and claimed disability could receive a disability payment from the RRB on top of their LIRR pension, regardless of age. A retiree’s LIRR pension, in combination with RRB disability payments, can be roughly equivalent to the base salary earned during his or her career.
Hundreds of LIRR employees have allegedly exploited the overlap between the LIRR pension and the RRB disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under penalty of prosecution in disability applications, allowed LIRR employees to retire as early as age 50 with an LIRR pension, supplemented by the fraudulently obtained RRB disability annuity. From 1995 through 2011, more than 75 percent of retiring LIRR employees stopped working and began receiving RRB disability benefits, whereas during this same period, only 25 percent of retiring Metro-North employees stopped working and began receiving RRB disability benefits.
Lesniewski was instrumental in helping LIRR retirees receive disability benefits to which they were not entitled. As part of the massive fraud scheme, Lesniewski prepared false documentation purporting to show the LIRR employees’ steady decline toward disability exactly at the time they pre-planned their retirement. He then provided to those LIRR employees a narrative for submission to the RRB that claimed they should receive a disability annuity. These medical narratives were completely fabricated or grossly exaggerated so that Lesniewski could recommend a set of restrictions that, if legitimate, would render it impossible for the LIRR employees to continue performing their jobs. Many of the purportedly “objective” findings from the tests he conducted showed nothing more than normal degenerative changes one would expect to see in patients within the relevant age bracket.
Lesniewski received approximately $1,000, often in cash, for these fraudulent assessments and narratives, and hundreds of thousands of dollars in additional health insurance payments for unnecessary medical treatments. In turn, the 242 patients who obtained disability benefits with Lesniewski’s assistance have received approximately $70 million in RRB disability benefit payments. In sentencing LESNIEWSKI, Judge Marrero found that the total intended losses from his fraud were over $90 million and that the actual losses suffered by the RRB and insurance companies to date total over $70 million.
Thirty-three people have been charged in connection with the LIRR disability fraud scheme, 28 of whom have pled guilty and five of whom were convicted after trial.
Mr. Bharara praised the Railroad Retirement Board’s Office of the Inspector General, the FBI, and the Metro Transit Authority’s Office of the Inspector General for their outstanding work in the investigation, which he noted is ongoing. He also acknowledged the previous investigation conducted by the New York State Attorney General’s Office into these pension fraud issues.
The Office’s Complex Frauds Unit is handling the case. Assistant U.S. Attorneys Justin Weddle, Daniel Tehrani, and Nicole Friedlander are in charge of the prosecution.
Manhattan U.S. Attorney Preet Bharara said, “In perpetrating this elaborate scheme, Dr. Lesniewski compromised both his professional and his personal integrity. Regrettably, Dr. Lesniewski is one of a number of health care professionals whose gross misconduct has depleted the RRB’s funds and diverted benefits from the rightful beneficiaries of its disability program.”
According to the complaint, the superseding indictments, the evidence at trial, and statements made in court:
The LIRR Disability Fraud Scheme
The RRB is an independent U.S. agency that administers benefit programs, including disability benefits, for the nation’s railroad workers and their families. A unique LIRR contract allowed employees to retire at the relatively young age of 50—the age of eligibility has since changed to 55—if they had been employed by the LIRR for at least 20 years. Eligible employees are entitled to receive an LIRR pension, which is a portion of the full retirement payment for which they are eligible at 65. In addition, at full retirement age (between age 60 and age 65 depending on years of service), they are eligible to receive an RRB retirement pension. LIRR workers who retired at 50 with only an LIRR pension would receive less than their prior salary and substantially lower pension payments than those to which they would be entitled at full retirement age. However, LIRR employees who retired and claimed disability could receive a disability payment from the RRB on top of their LIRR pension, regardless of age. A retiree’s LIRR pension, in combination with RRB disability payments, can be roughly equivalent to the base salary earned during his or her career.
Hundreds of LIRR employees have allegedly exploited the overlap between the LIRR pension and the RRB disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under penalty of prosecution in disability applications, allowed LIRR employees to retire as early as age 50 with an LIRR pension, supplemented by the fraudulently obtained RRB disability annuity. From 1995 through 2011, more than 75 percent of retiring LIRR employees stopped working and began receiving RRB disability benefits, whereas during this same period, only 25 percent of retiring Metro-North employees stopped working and began receiving RRB disability benefits.
Lesniewski was instrumental in helping LIRR retirees receive disability benefits to which they were not entitled. As part of the massive fraud scheme, Lesniewski prepared false documentation purporting to show the LIRR employees’ steady decline toward disability exactly at the time they pre-planned their retirement. He then provided to those LIRR employees a narrative for submission to the RRB that claimed they should receive a disability annuity. These medical narratives were completely fabricated or grossly exaggerated so that Lesniewski could recommend a set of restrictions that, if legitimate, would render it impossible for the LIRR employees to continue performing their jobs. Many of the purportedly “objective” findings from the tests he conducted showed nothing more than normal degenerative changes one would expect to see in patients within the relevant age bracket.
Lesniewski received approximately $1,000, often in cash, for these fraudulent assessments and narratives, and hundreds of thousands of dollars in additional health insurance payments for unnecessary medical treatments. In turn, the 242 patients who obtained disability benefits with Lesniewski’s assistance have received approximately $70 million in RRB disability benefit payments. In sentencing LESNIEWSKI, Judge Marrero found that the total intended losses from his fraud were over $90 million and that the actual losses suffered by the RRB and insurance companies to date total over $70 million.
* * *
In addition to his prison term, Lesniewski, 63, of Rockville Centre, New York, was also sentenced to three years of supervised release. He was also ordered to forfeit $70,947,699 and pay $70,632,900 in restitution.Thirty-three people have been charged in connection with the LIRR disability fraud scheme, 28 of whom have pled guilty and five of whom were convicted after trial.
Mr. Bharara praised the Railroad Retirement Board’s Office of the Inspector General, the FBI, and the Metro Transit Authority’s Office of the Inspector General for their outstanding work in the investigation, which he noted is ongoing. He also acknowledged the previous investigation conducted by the New York State Attorney General’s Office into these pension fraud issues.
The Office’s Complex Frauds Unit is handling the case. Assistant U.S. Attorneys Justin Weddle, Daniel Tehrani, and Nicole Friedlander are in charge of the prosecution.
Manhattan U.S. Attorney and FBI Assistant Director in Charge Announce Insider Trading Charges Against Former Senior Managing Director of Investment Bank
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI), announced today the unsealing of a criminal complaint charging Frank Perkins Hixon, Jr., a former senior managing director of Evercore Group LLC, a subsidiary of Evercore Partners Inc. (Evercore), with insider trading offenses. Specifically, Hixon is alleged to have used inside information to trade and cause others to trade in the securities of Evercore, Westway Group Inc. (Westway), and Titanium Metals Corporation (Titanium). Hixon is also charged with making false statements to FBI agents. The defendant was arrested on these charges this morning at his apartment in New York, New York, and presented this afternoon in Manhattan federal court.
Manhattan U.S. Attorney Preet Bharara said, “As we have often said, those like Frank Perkins Hixon, Jr. who illegally manipulate the market by allegedly trading on material non-public information exploit law-abiding investors and traders. In this case, the alleged wrongdoing was compounded when Hixon tried to evade detection by lying to investigators and to his company.”
Assistant Director in Charge George Venizelos said, “This is the same old song: another high-ranking finance official allegedly broke the law and abused his position in a thinly veiled attempt to make illegal trades. The alleged use of material information gleaned through confidential meetings at Evercore was deceptive and more importantly illegal. When Hixon was confronted about his back door trades, he allegedly doubled down and lied to the FBI agents who interviewed him. The integrity of our markets remains a paramount concern of the FBI. We’ll continue to pursue these cases until that message is crystal clear.”
According to the allegations contained in the complaint unsealed today in Manhattan federal court:
Between April 2010 and January 2014, Hixon was a senior managing director with the Mining and Metals Group of Evercore Group LLC. Hixon used material non-public information that he acquired as part of his employment with Evercore to trade and cause trades in brokerage accounts belonging to the mother of his young child (Individual A), who lived in Austin, Texas, and to Hixon’s close relative (Individual B), who lived in Johns Creek, Georgia.
In 2011, Hixon led an Evercore team in advising Westway about a non-public offer from another company (Company A) to purchase some of its business components and, more generally, in connection with potential transactions concerning Westway’s other business components. Company A’s offer was made in early September 2011, and a special committee was formed around that time to consider the offer and other strategic alternatives. Those developments were not announced publicly until December 15, 2011. Meanwhile, between October 21 and December 15, 2011, Hixon purchased and caused to be purchased 229,000 shares of Westway for Individual A’s brokerage account by logging into Individual A’s account from various locations, including Evercore’s Manhattan office. As the negotiations for the contemplated Westway transactions became protracted, Hixon sold and caused to be sold about 140,000 of the Westway shares that had accumulated in Individual A’s account for a profit of approximately $260,000.
In October 2012, Hixon was invited, along with other Evercore personnel, to meet with a special committee of Titanium’s board of directors to discuss a potential engagement in connection with an unspecified $3 billion transaction. At the October 23, 2012 pitch meeting, which Hixon attended by teleconference from London, England, Hixon and the rest of the Evercore team learned that the transaction being considered was an acquisition of Titanium by Precision Castparts Corp. (PCP), a manufacturer of complex metal components and products. Hixon also learned the approximate offer price and that the transaction was likely to close before year’s end.
Within approximately one hour of the meeting with the special committee, Hixon began buying 20,000 Titanium shares for Individual A’s account from a mobile device traced back to London, England. Eight days later, 20,000 more shares of Titanium were purchased for Individual A’s account. Most of the logins to the account corresponding with these purchases traced back to Evercore’s Manhattan office. That same day, 15,000 shares were purchased for Individual B’s account. After market close on November 9, 2012, Titanium announced PCP’s tender offer for its shares. The next trading day, November 12, 2012, all 40,000 of Individual A’s shares of Titanium were sold for a profit of approximately $180,000. Later that month, Individual B’s Titanium shares were sold for a profit of approximately $72,350.
On January 14, 2013, Hixon attended an Evercore partnership meeting at which he learned that Evercore would be announcing record financial results for the fourth quarter of 2012. After the partnership meeting that day, Hixon spoke to Individual B by phone. During the two days preceding the bank’s January 30, 2013 announcement, Hixon, logging into Individual A’s account from Evercore’s Manhattan offices and from his home in Manhattan, bought 27,000 shares of Evercore for the account. Meanwhile, the day before the announcement, 10,000 shares of Evercore were purchased for Individual B’s account. After Evercore’s earnings release, Individual A and Individual B sold all the Evercore shares the next day and reaped a combined profit of approximately $94,700.
In February 2013, Evercore asked Hixon to respond to a request from the Financial Industry Regulatory Authority (FINRA) and to identify any known names from a list of people and entities who had traded in Titanium stock prior to PCP’s tender offer. Although Individual A and B were both on the FINRA list, Hixon responded by e-mail, “No known relationships.”
When Evercore confronted Hixon about his failure to identify Individual A—who, as noted above, is the mother of his young child—Hixon claimed not to know Individual A by her legal name, which was what appeared on the FINRA list, and to know her only by a different name she uses. Documents produced by Evercore, including text messages and e-mails between Hixon and Individual A, make clear that Hixon had, in fact, long been aware of Individual A’s legal name. Bank records show that he wrote numerous large checks to Individual A, in her legal name, from 2009 to 2010. On January 28, 2014, Hixon met with two FBI agents and told them, among other things, that he had never traded in or even accessed Individual A’s brokerage account.
Mr. Bharara praised the investigative work of the FBI and thanked the Securities and Exchange Commission, which has filed civil charges in a separate action. Mr. Bharara also thanked Evercore for its cooperation in this matter.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Sarah E. McCallum is in charge of the prosecution.
The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Manhattan U.S. Attorney Preet Bharara said, “As we have often said, those like Frank Perkins Hixon, Jr. who illegally manipulate the market by allegedly trading on material non-public information exploit law-abiding investors and traders. In this case, the alleged wrongdoing was compounded when Hixon tried to evade detection by lying to investigators and to his company.”
Assistant Director in Charge George Venizelos said, “This is the same old song: another high-ranking finance official allegedly broke the law and abused his position in a thinly veiled attempt to make illegal trades. The alleged use of material information gleaned through confidential meetings at Evercore was deceptive and more importantly illegal. When Hixon was confronted about his back door trades, he allegedly doubled down and lied to the FBI agents who interviewed him. The integrity of our markets remains a paramount concern of the FBI. We’ll continue to pursue these cases until that message is crystal clear.”
According to the allegations contained in the complaint unsealed today in Manhattan federal court:
Between April 2010 and January 2014, Hixon was a senior managing director with the Mining and Metals Group of Evercore Group LLC. Hixon used material non-public information that he acquired as part of his employment with Evercore to trade and cause trades in brokerage accounts belonging to the mother of his young child (Individual A), who lived in Austin, Texas, and to Hixon’s close relative (Individual B), who lived in Johns Creek, Georgia.
In 2011, Hixon led an Evercore team in advising Westway about a non-public offer from another company (Company A) to purchase some of its business components and, more generally, in connection with potential transactions concerning Westway’s other business components. Company A’s offer was made in early September 2011, and a special committee was formed around that time to consider the offer and other strategic alternatives. Those developments were not announced publicly until December 15, 2011. Meanwhile, between October 21 and December 15, 2011, Hixon purchased and caused to be purchased 229,000 shares of Westway for Individual A’s brokerage account by logging into Individual A’s account from various locations, including Evercore’s Manhattan office. As the negotiations for the contemplated Westway transactions became protracted, Hixon sold and caused to be sold about 140,000 of the Westway shares that had accumulated in Individual A’s account for a profit of approximately $260,000.
In October 2012, Hixon was invited, along with other Evercore personnel, to meet with a special committee of Titanium’s board of directors to discuss a potential engagement in connection with an unspecified $3 billion transaction. At the October 23, 2012 pitch meeting, which Hixon attended by teleconference from London, England, Hixon and the rest of the Evercore team learned that the transaction being considered was an acquisition of Titanium by Precision Castparts Corp. (PCP), a manufacturer of complex metal components and products. Hixon also learned the approximate offer price and that the transaction was likely to close before year’s end.
Within approximately one hour of the meeting with the special committee, Hixon began buying 20,000 Titanium shares for Individual A’s account from a mobile device traced back to London, England. Eight days later, 20,000 more shares of Titanium were purchased for Individual A’s account. Most of the logins to the account corresponding with these purchases traced back to Evercore’s Manhattan office. That same day, 15,000 shares were purchased for Individual B’s account. After market close on November 9, 2012, Titanium announced PCP’s tender offer for its shares. The next trading day, November 12, 2012, all 40,000 of Individual A’s shares of Titanium were sold for a profit of approximately $180,000. Later that month, Individual B’s Titanium shares were sold for a profit of approximately $72,350.
On January 14, 2013, Hixon attended an Evercore partnership meeting at which he learned that Evercore would be announcing record financial results for the fourth quarter of 2012. After the partnership meeting that day, Hixon spoke to Individual B by phone. During the two days preceding the bank’s January 30, 2013 announcement, Hixon, logging into Individual A’s account from Evercore’s Manhattan offices and from his home in Manhattan, bought 27,000 shares of Evercore for the account. Meanwhile, the day before the announcement, 10,000 shares of Evercore were purchased for Individual B’s account. After Evercore’s earnings release, Individual A and Individual B sold all the Evercore shares the next day and reaped a combined profit of approximately $94,700.
In February 2013, Evercore asked Hixon to respond to a request from the Financial Industry Regulatory Authority (FINRA) and to identify any known names from a list of people and entities who had traded in Titanium stock prior to PCP’s tender offer. Although Individual A and B were both on the FINRA list, Hixon responded by e-mail, “No known relationships.”
When Evercore confronted Hixon about his failure to identify Individual A—who, as noted above, is the mother of his young child—Hixon claimed not to know Individual A by her legal name, which was what appeared on the FINRA list, and to know her only by a different name she uses. Documents produced by Evercore, including text messages and e-mails between Hixon and Individual A, make clear that Hixon had, in fact, long been aware of Individual A’s legal name. Bank records show that he wrote numerous large checks to Individual A, in her legal name, from 2009 to 2010. On January 28, 2014, Hixon met with two FBI agents and told them, among other things, that he had never traded in or even accessed Individual A’s brokerage account.
When Evercore confronted Hixon about his failure to identify Individual B, his close relative, Hixon responded that the associated location given for Individual B on the FINRA list—Duluth, Georgia—was inaccurate, because Individual B lives in Johns Creek, Georgia. Johns Creek shares a zip code with portions of Duluth and was only incorporated as its own city in December 2006. The city reflected on the brokerage account statements for Individual B’s account is Duluth.
Hixon, 55, of New York, New York, has been charged in the complaint with five counts of securities fraud (counts one through three, five, and six), two counts of securities fraud in connection with a tender offer (counts four and seven), and one count of making a false statement (count eight). The securities fraud and fraud in connection with a tender offer charges each carry a maximum term of 20 years in prison, and the false statement charge carries a maximum term of five years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.Mr. Bharara praised the investigative work of the FBI and thanked the Securities and Exchange Commission, which has filed civil charges in a separate action. Mr. Bharara also thanked Evercore for its cooperation in this matter.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Sarah E. McCallum is in charge of the prosecution.
The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Endo Pharmaceuticals and Endo Health Solutions to Pay $192.7 Million to Resolve Criminal and Civil Liability Relating to Marketing of Prescription Drug Lidoderm for Unapproved Uses
Pharmaceutical company Endo Health Solutions Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo) have agreed to pay $192.7 million to resolve criminal and civil liability arising from Endo’s marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration (FDA), the Justice Department announced today. The resolution includes a deferred prosecution agreement and forfeiture totaling $20.8 million and civil false claims settlements with the federal government and the states and the District of Columbia totaling $171.9 million. Endo Pharmaceuticals Inc. is a Delaware corporation headquartered in Malvern, Pennsylvania.
“FDA’s drug approval process is designed to ensure that companies market their products for uses that are proven to be safe and effective,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “We will hold accountable those who circumvent that process in pursuit of financial gain.”
In a criminal information filed today in the Northern District of New York, the government charged that, between 2002 and 2006, Endo Pharmaceuticals Inc. introduced into interstate commerce Lidoderm that was misbranded under the Federal Food, Drug and Cosmetic Act (FDCA). The FDCA requires a company, such as Endo Pharmaceuticals Inc., to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses. During the period of 2002 to 2006, Lidoderm was approved by the FDA only for the relief of pain associated with post-herpetic neuralgia (PHN), a complication of shingles. The information alleges that, during the relevant time period, the Lidoderm distributed nationwide by Endo Pharmaceuticals Inc. was misbranded because its labeling lacked adequate directions for use in the treatment of non-PHN related pain, including low back pain, diabetic neuropathy, and carpal tunnel syndrome. These uses were intended by Endo Pharmaceuticals Inc. but never approved by the FDA. The information further alleges that certain Endo Pharmaceuticals Inc. sales managers provided instruction to certain sales representatives concerning how to expand sales conversations with doctors beyond PHN and encouraged promotion of Lidoderm in workers’ compensation clinics.
In a deferred prosecution agreement to resolve the charge, Endo Pharmaceuticals Inc. admitted that it intended that Lidoderm be used for unapproved indications and that it promoted Lidoderm to health care providers for those unapproved indications. Under the terms of the deferred prosecution agreement, Endo Pharmaceuticals Inc. will pay a total of $20.8 million in monetary penalties and forfeiture. Endo Pharmaceuticals Inc. further agreed to implement and maintain a number of enhanced compliance measures, including making publicly available the results of certain clinical trials and requiring an annual review and certification of its compliance efforts by the chief executive officer of its parent company, Endo Health Solutions. The deferred prosecution agreement will not be final until accepted by the U.S. District Court for the Northern District of New York.
“The safety and efficacy of drugs must be shown by science, not sales pitches,” said U.S. Attorney for the Northern District of New York Richard S. Hartunian. “Drugs marketed for intended uses not approved by the FDA are misbranded because their labeling lacks adequate directions for those uses. This settlement emphasizes that public health is protected by labeling based on product performance, rather than profitability, and promotes enhanced efforts to ensure compliance with all requirements.”
In addition, Endo agreed to settle its potential civil liability in connection with its marketing of Lidoderm. The government alleged that, from March 1999 through December 2007, Endo caused false claims to be submitted to federal health care programs, including Medicaid, a jointly funded federal and state program, by promoting Lidoderm for unapproved uses, some of which were not medically accepted indications and, therefore, were not covered by the federal health care programs. Of the $171.9 million Endo has agreed to pay to resolve these civil claims, Endo will pay $137.7 million to the federal government and $34.2 million to the states and the District of Columbia.
“Off-label marketing can undermine the doctor-patient relationship and adversely influence the clear and honest judgment of doctors that their patients rely on and trust,” said U.S. Attorney for the Eastern District of Pennsylvania Zane D. Memeger. “Pharmaceutical companies have a legal obligation to promote their drugs for only FDA-approved uses. This obligation takes precedence over the company’s bottom line.”
“The settlement announced today demonstrates the government’s continued scrutiny of pharmaceutical companies that interfere with FDA’s mission of ensuring that drugs are safe and effective for the American public,” said Special Agent in Charge of the FDA’s Office of Criminal Investigations’ New York Field Office Mark Dragonetti. “We will continue to work with our law enforcement partners to investigate and prosecute pharmaceutical companies that disregard the drug approval process and jeopardize the public health by engaging in the nationwide distribution of misbranded products.”
“Endo Pharmaceutical enriched themselves at the expense of the public,” said Special Agent in Charge Andrew W. Vale of the Albany Division of the Federal Bureau of Investigation. “Patients will search for drug therapies to assist in pain management, and they deserve the right to drugs approved for such use. The FBI will continue to work with our federal partners to investigate companies such as Endo Pharmaceuticals to ensure patients are safe.”
Also as part of the settlement, Endo Pharmaceuticals Inc. has agreed to enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General that requires Endo to implement measures designed to avoid or promptly detect conduct similar to that which gave rise to this resolution. Among other things, the CIA requires Endo to implement an internal risk assessment and mitigation program and requires numerous internal and external reviews of promotional and other practices. The CIA also requires key executives and individual board members to sign certifications about compliance, and it requires the company to publicly report information about its financial arrangements with physicians.
“By marketing Lidoderm for uses not covered by federal health care programs, Endo profited at the expense of taxpayers and could have put patients at risk,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson. “Under our CIA, Endo agrees to promote its products legally, while board members and top executives are specifically held accountable for compliance.”
The civil settlement resolves three lawsuits pending in federal court in the Eastern District of Pennsylvania under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and to share in any recovery. The actions were filed by Peggy Ryan, a former Lidoderm sales representative; Max Weathersby, another former Lidoderm sales representative; and Gursheel S. Dhillon, a physician. The whistleblowers’ share of the settlement has not been determined.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.
The civil settlement was handled by the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Civil Division’s Commercial Litigation Branch. The criminal case was handled by the U.S. Attorney’s Office for the Northern District of New York and the Civil Division’s Consumer Protection Branch. These matters were investigated by the Federal Bureau of Investigation, the Food and Drug Administration-Office of Criminal Investigation, the Department of Health and Human Services Office of Inspector General Office of Investigations, the Defense Criminal Investigative Service of the Department of Defense, the U.S. Postal Service Office of Inspector General, and the Office of Personnel Management Office of Inspector General, with assistance from the Department of Health and Human Services Office of Counsel to the Inspector General and Office of General Counsel and Center for Medicare and Medicaid Services, the Food and Drug Administration’s Office of Chief Counsel, and the National Association of Medicaid Fraud Control Units.
Except as to conduct admitted in connection with the deferred prosecution agreement, the claims settled by the civil agreement are allegations only, and there has been no determination of civil liability. The civil lawsuits are captioned United States ex rel. Ryan v. Endo Pharmaceuticals Inc., Civil Action No. 05-cv-3450; United States ex rel. Weathersby, et al. v. Endo Pharmaceuticals Inc., et al, Civil Action No. 10-cv-2039; and United States ex rel. Dhillon v. Endo Pharmaceuticals, Civil Action No. 11-cv-7767, all docketed in the Eastern District of Pennsylvania.
“FDA’s drug approval process is designed to ensure that companies market their products for uses that are proven to be safe and effective,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “We will hold accountable those who circumvent that process in pursuit of financial gain.”
In a criminal information filed today in the Northern District of New York, the government charged that, between 2002 and 2006, Endo Pharmaceuticals Inc. introduced into interstate commerce Lidoderm that was misbranded under the Federal Food, Drug and Cosmetic Act (FDCA). The FDCA requires a company, such as Endo Pharmaceuticals Inc., to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses. During the period of 2002 to 2006, Lidoderm was approved by the FDA only for the relief of pain associated with post-herpetic neuralgia (PHN), a complication of shingles. The information alleges that, during the relevant time period, the Lidoderm distributed nationwide by Endo Pharmaceuticals Inc. was misbranded because its labeling lacked adequate directions for use in the treatment of non-PHN related pain, including low back pain, diabetic neuropathy, and carpal tunnel syndrome. These uses were intended by Endo Pharmaceuticals Inc. but never approved by the FDA. The information further alleges that certain Endo Pharmaceuticals Inc. sales managers provided instruction to certain sales representatives concerning how to expand sales conversations with doctors beyond PHN and encouraged promotion of Lidoderm in workers’ compensation clinics.
In a deferred prosecution agreement to resolve the charge, Endo Pharmaceuticals Inc. admitted that it intended that Lidoderm be used for unapproved indications and that it promoted Lidoderm to health care providers for those unapproved indications. Under the terms of the deferred prosecution agreement, Endo Pharmaceuticals Inc. will pay a total of $20.8 million in monetary penalties and forfeiture. Endo Pharmaceuticals Inc. further agreed to implement and maintain a number of enhanced compliance measures, including making publicly available the results of certain clinical trials and requiring an annual review and certification of its compliance efforts by the chief executive officer of its parent company, Endo Health Solutions. The deferred prosecution agreement will not be final until accepted by the U.S. District Court for the Northern District of New York.
“The safety and efficacy of drugs must be shown by science, not sales pitches,” said U.S. Attorney for the Northern District of New York Richard S. Hartunian. “Drugs marketed for intended uses not approved by the FDA are misbranded because their labeling lacks adequate directions for those uses. This settlement emphasizes that public health is protected by labeling based on product performance, rather than profitability, and promotes enhanced efforts to ensure compliance with all requirements.”
In addition, Endo agreed to settle its potential civil liability in connection with its marketing of Lidoderm. The government alleged that, from March 1999 through December 2007, Endo caused false claims to be submitted to federal health care programs, including Medicaid, a jointly funded federal and state program, by promoting Lidoderm for unapproved uses, some of which were not medically accepted indications and, therefore, were not covered by the federal health care programs. Of the $171.9 million Endo has agreed to pay to resolve these civil claims, Endo will pay $137.7 million to the federal government and $34.2 million to the states and the District of Columbia.
“Off-label marketing can undermine the doctor-patient relationship and adversely influence the clear and honest judgment of doctors that their patients rely on and trust,” said U.S. Attorney for the Eastern District of Pennsylvania Zane D. Memeger. “Pharmaceutical companies have a legal obligation to promote their drugs for only FDA-approved uses. This obligation takes precedence over the company’s bottom line.”
“The settlement announced today demonstrates the government’s continued scrutiny of pharmaceutical companies that interfere with FDA’s mission of ensuring that drugs are safe and effective for the American public,” said Special Agent in Charge of the FDA’s Office of Criminal Investigations’ New York Field Office Mark Dragonetti. “We will continue to work with our law enforcement partners to investigate and prosecute pharmaceutical companies that disregard the drug approval process and jeopardize the public health by engaging in the nationwide distribution of misbranded products.”
“Endo Pharmaceutical enriched themselves at the expense of the public,” said Special Agent in Charge Andrew W. Vale of the Albany Division of the Federal Bureau of Investigation. “Patients will search for drug therapies to assist in pain management, and they deserve the right to drugs approved for such use. The FBI will continue to work with our federal partners to investigate companies such as Endo Pharmaceuticals to ensure patients are safe.”
Also as part of the settlement, Endo Pharmaceuticals Inc. has agreed to enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General that requires Endo to implement measures designed to avoid or promptly detect conduct similar to that which gave rise to this resolution. Among other things, the CIA requires Endo to implement an internal risk assessment and mitigation program and requires numerous internal and external reviews of promotional and other practices. The CIA also requires key executives and individual board members to sign certifications about compliance, and it requires the company to publicly report information about its financial arrangements with physicians.
“By marketing Lidoderm for uses not covered by federal health care programs, Endo profited at the expense of taxpayers and could have put patients at risk,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson. “Under our CIA, Endo agrees to promote its products legally, while board members and top executives are specifically held accountable for compliance.”
The civil settlement resolves three lawsuits pending in federal court in the Eastern District of Pennsylvania under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and to share in any recovery. The actions were filed by Peggy Ryan, a former Lidoderm sales representative; Max Weathersby, another former Lidoderm sales representative; and Gursheel S. Dhillon, a physician. The whistleblowers’ share of the settlement has not been determined.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.
The civil settlement was handled by the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Civil Division’s Commercial Litigation Branch. The criminal case was handled by the U.S. Attorney’s Office for the Northern District of New York and the Civil Division’s Consumer Protection Branch. These matters were investigated by the Federal Bureau of Investigation, the Food and Drug Administration-Office of Criminal Investigation, the Department of Health and Human Services Office of Inspector General Office of Investigations, the Defense Criminal Investigative Service of the Department of Defense, the U.S. Postal Service Office of Inspector General, and the Office of Personnel Management Office of Inspector General, with assistance from the Department of Health and Human Services Office of Counsel to the Inspector General and Office of General Counsel and Center for Medicare and Medicaid Services, the Food and Drug Administration’s Office of Chief Counsel, and the National Association of Medicaid Fraud Control Units.
Except as to conduct admitted in connection with the deferred prosecution agreement, the claims settled by the civil agreement are allegations only, and there has been no determination of civil liability. The civil lawsuits are captioned United States ex rel. Ryan v. Endo Pharmaceuticals Inc., Civil Action No. 05-cv-3450; United States ex rel. Weathersby, et al. v. Endo Pharmaceuticals Inc., et al, Civil Action No. 10-cv-2039; and United States ex rel. Dhillon v. Endo Pharmaceuticals, Civil Action No. 11-cv-7767, all docketed in the Eastern District of Pennsylvania.
Burlington Real Estate Consultant Sentenced to 20 Months in Prison
CAMDEN, NJ—A real estate consultant was sentenced today to 20 months in prison for helping five people defraud banks by obtaining multiple home equity loans on the same property, U.S. Attorney Paul J. Fishman announced.
William Barksdale, 47, of Burlington, New Jersey, previously pleaded guilty before U.S. District Judge Robert B. Kugler to an information charging him with one count of conspiracy to commit wire fraud. Judge Kugler imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
Barksdale was the owner of Barksdale Business Group, Barksdale Investment Properties, and Barksdale Loan Consultants. He devised a scheme to obtain multiple home equity lines of credit on a single home for more than the property was worth. A homeowner would submit loan applications to several lenders simultaneously without advising each lender about the other applications. Any bank conducting a title search would receive a clean title report because the other home equity lines of credit had not yet been recorded.
Barksdale advised five people to secure multiple home equity loans using his scheme, and each obtained at least three home equity loans on a single property. One individual obtained seven home equity loans on one home. Each person paid Barksdale a portion of the fraudulent proceeds. Many of the home equity loans later went into default. The scheme caused more than $1 million in losses.
In addition to the prison term, Judge Kugler sentenced Barksdale to five years of supervised release. A restitution hearing will be held at a later date.
U.S. Attorney Fishman credited agents of the FBI’s Trenton Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford, and agents of the New Jersey Division of Criminal Justice, under the leadership of Director Elie Honig, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney R. David Walk, Jr. of the U.S. Attorney’s Office Criminal Division in Camden.
William Barksdale, 47, of Burlington, New Jersey, previously pleaded guilty before U.S. District Judge Robert B. Kugler to an information charging him with one count of conspiracy to commit wire fraud. Judge Kugler imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
Barksdale was the owner of Barksdale Business Group, Barksdale Investment Properties, and Barksdale Loan Consultants. He devised a scheme to obtain multiple home equity lines of credit on a single home for more than the property was worth. A homeowner would submit loan applications to several lenders simultaneously without advising each lender about the other applications. Any bank conducting a title search would receive a clean title report because the other home equity lines of credit had not yet been recorded.
Barksdale advised five people to secure multiple home equity loans using his scheme, and each obtained at least three home equity loans on a single property. One individual obtained seven home equity loans on one home. Each person paid Barksdale a portion of the fraudulent proceeds. Many of the home equity loans later went into default. The scheme caused more than $1 million in losses.
In addition to the prison term, Judge Kugler sentenced Barksdale to five years of supervised release. A restitution hearing will be held at a later date.
U.S. Attorney Fishman credited agents of the FBI’s Trenton Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford, and agents of the New Jersey Division of Criminal Justice, under the leadership of Director Elie Honig, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney R. David Walk, Jr. of the U.S. Attorney’s Office Criminal Division in Camden.
Friday, February 21, 2014
Illegal Alien Sentenced for Drug Trafficking Violations in Harrison County
MARSHALL, TX—A 42-year-old Mexican national illegally residing in Marshall, Texas was sentenced to over 18 years in federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Apolinar Carbajal Abelardo, of Guerrero, Mexico, pleaded guilty on February 18, 2013 to possession with intent to distribute and distribution of methamphetamine and was sentenced to 225 months in federal prison on February 18, 2014 by U.S. District Judge Rodney Gilstrap. Abelardo also agreed to forfeit a truck, several firearms, $13,650 in U.S. currency, and a money judgment in the amount of $20,000 to the United States as part of his sentence.
According to information presented in court, from November 2009 to October 2012, Abelardo conspired with others to manufacture and distribute methamphetamine and cocaine in East Texas. Abelardo admitted to distributing over 50 grams of methamphetamine and possessing a firearm during the conspiracy. A federal grand jury returned an indictment on November 7, 2012 charging Abelardo with federal drug trafficking violations.
This case was investigated by the Federal Bureau of Investigation, the Marshall Police Department, and the Harrison County District Attorney’s Office and prosecuted by Assistant U.S. Attorney Allen Hurst.
Apolinar Carbajal Abelardo, of Guerrero, Mexico, pleaded guilty on February 18, 2013 to possession with intent to distribute and distribution of methamphetamine and was sentenced to 225 months in federal prison on February 18, 2014 by U.S. District Judge Rodney Gilstrap. Abelardo also agreed to forfeit a truck, several firearms, $13,650 in U.S. currency, and a money judgment in the amount of $20,000 to the United States as part of his sentence.
According to information presented in court, from November 2009 to October 2012, Abelardo conspired with others to manufacture and distribute methamphetamine and cocaine in East Texas. Abelardo admitted to distributing over 50 grams of methamphetamine and possessing a firearm during the conspiracy. A federal grand jury returned an indictment on November 7, 2012 charging Abelardo with federal drug trafficking violations.
This case was investigated by the Federal Bureau of Investigation, the Marshall Police Department, and the Harrison County District Attorney’s Office and prosecuted by Assistant U.S. Attorney Allen Hurst.
Mexican National Sentenced for Trafficking Methamphetamine in East Texas
MARSHALL, TX—A 45-year-old Mexican national illegally residing in Marshall, Texas was sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Melicio Nunez-Duque, also known as La Burra, of Coyuca de Catalan, Guerrero, Mexico, pleaded guilty on January 30, 2013 to possession with intent to distribute and distribution of methamphetamine and was sentenced to 108 months in federal prison on February 18, 2014 by U.S. District Judge Rodney Gilstrap. Nunez-Duque was also ordered to pay a money judgment in the amount of $20,000 to the United States as part of his sentence.
According to information presented in court, from July 2011 to October 2012, Nunez-Duque conspired with others to distribute methamphetamine in and around Marshall, Texas. Nunez-Duque admitted to distributing 15 grams of methamphetamine on July 27, 2011 and another 14 grams on October 27, 2011 in Marshall, Texas. He also admitted to directing others to distribute methamphetamine on August 4, 2011 and August 24, 2011. He admitted the value of the methamphetamine distributed was at least $20,000. A federal grand jury returned an indictment on October 3, 2012 charging Nunez-Duque and co-defendants Julia Flores Saucedo and Oscar Diaz-Mendoz with federal drug trafficking violations.
This case was investigated by the Federal Bureau of Investigation, the Marshall Police Department, and the Harrison County District Attorney’s Office and prosecuted by Assistant U.S. Attorney Allen Hurst.
Melicio Nunez-Duque, also known as La Burra, of Coyuca de Catalan, Guerrero, Mexico, pleaded guilty on January 30, 2013 to possession with intent to distribute and distribution of methamphetamine and was sentenced to 108 months in federal prison on February 18, 2014 by U.S. District Judge Rodney Gilstrap. Nunez-Duque was also ordered to pay a money judgment in the amount of $20,000 to the United States as part of his sentence.
According to information presented in court, from July 2011 to October 2012, Nunez-Duque conspired with others to distribute methamphetamine in and around Marshall, Texas. Nunez-Duque admitted to distributing 15 grams of methamphetamine on July 27, 2011 and another 14 grams on October 27, 2011 in Marshall, Texas. He also admitted to directing others to distribute methamphetamine on August 4, 2011 and August 24, 2011. He admitted the value of the methamphetamine distributed was at least $20,000. A federal grand jury returned an indictment on October 3, 2012 charging Nunez-Duque and co-defendants Julia Flores Saucedo and Oscar Diaz-Mendoz with federal drug trafficking violations.
This case was investigated by the Federal Bureau of Investigation, the Marshall Police Department, and the Harrison County District Attorney’s Office and prosecuted by Assistant U.S. Attorney Allen Hurst.
Three Individuals Convicted of Sabotage at the Y-12 National Security Complex Sentenced
KNOXVILLE, TN—On February 18, 2014, Michael Walli, Megan Rice, and Greg Boertje-Obed were sentenced in U.S. District Court by the Honorable Thapar, U.S. District Judge. Sister Megan Rice was sentenced to serve 35 months in prison. Walli and Boertje-Obed were each sentenced to serve 62 months in prison. All three will serve three years’ supervised release upon their release from prison. Additionally, these individuals were ordered to pay $52,953 in restitution to the Department of Energy.
These individuals were convicted in May 2013 of one count of injuring national defense premises, that is, the Y-12 National Security Complex, with the intent to interfere with the national defense of the United States and another count of depredation against property of the United States.
On July 28, 2012, in the middle of the night, the Walli, Rice, and Boertje-Obed unlawfully intruded upon the Y-12 National Security Complex in Oak Ridge, Tennessee. They used bolt cutters and cut through three highly sensitive security fences and made their way to the Highly Enriched Uranium Materials Facility (HEUMF), which houses weapons-grade uranium. They splashed human blood and painted slogans on the exterior wall of the HEUMF.
Agencies participating in the investigation of these charges, which resulted in today’s sentences, included the U.S. Department of Energy-Office of Inspector General and Federal Bureau of Investigation. Assistant U.S. Attorney Jeffrey E. Theodore represented the United States.
U.S. Attorney William C. Killian commended the sentences and said he hoped it would send a strong message. “The Y-12 National Security Complex plays a critical role in our country’s national defense. People cannot take the law into their own hands and unlawfully intrude upon sensitive government facilities. Those who violate the law and compromise the security of the Y-12 National Security Complex will be vigorously prosecuted.”
These individuals were convicted in May 2013 of one count of injuring national defense premises, that is, the Y-12 National Security Complex, with the intent to interfere with the national defense of the United States and another count of depredation against property of the United States.
On July 28, 2012, in the middle of the night, the Walli, Rice, and Boertje-Obed unlawfully intruded upon the Y-12 National Security Complex in Oak Ridge, Tennessee. They used bolt cutters and cut through three highly sensitive security fences and made their way to the Highly Enriched Uranium Materials Facility (HEUMF), which houses weapons-grade uranium. They splashed human blood and painted slogans on the exterior wall of the HEUMF.
Agencies participating in the investigation of these charges, which resulted in today’s sentences, included the U.S. Department of Energy-Office of Inspector General and Federal Bureau of Investigation. Assistant U.S. Attorney Jeffrey E. Theodore represented the United States.
U.S. Attorney William C. Killian commended the sentences and said he hoped it would send a strong message. “The Y-12 National Security Complex plays a critical role in our country’s national defense. People cannot take the law into their own hands and unlawfully intrude upon sensitive government facilities. Those who violate the law and compromise the security of the Y-12 National Security Complex will be vigorously prosecuted.”
Barbour County Sheriff Admits to Fraud, Resigns Position
ELKINS, WV—The Barbour County sheriff admitted to insurance fraud on Thursday in federal court and resigned his position as the chief law enforcement officer in the county.
United States Attorney William J. Ihlenfeld, II announced that JOHN W. HAWKINS, 47 years of age, of Philipi, West Virginia, entered a guilty plea to a felony Information charging him with mail fraud. HAWKINS admitted to staging an automobile accident in April of 2013 and then, with the assistance of one his deputies, fabricating a report for submission to Nationwide Insurance Company so that his claim would be approved. HAWKINS asserted that while driving his 2004 GMC Envoy, he accidentally drove off Jerusalem Church Road in Philipi and ran into a tree. However, a review of the claim file revealed inconsistencies in HAWKINS’ story. Photographs taken by the insurance adjuster and information from the vehicle’s data recorder contradicted HAWKINS’ version of events. Witnesses familiar with the scheme advised investigators that the story provided by HAWKINS was false.
HAWKINS used the United States mail to make a fraudulent claim in the amount of $8,262.65, which was paid to him by Nationwide last year. HAWKINS also used his official Barbour County e-mail account to communicate with Nationwide regarding his false claim.
“The defendant used his position as sheriff to take advantage of the insurance claims process and to receive a substantial financial benefit,” said U.S. Attorney Ihlenfeld. “The false accident report that he ordered his deputy to create helped to substantiate his claim, as did the fact that he was a law enforcement officer himself. By abusing the authority of his position, Sheriff Hawkins violated the trust that the citizens of Barbour County placed in him when he was elected.”
As part of his plea agreement, HAWKINS must make full restitution to Nationwide Insurance Company. HAWKINS also is required to resign as the sheriff of Barbour County, to relinquish his West Virginia law enforcement certification, and to agree to never again serve as a law enforcement officer.
The United States Attorney’s Office agreed not to pursue other investigations into the conduct of HAWKINS, including his alleged mishandling of an estate in his official capacity as sheriff, allegations of missing funds from the sheriff’s tax office, and potential civil rights violations.
The investigation into others who may have been involved in the scheme is ongoing, according to Ihlenfeld.
HAWKINS faces up to 20 years and a fine of up to $250,000 when he is sentenced. Under the Federal Sentencing Guidelines the actual sentence imposed will be based upon the seriousness of the offense and his prior criminal history, if any.
This case was prosecuted by Assistant United States Attorney John C. Parr and was investigated by the U.S. Attorney’s Office Public Corruption Unit. Agents and officers from the Federal Bureau of Investigation and the West Virginia State Police led the inquiry into HAWKINS. Assistance was provided by the West Virginia Insurance Commission, Fraud Investigations Division.
Ihlenfeld urges anyone with information regarding public corruption in their community to call the West Virginia Public Corruption Hotline at 855-WVA-FEDS (1-855-982-3337), or to send an e-mail to wvafeds@usdoj.gov.
United States Attorney William J. Ihlenfeld, II announced that JOHN W. HAWKINS, 47 years of age, of Philipi, West Virginia, entered a guilty plea to a felony Information charging him with mail fraud. HAWKINS admitted to staging an automobile accident in April of 2013 and then, with the assistance of one his deputies, fabricating a report for submission to Nationwide Insurance Company so that his claim would be approved. HAWKINS asserted that while driving his 2004 GMC Envoy, he accidentally drove off Jerusalem Church Road in Philipi and ran into a tree. However, a review of the claim file revealed inconsistencies in HAWKINS’ story. Photographs taken by the insurance adjuster and information from the vehicle’s data recorder contradicted HAWKINS’ version of events. Witnesses familiar with the scheme advised investigators that the story provided by HAWKINS was false.
HAWKINS used the United States mail to make a fraudulent claim in the amount of $8,262.65, which was paid to him by Nationwide last year. HAWKINS also used his official Barbour County e-mail account to communicate with Nationwide regarding his false claim.
“The defendant used his position as sheriff to take advantage of the insurance claims process and to receive a substantial financial benefit,” said U.S. Attorney Ihlenfeld. “The false accident report that he ordered his deputy to create helped to substantiate his claim, as did the fact that he was a law enforcement officer himself. By abusing the authority of his position, Sheriff Hawkins violated the trust that the citizens of Barbour County placed in him when he was elected.”
As part of his plea agreement, HAWKINS must make full restitution to Nationwide Insurance Company. HAWKINS also is required to resign as the sheriff of Barbour County, to relinquish his West Virginia law enforcement certification, and to agree to never again serve as a law enforcement officer.
The United States Attorney’s Office agreed not to pursue other investigations into the conduct of HAWKINS, including his alleged mishandling of an estate in his official capacity as sheriff, allegations of missing funds from the sheriff’s tax office, and potential civil rights violations.
The investigation into others who may have been involved in the scheme is ongoing, according to Ihlenfeld.
HAWKINS faces up to 20 years and a fine of up to $250,000 when he is sentenced. Under the Federal Sentencing Guidelines the actual sentence imposed will be based upon the seriousness of the offense and his prior criminal history, if any.
This case was prosecuted by Assistant United States Attorney John C. Parr and was investigated by the U.S. Attorney’s Office Public Corruption Unit. Agents and officers from the Federal Bureau of Investigation and the West Virginia State Police led the inquiry into HAWKINS. Assistance was provided by the West Virginia Insurance Commission, Fraud Investigations Division.
Ihlenfeld urges anyone with information regarding public corruption in their community to call the West Virginia Public Corruption Hotline at 855-WVA-FEDS (1-855-982-3337), or to send an e-mail to wvafeds@usdoj.gov.
Uniontown Man Sentenced to Prison for Illegally Possessing Revolver
PITTSBURGH—A convicted felon was sentenced yesterday afternoon in federal court to 18 months’ imprisonment followed by three years’ supervised release on his conviction of violating federal firearms laws, United States Attorney David J. Hickton announced today.
United States District Judge Mark R. Hornak imposed the sentence on William Kent Bricker, 56, of Varndell Street, Uniontown, Pennsylvania.
According to information presented to the court, on September 2, 2012, Bricker, being a convicted felon, illegally possessed a .32 caliber revolver. Bricker was convicted of armed bank robbery in 1993 and illegal firearms possession in 2004. Federal law prohibits anyone who has been convicted of a crime punishable by a term of imprisonment exceeding one year to possess a firearm.
Assistant United States Attorney Charles A. Eberle prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Pennsylvania State Police; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; and the Federal Bureau of Investigation for the investigation leading to the successful prosecution of Bricker. This case was prosecuted under Project Safe Neighborhoods, a collaborative effort by federal, state, and local law enforcement agencies, prosecutors, and communities to prevent, deter, and prosecute gun crime.
United States District Judge Mark R. Hornak imposed the sentence on William Kent Bricker, 56, of Varndell Street, Uniontown, Pennsylvania.
According to information presented to the court, on September 2, 2012, Bricker, being a convicted felon, illegally possessed a .32 caliber revolver. Bricker was convicted of armed bank robbery in 1993 and illegal firearms possession in 2004. Federal law prohibits anyone who has been convicted of a crime punishable by a term of imprisonment exceeding one year to possess a firearm.
Assistant United States Attorney Charles A. Eberle prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Pennsylvania State Police; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; and the Federal Bureau of Investigation for the investigation leading to the successful prosecution of Bricker. This case was prosecuted under Project Safe Neighborhoods, a collaborative effort by federal, state, and local law enforcement agencies, prosecutors, and communities to prevent, deter, and prosecute gun crime.
Division of Highways Supervisor Indicted on False Statement Charge
ELKINS, WV—A supervisor with the state Division of Highways (DOH) has been charged with making a false statement to a federal agent.
United States Attorney William J. Ihlenfeld, II, announced that Barry D. Thompson, 48 years old, of Mount Clare, West Virginia, was indicted by a federal grand jury yesterday on one count of false statement to a federal agent. Thompson is charged with making materially false statements last month to an FBI agent who questioned him as part of an ongoing federal investigation into the Equipment Division of the West Virginia Division of Highways. Thompson works as a supervisor at the Buckhannon office of the DOH.
An indictment is merely an accusation, and Thompson is presumed innocent until and unless proven guilty. Thompson faces up to five years in prison and a fine of up to $250,000 if he is convicted. Under the Federal Sentencing Guidelines the actual sentence imposed will be based upon the seriousness of the offense and his prior criminal history, if any.
This case is being prosecuted by Assistant United States Attorney John C. Parr and was investigated by the U.S. Attorney’s Office Public Corruption Unit. Agents and officers from the Federal Bureau of Investigation, the West Virginia State Police, and the State Commission on Special Investigations are leading the inquiry.
United States Attorney William J. Ihlenfeld, II, announced that Barry D. Thompson, 48 years old, of Mount Clare, West Virginia, was indicted by a federal grand jury yesterday on one count of false statement to a federal agent. Thompson is charged with making materially false statements last month to an FBI agent who questioned him as part of an ongoing federal investigation into the Equipment Division of the West Virginia Division of Highways. Thompson works as a supervisor at the Buckhannon office of the DOH.
An indictment is merely an accusation, and Thompson is presumed innocent until and unless proven guilty. Thompson faces up to five years in prison and a fine of up to $250,000 if he is convicted. Under the Federal Sentencing Guidelines the actual sentence imposed will be based upon the seriousness of the offense and his prior criminal history, if any.
This case is being prosecuted by Assistant United States Attorney John C. Parr and was investigated by the U.S. Attorney’s Office Public Corruption Unit. Agents and officers from the Federal Bureau of Investigation, the West Virginia State Police, and the State Commission on Special Investigations are leading the inquiry.
Former Executive Sentenced to 10 Years in Prison for Brokering $30 Million in Fraudulent Mortgage Loans
PITTSBURGH—A resident of Finleyville, Pennsylvania, has been sentenced in federal court to 10 years of imprisonment on his conviction of wire fraud conspiracy, United States Attorney David J. Hickton announced today.
Chief United States District Judge Joy Flowers Conti imposed the sentence yesterday on David McCloskey, 49, of School Place, Finleyville, Pennsylvania.
According to information presented to the court, McCloskey operated a mortgage broker company called First Atlantic Financial that brokered more than $30 million worth of fraudulent loans. The loans were fraudulent because the loan applications contained false representations related to the borrowers’ income and assets, which were supported by bogus documents prepared by McCloskey and his co-conspirators. Fraudulent appraisals were also part of McCloskey’s conspiracy. Most of the fraudulent appraisals were prepared by co-conspirator Kenneth Cowden, who was not licensed to prepared appraisals. His appraisals also drastically overstated the values of the properties serving as collateral for the loans.
Assistant United States Attorney Brendan T. Conway prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Mortgage Fraud Task Force for the investigation leading to the successful prosecution of McCloskey.
The Mortgage Fraud Task Force is composed of investigators from federal, state, and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.
Chief United States District Judge Joy Flowers Conti imposed the sentence yesterday on David McCloskey, 49, of School Place, Finleyville, Pennsylvania.
According to information presented to the court, McCloskey operated a mortgage broker company called First Atlantic Financial that brokered more than $30 million worth of fraudulent loans. The loans were fraudulent because the loan applications contained false representations related to the borrowers’ income and assets, which were supported by bogus documents prepared by McCloskey and his co-conspirators. Fraudulent appraisals were also part of McCloskey’s conspiracy. Most of the fraudulent appraisals were prepared by co-conspirator Kenneth Cowden, who was not licensed to prepared appraisals. His appraisals also drastically overstated the values of the properties serving as collateral for the loans.
Assistant United States Attorney Brendan T. Conway prosecuted this case on behalf of the government.
U.S. Attorney Hickton commended the Mortgage Fraud Task Force for the investigation leading to the successful prosecution of McCloskey.
The Mortgage Fraud Task Force is composed of investigators from federal, state, and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.
Final Defendant Convicted in Advance Pay Scheme That Bilked Entrepreneurs of Millions
PHILADELPHIA—Matthew McManus, 45, of Glenside, Pennsylvania, was convicted today for his role in an advance fee fraud scheme that defrauded hundreds of victims searching for commercial financing. McManus was charged with five other defendants, all of whom have pleaded guilty. Their scheme defrauded more than 1,900 victims out of more than $26 million. A sentencing hearing is scheduled for May 21, 2014. McManus faces a potential advisory guideline sentence of 15 years in prison with a statutory maximum possible sentence of 105 years in prison.
Defendant Andrew Bogdanoff, of Scottsdale, Arizona, was the founder and chairman of Remington Financial Group (later renamed Remington Capital) and ran the company with defendant McManus until 2008 in Arizona and Pennsylvania. After McManus left the company in 2008, defendant Shayne Fowler, also of Scottsdale, replaced McManus as Bogdanoff’s right-hand man. Defendant Joel Nathanson, of San Diego, California, was one of Remington’s most proficient employees and helped Remington defraud many victims. Defendant Frank Vogel, of Rochester Hills, Michigan, was a Michigan‑based broker who referred numerous victims to Remington in exchange for large kickbacks. Aaron Bogdanoff, also of Scottsdale, was also charged in the conspiracy.
Between 2005 and 2011, the defendants fraudulently induced hundreds of people to pay Remington fees in excess of $10,000 a piece based on false representations that Remington had lenders and/or investors ready to provide financing for the victims’ projects. To facilitate this fraud, the defendants issued each victim a “letter of interest,” commonly referred to as an LOI. Almost every LOI Remington issued stated that Remington had a lender or investor interested in financing the victim’s project. Remington issued an LOI to every victim even though no Remington employee had spoken to any funding source and Remington knew that it was unlikely to find funding for the project.
The LOI was written to fraudulently lead victims to believe that Remington either was an actual lender or had spoken to lenders that had already expressed interest in the customer’s project. Neither was true. Additionally, the financing terms Remington included in the LOI were unrealistic and were used solely to induce customers to pay Remington’s advance fees. In addition to the false representations in the LOI, the defendants and other Remington employees also told victims the following lies to further induce victims to pay Remington’s fees: a) Remington had five investors or lenders interested in their project; b) Remington was the actual lender for the project; c) Remington funded or “closed” 80 percent of its deals; d) the victim would get funding for the project once the advance fee was paid and/or; e) Remington would provide funding through its funding source Northbridge. After a customer paid Remington’s fee, McManus and Andrew Bogdanoff instructed Remington employees to find problems with the projects so that Remington could blame its failure to provide financing on the victim. The defendants did this to help protect Remington from civil and criminal complaints.
After the FBI and IRS conducted search warrants in Arizona and Colorado in March 2011, defendant Matthew McManus attempted to distance himself from the fraudulent scheme by obstructing justice and lying to federal agents. He was convicted of these charges as well.
Some of the defendants used sophisticated means to perpetuate the fraud. For instance, in 2010, defendants Fowler and Andrew Bogdanoff used Remington’s website to advertise an anti‑fraud policy and stated falsely that Remington had recently provided information to the Federal Bureau of Investigation and local law enforcement authorities about a suspected e-mail scam. Remington posted this information to ensure that if potential customers used an Internet search engine to search for allegations about Remington’s fraud, they would be directed to Remington’s website rather than third‑party Internet sources that contained negative information about Remington.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigations with assistance from the Pennsylvania Securities Commission. It is being prosecuted by Assistant United States Attorney David Axelrod.
Defendant Andrew Bogdanoff, of Scottsdale, Arizona, was the founder and chairman of Remington Financial Group (later renamed Remington Capital) and ran the company with defendant McManus until 2008 in Arizona and Pennsylvania. After McManus left the company in 2008, defendant Shayne Fowler, also of Scottsdale, replaced McManus as Bogdanoff’s right-hand man. Defendant Joel Nathanson, of San Diego, California, was one of Remington’s most proficient employees and helped Remington defraud many victims. Defendant Frank Vogel, of Rochester Hills, Michigan, was a Michigan‑based broker who referred numerous victims to Remington in exchange for large kickbacks. Aaron Bogdanoff, also of Scottsdale, was also charged in the conspiracy.
Between 2005 and 2011, the defendants fraudulently induced hundreds of people to pay Remington fees in excess of $10,000 a piece based on false representations that Remington had lenders and/or investors ready to provide financing for the victims’ projects. To facilitate this fraud, the defendants issued each victim a “letter of interest,” commonly referred to as an LOI. Almost every LOI Remington issued stated that Remington had a lender or investor interested in financing the victim’s project. Remington issued an LOI to every victim even though no Remington employee had spoken to any funding source and Remington knew that it was unlikely to find funding for the project.
The LOI was written to fraudulently lead victims to believe that Remington either was an actual lender or had spoken to lenders that had already expressed interest in the customer’s project. Neither was true. Additionally, the financing terms Remington included in the LOI were unrealistic and were used solely to induce customers to pay Remington’s advance fees. In addition to the false representations in the LOI, the defendants and other Remington employees also told victims the following lies to further induce victims to pay Remington’s fees: a) Remington had five investors or lenders interested in their project; b) Remington was the actual lender for the project; c) Remington funded or “closed” 80 percent of its deals; d) the victim would get funding for the project once the advance fee was paid and/or; e) Remington would provide funding through its funding source Northbridge. After a customer paid Remington’s fee, McManus and Andrew Bogdanoff instructed Remington employees to find problems with the projects so that Remington could blame its failure to provide financing on the victim. The defendants did this to help protect Remington from civil and criminal complaints.
After the FBI and IRS conducted search warrants in Arizona and Colorado in March 2011, defendant Matthew McManus attempted to distance himself from the fraudulent scheme by obstructing justice and lying to federal agents. He was convicted of these charges as well.
Some of the defendants used sophisticated means to perpetuate the fraud. For instance, in 2010, defendants Fowler and Andrew Bogdanoff used Remington’s website to advertise an anti‑fraud policy and stated falsely that Remington had recently provided information to the Federal Bureau of Investigation and local law enforcement authorities about a suspected e-mail scam. Remington posted this information to ensure that if potential customers used an Internet search engine to search for allegations about Remington’s fraud, they would be directed to Remington’s website rather than third‑party Internet sources that contained negative information about Remington.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigations with assistance from the Pennsylvania Securities Commission. It is being prosecuted by Assistant United States Attorney David Axelrod.
FBI Seeks Information on 2005 Disappearance of Richard Petrone and Danielle Imbo
The FBI, Burlington County Prosecutor’s Office, and Philadelphia Police Department Homicide Division continue to investigate the disappearance—nine years ago today—of Richard Petrone and Danielle Imbo (née Ottobre).
The pair was last seen at 11:30 p.m. on February 19, 2005, leaving a bar (formerly Abilene’s) at 4th and South Streets in Philadelphia. They were in Petrone’s 2001 Dodge Dakota pickup truck. Investigators have reason to believe that Petrone and Imbo were victims of foul play. Neither the couple nor the vehicle has been found.
Richard Petrone was a single parent living in South Philadelphia and working full time at his family’s business, Viking Pastries, in Ardmore, Pennsylvania. Danielle Imbo, who was estranged from her husband, was living in South Jersey with her infant son and working in the mortgage industry.
On the ninth anniversary of their disappearance, investigators are again asking the public for help in concluding this case. Anyone with information that may assist investigators is urged to call the Philadelphia Citizens Crime Commission Tip Line at 215-546-TIPS (215-546-8477). There is a $50,000 reward for information about the whereabouts of Richard Petrone and Danielle Imbo and/or for information leading to the arrest of those responsible. Tipsters can remain anonymous.
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| As of Tuesday, February 18, 25 digital billboards in the Philadelphia area and South Jersey feature Danielle and Richard’s case. An example is above. |
The pair was last seen at 11:30 p.m. on February 19, 2005, leaving a bar (formerly Abilene’s) at 4th and South Streets in Philadelphia. They were in Petrone’s 2001 Dodge Dakota pickup truck. Investigators have reason to believe that Petrone and Imbo were victims of foul play. Neither the couple nor the vehicle has been found.
Richard Petrone was a single parent living in South Philadelphia and working full time at his family’s business, Viking Pastries, in Ardmore, Pennsylvania. Danielle Imbo, who was estranged from her husband, was living in South Jersey with her infant son and working in the mortgage industry.
On the ninth anniversary of their disappearance, investigators are again asking the public for help in concluding this case. Anyone with information that may assist investigators is urged to call the Philadelphia Citizens Crime Commission Tip Line at 215-546-TIPS (215-546-8477). There is a $50,000 reward for information about the whereabouts of Richard Petrone and Danielle Imbo and/or for information leading to the arrest of those responsible. Tipsters can remain anonymous.
FBI Seeks Kevin Anthony Briggs
The FBI Portland Field Office joins the FBI Salt Lake City Field Office in looking for Kevin Anthony Briggs, who may be traveling through Oregon. Briggs is wanted on state charges of aggravated assault, attempted sexual intercourse without consent, assault on a peace officer, and escape.
Authorities believe Briggs purchased a one-way bus ticket to Spokane, Washington, on February 1, 2014, from Missoula, Montana. Information developed during the investigation suggests he could travel through Washington state or to Oregon, California, and/or Mexico.
The subject is considered armed and dangerous. Anyone with information as to the identity or whereabouts of this fugitive should refrain from approaching him and is urged to contact law enforcement immediately.
More Information:
- FBI wanted poster for Kevin Anthony Briggs
Authorities believe Briggs purchased a one-way bus ticket to Spokane, Washington, on February 1, 2014, from Missoula, Montana. Information developed during the investigation suggests he could travel through Washington state or to Oregon, California, and/or Mexico.
The subject is considered armed and dangerous. Anyone with information as to the identity or whereabouts of this fugitive should refrain from approaching him and is urged to contact law enforcement immediately.
More Information:
- FBI wanted poster for Kevin Anthony Briggs
Former Director of Cleveland and Dayton VA Medical Centers Pleads Guilty to Taking Money While Steering VA Work to Design Firm
The former director of the Cleveland and Dayton VA Medical Center pleaded guilty today to a scheme to enrich himself by working as a consultant for and taking money and other things of value from a design firm bidding on VA jobs and sharing confidential information about construction projects while still employed by the VA, law enforcement officials said.
William D. Montague, 61, of Brecksville, pleaded guilty to 64 counts, including Hobbs Act conspiracy, conspiracy to commit honest services mail fraud, violating the Hobbs Act, money laundering, multiple counts of wire fraud, mail fraud, disclosing public contract information, and other charges.
Montague is scheduled to be sentenced on May 20. He agreed to pay more than $390,000 to satisfy restitution and forfeiture requirements
“As a Veterans Affairs Medical Center Director, William Montague misled staff and misused his position to enrich himself and businesses pursuing contracts with the agency,” said Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Field Office. “We are pleased with the acceptance of responsibility by Mr. Montague, along with the significant forfeiture amount to be returned to the Department of Veteran’s Affairs.”
“Today’s guilty plea is the result of a two-year investigation conducted by special agents of the Cleveland Veterans Affairs Office of Inspector General and the Federal Bureau of Investigation,” said Gavin McClaren, U.S. VA Office of Inspector General, Resident Agent in Charge, Cleveland. “We will continue to protect taxpayers against those who would enrich themselves at the expense of our nation’s veterans.”
Montague served as director of the Cleveland VA Medical Center from 1995 until February 3, 2010. On March 11, 2011, Montague began working as director of the Dayton VA Medical Center, a position he held through December 17, 2011, according to the indictment.
The superseding indictment details interactions between Montague and a company identified as Business 75, an integrated design firm with offices throughout the United States, including New York, Illinois, Virginia, Missouri, and California. The company performed work for the VA directly and through its participation in joint ventures and other teaming agreements, according to the indictment.
From January 2010, Montague, Business 75, and employees of the company conspired to defraud the VA of its right to the honest and faithful service of Montague through bribery and kickbacks and to defraud the VA and other potential VA contractors by means of false and fraudulent pretenses, according to the indictment.
Montague secretly used his position as Dayton VA Medical Center director to enrich himself and his designees (including House of Montague, a financial services company Montague operated) by soliciting and accepting gifts, payments, and other things of value from Business 75 in exchange for favorable official actions, according to the indictment.
Montague solicited money and a consulting contract from Business 75 in exchange for information related to VA contracts and projects, which would benefit Business 75, Business 75’s principal and their designees, according to the indictment.
This was done to give Business 75 an advantage in obtaining VA contracts and projects. Montague gave false and misleading information to VA employees about his reasons for requesting VA documents and information, according to the indictment.
For example, on March 1, 2011, Business 75 issued a $20,000 check payable to Montague, which he deposited into the House of Montague’s account. Ten days later, Business 75’s principal sent an e-mail to some employees with Montague’s consulting agreement explaining: “His job is to help us bring in more work from the VA, in part by helping us access key decision makers,” according to the indictment.
On March 14, 2011, Business 75’s principal sent another e-mail to some employees stating that Business 75 will end the current “$15 [million VA] IDIQ contract with just slightly over $12M in sales. $3M in fee, therefore, will be left on the table…[O]ne of MONTAGUE’s jobs will be to fill up the bucket by directing task orders toward our contract, Going forward, we have two $15M buckets to fill (Central and Eastern regions). That’s a lot of shoveling to get to $30M…BILL has the relationships to help us maximize the contracts…On the VA ‘major construction’ front here is the list of medical centers and their approximate construction cost in the pipeline: West Los Angeles, CA: $750M; San Francisco, CA: $125M, Reno, NV: $115M, Alameda, CA: $225M. Montague told us about these before they were advertised, which has allowed us to get an early start in developing the team. If we bring him on board, he can help us pull in one or two of these large projects,” according to the indictment.
On May 26, 2011, Montague traveled to Washington, D.C. on official VA business. On June 17, 2011, he caused to be submitted a government expense report seeking reimbursement for $1,204 for hotels, parking, per diems, and other expenses. On June 12, 2011, Montague caused to be sent a $2,741 invoice to Business 75 for “consulting services” for work performed at “Wash/Cleve/Dayton.” The invoice included $211 for hotel and $30.60 for hotel taxes incurred on May 26, 2011, according to the indictment.
The case was prosecuted by Assistant United States Attorneys Antoinette T. Bacon and Justin J. Roberts following an investigation by the FBI and United States Department of Veterans Affairs-Office of Inspector General.
William D. Montague, 61, of Brecksville, pleaded guilty to 64 counts, including Hobbs Act conspiracy, conspiracy to commit honest services mail fraud, violating the Hobbs Act, money laundering, multiple counts of wire fraud, mail fraud, disclosing public contract information, and other charges.
Montague is scheduled to be sentenced on May 20. He agreed to pay more than $390,000 to satisfy restitution and forfeiture requirements
“As a Veterans Affairs Medical Center Director, William Montague misled staff and misused his position to enrich himself and businesses pursuing contracts with the agency,” said Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Field Office. “We are pleased with the acceptance of responsibility by Mr. Montague, along with the significant forfeiture amount to be returned to the Department of Veteran’s Affairs.”
“Today’s guilty plea is the result of a two-year investigation conducted by special agents of the Cleveland Veterans Affairs Office of Inspector General and the Federal Bureau of Investigation,” said Gavin McClaren, U.S. VA Office of Inspector General, Resident Agent in Charge, Cleveland. “We will continue to protect taxpayers against those who would enrich themselves at the expense of our nation’s veterans.”
Montague served as director of the Cleveland VA Medical Center from 1995 until February 3, 2010. On March 11, 2011, Montague began working as director of the Dayton VA Medical Center, a position he held through December 17, 2011, according to the indictment.
The superseding indictment details interactions between Montague and a company identified as Business 75, an integrated design firm with offices throughout the United States, including New York, Illinois, Virginia, Missouri, and California. The company performed work for the VA directly and through its participation in joint ventures and other teaming agreements, according to the indictment.
From January 2010, Montague, Business 75, and employees of the company conspired to defraud the VA of its right to the honest and faithful service of Montague through bribery and kickbacks and to defraud the VA and other potential VA contractors by means of false and fraudulent pretenses, according to the indictment.
Montague secretly used his position as Dayton VA Medical Center director to enrich himself and his designees (including House of Montague, a financial services company Montague operated) by soliciting and accepting gifts, payments, and other things of value from Business 75 in exchange for favorable official actions, according to the indictment.
Montague solicited money and a consulting contract from Business 75 in exchange for information related to VA contracts and projects, which would benefit Business 75, Business 75’s principal and their designees, according to the indictment.
This was done to give Business 75 an advantage in obtaining VA contracts and projects. Montague gave false and misleading information to VA employees about his reasons for requesting VA documents and information, according to the indictment.
For example, on March 1, 2011, Business 75 issued a $20,000 check payable to Montague, which he deposited into the House of Montague’s account. Ten days later, Business 75’s principal sent an e-mail to some employees with Montague’s consulting agreement explaining: “His job is to help us bring in more work from the VA, in part by helping us access key decision makers,” according to the indictment.
On March 14, 2011, Business 75’s principal sent another e-mail to some employees stating that Business 75 will end the current “$15 [million VA] IDIQ contract with just slightly over $12M in sales. $3M in fee, therefore, will be left on the table…[O]ne of MONTAGUE’s jobs will be to fill up the bucket by directing task orders toward our contract, Going forward, we have two $15M buckets to fill (Central and Eastern regions). That’s a lot of shoveling to get to $30M…BILL has the relationships to help us maximize the contracts…On the VA ‘major construction’ front here is the list of medical centers and their approximate construction cost in the pipeline: West Los Angeles, CA: $750M; San Francisco, CA: $125M, Reno, NV: $115M, Alameda, CA: $225M. Montague told us about these before they were advertised, which has allowed us to get an early start in developing the team. If we bring him on board, he can help us pull in one or two of these large projects,” according to the indictment.
On May 26, 2011, Montague traveled to Washington, D.C. on official VA business. On June 17, 2011, he caused to be submitted a government expense report seeking reimbursement for $1,204 for hotels, parking, per diems, and other expenses. On June 12, 2011, Montague caused to be sent a $2,741 invoice to Business 75 for “consulting services” for work performed at “Wash/Cleve/Dayton.” The invoice included $211 for hotel and $30.60 for hotel taxes incurred on May 26, 2011, according to the indictment.
The case was prosecuted by Assistant United States Attorneys Antoinette T. Bacon and Justin J. Roberts following an investigation by the FBI and United States Department of Veterans Affairs-Office of Inspector General.
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