BUFFALO, NY—U.S. Attorney William J. Hochul announced today that Marlon Johnson, Jr., 25, of Kenmore, New York, who was convicted of possession of a firearm by a convicted felon, was sentenced to 48 months in prison by Chief U.S. District Judge William M. Skretny.
Assistant U.S. Attorney Anthony M. Bruce, who handled the case, stated that on December 16, 2011, Buffalo Police responded to a call on Emerson Street. As officers approached the area, the defendant ran from the area and a foot chase ensued. Johnson was taken into custody inside a residence on Glenwood Avenue. Officers searched a garbage tote next to the door of the residence and found a loaded .380 caliber semi-automatic pistol with a defaced serial number. The defendant later admitted that he stole the gun from another individual.
Today’s development is the latest in a continuing series of actions aimed at the Bailey Boys Gang allegedly operating in the city of Buffalo. A total of 10 alleged members and associates of the Bailey Boys have been indicted on racketeering charges, which include multiple murders, attempted murders, robberies, and narcotics trafficking. Authorities believe that Johnson, the subject of today’s sentencing, in fact was a criminal associate of the Bailey Boys.
The sentencing is the result of an investigation by the Buffalo Police Department, under the direction of Commissioner Daniel Derenda; the Bureau of Alcohol, Tobacco, Firearms, and Explosives, under the direction of Special Agent in Charge Thomas J. Cannon; and the Federal Bureau of Investigation’s Safe Streets Task Force.
Tuesday, April 22, 2014
Cell Phone Store Robber Sentenced to 116 Years
A 29-year-old Detroit man was sentenced today in federal court to 116 years in prison for his role in six cellular telephone store robberies, U.S. Attorney Barbara L. McQuade announced.
Joining McQuade in the announcement was Paul M. Abbate, Special Agent in Charge, Federal Bureau of Investigation, Detroit Field Office.
U.S. District Judge Sean F. Cox imposed sentence on Timothy Ivory Carpenter, who was convicted after a two-week jury trial in December. The jury found Carpenter guilty of committing six robberies of cell phone stores and of using a gun during five of the robberies. The evidence at trial established that Carpenter and his brother, Timothy Sanders, conspired with others to rob cell phone stores in Detroit, Highland Park, Eastpointe, and Warren, Ohio between December 13, 2010 and December 1, 2012.
“Armed robberies at neighborhood stores make citizens fearful to carry out their daily business in our community,” McQuade said. “This lengthy sentence sends a powerful message that using guns to commit crimes will not be tolerated.”
“Aggressively pursuing violent offenders, particularly those associated with organized criminal groups, is among the highest priorities of the FBI,” stated Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “Today’s sentence, along with others seen recently, sends a strong message to violent perpetrators whose actions wreak havoc upon our community—the FBI, our local, state, and federal partners and the U.S. Attorney’s Office will work tirelessly to combat violent crime and bring justice to bear on these offenders.”
The case was investigated by the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Kenneth Chadwell.
Joining McQuade in the announcement was Paul M. Abbate, Special Agent in Charge, Federal Bureau of Investigation, Detroit Field Office.
U.S. District Judge Sean F. Cox imposed sentence on Timothy Ivory Carpenter, who was convicted after a two-week jury trial in December. The jury found Carpenter guilty of committing six robberies of cell phone stores and of using a gun during five of the robberies. The evidence at trial established that Carpenter and his brother, Timothy Sanders, conspired with others to rob cell phone stores in Detroit, Highland Park, Eastpointe, and Warren, Ohio between December 13, 2010 and December 1, 2012.
“Armed robberies at neighborhood stores make citizens fearful to carry out their daily business in our community,” McQuade said. “This lengthy sentence sends a powerful message that using guns to commit crimes will not be tolerated.”
“Aggressively pursuing violent offenders, particularly those associated with organized criminal groups, is among the highest priorities of the FBI,” stated Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “Today’s sentence, along with others seen recently, sends a strong message to violent perpetrators whose actions wreak havoc upon our community—the FBI, our local, state, and federal partners and the U.S. Attorney’s Office will work tirelessly to combat violent crime and bring justice to bear on these offenders.”
The case was investigated by the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Kenneth Chadwell.
Guilty Verdict Reached in Bank Robbery Trial
Michael J. Moore, United States Attorney for the Middle District of Georgia, announced the conviction today of Walter Butler, Jr., aged 45, of Gainesville, Georgia, of bank robbery. Orlando Brock, aged 43, of Hartwell, Georgia, was found guilty of armed bank robbery and brandishing a firearm during a crime of violence. The guilty verdicts were handed down following a four-day trial before the Honorable C. Ashley Royal, Chief United States District Court Judge, in Athens, Georgia.
Evidence presented at trial showed that on Thursday, September 22, 2011, at approximately 2:40 p.m., Allen Colbert, a/k/a “Juicy,” and Juan Vladimir Camp entered the North Georgia Credit Union in Lavonia, Georgia. Both men carried firearms; one of them brandished a firearm. Both men wore gloves and covers over their heads. The pair forced the tellers to hand over approximately $310,000 and then sprayed them with pepper spray. After stealing the money, both Mr. Butler and Mr. Colbert left the scene in a truck driven by Mr. Butler. Orlando Brock planned the robbery, supplied the firearms, and dropped Mr. Colbert and Mr. Camp off at the bank that day.
Mr. Colbert and Mr. Camp entered guilty pleas to their part in the robbery on March 20, 2013. The court has set their sentencing hearing for May 27, 2014, in Athens, Georgia.
Mr. Butler faces a maximum sentence of 20 years’ imprisonment, a maximum fine of $250,000, or both. Mr. Brock, Mr. Colbert and Mr. Camp face a maximum sentence of 25 years’ imprisonment, a maximum fine of $250,000, or both. Mr. Brock faces an additional minimum mandatory sentence of seven years up to a maximum sentence of life, a maximum fine of $250,000, or both on the firearm charges. The court will set a sentencing date for Mr. Butler and Mr. Brock following the completion of a pre-sentence investigation and report.
“This case is a fine example of a cooperative investigation by the federal, state, and local authorities. These defendants face lengthy terms of imprisonment without parole as the result of their violent criminal activity,” stated U.S. Attorney Michael Moore.
“The GBI is committed to working with our local and federal law enforcement partners to insure those who commit crimes such as this are brought to justice,” said GBI Director Vernon Keenan.
The case was investigated by the Federal Bureau of Investigation, Georgia Bureau of Investigation, Franklin County Sheriff’s Office, and Lavonia Police Department. Assistant United States Attorneys Graham Thorpe and Sonja Profit prosecuted the case for the Government.
Inquiries regarding the case should be directed to Pamela Lightsey, United States Attorney’s Office at (478) 621-2603.
Mr. Colbert and Mr. Camp entered guilty pleas to their part in the robbery on March 20, 2013. The court has set their sentencing hearing for May 27, 2014, in Athens, Georgia.
Mr. Butler faces a maximum sentence of 20 years’ imprisonment, a maximum fine of $250,000, or both. Mr. Brock, Mr. Colbert and Mr. Camp face a maximum sentence of 25 years’ imprisonment, a maximum fine of $250,000, or both. Mr. Brock faces an additional minimum mandatory sentence of seven years up to a maximum sentence of life, a maximum fine of $250,000, or both on the firearm charges. The court will set a sentencing date for Mr. Butler and Mr. Brock following the completion of a pre-sentence investigation and report.
“This case is a fine example of a cooperative investigation by the federal, state, and local authorities. These defendants face lengthy terms of imprisonment without parole as the result of their violent criminal activity,” stated U.S. Attorney Michael Moore.
“The GBI is committed to working with our local and federal law enforcement partners to insure those who commit crimes such as this are brought to justice,” said GBI Director Vernon Keenan.
The case was investigated by the Federal Bureau of Investigation, Georgia Bureau of Investigation, Franklin County Sheriff’s Office, and Lavonia Police Department. Assistant United States Attorneys Graham Thorpe and Sonja Profit prosecuted the case for the Government.
Inquiries regarding the case should be directed to Pamela Lightsey, United States Attorney’s Office at (478) 621-2603.
Two Winter Garden Men Convicted at Trial
ORLANDO—United States Attorney A. Lee Bentley, III announces that yesterday a federal jury found Linell Devon Lowe (22) and Latavis Deyonta Mackroy (20) guilty of conspiracy to commit a Hobbs Act robbery and the brandishing of a firearm during the commission of the robbery. Both men face a maximum penalty of 20 years’ imprisonment for the robbery, plus a mandatory minimum, consecutive sentence of seven years, up to life in prison, on the firearm offense. A sentencing hearing is scheduled for July 28, 2014.
Lowe and Mackroy were indicted on December 11, 2013. A third person, who acted as lookout during the robbery, pleaded guilty on February 24, 2014.
According to the testimony and evidence presented at trial, on May 23, 2013, Lowe and Mackroy, armed with a firearm and a hammer, robbed the Value Pawn and Jewelry located at 2200 E. Semoran Boulevard, in Apopka, Florida. During the course of the robbery, they made death threats and intimidated two employees and a customer. Mackroy repeatedly hit a customer with a hammer and then stole approximately 100 pieces of gold and diamond jewelry, while Lowe pointed a gun at the manager and stole the cash from the registers.
This case was investigated by Federal Bureau of Investigation and the Apopka Police Department, with assistance from both the Winter Garden Police and Orlando Police Departments. It is being prosecuted by Assistant United States Attorney Ilianys Rivera Miranda.
Lowe and Mackroy were indicted on December 11, 2013. A third person, who acted as lookout during the robbery, pleaded guilty on February 24, 2014.
According to the testimony and evidence presented at trial, on May 23, 2013, Lowe and Mackroy, armed with a firearm and a hammer, robbed the Value Pawn and Jewelry located at 2200 E. Semoran Boulevard, in Apopka, Florida. During the course of the robbery, they made death threats and intimidated two employees and a customer. Mackroy repeatedly hit a customer with a hammer and then stole approximately 100 pieces of gold and diamond jewelry, while Lowe pointed a gun at the manager and stole the cash from the registers.
This case was investigated by Federal Bureau of Investigation and the Apopka Police Department, with assistance from both the Winter Garden Police and Orlando Police Departments. It is being prosecuted by Assistant United States Attorney Ilianys Rivera Miranda.
Mastermind of Violent Robbery Crew Convicted of Robbery Murder and Weapons Charges
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announce today that Terrance Brown, 41, of Miami, was convicted of Hobbs Act robbery, two counts of attempted Hobbs Act robbery, and three counts of possession of a firearm in furtherance of a crime of violence.
According to the indictment and evidence presented at trial, Brown was the mastermind of a seven-man robbery crew that conspired in 2010 to rob armored Brinks trucks. In July 2010, the crew planned to rob a Brinks truck at a Bank of America in Lighthouse Point. However, that robbery did not occur because the Brinks truck did not arrive at the bank at the time that the crew planned to rob it. In September 2010, the crew attempted to rob another Brinks truck at a Bank of America in Miramar. That robbery also did not occur because a police vehicle drove through the bank parking lot just prior to the planned robbery, causing members of the crew to run from the scene. Finally, in October 2010, the crew returned to the same Bank of America in Miramar to once again rob the Brinks guard as he was delivering currency to the bank. During that robbery, the gunman fatally shot the guard in the head while Brown and his accomplices acted as lookouts. The gunman was arrested at the scene and one year later pleaded guilty and was sentenced to life in prison. Thereafter, in July 2013, a jury convicted Brown and three other co-defendants of several charges, including conspiracy to commit Hobbs Act robbery. However, the jury was unable to reach a unanimous verdict on several other charges, which resulted in a retrial for the charges for which defendant Brown was just convicted.
U.S. Attorney Wifredo A. Ferrer stated, “We are gratified that the jury reached a unanimous verdict finding Terrance Brown guilty of robbery murder and related weapons charges. Brown was the mastermind of a violent robbery crew that resulted in the senseless murder of a Brinks guard. Today our community can sleep sounder knowing that Brown is off our streets and that justice has been served.”
“Terrance Brown is a violent and greedy criminal who was bent on hitting armored truck couriers during their deliveries,” said George L. Piro, Special Agent in Charge, FBI Miami. “In July 2010, Brown and his robbery crew fatally shot a Brinks guard during the course of his duties. For this brutal and cowardly act, Brown is now being held accountable.”
Sentencing for Brown is scheduled for July 1, 2014, before U.S. District Judge Robin S. Rosenbaum in Ft. Lauderdale. Brown faces a maximum sentence of life in prison.
Mr. Ferrer commended the FBI’s Violent Crime Task Force, the Broward County Sheriff’s Office, the Miramar Police Department, the Lighthouse Point Police Department, and the Coconut Creek Police Department for their excellent work on this matter. This case was prosecuted by Assistant U.S. Attorneys Mark Dispoto, Marc Anton, and Michael Gilfarb.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls.
According to the indictment and evidence presented at trial, Brown was the mastermind of a seven-man robbery crew that conspired in 2010 to rob armored Brinks trucks. In July 2010, the crew planned to rob a Brinks truck at a Bank of America in Lighthouse Point. However, that robbery did not occur because the Brinks truck did not arrive at the bank at the time that the crew planned to rob it. In September 2010, the crew attempted to rob another Brinks truck at a Bank of America in Miramar. That robbery also did not occur because a police vehicle drove through the bank parking lot just prior to the planned robbery, causing members of the crew to run from the scene. Finally, in October 2010, the crew returned to the same Bank of America in Miramar to once again rob the Brinks guard as he was delivering currency to the bank. During that robbery, the gunman fatally shot the guard in the head while Brown and his accomplices acted as lookouts. The gunman was arrested at the scene and one year later pleaded guilty and was sentenced to life in prison. Thereafter, in July 2013, a jury convicted Brown and three other co-defendants of several charges, including conspiracy to commit Hobbs Act robbery. However, the jury was unable to reach a unanimous verdict on several other charges, which resulted in a retrial for the charges for which defendant Brown was just convicted.
U.S. Attorney Wifredo A. Ferrer stated, “We are gratified that the jury reached a unanimous verdict finding Terrance Brown guilty of robbery murder and related weapons charges. Brown was the mastermind of a violent robbery crew that resulted in the senseless murder of a Brinks guard. Today our community can sleep sounder knowing that Brown is off our streets and that justice has been served.”
“Terrance Brown is a violent and greedy criminal who was bent on hitting armored truck couriers during their deliveries,” said George L. Piro, Special Agent in Charge, FBI Miami. “In July 2010, Brown and his robbery crew fatally shot a Brinks guard during the course of his duties. For this brutal and cowardly act, Brown is now being held accountable.”
Sentencing for Brown is scheduled for July 1, 2014, before U.S. District Judge Robin S. Rosenbaum in Ft. Lauderdale. Brown faces a maximum sentence of life in prison.
Mr. Ferrer commended the FBI’s Violent Crime Task Force, the Broward County Sheriff’s Office, the Miramar Police Department, the Lighthouse Point Police Department, and the Coconut Creek Police Department for their excellent work on this matter. This case was prosecuted by Assistant U.S. Attorneys Mark Dispoto, Marc Anton, and Michael Gilfarb.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls.
Miami Resident Sentenced to 81 Months in IRS Fraudulent Refund Scheme
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI); George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; and Daniel C. Alexander, Chief, Boca Raton Police Department, announce today that Brandon James, of Miami, was sentenced by U.S. District Judge Daniel T.K. Hurley to 81 months in prison, followed by two years of supervised release. James was also ordered to pay restitution in the amount of $382,444 and a special assessment of $300.
According to court documents and statements made in court, James was involved in cashing out fraudulent federal income tax refunds that had been placed electronically onto debit cards. James and his co-conspirators, Laron Larkin and Eric Fussell, attempted to defraud the IRS of more than $862,000 in fraudulent income tax refunds based on at least 121 stolen identities. The IRS paid approximately $382,484 on these refund requests.
James pled guilty earlier to conspiracy to steal government monies, in violation of Title 18, United States Code, Section 371 (count one), theft of government funds, in violation of Title 18, United States Code, Section 641 (count four), and aggravated identity theft, in violation of Title 18, United States Code, Section 1028A (count nine).
Co-defendant Larkin was sentenced on October 7, 2013, to 36 months and one day in prison, to be followed by three years of supervised release. Larkin pled guilty to one count of conspiracy to steal monies of the United States, in violation of Title 18, United States Code, Section 641, the conspiracy being a violation of Title 18, United States Code, Section 371; and one count of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A.
Mr. Ferrer commended the investigative efforts of IRS-CI, FBI, and the Boca Raton Police Department. The case is being prosecuted by Assistant U.S. Attorney Stephen Carlton.
According to court documents and statements made in court, James was involved in cashing out fraudulent federal income tax refunds that had been placed electronically onto debit cards. James and his co-conspirators, Laron Larkin and Eric Fussell, attempted to defraud the IRS of more than $862,000 in fraudulent income tax refunds based on at least 121 stolen identities. The IRS paid approximately $382,484 on these refund requests.
James pled guilty earlier to conspiracy to steal government monies, in violation of Title 18, United States Code, Section 371 (count one), theft of government funds, in violation of Title 18, United States Code, Section 641 (count four), and aggravated identity theft, in violation of Title 18, United States Code, Section 1028A (count nine).
Co-defendant Larkin was sentenced on October 7, 2013, to 36 months and one day in prison, to be followed by three years of supervised release. Larkin pled guilty to one count of conspiracy to steal monies of the United States, in violation of Title 18, United States Code, Section 641, the conspiracy being a violation of Title 18, United States Code, Section 371; and one count of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A.
Mr. Ferrer commended the investigative efforts of IRS-CI, FBI, and the Boca Raton Police Department. The case is being prosecuted by Assistant U.S. Attorney Stephen Carlton.
Jury Convicts Former GMAC and Countrywide Loan Officer and Former New York Corrections Officer on Mortgage Fraud Charges
NEW HAVEN, CT—A federal jury has convicted two men for their roles in an extensive mortgage fraud scheme arising from the fraudulent purchases of more than 40 properties in New Haven, U.S. Attorney Paul J. Fishman, District of New Jersey, announced today.
Andrew Constantinou, of Unionville, Connecticut, and Jacques Kelly, of Poughkeepsie, New York, were convicted on April 18, 2014, of all counts charged in the indictment following a three-week trial before Chief U.S. District Judge Janet C. Hall. The jury found both men guilty of conspiracy to commit mail, wire, and bank fraud. The jury also found Kelly guilty of one count of wire fraud and one count of making a false statement to a financial institution.
According to documents filed in this case and the evidence at trial:
From 2006 to 2008, Constantinou, Kelly, and others, including Menachem Yosef Levitin, Ronald Hutchison, Charles Lesser, Jeffrey Weisman, Genevieve Salvatore, Bradford Rieger, Lawrence Dressler, and Kwame Nkrumah, conspired to defraud mortgage lenders of millions of dollars of mortgage proceeds by inflating the contract price that the sellers of the properties had actually agreed to accept. The scheme involved multi-family properties in New Haven.
The lower sale price, which ranged from approximately $30,000 to $145,000 less than the contract price, was not disclosed to the lenders from which the buyers obtained financing to purchase the properties. In most of the fraudulent transactions, the buyers did not make any deposits or down payments. Constantinou, Kelly, and their conspirators used some of the fraudulently obtained mortgage proceeds to cover the down payments and deposits. At or shortly after a closing, the borrowers would often receive thousands to tens of thousands of dollars in cash back, although these payments were not disclosed to the lender.
Constantinou, Kelly, and their conspirators submitted to mortgage lenders false HUD-1 forms that often did not match another, undisclosed HUD-1 form that was actually used to disburse the fraudulently obtained proceeds at the closing. As a result of the submission of the false HUD-1 forms and other false documentation in support of the loan, including fictitious leases and false information about the borrower’s assets and liabilities, the mortgage lenders would issue mortgages based on the inflated sales price.
Constantinou, 57, was a loan officer at GMAC Mortgage from 2006 to 2007 and at Countrywide Home Loans from 2007 to 2008. He submitted and received commissions from fraudulent loans as part of the scheme without disclosing the existence of inflated contract prices, secret contract addenda that contained large repair credits, false leases, and other false documentation. Constantinou worked with an unindicted conspirator, who was a licensed mortgage broker, to originate additional loans as part of the conspiracy.
Kelly, 48, was a corrections officer for the Westchester County Department of Corrections in New York. From December 2006 to May 2007, Kelly purchased eight multi-family properties in New Haven and attempted to purchase a ninth property. He paid no money to purchase the properties and received more than $56,000 from his closings. Kelly also made a fraudulent sale of a New Haven property he owned to conspirator Hutchison in September 2006 but for which Hutchison paid no money at closing.
Nearly all the properties purchased as part of this conspiracy went into default and have been foreclosed upon, causing losses of more than $7 million to lenders.
Constantinou faces a maximum potential penalty of 30 years in prison; his sentencing is scheduled for July 15, 2014. He has been free on bond since February 25, 2013. Kelly faces a maximum potential penalty of 30 years for conspiracy, 20 years for wire fraud, and 30 years for making a false statement; his sentencing is scheduled for July 14, 2014. Kelly has been free on bond since October 6, 2011.
Ten defendants have been charged and convicted for their participation in this mortgage fraud conspiracy, including two loan officers, four attorneys, and a real estate agent. Salvatore, Rieger, Dressler, and Nkrumah have previously been sentenced. Levitin, Hutchison, Lesser, and Weisman each await sentencing.
U.S. Attorney Fishman credited the FBI, the U.S. Postal Inspection Service, the U.S. Department of Housing and Urban Development-Office of Inspector General, and the Federal Housing Finance Agency-Office of Inspector General, which identified multiple Fannie Mae and Freddie Mac loans that went into foreclosure, for the investigation leading to the guilty verdicts.
The government is represented in the criminal cases by Assistant U.S. Attorney David T. Huang and Special Assistant U.S. Attorney John McReynolds of the U.S. Attorney’s Office, District of Connecticut; the parallel civil forfeiture cases are being handled by Assistant U.S. Attorney Julie G. Turbert, U.S. Attorney’s Office, District of Connecticut. The U.S. Attorney for the District of New Jersey has been overseeing the case because of the recusal of the U.S. Attorney’s Office for the District of Connecticut.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
Andrew Constantinou, of Unionville, Connecticut, and Jacques Kelly, of Poughkeepsie, New York, were convicted on April 18, 2014, of all counts charged in the indictment following a three-week trial before Chief U.S. District Judge Janet C. Hall. The jury found both men guilty of conspiracy to commit mail, wire, and bank fraud. The jury also found Kelly guilty of one count of wire fraud and one count of making a false statement to a financial institution.
According to documents filed in this case and the evidence at trial:
From 2006 to 2008, Constantinou, Kelly, and others, including Menachem Yosef Levitin, Ronald Hutchison, Charles Lesser, Jeffrey Weisman, Genevieve Salvatore, Bradford Rieger, Lawrence Dressler, and Kwame Nkrumah, conspired to defraud mortgage lenders of millions of dollars of mortgage proceeds by inflating the contract price that the sellers of the properties had actually agreed to accept. The scheme involved multi-family properties in New Haven.
The lower sale price, which ranged from approximately $30,000 to $145,000 less than the contract price, was not disclosed to the lenders from which the buyers obtained financing to purchase the properties. In most of the fraudulent transactions, the buyers did not make any deposits or down payments. Constantinou, Kelly, and their conspirators used some of the fraudulently obtained mortgage proceeds to cover the down payments and deposits. At or shortly after a closing, the borrowers would often receive thousands to tens of thousands of dollars in cash back, although these payments were not disclosed to the lender.
Constantinou, Kelly, and their conspirators submitted to mortgage lenders false HUD-1 forms that often did not match another, undisclosed HUD-1 form that was actually used to disburse the fraudulently obtained proceeds at the closing. As a result of the submission of the false HUD-1 forms and other false documentation in support of the loan, including fictitious leases and false information about the borrower’s assets and liabilities, the mortgage lenders would issue mortgages based on the inflated sales price.
Constantinou, 57, was a loan officer at GMAC Mortgage from 2006 to 2007 and at Countrywide Home Loans from 2007 to 2008. He submitted and received commissions from fraudulent loans as part of the scheme without disclosing the existence of inflated contract prices, secret contract addenda that contained large repair credits, false leases, and other false documentation. Constantinou worked with an unindicted conspirator, who was a licensed mortgage broker, to originate additional loans as part of the conspiracy.
Kelly, 48, was a corrections officer for the Westchester County Department of Corrections in New York. From December 2006 to May 2007, Kelly purchased eight multi-family properties in New Haven and attempted to purchase a ninth property. He paid no money to purchase the properties and received more than $56,000 from his closings. Kelly also made a fraudulent sale of a New Haven property he owned to conspirator Hutchison in September 2006 but for which Hutchison paid no money at closing.
Nearly all the properties purchased as part of this conspiracy went into default and have been foreclosed upon, causing losses of more than $7 million to lenders.
Constantinou faces a maximum potential penalty of 30 years in prison; his sentencing is scheduled for July 15, 2014. He has been free on bond since February 25, 2013. Kelly faces a maximum potential penalty of 30 years for conspiracy, 20 years for wire fraud, and 30 years for making a false statement; his sentencing is scheduled for July 14, 2014. Kelly has been free on bond since October 6, 2011.
Ten defendants have been charged and convicted for their participation in this mortgage fraud conspiracy, including two loan officers, four attorneys, and a real estate agent. Salvatore, Rieger, Dressler, and Nkrumah have previously been sentenced. Levitin, Hutchison, Lesser, and Weisman each await sentencing.
U.S. Attorney Fishman credited the FBI, the U.S. Postal Inspection Service, the U.S. Department of Housing and Urban Development-Office of Inspector General, and the Federal Housing Finance Agency-Office of Inspector General, which identified multiple Fannie Mae and Freddie Mac loans that went into foreclosure, for the investigation leading to the guilty verdicts.
The government is represented in the criminal cases by Assistant U.S. Attorney David T. Huang and Special Assistant U.S. Attorney John McReynolds of the U.S. Attorney’s Office, District of Connecticut; the parallel civil forfeiture cases are being handled by Assistant U.S. Attorney Julie G. Turbert, U.S. Attorney’s Office, District of Connecticut. The U.S. Attorney for the District of New Jersey has been overseeing the case because of the recusal of the U.S. Attorney’s Office for the District of Connecticut.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
Bay Area Man Pleads Guilty to Securities Fraud by Insider Trading in The Walt Disney Company’s Acquisition of Marvel Entertainment in August 2009
LOS ANGELES—A San Francisco man who made approximately $192,000 in profits by purchasing Marvel Entertainment Inc. stock options immediately prior to its acquisition by The Walt Disney Company in August 2009 pleaded guilty this morning to a federal securities fraud charge.
Toby G. Scammell, 29, pleaded guilty today to one count of securities fraud before United States District Judge S. James Otero.
According to a plea agreement filed in federal court, Scammell learned that Disney planned to acquire another company “that people would recognize right away” from his then-girlfriend, who was an extern at Disney in the summer of 2009 and who worked on the deal to acquire Marvel. Scammell later learned from a supervisor at his then-employer—which had periodically provided corporate consulting services to Disney and had confidentiality obligations to Disney—that Disney had previously been interested in acquiring Marvel. Scammell admitted that he learned the planned acquisition by Disney was estimated to close by Labor Day 2009, based on his observations of his girlfriend’s work schedule at Disney and their own travel plans at the time.
Scammell used the information that he learned from his girlfriend to acquire 659 call options to purchase Marvel stock for $5,465. He purchased more than half the options in his brother’s account. Scammell did not tell his girlfriend or his brother about the purchases of the Marvel call options.
Marvel’s stock rose approximately 25 percent after the deal with Disney was announced on August 31, 2009. After the acquisition was publicly disclosed by Disney, Scammell immediately sold his options, realizing more than $192,000 in profits. Scammell transferred $100,000 of the profits out of his brother’s account to conceal the trading and profits from his brother.
As a result of the guilty plea, Scammell faces a maximum statutory sentence of 25 years in federal prison when he is sentenced by Judge Otero on July 28, 2014.
Today’s guilty plea resolves a case filed in October 2013 when a federal grand jury returned an indictment that named Scammell.
Scammell was previously charged with securities fraud by the Securities and Exchange Commission in a civil lawsuit filed in August 2011. He was later ordered to disgorge his trading profits and pay civil penalties and interest totaling $800,985 in that case.
This case was investigated by the Federal Bureau of Investigation, which received assistance from the Securities and Exchange Commission.
Toby G. Scammell, 29, pleaded guilty today to one count of securities fraud before United States District Judge S. James Otero.
According to a plea agreement filed in federal court, Scammell learned that Disney planned to acquire another company “that people would recognize right away” from his then-girlfriend, who was an extern at Disney in the summer of 2009 and who worked on the deal to acquire Marvel. Scammell later learned from a supervisor at his then-employer—which had periodically provided corporate consulting services to Disney and had confidentiality obligations to Disney—that Disney had previously been interested in acquiring Marvel. Scammell admitted that he learned the planned acquisition by Disney was estimated to close by Labor Day 2009, based on his observations of his girlfriend’s work schedule at Disney and their own travel plans at the time.
Scammell used the information that he learned from his girlfriend to acquire 659 call options to purchase Marvel stock for $5,465. He purchased more than half the options in his brother’s account. Scammell did not tell his girlfriend or his brother about the purchases of the Marvel call options.
Marvel’s stock rose approximately 25 percent after the deal with Disney was announced on August 31, 2009. After the acquisition was publicly disclosed by Disney, Scammell immediately sold his options, realizing more than $192,000 in profits. Scammell transferred $100,000 of the profits out of his brother’s account to conceal the trading and profits from his brother.
As a result of the guilty plea, Scammell faces a maximum statutory sentence of 25 years in federal prison when he is sentenced by Judge Otero on July 28, 2014.
Today’s guilty plea resolves a case filed in October 2013 when a federal grand jury returned an indictment that named Scammell.
Scammell was previously charged with securities fraud by the Securities and Exchange Commission in a civil lawsuit filed in August 2011. He was later ordered to disgorge his trading profits and pay civil penalties and interest totaling $800,985 in that case.
This case was investigated by the Federal Bureau of Investigation, which received assistance from the Securities and Exchange Commission.
Wednesday, April 16, 2014
Newport News Man Pleads Guilty to Participating in Murder
NEWPORT NEWS, VA—Mustafah Kalil Muhammad, 27, of Newport News, Virginia, pleaded guilty today use of a firearm resulting in the death of Lloyd Robinson on January 8, 2010.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Royce E. Curtin, Special Agent in Charge of the Federal Bureau of Investigation’s Norfolk Field Office; and Richard W. Meyers, Chief of Newport News Police, made the announcement after the plea was accepted by United States District Judge Raymond A. Jackson.
Muhammad was charged, along with others, in a superseding indictment returned in July 2013 with interference with commerce by robbery and use of a firearm resulting in death.
Muhammad faces a maximum penalty of life in prison when he is sentenced on July 23, 2014, in Norfolk.
Muhammad is alleged to be part of a criminal organization known locally as Thug Relations, alternatively known as the Duct, “Warwick Lawnz, TR,” and from the Duct to the Lawnz, a neighborhood gang operating in the Aqueduct Apartments, St. Michael’s Apartments, Mariner’s Landing Apartments, and Heritage Trace Apartments, as well as Warwick Lawns, Warwick Town Home, Sharon Drive, and the Savage Drive areas of Newport News, Virginia. The alleged gang members are accused in the indictment of protecting their criminal enterprise and activities through murder, attempted murder, witness intimidation, robbery, and narcotics distribution. In a statement of facts filed with his plea agreement, Muhammad admitted to his participation in the drug related home invasion and murder of Lloyd Robinson on January 8, 2010.
This investigation was led by FBI and the Safe Streets Task Force, with assistance from the Newport News Police and the Virginia State Police. Assistant United States Attorneys Howard J. Zlotnick and Lisa R. McKeel and Special Assistant United States Attorney Jonathan A. Ophardt are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Royce E. Curtin, Special Agent in Charge of the Federal Bureau of Investigation’s Norfolk Field Office; and Richard W. Meyers, Chief of Newport News Police, made the announcement after the plea was accepted by United States District Judge Raymond A. Jackson.
Muhammad was charged, along with others, in a superseding indictment returned in July 2013 with interference with commerce by robbery and use of a firearm resulting in death.
Muhammad faces a maximum penalty of life in prison when he is sentenced on July 23, 2014, in Norfolk.
Muhammad is alleged to be part of a criminal organization known locally as Thug Relations, alternatively known as the Duct, “Warwick Lawnz, TR,” and from the Duct to the Lawnz, a neighborhood gang operating in the Aqueduct Apartments, St. Michael’s Apartments, Mariner’s Landing Apartments, and Heritage Trace Apartments, as well as Warwick Lawns, Warwick Town Home, Sharon Drive, and the Savage Drive areas of Newport News, Virginia. The alleged gang members are accused in the indictment of protecting their criminal enterprise and activities through murder, attempted murder, witness intimidation, robbery, and narcotics distribution. In a statement of facts filed with his plea agreement, Muhammad admitted to his participation in the drug related home invasion and murder of Lloyd Robinson on January 8, 2010.
This investigation was led by FBI and the Safe Streets Task Force, with assistance from the Newport News Police and the Virginia State Police. Assistant United States Attorneys Howard J. Zlotnick and Lisa R. McKeel and Special Assistant United States Attorney Jonathan A. Ophardt are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.
Utah Man Charged with Federal Hate Crime for Threatening Interracial Family
WASHINGTON—The Department of Justice announced today that an information was filed charging Robert Keller, 70, with interfering with the housing rights of three members of an interracial family because of the family members’ races and because the family members were living in Hurricane, Utah.
Keller has been charged with two counts of criminal interference with a right to fair housing. More specifically, the information alleges that Keller wrote a note to two Caucasian family members of an interracial family threatening to kill them if they did not make their African-American family member leave their home and the community. The first count alleges that Keller’s threats interfered with the housing rights of the Caucasian residents to associate in their home with their African-American family member, and the second count alleges that Keller’s threats interfered with the African-American resident’s right to occupy the home.
If convicted, Keller faces a statutory maximum penalty of one year in prison on each count.
This case is being investigated by the Salt Lake City Division of the FBI in cooperation with the Hurricane City Police Department. It is being prosecuted by Trial Attorney Saeed Mody of the Civil Rights Division and Assistant U.S. Attorney Carlos Esqueda for the District of Utah.
An information is merely an accusation, and the defendant is presumed innocent unless proven guilty.
Keller has been charged with two counts of criminal interference with a right to fair housing. More specifically, the information alleges that Keller wrote a note to two Caucasian family members of an interracial family threatening to kill them if they did not make their African-American family member leave their home and the community. The first count alleges that Keller’s threats interfered with the housing rights of the Caucasian residents to associate in their home with their African-American family member, and the second count alleges that Keller’s threats interfered with the African-American resident’s right to occupy the home.
If convicted, Keller faces a statutory maximum penalty of one year in prison on each count.
This case is being investigated by the Salt Lake City Division of the FBI in cooperation with the Hurricane City Police Department. It is being prosecuted by Trial Attorney Saeed Mody of the Civil Rights Division and Assistant U.S. Attorney Carlos Esqueda for the District of Utah.
An information is merely an accusation, and the defendant is presumed innocent unless proven guilty.
San Antonio Businessmen Sentenced to Federal Prison for Fraud and Tax Scheme Involving More Than $130 Million in Real-Dollar Losses
n San Antonio this morning, United States Chief District Judge Fred Biery handed down prison sentences to two individuals for their roles in what is believed to be the largest real-dollar loss fraud and tax related case ever prosecuted in the Western District of Texas, announced United States Attorney Robert Pitman, Acting FBI Special Agent in Charge Aaron C. Rouse, and IRS-Criminal Investigation Special Agent in Charge Steve McCollough.
Larry Kimes, the manager of AccounTex Financial Services LLC, was sentenced to 12 years in federal prison, followed by three years of supervised release, and ordered to pay $132 million restitution after pleading guilty to a Klein tax fraud conspiracy charge and a mail fraud conspiracy charge last month.
Charles Pircher, manager of a series of Professional Employer Organizations (PEOs) based in San Antonio, including service professionals, was sentenced to 11 years in federal prison, followed by three years of supervised release, and ordered to pay $132 million restitution after pleading guilty to a Klein tax fraud conspiracy charge and a mail fraud conspiracy charge in November 2013.
“The sentencing of so-called ‘white-collar’ defendants to significant terms of imprisonment such as the judge imposed in this case today should send a strong message to those who concoct fraudulent schemes—schemes that result in real losses to real people,” stated United States Attorney Robert Pitman.
In February, three other individuals who also entered guilty pleas in connection with this fraudulent scheme were sentenced to federal prison by Judge Biery. John Bean, owner of Synergy Personnel, a PEO based in San Antonio, as well as an agent, representative, officer, license holder, and accountant of several San Antonio- and Austin-based PEOs, including Service Professionals; Pat Mire, owner and manager of several San Antonio-based PEOs, including Service Professionals; and Mike Solis, an executive assistant at several San Antonio based PEOs, including Service Professionals, were sentenced to six years, three years, and three years in federal prison, respectively.
By pleading guilty, the defendants admitted that between 2002 and 2008, they participated in a scheme in which they stole more than $130 million from the clients of a series of PEOs operated by the defendants. The PEOs entered into staff leasing agreements with various client companies to manage the companies’ payroll and insurance programs. Kimes, Pircher, and the other co-conspirators diverted to their own use and benefit clients’ monies that should have been paid for payroll taxes and insurance premiums.
“The defendants involved in this, the largest-ever single criminal tax case in San Antonio’s history, knowingly violated our country’s tax laws. They chose to ignore their responsibilities and live a lavish lifestyle on money belonging to their employees and to the U.S. government. IRS special agents will continue to aggressively pursue these types of very serious tax crimes,” stated IRS-Criminal Investigation Special Agent in Charge Steve McCollough.
“Motivated by greed, the defendants perpetrated an extensive fraud scheme designed to steal money from their clients and taxpayers over a number of years. The FBI will continue to work with our partners to identify, investigate, and prosecute others, like the defendants, who seek unjust enrichment by victimizing others,” stated FBI Acting Special Agent in Charge Aaron C. Rouse.
This case was investigated by agents with the Federal Bureau of Investigation and the Internal Revenue Service- Criminal Investigation. Assistant United States Attorney Thomas J. McHugh prosecuted this case on behalf of the government.
Larry Kimes, the manager of AccounTex Financial Services LLC, was sentenced to 12 years in federal prison, followed by three years of supervised release, and ordered to pay $132 million restitution after pleading guilty to a Klein tax fraud conspiracy charge and a mail fraud conspiracy charge last month.
Charles Pircher, manager of a series of Professional Employer Organizations (PEOs) based in San Antonio, including service professionals, was sentenced to 11 years in federal prison, followed by three years of supervised release, and ordered to pay $132 million restitution after pleading guilty to a Klein tax fraud conspiracy charge and a mail fraud conspiracy charge in November 2013.
“The sentencing of so-called ‘white-collar’ defendants to significant terms of imprisonment such as the judge imposed in this case today should send a strong message to those who concoct fraudulent schemes—schemes that result in real losses to real people,” stated United States Attorney Robert Pitman.
In February, three other individuals who also entered guilty pleas in connection with this fraudulent scheme were sentenced to federal prison by Judge Biery. John Bean, owner of Synergy Personnel, a PEO based in San Antonio, as well as an agent, representative, officer, license holder, and accountant of several San Antonio- and Austin-based PEOs, including Service Professionals; Pat Mire, owner and manager of several San Antonio-based PEOs, including Service Professionals; and Mike Solis, an executive assistant at several San Antonio based PEOs, including Service Professionals, were sentenced to six years, three years, and three years in federal prison, respectively.
By pleading guilty, the defendants admitted that between 2002 and 2008, they participated in a scheme in which they stole more than $130 million from the clients of a series of PEOs operated by the defendants. The PEOs entered into staff leasing agreements with various client companies to manage the companies’ payroll and insurance programs. Kimes, Pircher, and the other co-conspirators diverted to their own use and benefit clients’ monies that should have been paid for payroll taxes and insurance premiums.
“The defendants involved in this, the largest-ever single criminal tax case in San Antonio’s history, knowingly violated our country’s tax laws. They chose to ignore their responsibilities and live a lavish lifestyle on money belonging to their employees and to the U.S. government. IRS special agents will continue to aggressively pursue these types of very serious tax crimes,” stated IRS-Criminal Investigation Special Agent in Charge Steve McCollough.
“Motivated by greed, the defendants perpetrated an extensive fraud scheme designed to steal money from their clients and taxpayers over a number of years. The FBI will continue to work with our partners to identify, investigate, and prosecute others, like the defendants, who seek unjust enrichment by victimizing others,” stated FBI Acting Special Agent in Charge Aaron C. Rouse.
This case was investigated by agents with the Federal Bureau of Investigation and the Internal Revenue Service- Criminal Investigation. Assistant United States Attorney Thomas J. McHugh prosecuted this case on behalf of the government.
Austin-Area Man Sentenced to Federal Prison for a String of Robberies
In Austin today, 52-year-old Randall David Reed of Dripping Springs, Texas, was sentenced to 15 years in federal prison for six robberies, including five banks and one grocery store, and brandishing a firearm during and in relation to a crime of violence, announced United States Attorney Robert Pitman and Acting FBI Special Agent in Charge Aaron C. Rouse.
In addition to the prison term, United States District Judge Lee Yeakel ordered that Reed pay restitution totaling $32,430 and be placed under supervised release for a period of three years after completing his prison term.
On February 5, 2014, Reed pleaded guilty to five counts of bank robbery, one count of violating the Hobbs Act (robbery that affects interstate commerce) and the firearm charge. According to court records, Reed admitted that he committed the following robberies:
This case was investigated by agents with the Federal Bureau of Investigation and the police departments from Austin, San Marcos, and San Antonio. Assistant United States Attorney Matthew B. Devlin prosecuted this case on behalf of the government.
In addition to the prison term, United States District Judge Lee Yeakel ordered that Reed pay restitution totaling $32,430 and be placed under supervised release for a period of three years after completing his prison term.
On February 5, 2014, Reed pleaded guilty to five counts of bank robbery, one count of violating the Hobbs Act (robbery that affects interstate commerce) and the firearm charge. According to court records, Reed admitted that he committed the following robberies:
- February 28, 2013—Randalls grocery store (2000 block of West Ben White Blvd. in Austin)—$3,000
- March 25, 2013—Pioneer Bank (100 block of Wonder World Dr. in San Marcos)—$8,312
- May 3, 2013—Prosperity Bank (12000 block of Research Blvd. in Austin)—$2,200
- May 21, 2013—Northstar Bank (1500 block of West 35th St. in Austin)—$3,552
- July 3, 2013—Broadway Bank (13400 block of U.S. Hwy 281 in San Antonio)—$1,500
- July 26, 2013—Benchmark Bank (1500 block of West 35th St. in Austin)—$13,866
This case was investigated by agents with the Federal Bureau of Investigation and the police departments from Austin, San Marcos, and San Antonio. Assistant United States Attorney Matthew B. Devlin prosecuted this case on behalf of the government.
Man Accused of Threatening Senator Joseph Manchin is Indicted by Federal Grand Jury
CHARLESTON, WV—A 49-year-old man was indicted today by a federal grand jury in Charleston for threatening to murder United States Senator Joseph Manchin, III. According to the four-count indictment, Steven Anthony Major, of Barboursville, West Virginia, is alleged to have made four separate threats to murder Senator Manchin from March 17 through March 20, 2014.
Major was arrested on Friday, March 21, 2014, on a federal criminal complaint. The complaint alleged that Major made multiple calls to Senator Manchin’s Charleston and D.C. offices. During the calls, Major identified himself and made violent threats against Senator Manchin and his family members.
Major faces up to 10 years in prison on each count, if convicted.
The investigation was conducted by the Federal Bureau of Investigation, the United States Capitol Police, and the West Virginia State Police. Assistant United States Attorney Haley Bunn is in charge of the prosecution.
Major was arrested on Friday, March 21, 2014, on a federal criminal complaint. The complaint alleged that Major made multiple calls to Senator Manchin’s Charleston and D.C. offices. During the calls, Major identified himself and made violent threats against Senator Manchin and his family members.
Major faces up to 10 years in prison on each count, if convicted.
The investigation was conducted by the Federal Bureau of Investigation, the United States Capitol Police, and the West Virginia State Police. Assistant United States Attorney Haley Bunn is in charge of the prosecution.
Last Defendant Sentenced for Counterfeiting Guitars
PHILADELPHIA—Randy Gray, 27, of Fort Worth, Texas, was sentenced today for his role in a scheme to traffic in counterfeit guitars carrying the marks of C.F. Martin and Company Guitars, Guild Guitars Incorporated, and Gibson Guitar Corporation. The counterfeit goods bore marks that were identical with and substantially indistinguishable from genuine marks in use and registered for those goods on the principal register in the United States Patent and Trademark Office and which are found on genuine guitars and the use of which was meant to deceive. The scheme resulted in 165 counterfeit guitars being sold to unsuspecting pawn shops, which paid a total of approximately $56,000 for the items.
Gray is one of four defendants charged in the case, each of whom pleaded guilty. In addition to one day in jail and three years of supervised release, the judge ordered the following: Gray was ordered to pay $7,617 in restitution; co-defendant Bruce Alford, 41, of Fort Worth, Texas, was ordered, on December 5, 2013, to pay $8,701 in restitution and a $100 special assessment; co-defendant Josh Davis, 39, of Galveston, Texas, was ordered, on January 15, 2014, to pay $22,047.60 in restitution and serve six months of home confinement; and co-defendant Romeo Rondeau, 44, of Fort Worth, Texas, was ordered, on November 7, 2013, to pay $7,133.93 in restitution and serve six months of home confinement.
The case was investigated by the FBI-Allentown Resident Agency and was prosecuted by Assistant United States Attorney John Gallagher.
Gray is one of four defendants charged in the case, each of whom pleaded guilty. In addition to one day in jail and three years of supervised release, the judge ordered the following: Gray was ordered to pay $7,617 in restitution; co-defendant Bruce Alford, 41, of Fort Worth, Texas, was ordered, on December 5, 2013, to pay $8,701 in restitution and a $100 special assessment; co-defendant Josh Davis, 39, of Galveston, Texas, was ordered, on January 15, 2014, to pay $22,047.60 in restitution and serve six months of home confinement; and co-defendant Romeo Rondeau, 44, of Fort Worth, Texas, was ordered, on November 7, 2013, to pay $7,133.93 in restitution and serve six months of home confinement.
The case was investigated by the FBI-Allentown Resident Agency and was prosecuted by Assistant United States Attorney John Gallagher.
Thirty-Nine Indicted Following Marion Drug Investigation
MARION, OH—Ohio Attorney General Mike DeWine, United States Attorney for the Northern District of Ohio Steven M. Dettelbach, Federal Bureau of Investigation Cleveland Division Special Agent in Charge Stephen D. Anthony, Marion Police Chief Bill Collins, Marion County Sheriff Tim Bailey, and Marion County Prosecutor Brent Yager announced today that more than three dozen people are now facing charges as a result of a large-scale investigation focusing on the trafficking and possession of drugs in Marion, Ohio.
Thirty-nine individuals were indicted on a total of 125 felony and misdemeanor charges last week. The indictments, which were unsealed today, primarily surround the sale and/or possession of heroin, cocaine, and prescription drugs such as Percocet, Vicodin, and Xanax. The charges follow the February indictments of 19 others who are facing federal charges in connection with the investigation.
Investigators served arrest warrants on the suspects this morning as part of Operation Buyers’ Remorse. Prosecutors with Attorney General DeWine’s Office will prosecute the cases.
“Today’s indictments and arrests focus on the mid-level traffickers and the addicts who are fueling the demand for drugs being brought into Marion County,” said Attorney General DeWine. “While we know we cannot arrest our way out of the drug abuse problem, those who break the law must face the consequences. It is our hope that those arrested today will use this as a wake-up call to turn their lives around.”
“Today is just another example of agencies working together for the common good of our community, and as I have stated month after month, we are not done yet,” said Chief Collins. “This will continue to be the way we fight our drug problem in Marion, Ohio. We know we are just a piece of the puzzle in solving the heroin epidemic that has plagued our community, but we have shown time and again that we are committed 100 percent to making our piece of the puzzle happen day in and day out.”
“I want to thank everyone involved in this investigation for their hard work in yet another wave of arrests in our continuing push to drive drugs out of our community,” said Prosecutor Yager. “Let this be a message to the individuals still slinging their poison in our community that we will find you, we will arrest you, and we will prosecute you.”
“The teamwork by local, state, and federal authorities that went into this investigation was outstanding,” said Sheriff Bailey. “Those who want to come to our community and deal drugs need to ask themselves if they really want to risk being arrested, because this case is proof that we are watching, and we will come after you.”
“These indictments are an important step in our efforts to shut down the pipeline of heroin, pills and cocaine into Marion,” said U.S. Attorney Dettelbach. “This case is another example of the continued partnership between local, state, and federal law enforcement when it comes to keeping our communities safe.”
“This interstate drug trafficking organization brought danger and violence to the community through multiple shootings, overdoses, and continued addiction for citizens in Marion,” said Special Agent in Charge Anthony. “The FBI, along with the numerous agencies that brought this group to justice, will continue collaborative efforts to disrupt, dismantle, and prosecute drug traffickers.”
Investigators began investigating the suspects after an influx of drugs started coming into the community from Detroit and Fort Wayne, Indiana. The investigation involved electronic surveillance, which assisted in both the federal and state indictments.
In addition to the FBI, Marion Police Department, and Marion County Sheriff’s Office, authorities with the MARMET Drug Task Force, METRICH Drug Task Force, Ohio Attorney General’s Bureau of Criminal Investigation, Ohio Highway Patrol, and United States Drug Enforcement Administration assisted in the investigation.
A complete list of those indicted by the Marion County Grand Jury, as well as five additional individuals charged in Marion Municipal Court, can be found on the Ohio Attorney General’s website.
Thirty-nine individuals were indicted on a total of 125 felony and misdemeanor charges last week. The indictments, which were unsealed today, primarily surround the sale and/or possession of heroin, cocaine, and prescription drugs such as Percocet, Vicodin, and Xanax. The charges follow the February indictments of 19 others who are facing federal charges in connection with the investigation.
Investigators served arrest warrants on the suspects this morning as part of Operation Buyers’ Remorse. Prosecutors with Attorney General DeWine’s Office will prosecute the cases.
“Today’s indictments and arrests focus on the mid-level traffickers and the addicts who are fueling the demand for drugs being brought into Marion County,” said Attorney General DeWine. “While we know we cannot arrest our way out of the drug abuse problem, those who break the law must face the consequences. It is our hope that those arrested today will use this as a wake-up call to turn their lives around.”
“Today is just another example of agencies working together for the common good of our community, and as I have stated month after month, we are not done yet,” said Chief Collins. “This will continue to be the way we fight our drug problem in Marion, Ohio. We know we are just a piece of the puzzle in solving the heroin epidemic that has plagued our community, but we have shown time and again that we are committed 100 percent to making our piece of the puzzle happen day in and day out.”
“I want to thank everyone involved in this investigation for their hard work in yet another wave of arrests in our continuing push to drive drugs out of our community,” said Prosecutor Yager. “Let this be a message to the individuals still slinging their poison in our community that we will find you, we will arrest you, and we will prosecute you.”
“The teamwork by local, state, and federal authorities that went into this investigation was outstanding,” said Sheriff Bailey. “Those who want to come to our community and deal drugs need to ask themselves if they really want to risk being arrested, because this case is proof that we are watching, and we will come after you.”
“These indictments are an important step in our efforts to shut down the pipeline of heroin, pills and cocaine into Marion,” said U.S. Attorney Dettelbach. “This case is another example of the continued partnership between local, state, and federal law enforcement when it comes to keeping our communities safe.”
“This interstate drug trafficking organization brought danger and violence to the community through multiple shootings, overdoses, and continued addiction for citizens in Marion,” said Special Agent in Charge Anthony. “The FBI, along with the numerous agencies that brought this group to justice, will continue collaborative efforts to disrupt, dismantle, and prosecute drug traffickers.”
Investigators began investigating the suspects after an influx of drugs started coming into the community from Detroit and Fort Wayne, Indiana. The investigation involved electronic surveillance, which assisted in both the federal and state indictments.
In addition to the FBI, Marion Police Department, and Marion County Sheriff’s Office, authorities with the MARMET Drug Task Force, METRICH Drug Task Force, Ohio Attorney General’s Bureau of Criminal Investigation, Ohio Highway Patrol, and United States Drug Enforcement Administration assisted in the investigation.
A complete list of those indicted by the Marion County Grand Jury, as well as five additional individuals charged in Marion Municipal Court, can be found on the Ohio Attorney General’s website.
Three Texas Men Indicted for Possessing More Than 100 Pounds of Cocaine
A federal grand jury in Cleveland returned a one-count indictment charging three Texas men with possession with the intent to distribute approximately 51 kilograms of cocaine, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
Indicted are Guadalupe J. Zarate, age 42, of Penitas, Texas; Jesus Alberto Flores, age 25, of Pharr, Texas; and Noe Romero Salinas, age 32, of Rio Grande, Texas.
The men were in possession of the drugs in the Northern District of Ohio on April 4, 2014, according to the indictment.
If convicted, a defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any; the defendant’s role in the offense; and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum, and in most cases it will be less than the maximum.
The investigation preceding the indictment was conducted by the Drug Enforcement Administration, the Federal Bureau of Investigation, the Akron Police Department, the Summit County Sheriff’s Office, and the Akron-Summit County High Intensity Drug Trafficking Area (HIDTA) initiative. The case is being prosecuted by Assistant United States Attorney Samuel A. Yannucci.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Indicted are Guadalupe J. Zarate, age 42, of Penitas, Texas; Jesus Alberto Flores, age 25, of Pharr, Texas; and Noe Romero Salinas, age 32, of Rio Grande, Texas.
The men were in possession of the drugs in the Northern District of Ohio on April 4, 2014, according to the indictment.
If convicted, a defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any; the defendant’s role in the offense; and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum, and in most cases it will be less than the maximum.
The investigation preceding the indictment was conducted by the Drug Enforcement Administration, the Federal Bureau of Investigation, the Akron Police Department, the Summit County Sheriff’s Office, and the Akron-Summit County High Intensity Drug Trafficking Area (HIDTA) initiative. The case is being prosecuted by Assistant United States Attorney Samuel A. Yannucci.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Two Lawyers and Office Worker Convicted of Immigration Fraud Offenses Following Jury Trial in Manhattan Federal Court
Preet Bharara, the United States Attorney for the Southern District of New York, announced that Feng Ling Liu, Vanessa Bandrich, and Rui Yang were found guilty yesterday in Manhattan federal court of one count of conspiracy to commit immigration fraud. Liu, Bandrich, and Yang, who were initially charged in December 2012, were convicted following a 19-day jury trial presided over by U.S. District Judge Ronnie Abrams.
Manhattan U.S. Attorney Preet Bharara said, “As the jury found, Feng Ling Liu, Vanessa Bandrich, and Rui Yang assisted immigrants in obtaining asylum status under false pretenses, including by using concocted tales of persecution. These defendants will now join the 27 others who have been convicted in connection with this sprawling immigration fraud scheme.”
According to the Indictment filed in Manhattan federal court, public court filings, and the evidence admitted at trial:
Liu, a lawyer, operated two law firms—the Law Offices of Feng Ling Liu and Moslemi and Associates Inc.—both of which assisted aliens from China in obtaining asylum status through fraud. Liu and her employees profited by creating and submitting asylum applications containing false stories of persecution purportedly suffered by alien applicants. Bandrich worked as a lawyer at one of Liu’s firms, Moslemi and Associates Inc. In that capacity, she prepared certain clients to tell false stories of persecution in immigration court proceedings related to their asylum application. Bandrich also opened a separate law firm, Bandrich and Associates Inc. (Bandrich firm), that assisted clients in obtaining asylum status through fraud. Yang was an office worker at the Bandrich firm and helped the firm’s clients prepare their false asylum applications.
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 Rebecca Mermelstein, Robert Boone and Patrick Egan are in charge of the prosecution.
Manhattan U.S. Attorney Preet Bharara said, “As the jury found, Feng Ling Liu, Vanessa Bandrich, and Rui Yang assisted immigrants in obtaining asylum status under false pretenses, including by using concocted tales of persecution. These defendants will now join the 27 others who have been convicted in connection with this sprawling immigration fraud scheme.”
According to the Indictment filed in Manhattan federal court, public court filings, and the evidence admitted at trial:
Liu, a lawyer, operated two law firms—the Law Offices of Feng Ling Liu and Moslemi and Associates Inc.—both of which assisted aliens from China in obtaining asylum status through fraud. Liu and her employees profited by creating and submitting asylum applications containing false stories of persecution purportedly suffered by alien applicants. Bandrich worked as a lawyer at one of Liu’s firms, Moslemi and Associates Inc. In that capacity, she prepared certain clients to tell false stories of persecution in immigration court proceedings related to their asylum application. Bandrich also opened a separate law firm, Bandrich and Associates Inc. (Bandrich firm), that assisted clients in obtaining asylum status through fraud. Yang was an office worker at the Bandrich firm and helped the firm’s clients prepare their false asylum applications.
***
The defendants each face a maximum sentence of five years in prison on the count of conspiracy to commit immigration fraud. Liu, 48, of Manhattan, New York, is scheduled to be sentenced by Judge Abrams on July 25, 2014. Bandrich, 34, of Manhattan, New York, is scheduled to be sentenced by Judge Abrams on July 31, 2014. Yang, 30, of Flushing, New York, is scheduled to be sentenced by Judge Abrams on August 1, 2014. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as the defendants’ sentences 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 Rebecca Mermelstein, Robert Boone and Patrick Egan are in charge of the prosecution.
Retired Buffalo Police Officer Pleads Guilty to Defrauding Injured on Duty Program
BUFFALO, NY—U.S. Attorney William J. Hochul, Jr. announced today that Patrick S. O’Mara, 52, of Buffalo, New York, pleaded guilty to wire fraud before Chief U.S. District Judge William M Skretny. The charge carries a maximum penalty of 20 years in prison, a $250,000 fine, or both.
Assistant U.S. Attorneys Trini E. Ross and John E. Rogowski, who are handling the case, stated that on February 16, 2004, the defendant, a Buffalo Police officer, was placed on Injured on Duty status (IOD) by the city of Buffalo. O’Mara was placed on IOD status for exacerbation of cervical and lumbar strains previously suffered while on duty. The defendant remained on IOD status until October 18, 2004, when he was ordered to return to light duty. O’Mara again claimed to have injured his right arm on March 21, 2005, while lifting two reams of copy paper. While the defendant did not report the injury to his superiors until 23 days later, the defendant was placed on IOD status once again on September 6, 2005, where he remained until he retired.
While the defendant’s primary care physician did not recommend that O’Mara return to work, several independent medical exams concluded that the defendant was not permanently disabled. One doctor noted that the defendant walked into his office using a cane but later witnessed O’Mara walking in the parking lot without any limp. In addition, the investigation determined that the defendant worked as a paid musical director and church organist during most, if not all, of the time that he has been on IOD status. Such work would have involved the use of his right arm.
The defendant retired from the Buffalo Police Department effective March 31, 2012, following an independent medical exam and administrative hearing. During an interview with special agents from the Federal Bureau of Investigation on May 9, 2012, the defendant stated (among other things) that he was capable of performing light duty and had been playing the organ for a church. Nevertheless, the defendant stated there was no incentive to return to work on light duty status because “it is demeaning to sit at a desk and answer phones, and I consider it to be punishment,” and “the pay on IOD status, which is without taxes, is actually an incentive to stay off-duty in IOD status.”
“The IOD program is an important way in which injured officers continue to receive compensation for their difficult and oftentimes heroic work,” said U.S. Attorney Hochul. “When the program is abused, however, more than taxpayers suffer. Those officers who remain faithfully at their post are forced to work longer hours, more often, and in turn have an even greater chance of experiencing injury. While the vast majority of officers are honest and exemplify the highest ideals of their profession, this office will not hesitate to act when, as here, it finds evidence of fraud.”
O’Mara’s is one of two Buffalo Police officers charged with defrauding the IOD Program. On May 9, 2012, Robert Quintana, who has been on IOD status since March 2005, was arrested and also charged with mail and health care fraud. The fact that a defendant has been charged with a crime is merely an accusation, and the defendant is presumed innocent until and unless proven guilty.
The plea is the culmination of an investigation by special agents of the Federal Bureau of Investigation and the Buffalo Police Department, under the direction of Commissioner Daniel Derenda.
Sentencing is scheduled July 30, 2014, at 10:00 a.m. before Judge Skretny.
Assistant U.S. Attorneys Trini E. Ross and John E. Rogowski, who are handling the case, stated that on February 16, 2004, the defendant, a Buffalo Police officer, was placed on Injured on Duty status (IOD) by the city of Buffalo. O’Mara was placed on IOD status for exacerbation of cervical and lumbar strains previously suffered while on duty. The defendant remained on IOD status until October 18, 2004, when he was ordered to return to light duty. O’Mara again claimed to have injured his right arm on March 21, 2005, while lifting two reams of copy paper. While the defendant did not report the injury to his superiors until 23 days later, the defendant was placed on IOD status once again on September 6, 2005, where he remained until he retired.
While the defendant’s primary care physician did not recommend that O’Mara return to work, several independent medical exams concluded that the defendant was not permanently disabled. One doctor noted that the defendant walked into his office using a cane but later witnessed O’Mara walking in the parking lot without any limp. In addition, the investigation determined that the defendant worked as a paid musical director and church organist during most, if not all, of the time that he has been on IOD status. Such work would have involved the use of his right arm.
The defendant retired from the Buffalo Police Department effective March 31, 2012, following an independent medical exam and administrative hearing. During an interview with special agents from the Federal Bureau of Investigation on May 9, 2012, the defendant stated (among other things) that he was capable of performing light duty and had been playing the organ for a church. Nevertheless, the defendant stated there was no incentive to return to work on light duty status because “it is demeaning to sit at a desk and answer phones, and I consider it to be punishment,” and “the pay on IOD status, which is without taxes, is actually an incentive to stay off-duty in IOD status.”
“The IOD program is an important way in which injured officers continue to receive compensation for their difficult and oftentimes heroic work,” said U.S. Attorney Hochul. “When the program is abused, however, more than taxpayers suffer. Those officers who remain faithfully at their post are forced to work longer hours, more often, and in turn have an even greater chance of experiencing injury. While the vast majority of officers are honest and exemplify the highest ideals of their profession, this office will not hesitate to act when, as here, it finds evidence of fraud.”
O’Mara’s is one of two Buffalo Police officers charged with defrauding the IOD Program. On May 9, 2012, Robert Quintana, who has been on IOD status since March 2005, was arrested and also charged with mail and health care fraud. The fact that a defendant has been charged with a crime is merely an accusation, and the defendant is presumed innocent until and unless proven guilty.
The plea is the culmination of an investigation by special agents of the Federal Bureau of Investigation and the Buffalo Police Department, under the direction of Commissioner Daniel Derenda.
Sentencing is scheduled July 30, 2014, at 10:00 a.m. before Judge Skretny.
Deborah Williamson Pleads Not Guilty to Embezzling from Grocery Employer
The Office of the United States Attorney for the District of Vermont announced that Deborah Williamson, 36, a former resident of Wheelock who now lives in Florida, pleaded not guilty yesterday in United States District Court in Burlington to a charge that she embezzled about $70,000 from her ex-employer. U.S. Magistrate Judge John M. Conroy released Williamson on conditions pending trial, which has not been scheduled.
On March 20, 2014, a federal grand jury in Burlington returned a one-count indictment accusing Williamson of mail fraud. According to the indictment, Williamson was employed as the manager of White Market, a grocery store in Lyndonville. Her duties included regularly cashing checks drawn against the company’s local bank account to obtain one dollar bills and coins for the cashier’s cash registers. The indictment alleges that between 2010 and 2012, Williamson stole nearly $70,000 in cash from the store’s safe. She allegedly tried to cover up these thefts by not recording or underreporting the amount of cash and coins received from the bank in the store’s computerized accounting system.
The United States Attorney emphasizes that the charge in the indictment is merely an accusation and that the defendant is presumed innocent unless and until she is proven guilty.
If convicted, Williamson faces up to 20 years of imprisonment and a fine of up to $250,000. The actual sentence would be determined with reference to federal sentencing guidelines.
This case was investigated by the Lyndonville Police Department and the Federal Bureau of Investigation.
Williamson is represented by Brooks McArthur. The prosecutor is Assistant U.S. Attorney Gregory Waples.
On March 20, 2014, a federal grand jury in Burlington returned a one-count indictment accusing Williamson of mail fraud. According to the indictment, Williamson was employed as the manager of White Market, a grocery store in Lyndonville. Her duties included regularly cashing checks drawn against the company’s local bank account to obtain one dollar bills and coins for the cashier’s cash registers. The indictment alleges that between 2010 and 2012, Williamson stole nearly $70,000 in cash from the store’s safe. She allegedly tried to cover up these thefts by not recording or underreporting the amount of cash and coins received from the bank in the store’s computerized accounting system.
The United States Attorney emphasizes that the charge in the indictment is merely an accusation and that the defendant is presumed innocent unless and until she is proven guilty.
If convicted, Williamson faces up to 20 years of imprisonment and a fine of up to $250,000. The actual sentence would be determined with reference to federal sentencing guidelines.
This case was investigated by the Lyndonville Police Department and the Federal Bureau of Investigation.
Williamson is represented by Brooks McArthur. The prosecutor is Assistant U.S. Attorney Gregory Waples.
Enforcer for Atlantic City Dirty Block Gang Admits Participating in Heroin Trafficking Conspiracy
CAMDEN—An Atlantic City, New Jersey man admitted today to engaging in a conspiracy to distribute heroin with the Dirty Block criminal street gang that allegedly used threats, intimidation, and violence to maintain control of the illegal drug trade in Atlantic City.
Shaamel Spencer, a/k/a “Buck,” 30, pleaded guilty before U.S. District Judge Joseph E. Irenas in Camden federal court to a superseding information charging him with one count of conspiracy to distribute and to possess with intent to distribute 100 grams or more of heroin and one count of being a previously convicted felon in possession of a firearm.
According to documents filed in this case and statements made in court:
During the period of the conspiracy Spencer acted as an “enforcer” on behalf of Mykal Derry, 33, of Atlantic City, helping Dirty Block to control the heroin trafficking trade in and around the public housing apartment complexes of Stanley Holmes, Carver Hall, Schoolhouse, Adams Court, and Cedar Court in Atlantic City. Spencer assisted in the distribution of heroin to Dirty Block customers.
Spencer was arrested on October 30, 2012, and found to be in possession of a firearm at the time of the arrest. On February 12, 2013, Spencer was charged federally with being a previously convicted felon in possession of a firearm and ammunition. A search warrant executed at Spencer’s residence at the time of his arrest revealed approximately $4,500 in suspected drug proceeds, as well as a 9mm semi-automatic handgun and approximately 44 rounds of 9mm ammunition.
Spencer and other members of the Dirty Block gang—a number of them previously convicted felons—travelled to a shooting range in Lakewood, New Jersey, where they were photographed firing handguns.
As part of his guilty plea, Spencer admitted to distributing heroin. He also admitted to being a previously convicted felon who possessed firearms and ammunition and that specifically, he took a handgun to an Atlantic City casino where he believed Derry was involved in a violent fight with his rivals. Spencer also agreed to forfeit the proceeds of his drug trafficking, as well as his firearms and ammunition.
The drug conspiracy charge carries a minimum penalty of five years in prison, a maximum potential penalty of 40 years in prison, and maximum $5 million fine. The felon-in-possession charge carries a maximum potential penalty of 10 years in prison and a maximum $250,000 fine. Sentencing is scheduled for July 22, 2014.
U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford; the Atlantic County Prosecutor’s Office, under the direction of Acting Prosecutor James P. McClain; the Atlantic City Police Department, under the direction of Police Chief Henry White; and the South Jersey Safe Streets Violent Incident and Gang Task Force, with the investigation.
The charges and allegations in the indictment charging Derry are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The government is represented by Assistant U.S. Attorneys Patrick C. Askin and Justin C. Danilewitz.
Shaamel Spencer, a/k/a “Buck,” 30, pleaded guilty before U.S. District Judge Joseph E. Irenas in Camden federal court to a superseding information charging him with one count of conspiracy to distribute and to possess with intent to distribute 100 grams or more of heroin and one count of being a previously convicted felon in possession of a firearm.
According to documents filed in this case and statements made in court:
During the period of the conspiracy Spencer acted as an “enforcer” on behalf of Mykal Derry, 33, of Atlantic City, helping Dirty Block to control the heroin trafficking trade in and around the public housing apartment complexes of Stanley Holmes, Carver Hall, Schoolhouse, Adams Court, and Cedar Court in Atlantic City. Spencer assisted in the distribution of heroin to Dirty Block customers.
Spencer was arrested on October 30, 2012, and found to be in possession of a firearm at the time of the arrest. On February 12, 2013, Spencer was charged federally with being a previously convicted felon in possession of a firearm and ammunition. A search warrant executed at Spencer’s residence at the time of his arrest revealed approximately $4,500 in suspected drug proceeds, as well as a 9mm semi-automatic handgun and approximately 44 rounds of 9mm ammunition.
Spencer and other members of the Dirty Block gang—a number of them previously convicted felons—travelled to a shooting range in Lakewood, New Jersey, where they were photographed firing handguns.
As part of his guilty plea, Spencer admitted to distributing heroin. He also admitted to being a previously convicted felon who possessed firearms and ammunition and that specifically, he took a handgun to an Atlantic City casino where he believed Derry was involved in a violent fight with his rivals. Spencer also agreed to forfeit the proceeds of his drug trafficking, as well as his firearms and ammunition.
The drug conspiracy charge carries a minimum penalty of five years in prison, a maximum potential penalty of 40 years in prison, and maximum $5 million fine. The felon-in-possession charge carries a maximum potential penalty of 10 years in prison and a maximum $250,000 fine. Sentencing is scheduled for July 22, 2014.
U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Aaron T. Ford; the Atlantic County Prosecutor’s Office, under the direction of Acting Prosecutor James P. McClain; the Atlantic City Police Department, under the direction of Police Chief Henry White; and the South Jersey Safe Streets Violent Incident and Gang Task Force, with the investigation.
The charges and allegations in the indictment charging Derry are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The government is represented by Assistant U.S. Attorneys Patrick C. Askin and Justin C. Danilewitz.
Thursday, April 10, 2014
Two Executives Sentenced for Convictions in SK Foods Investigation
SACRAMENTO, CA—United States District Judge Lawrence K. Karlton sentenced two defendants charged in the SK Foods investigation, United States Attorney Benjamin B. Wagner announced. Former food broker Randall Rahal, 65, of Nantucket, Massachusetts, was sentenced today to three years in prison. Former senior vice president of SK Foods, Alan Huey, 57, of Pebble Beach, California, was sentenced to three years’ probation with a special condition of 60 days’ intermittent confinement.
According to court documents, Rahal paid bribes on behalf of SK Foods to the purchasing officers of customers of SK Foods. He had been the subject of multiple wiretaps in 2007 and 2008. Huey had been a member of the SK Foods senior management team and admitted to directing others to falsely label food product.
In sentencing the two defendants, Judge Karlton remarked that their crimes had been very serious and called for substantial prison sentences. Because Huey’s wife has serious health problems and is entirely dependent on him for care, Judge Karlton sentenced Huey to probation.
These cases were the product of an investigation by the FBI, IRS-Criminal Investigation, FDA-Office of Criminal Investigations, and the Antitrust Division of the U.S. Department of Justice. Assistant United States Attorneys Matthew D. Segal and Jared C. Dolan and Antitrust Division Trial Attorneys Anna T. Pletcher and Tai Milder prosecuted the cases.
According to court documents, Rahal paid bribes on behalf of SK Foods to the purchasing officers of customers of SK Foods. He had been the subject of multiple wiretaps in 2007 and 2008. Huey had been a member of the SK Foods senior management team and admitted to directing others to falsely label food product.
In sentencing the two defendants, Judge Karlton remarked that their crimes had been very serious and called for substantial prison sentences. Because Huey’s wife has serious health problems and is entirely dependent on him for care, Judge Karlton sentenced Huey to probation.
These cases were the product of an investigation by the FBI, IRS-Criminal Investigation, FDA-Office of Criminal Investigations, and the Antitrust Division of the U.S. Department of Justice. Assistant United States Attorneys Matthew D. Segal and Jared C. Dolan and Antitrust Division Trial Attorneys Anna T. Pletcher and Tai Milder prosecuted the cases.
Hewlett-Packard Russia Agrees to Plead Guilty to Foreign Bribery Violations
WASHINGTON—ZAO Hewlett-Packard A.O. (HP Russia), an international subsidiary of the California technology company Hewlett-Packard Company (HP Co.), has agreed to plead guilty to felony violations of the Foreign Corrupt Practices Act (FCPA) and admit its role in bribing Russian government officials to secure a large technology contract with the Office of the Prosecutor General of the Russian Federation.
Deputy Assistant Attorney General Bruce Swartz of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office, and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.
A criminal information filed today in U.S. District Court for the Northern District of California charges HP Russia with conspiracy and substantive violations of the anti-bribery and accounting provisions of the FCPA. In addition, the government is entering into criminal resolutions with HP subsidiaries in Poland and Mexico relating to contracts with Poland’s national police agency and Mexico’s state-owned petroleum company, respectively. Pursuant to a deferred prosecution agreement, the department filed a criminal information charging Hewlett-Packard Polska, Sp. Z o.o. (HP Poland) with violating the accounting provisions of the FCPA. Hewlett-Packard Mexico, S. de R.L. de C.V. (HP Mexico) has entered into a non-prosecution agreement with the government pursuant to which it will forfeit proceeds and admit and accept responsibility for its misconduct as set forth in the statement of facts. In total, the three HP entities will pay $76,760,224 in criminal penalties and forfeiture.
In a related FCPA matter, the U.S. Securities and Exchange Commission (SEC) filed a proposed final judgment to which HP Co. consented. Under the terms of the proposed final judgment, HP Co. agreed to pay $31,472,250 in disgorgement, prejudgment interest, and civil penalties, bringing the total amount of U.S. criminal and regulatory penalties paid by HP Co. and its subsidiaries (collectively, HP) to more than $108 million.
“Hewlett-Packard subsidiaries created a slush fund for bribe payments, set up an intricate web of shell companies and bank accounts to launder money, employed two sets of books to track bribe recipients, and used anonymous e-mail accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash,” said Deputy Assistant Attorney General Swartz. “Even as the tradecraft of corruption becomes more sophisticated, the department is staying a step ahead of those who choose to violate our laws, thanks to the diligent efforts of U.S. prosecutors and agents and our colleagues at the SEC, as well as the tremendous cooperation of our law enforcement partners in Germany, Poland, and Mexico.”
“The United States Attorney’s Office, working alongside our colleagues in the Criminal Division, will vigorously police any efforts by companies in our district to illegally sell products to foreign governments using bribes or kickbacks in violation of the FCPA,” said U.S. Attorney Haag. “Today’s resolution with HP reinforces the fact that there is no double standard: U.S. businesses must respect the same ethics and compliance standards whether they are selling products to foreign governments or to the United States government.”
“This case demonstrates the FBI’s ability to successfully coordinate with our foreign law enforcement partners to investigate and bring to justice corporations that choose to do business through bribery and off-the-book dealings,” said Assistant Director in Charge Parlave. “I want to thank the agents who worked on this case in Washington, New York, and in our Legal Attaché offices in Mexico City, Moscow, Berlin, and Warsaw, as well as the prosecutors. Their work ensures a level playing field for businesses seeking lucrative overseas government contracts.”
“This agreement is the result of untangling a global labyrinth of complex financial transactions used by HP to facilitate bribes to foreign officials,” said IRS-CI Chief Weber. “IRS-CI has become a trusted leader in pursuit of corporations and executives who use hidden offshore assets and shell companies to circumvent the law. CI is committed to maintaining fair competition, free of corrupt practices, through a potent synthesis of global teamwork and our dynamic financial investigative talents.”
According to court documents, in 1999, the Russian government announced a project to automate the computer and telecommunications infrastructure of its Office of the Prosecutor General of the Russian Federation (GPO). Not only was that project itself worth more than $100 million, but HP Russia viewed it as the “golden key” that could unlock the door to another $100 to $150 million dollars in business with Russian government agencies. To secure a contract for the first phase of project, ultimately valued at more than €35 million, HP Russia executives and other employees structured the deal to create a secret slush fund totaling several million dollars, at least part of which was intended for bribes to Russian government officials.
As admitted in a statement of facts, HP Russia created excess profit margins for the slush fund through an elaborate buy-back deal structure, whereby (1) HP sold the computer hardware and other technology products called for under the contract to a Russian channel partner, (2) HP bought the same products back from an intermediary company at a nearly €8 million mark-up and paid the intermediary an additional €4.2 million for purported services, and (3) HP sold the same products to the GPO at the increased price. The payments to the intermediary were then largely transferred through a cascading series of shell companies—some of which were directly associated with government officials—registered in the United States, United Kingdom, British Virgin Islands, and Belize. Much of these payments from the intermediary were laundered through off-shore bank accounts in Switzerland, Lithuania, Latvia, and Austria. Portions of the funds were spent on travel, cars, jewelry, clothing, expensive watches, swimming pool technology, furniture, household appliances, and other luxury goods. To keep track of these corrupt payments, the conspirators inside HP Russia kept two sets of books: secret spreadsheets that detailed the categories of recipients of the corrupt funds and sanitized versions that hid the corrupt payments from others outside HP Russia. They also entered into off-the-books side agreements. As one example, an HP Russia executive executed a letter agreement to pay €2.8 million in purported “commission” fees to a U.K.-registered shell company that was linked to a director of the Russian government agency responsible for managing the GPO project. HP Russia never disclosed the existence of the agreement to internal or external auditors or management outside of HP Russia and conducted no due diligence of the shell company.
According to an agreed statement of facts, in Poland, from 2006 through at least 2010, HP Poland falsified HP books and records and circumvented HP internal controls to execute and conceal a scheme to corruptly secure and maintain millions of dollars in technology contracts with the Komenda Główna Policji (KGP), the Polish National Police agency. HP Poland made corrupt payments totaling more than $600,000 in the form of cash bribes and gifts, travel, and entertainment to the KGP’s Director of Information and Communications Technology. Among other things, HP Poland gave the government official bags filled with hundreds of thousands of dollars of cash; provided the official with HP desktop and laptop computers, mobile devices, and other products; and took the official on a leisure trip to Las Vegas, which included drinks, dining, entertainment, and a private tour flight over the Grand Canyon. To covertly communicate with the official about the corrupt scheme, an HP Poland executive used anonymous e-mail accounts, prepaid mobile telephones, and other methods meant to evade detection.
In Mexico, according to the non-prosecution agreement, HP Mexico falsified corporate books and records and circumvented HP internal controls in connection with contracts to sell hardware, software, and licenses to Mexico’s state-owned petroleum company, Petroleos Mexicanos (Pemex). To secure the contracts, HP Mexico understood that it had to retain a certain third-party consultant with close ties to senior executives of Pemex. HP agreed to pay a $1.41 million “commission” to the consultant and hid the payments by inserting into the deal structure another third party, which had been approved by HP as a channel partner. HP Mexico made the commission payment to the channel partner, which in turn forwarded the payments to the consultant. Shortly thereafter, the consultant paid one of the Pemex officials approximately $125,000.
Court filings acknowledge HP Co.’s extensive cooperation with the department, including conducting a robust internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence for the department. Court filings also acknowledge the extensive anti-corruption remedial efforts undertaken by HP Co., including taking appropriate disciplinary action against culpable employees and enhancing HP Co.’s internal accounting, reporting, and compliance functions.
The case is being investigated by the FBI’s Washington Field Office, with assistance from the FBI’s New York City Field Office and FBI Legal Attache offices in Mexico City, Moscow, Berlin, and Warsaw, and the IRS-CI’s Oakland Field Office. The case is being prosecuted by Trial Attorneys Ryan Rohlfsen and Jason Linder of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Adam Reeves of the Northern District of California. The Criminal Division’s Office of International Affairs also provided significant assistance in this matter.
The Justice Department expresses its deep appreciation for the significant assistance provided by the SEC’s Division of Enforcement, the Polish Anti-Corruption Bureau (CBA), the Polish Appellate Prosecutor’s Office, the Public Prosecutor’s Office in Dresden, Germany, and our law enforcement partners in Mexico, the United Kingdom, Lithuania, Latvia, Italy, Spain, and Hungary.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Deputy Assistant Attorney General Bruce Swartz of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office, and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.
A criminal information filed today in U.S. District Court for the Northern District of California charges HP Russia with conspiracy and substantive violations of the anti-bribery and accounting provisions of the FCPA. In addition, the government is entering into criminal resolutions with HP subsidiaries in Poland and Mexico relating to contracts with Poland’s national police agency and Mexico’s state-owned petroleum company, respectively. Pursuant to a deferred prosecution agreement, the department filed a criminal information charging Hewlett-Packard Polska, Sp. Z o.o. (HP Poland) with violating the accounting provisions of the FCPA. Hewlett-Packard Mexico, S. de R.L. de C.V. (HP Mexico) has entered into a non-prosecution agreement with the government pursuant to which it will forfeit proceeds and admit and accept responsibility for its misconduct as set forth in the statement of facts. In total, the three HP entities will pay $76,760,224 in criminal penalties and forfeiture.
In a related FCPA matter, the U.S. Securities and Exchange Commission (SEC) filed a proposed final judgment to which HP Co. consented. Under the terms of the proposed final judgment, HP Co. agreed to pay $31,472,250 in disgorgement, prejudgment interest, and civil penalties, bringing the total amount of U.S. criminal and regulatory penalties paid by HP Co. and its subsidiaries (collectively, HP) to more than $108 million.
“Hewlett-Packard subsidiaries created a slush fund for bribe payments, set up an intricate web of shell companies and bank accounts to launder money, employed two sets of books to track bribe recipients, and used anonymous e-mail accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash,” said Deputy Assistant Attorney General Swartz. “Even as the tradecraft of corruption becomes more sophisticated, the department is staying a step ahead of those who choose to violate our laws, thanks to the diligent efforts of U.S. prosecutors and agents and our colleagues at the SEC, as well as the tremendous cooperation of our law enforcement partners in Germany, Poland, and Mexico.”
“The United States Attorney’s Office, working alongside our colleagues in the Criminal Division, will vigorously police any efforts by companies in our district to illegally sell products to foreign governments using bribes or kickbacks in violation of the FCPA,” said U.S. Attorney Haag. “Today’s resolution with HP reinforces the fact that there is no double standard: U.S. businesses must respect the same ethics and compliance standards whether they are selling products to foreign governments or to the United States government.”
“This case demonstrates the FBI’s ability to successfully coordinate with our foreign law enforcement partners to investigate and bring to justice corporations that choose to do business through bribery and off-the-book dealings,” said Assistant Director in Charge Parlave. “I want to thank the agents who worked on this case in Washington, New York, and in our Legal Attaché offices in Mexico City, Moscow, Berlin, and Warsaw, as well as the prosecutors. Their work ensures a level playing field for businesses seeking lucrative overseas government contracts.”
“This agreement is the result of untangling a global labyrinth of complex financial transactions used by HP to facilitate bribes to foreign officials,” said IRS-CI Chief Weber. “IRS-CI has become a trusted leader in pursuit of corporations and executives who use hidden offshore assets and shell companies to circumvent the law. CI is committed to maintaining fair competition, free of corrupt practices, through a potent synthesis of global teamwork and our dynamic financial investigative talents.”
According to court documents, in 1999, the Russian government announced a project to automate the computer and telecommunications infrastructure of its Office of the Prosecutor General of the Russian Federation (GPO). Not only was that project itself worth more than $100 million, but HP Russia viewed it as the “golden key” that could unlock the door to another $100 to $150 million dollars in business with Russian government agencies. To secure a contract for the first phase of project, ultimately valued at more than €35 million, HP Russia executives and other employees structured the deal to create a secret slush fund totaling several million dollars, at least part of which was intended for bribes to Russian government officials.
As admitted in a statement of facts, HP Russia created excess profit margins for the slush fund through an elaborate buy-back deal structure, whereby (1) HP sold the computer hardware and other technology products called for under the contract to a Russian channel partner, (2) HP bought the same products back from an intermediary company at a nearly €8 million mark-up and paid the intermediary an additional €4.2 million for purported services, and (3) HP sold the same products to the GPO at the increased price. The payments to the intermediary were then largely transferred through a cascading series of shell companies—some of which were directly associated with government officials—registered in the United States, United Kingdom, British Virgin Islands, and Belize. Much of these payments from the intermediary were laundered through off-shore bank accounts in Switzerland, Lithuania, Latvia, and Austria. Portions of the funds were spent on travel, cars, jewelry, clothing, expensive watches, swimming pool technology, furniture, household appliances, and other luxury goods. To keep track of these corrupt payments, the conspirators inside HP Russia kept two sets of books: secret spreadsheets that detailed the categories of recipients of the corrupt funds and sanitized versions that hid the corrupt payments from others outside HP Russia. They also entered into off-the-books side agreements. As one example, an HP Russia executive executed a letter agreement to pay €2.8 million in purported “commission” fees to a U.K.-registered shell company that was linked to a director of the Russian government agency responsible for managing the GPO project. HP Russia never disclosed the existence of the agreement to internal or external auditors or management outside of HP Russia and conducted no due diligence of the shell company.
According to an agreed statement of facts, in Poland, from 2006 through at least 2010, HP Poland falsified HP books and records and circumvented HP internal controls to execute and conceal a scheme to corruptly secure and maintain millions of dollars in technology contracts with the Komenda Główna Policji (KGP), the Polish National Police agency. HP Poland made corrupt payments totaling more than $600,000 in the form of cash bribes and gifts, travel, and entertainment to the KGP’s Director of Information and Communications Technology. Among other things, HP Poland gave the government official bags filled with hundreds of thousands of dollars of cash; provided the official with HP desktop and laptop computers, mobile devices, and other products; and took the official on a leisure trip to Las Vegas, which included drinks, dining, entertainment, and a private tour flight over the Grand Canyon. To covertly communicate with the official about the corrupt scheme, an HP Poland executive used anonymous e-mail accounts, prepaid mobile telephones, and other methods meant to evade detection.
In Mexico, according to the non-prosecution agreement, HP Mexico falsified corporate books and records and circumvented HP internal controls in connection with contracts to sell hardware, software, and licenses to Mexico’s state-owned petroleum company, Petroleos Mexicanos (Pemex). To secure the contracts, HP Mexico understood that it had to retain a certain third-party consultant with close ties to senior executives of Pemex. HP agreed to pay a $1.41 million “commission” to the consultant and hid the payments by inserting into the deal structure another third party, which had been approved by HP as a channel partner. HP Mexico made the commission payment to the channel partner, which in turn forwarded the payments to the consultant. Shortly thereafter, the consultant paid one of the Pemex officials approximately $125,000.
Court filings acknowledge HP Co.’s extensive cooperation with the department, including conducting a robust internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence for the department. Court filings also acknowledge the extensive anti-corruption remedial efforts undertaken by HP Co., including taking appropriate disciplinary action against culpable employees and enhancing HP Co.’s internal accounting, reporting, and compliance functions.
The case is being investigated by the FBI’s Washington Field Office, with assistance from the FBI’s New York City Field Office and FBI Legal Attache offices in Mexico City, Moscow, Berlin, and Warsaw, and the IRS-CI’s Oakland Field Office. The case is being prosecuted by Trial Attorneys Ryan Rohlfsen and Jason Linder of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Adam Reeves of the Northern District of California. The Criminal Division’s Office of International Affairs also provided significant assistance in this matter.
The Justice Department expresses its deep appreciation for the significant assistance provided by the SEC’s Division of Enforcement, the Polish Anti-Corruption Bureau (CBA), the Polish Appellate Prosecutor’s Office, the Public Prosecutor’s Office in Dresden, Germany, and our law enforcement partners in Mexico, the United Kingdom, Lithuania, Latvia, Italy, Spain, and Hungary.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Brian Campbell Sentenced for Money Laundering
ROCHESTER, NY—U.S. Attorney William J. Hochul, Jr. announced today that Brian Campbell, 74, of Rochester, New York, who was convicted of conspiring to launder money, was sentenced to one year of home confinement and five years’ probation by U.S. District Judge Frank P. Geraci.
Assistant U.S. Attorney John J. Field, who handled the case, stated that the defendant worked for Kenneth Griffin, a co-defendant who was convicted in May 2013, at an employment staffing business that was used to commit fraud. The fraud involved creating false invoices and other supporting documents that the defendant then sold to a series of financing companies on a weekly basis for immediate cash. When a financing company realized that it had been sold uncollectible invoices and stopped dealing with Griffin’s business, the defendant would change business names and continue the scheme with another financing company.
Griffin and others involved in the conspiracy sought to conceal their ill-gotten gains, which totaled approximately $567,000, by laundering the proceeds of the fraud using anonymous debit cards. These cards were provided to lower-level employees, who were directed to go to ATMs in the Rochester area to withdraw cash and return with the money, which was shared among the co-conspirators. Kenneth Griffin was sentenced to 46 months in prison.
The sentencing is the culmination of an investigation on the part of special agents of the Internal Revenue Service, Criminal Investigation Division, under the direction of Shantelle P. Kitchen, Acting Special Agent in Charge, New York Field Office, and the Federal Bureau of Investigation.
Assistant U.S. Attorney John J. Field, who handled the case, stated that the defendant worked for Kenneth Griffin, a co-defendant who was convicted in May 2013, at an employment staffing business that was used to commit fraud. The fraud involved creating false invoices and other supporting documents that the defendant then sold to a series of financing companies on a weekly basis for immediate cash. When a financing company realized that it had been sold uncollectible invoices and stopped dealing with Griffin’s business, the defendant would change business names and continue the scheme with another financing company.
Griffin and others involved in the conspiracy sought to conceal their ill-gotten gains, which totaled approximately $567,000, by laundering the proceeds of the fraud using anonymous debit cards. These cards were provided to lower-level employees, who were directed to go to ATMs in the Rochester area to withdraw cash and return with the money, which was shared among the co-conspirators. Kenneth Griffin was sentenced to 46 months in prison.
The sentencing is the culmination of an investigation on the part of special agents of the Internal Revenue Service, Criminal Investigation Division, under the direction of Shantelle P. Kitchen, Acting Special Agent in Charge, New York Field Office, and the Federal Bureau of Investigation.
Ronald House Sentenced on Obstruction of Justice Charges
ALBANY, NY—Richard S. Hartunian, United States Attorney for the Northern District of New York, announced that Ronald L. House, 58, of Rochester, New York, was sentenced today in Buffalo, New York, on his November 2013 conviction for three counts of obstruction of justice and one count of making materially false statements.
Honorable William M. Skretny, Chief United States District Judge for the Western District of New York, sentenced House to 48 months’ imprisonment, two years’ supervised release, and a money judgment of $32,000.
House’s conviction came after a jury trial in Buffalo, New York, charging that he endeavored to obstruct justice on behalf of criminal defendants with cases pending in the United States District Court in Rochester. He was convicted of obstructing two cases by endeavoring to fraudulently attribute information to criminal defendants that they could use in exchange for sentencing leniency and, in one case, for pre-trial release. As to a third case, he was also convicted of obstructing justice by making false representations to a United States Probation Officer in an effort to persuade the officer from filing a supervised release violation against the offender.
House was also convicted of making materially false statements to the then-director of a Rochester halfway house in order to obtain extra liberty for an inmate by falsely representing that the inmate was going to be with House at a church men’s group, while knowing that the inmate instead was going to use the time to spend time with a girlfriend.
House’s arrest and conviction are the result of an investigation by the Federal Bureau of Investigation-Buffalo Division, the Internal Revenue Service-Criminal Investigation, New York Field Office, the City of Rochester Office of Public Integrity, and the Rochester Police Department. The prosecution was handled by Northern District of New York Assistant U.S. Attorney Lisa Fletcher, who can be reached at 315-448-0672.
Honorable William M. Skretny, Chief United States District Judge for the Western District of New York, sentenced House to 48 months’ imprisonment, two years’ supervised release, and a money judgment of $32,000.
House’s conviction came after a jury trial in Buffalo, New York, charging that he endeavored to obstruct justice on behalf of criminal defendants with cases pending in the United States District Court in Rochester. He was convicted of obstructing two cases by endeavoring to fraudulently attribute information to criminal defendants that they could use in exchange for sentencing leniency and, in one case, for pre-trial release. As to a third case, he was also convicted of obstructing justice by making false representations to a United States Probation Officer in an effort to persuade the officer from filing a supervised release violation against the offender.
House was also convicted of making materially false statements to the then-director of a Rochester halfway house in order to obtain extra liberty for an inmate by falsely representing that the inmate was going to be with House at a church men’s group, while knowing that the inmate instead was going to use the time to spend time with a girlfriend.
House’s arrest and conviction are the result of an investigation by the Federal Bureau of Investigation-Buffalo Division, the Internal Revenue Service-Criminal Investigation, New York Field Office, the City of Rochester Office of Public Integrity, and the Rochester Police Department. The prosecution was handled by Northern District of New York Assistant U.S. Attorney Lisa Fletcher, who can be reached at 315-448-0672.
Two Defendants Sentenced to Prison in Insider Trading Scheme
NEWARK, NJ—The two primary traders in an extensive insider trading network were sentenced to prison today for repeatedly using information divulged by insiders at pharmaceutical/medical technology firms operating in New Jersey, U.S. Attorney Paul J. Fishman announced.
Lawrence Grum, 50, of Livingston, New Jersey, was sentenced to one year and one day in prison, and Michael Castelli, 50, of Morris Plains, New Jersey, was sentenced to nine months in prison. Grum previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with two counts of conspiracy to commit securities fraud and four counts of securities fraud. Castelli previously pleaded guilty before Judge Hayden to an information charging him with two counts of conspiracy to commit securities fraud and five counts of securities fraud. Judge Hayden imposed both sentences today in Newark federal court.
According to documents filed in this case and statements made in court:
From 2007 to 2012, Grum and Castelli executed numerous, profitable trades based on inside information fed to them by their friend, Mark Cupo, 53, of Morris Plains, who was an executive at Sanofi-Aventis, a global pharmaceutical company with United States operations based in New Jersey. Cupo, in turn, obtained much of the inside information from his friend and former employee, John Lazorchak, 43, of Long Valley, New Jersey, who was director of financial reporting at Celgene Corp., another global pharmaceutical company based in New Jersey. Lazorchak also obtained certain inside information from Mark Foldy, 44, of Morris Plains, a friend and former high school classmate of Lazorchak who was a marketing executive at Stryker Corp., a leading medical technology business with a major division located in New Jersey.
During the course of the multi-year insider trading operation, Grum and Castelli regularly received from Lazorchak, via Cupo, material, non-public information about Celgene’s anticipated corporate acquisitions, numerous quarterly earnings results, and regulatory news, with the understanding that Grum and Castelli would trade based on the inside information and share their profits with Lazorchak and Cupo. Grum and Castelli also received inside information directly from Cupo regarding a corporate acquisition planned by Cupo’s employer, Sanofi, as well as inside information Cupo had obtained from Lazorchak regarding a Stryker acquisition. Lazorchak, in turn, had obtained the Stryker inside information from his friend, Foldy.
Grum and Castelli made efforts to conceal their involvement in insider trading by, for example, compiling binders of market research to try to provide an independent basis for their knowledge of confidential, material non-public information.
The material, non-public information available to Grum and Castelli enabled them to reap substantial profits by engaging in lucrative securities trading ahead of the public announcement of several corporate acquisitions, numerous quarterly earnings results, and regulatory news. In addition, they shared a portion of their profits with Lazorchak and Cupo for their respective roles in providing Grum and Castelli inside information.
In addition to the prison terms, Judge Hayden sentenced Grum and Castelli to two years each of supervised release.
Grum and Castelli are the last of the six defendants charged with participating in this insider trading network to plead guilty. The other four defendants—Lazorchak, Cupo, Foldy, and Michael Pendolino, 44, of Nashua, New Hampshire—entered their guilty pleas before Judge Hayden on October 7, 2013, and are awaiting sentencing.
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 guilty pleas. He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Daniel M. Hawke.
The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
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.
Lawrence Grum, 50, of Livingston, New Jersey, was sentenced to one year and one day in prison, and Michael Castelli, 50, of Morris Plains, New Jersey, was sentenced to nine months in prison. Grum previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an information charging him with two counts of conspiracy to commit securities fraud and four counts of securities fraud. Castelli previously pleaded guilty before Judge Hayden to an information charging him with two counts of conspiracy to commit securities fraud and five counts of securities fraud. Judge Hayden imposed both sentences today in Newark federal court.
According to documents filed in this case and statements made in court:
From 2007 to 2012, Grum and Castelli executed numerous, profitable trades based on inside information fed to them by their friend, Mark Cupo, 53, of Morris Plains, who was an executive at Sanofi-Aventis, a global pharmaceutical company with United States operations based in New Jersey. Cupo, in turn, obtained much of the inside information from his friend and former employee, John Lazorchak, 43, of Long Valley, New Jersey, who was director of financial reporting at Celgene Corp., another global pharmaceutical company based in New Jersey. Lazorchak also obtained certain inside information from Mark Foldy, 44, of Morris Plains, a friend and former high school classmate of Lazorchak who was a marketing executive at Stryker Corp., a leading medical technology business with a major division located in New Jersey.
During the course of the multi-year insider trading operation, Grum and Castelli regularly received from Lazorchak, via Cupo, material, non-public information about Celgene’s anticipated corporate acquisitions, numerous quarterly earnings results, and regulatory news, with the understanding that Grum and Castelli would trade based on the inside information and share their profits with Lazorchak and Cupo. Grum and Castelli also received inside information directly from Cupo regarding a corporate acquisition planned by Cupo’s employer, Sanofi, as well as inside information Cupo had obtained from Lazorchak regarding a Stryker acquisition. Lazorchak, in turn, had obtained the Stryker inside information from his friend, Foldy.
Grum and Castelli made efforts to conceal their involvement in insider trading by, for example, compiling binders of market research to try to provide an independent basis for their knowledge of confidential, material non-public information.
The material, non-public information available to Grum and Castelli enabled them to reap substantial profits by engaging in lucrative securities trading ahead of the public announcement of several corporate acquisitions, numerous quarterly earnings results, and regulatory news. In addition, they shared a portion of their profits with Lazorchak and Cupo for their respective roles in providing Grum and Castelli inside information.
In addition to the prison terms, Judge Hayden sentenced Grum and Castelli to two years each of supervised release.
Grum and Castelli are the last of the six defendants charged with participating in this insider trading network to plead guilty. The other four defendants—Lazorchak, Cupo, Foldy, and Michael Pendolino, 44, of Nashua, New Hampshire—entered their guilty pleas before Judge Hayden on October 7, 2013, and are awaiting sentencing.
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 guilty pleas. He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Daniel M. Hawke.
The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
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.
Former Partner of a Freehold Office Equipment Leasing Company Admits Stealing More Than $600,000
TRENTON—A former partner of a Freehold, New Jersey-based office equipment leasing company today admitted stealing more than $600,000 in a fraudulent loan scheme, U.S. Attorney Paul J. Fishman announced.
Jason Lee Lum, 35, of Yardley, Pennsylvania, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with wire fraud for receiving approximately $682,000 in fraudulently obtained loan proceeds.
According to documents filed in this case and statements made in court:
Lee Lum was a partner in a company called Superior Data Corp., which was in the business of providing office equipment leasing services. As a result of the high cost of leasing office equipment, the company would obtain loans through a financing company for its clients to lease office equipment. After a client agreed to lease office equipment, a company employee would submit the lease agreement paperwork to the financing company in order to obtain a loan for the client. If the financing company approved the loan, the financing company would send the loan proceeds directly to the company’s bank account. The client would then receive the leased office equipment and would directly repay the loan to the financing company.
As a partner at the company, Lee Lum was responsible for the company’s finances and for submitting loan documentation on behalf of clients. From October 2011 to May 2012, Lee Lum forged signatures of existing company clients on loan documents and then submitted the documents to the financing company. The company clients had neither approved nor consented to the loan documents being submitted, nor did the clients obtain any office equipment in connection with the fraudulent loan applications. When the financing company approved the fraudulent loan applications, Lee Lum directed the proceeds to be sent to the company’s bank account, which he controlled. Lee Lum used the fraudulently obtained loan proceeds to pay personal expenses, company payroll (including his own salary), and to increase the company’s revenue for accounting purposes. Lee Lum sought to conceal his fraud by making payments on the fraudulently obtained loans. When Lee Lum began to fall behind on those payments, the financing company that issued the loans sought payment directly from the company’s clients, whose names were on the fraudulent loans.
The wire fraud count to which Lee Lum pleaded guilty carries a maximum penalty of 20 years in prison and a $250,000 fine. As part of the plea, Lee Lum agreed to pay restitution in the amount of $682,862. Sentencing is scheduled for September 19, 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 Fabiana Pierre-Louis of the U.S. Attorney’s Office Criminal Division in Trenton.
Jason Lee Lum, 35, of Yardley, Pennsylvania, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with wire fraud for receiving approximately $682,000 in fraudulently obtained loan proceeds.
According to documents filed in this case and statements made in court:
Lee Lum was a partner in a company called Superior Data Corp., which was in the business of providing office equipment leasing services. As a result of the high cost of leasing office equipment, the company would obtain loans through a financing company for its clients to lease office equipment. After a client agreed to lease office equipment, a company employee would submit the lease agreement paperwork to the financing company in order to obtain a loan for the client. If the financing company approved the loan, the financing company would send the loan proceeds directly to the company’s bank account. The client would then receive the leased office equipment and would directly repay the loan to the financing company.
As a partner at the company, Lee Lum was responsible for the company’s finances and for submitting loan documentation on behalf of clients. From October 2011 to May 2012, Lee Lum forged signatures of existing company clients on loan documents and then submitted the documents to the financing company. The company clients had neither approved nor consented to the loan documents being submitted, nor did the clients obtain any office equipment in connection with the fraudulent loan applications. When the financing company approved the fraudulent loan applications, Lee Lum directed the proceeds to be sent to the company’s bank account, which he controlled. Lee Lum used the fraudulently obtained loan proceeds to pay personal expenses, company payroll (including his own salary), and to increase the company’s revenue for accounting purposes. Lee Lum sought to conceal his fraud by making payments on the fraudulently obtained loans. When Lee Lum began to fall behind on those payments, the financing company that issued the loans sought payment directly from the company’s clients, whose names were on the fraudulent loans.
The wire fraud count to which Lee Lum pleaded guilty carries a maximum penalty of 20 years in prison and a $250,000 fine. As part of the plea, Lee Lum agreed to pay restitution in the amount of $682,862. Sentencing is scheduled for September 19, 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 Fabiana Pierre-Louis of the U.S. Attorney’s Office Criminal Division in Trenton.
Wednesday, April 9, 2014
Fort Hall Woman Pleads Guilty to Assaulting a Federal Officer
POCATELLO—Kayla Teton, 23, of Fort Hall, Idaho, pleaded guilty today in United States District Court to assaulting a federal officer, U.S. Attorney Wendy J. Olson announced. She was indicted on February 26, 2013.
On January 6, 2013, Teton was arrested on the Fort Hall Indian Reservation for intoxication. She was taken to the Fort Hall Correction Center where she refused to change into jail clothing and slapped a Fort Hall Corrections officer in the face with her hand.
The charge is punishable by up to eight years in prison, a maximum fine of $250,000, and up to three years of supervised release.
Teton is set for sentencing on June 18, 2014, by Chief U.S. District Judge B. Lynn Winmill at the federal courthouse in Pocatello.
The case was investigated by the Fort Hall Police Department and the Federal Bureau of Investigation.
On January 6, 2013, Teton was arrested on the Fort Hall Indian Reservation for intoxication. She was taken to the Fort Hall Correction Center where she refused to change into jail clothing and slapped a Fort Hall Corrections officer in the face with her hand.
The charge is punishable by up to eight years in prison, a maximum fine of $250,000, and up to three years of supervised release.
Teton is set for sentencing on June 18, 2014, by Chief U.S. District Judge B. Lynn Winmill at the federal courthouse in Pocatello.
The case was investigated by the Fort Hall Police Department and the Federal Bureau of Investigation.
Five Juveniles Recovered in Joint Operation to Combat Human Trafficking in the Metroplex
The FBI Dallas Child Exploitation Task Force, in partnership last week with 18 federal, state, and local law enforcement agencies, recovered five juveniles during an enforcement action focused on commercial child sex trafficking throughout the Metroplex. Additionally, the enforcement operation resulted in the arrests of four pimps, 18 johns, and three preferential offenders who solicited children for sex trafficking via the Internet.
“Collaboration of federal, state, and local law enforcement is crucial to identify and interrupt child prostitution operations,” said Dallas FBI Special Agent in Charge Diego Rodriguez. “The FBI and our partners are committed to providing care to the victims of child exploitation and bringing justice to those who try to profit from these criminal activities.”
“These operations with our partner law enforcement agencies help us identify minors who may have been trafficked into the sex industry,” said David M. Marwell, Special Agent in Charge of HSI Dallas. “Homeland Security Investigations takes an extremely active role in rescuing these children and pursuing prosecution against their traffickers.”
Dallas Police Chief David Brown explained, “The Dallas Police Department Crimes Against Children Unit and its High Risk Victims Squad, has developed a victim centered model for finding children who are enticed into sex trafficking. The Dallas Police Department worked with our federal, state, and local partners over the last four days to find these victims and find the offenders who are responsible for trafficking them.”
The minors recovered during the four-day operation ranged in age from 16 to 17 years old and included children who had run away from home. Over the course of the operation, more than 65 women and children were offered services such as food, clothing, and referrals to health care facilities, shelters, and other programs.
This law enforcement action was part of the Innocence Lost National Initiative, established in 2003 by the FBI’s Criminal Investigative Division, in partnership with the Department of Justice and the National Center for Missing and Exploited Children, to address the growing problem of child prostitution. To learn more about the Innocence Lost National Initiative, please visit http://www.fbi.gov.
The Dallas FBI worked closely with the Dallas Police Department and Homeland Security Investigations in executing this operation and would like to thank the following federal, state, and local enforcement partners who participated in the enforcement effort:
“Collaboration of federal, state, and local law enforcement is crucial to identify and interrupt child prostitution operations,” said Dallas FBI Special Agent in Charge Diego Rodriguez. “The FBI and our partners are committed to providing care to the victims of child exploitation and bringing justice to those who try to profit from these criminal activities.”
“These operations with our partner law enforcement agencies help us identify minors who may have been trafficked into the sex industry,” said David M. Marwell, Special Agent in Charge of HSI Dallas. “Homeland Security Investigations takes an extremely active role in rescuing these children and pursuing prosecution against their traffickers.”
Dallas Police Chief David Brown explained, “The Dallas Police Department Crimes Against Children Unit and its High Risk Victims Squad, has developed a victim centered model for finding children who are enticed into sex trafficking. The Dallas Police Department worked with our federal, state, and local partners over the last four days to find these victims and find the offenders who are responsible for trafficking them.”
The minors recovered during the four-day operation ranged in age from 16 to 17 years old and included children who had run away from home. Over the course of the operation, more than 65 women and children were offered services such as food, clothing, and referrals to health care facilities, shelters, and other programs.
This law enforcement action was part of the Innocence Lost National Initiative, established in 2003 by the FBI’s Criminal Investigative Division, in partnership with the Department of Justice and the National Center for Missing and Exploited Children, to address the growing problem of child prostitution. To learn more about the Innocence Lost National Initiative, please visit http://www.fbi.gov.
The Dallas FBI worked closely with the Dallas Police Department and Homeland Security Investigations in executing this operation and would like to thank the following federal, state, and local enforcement partners who participated in the enforcement effort:
- Arlington Police Department
- Dallas County District Attorney’s Office
- Dallas Police Department
- Denton County District Attorney’s Office
- Denton County Sheriff’s Office
- Denton Police Department
- Fort Worth Police Department
- Grand Prairie Police Department
- Homeland Security Investigations
- Irving Police Department
- Lewisville Police Department
- Richardson Police Department
- Tarrant County District Attorney’s Office
- Texas Attorney General’s Office
- Texas Department of Public Safety
- U.S. Attorney’s Office - Eastern District of Texas
- U.S. Attorney’s Office - Northern District of Texas
- U.S. Customs and Border Protection
Former Caseworker for the Dallas Project Reconnect Pleads Guilty to Witness Tampering, Making a False Statement to HUD, and Deprivation Under Color of Law
DALLAS—Lawrence Hart, 37, appeared today before U.S. Magistrate Judge Renée Harris Toliver and pleaded guilty to a felony and misdemeanor Information charging various offenses stemming from his role as a caseworker for an outreach program that is managed by the city of Dallas’s Housing Department. The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Specifically, Hart pleaded guilty to one count of witness tampering, one count of making a false statement to the U.S. Department of Housing and Urban Development (HUD), and one count of deprivation of rights under color of law. He faces a maximum statutory sentence of 20 years in federal prison and a $250,000 fine for the witness tampering count and a maximum statutory sentence of one year in federal prison and a $100,000 fine for the false statement count and for the deprivation of rights count. He will remain on bond pending sentencing, set for July 14, 2014, by U.S. District Judge David C. Godbey.
According to documents filed in the case, in 2012 and 2013, Hart was a caseworker for Project Reconnect, a HUD-funded outreach program managed by the city of Dallas’s Housing Department. Project Reconnect provides re-entry case management and community referrals to help non-violent offenders on parole settle back into the Dallas community. One of the main components of Project Reconnect is to provide housing to eligible individuals. As the program was being applied at the time, to be eligible for Project Reconnect, an individual must reside in Dallas, have felony conviction, be 18 years or older, be currently on parole or probation, and meet HUD low- to moderate-income guidelines.
Hart admitted that in July 2012, he arranged for “Person A” to sign a lease for an apartment in Carrollton, under the Project Reconnect program, even though Person A did not qualify for the program at that time. The apartment’s rent was $980 per month, and Project Reconnect was responsible for $975 of that amount, and Person A was responsible for $5 per month. Hart admitted that while he worked for the city of Dallas’s Housing Authority, he was in fact the sole occupant of that apartment, and Person A never resided there. Hart further admitted that he submitted documentation to HUD reflecting that Person A was the sole occupant.
When HUD, the Dallas Police Department (DPD) and the FBI began investigating fraudulent activity related to Project Reconnect, they interviewed Hart about his involvement in Project Reconnect and his potential criminal activity. After that interview, Hart contacted Person A and instructed Person A to lie to a DPD detective and FBI special agent by telling them that Person A lived in the Carrollton apartment.
In late 2012, according to the factual resume filed in the case, Hart met “Person B” and fast-tracked Person B through the Project Reconnect program. While Person B was qualified for the program, Hart propositioned her for sex and expedited her placement in an apartment because she agreed to have sex with him. In January 2013, Person B ended her intimate relationship with Hart. Acting under color of law, Hart removed her from the HUD-subsidized apartment, wilfully depriving her of the right to be free from discrimination in the terms, condition, and privileges of rental of a dwelling because of her sex.
The DPD, HUD, and FBI investigated the case. Assistant U.S. Attorney Errin Martin is prosecuting.
Specifically, Hart pleaded guilty to one count of witness tampering, one count of making a false statement to the U.S. Department of Housing and Urban Development (HUD), and one count of deprivation of rights under color of law. He faces a maximum statutory sentence of 20 years in federal prison and a $250,000 fine for the witness tampering count and a maximum statutory sentence of one year in federal prison and a $100,000 fine for the false statement count and for the deprivation of rights count. He will remain on bond pending sentencing, set for July 14, 2014, by U.S. District Judge David C. Godbey.
According to documents filed in the case, in 2012 and 2013, Hart was a caseworker for Project Reconnect, a HUD-funded outreach program managed by the city of Dallas’s Housing Department. Project Reconnect provides re-entry case management and community referrals to help non-violent offenders on parole settle back into the Dallas community. One of the main components of Project Reconnect is to provide housing to eligible individuals. As the program was being applied at the time, to be eligible for Project Reconnect, an individual must reside in Dallas, have felony conviction, be 18 years or older, be currently on parole or probation, and meet HUD low- to moderate-income guidelines.
Hart admitted that in July 2012, he arranged for “Person A” to sign a lease for an apartment in Carrollton, under the Project Reconnect program, even though Person A did not qualify for the program at that time. The apartment’s rent was $980 per month, and Project Reconnect was responsible for $975 of that amount, and Person A was responsible for $5 per month. Hart admitted that while he worked for the city of Dallas’s Housing Authority, he was in fact the sole occupant of that apartment, and Person A never resided there. Hart further admitted that he submitted documentation to HUD reflecting that Person A was the sole occupant.
When HUD, the Dallas Police Department (DPD) and the FBI began investigating fraudulent activity related to Project Reconnect, they interviewed Hart about his involvement in Project Reconnect and his potential criminal activity. After that interview, Hart contacted Person A and instructed Person A to lie to a DPD detective and FBI special agent by telling them that Person A lived in the Carrollton apartment.
In late 2012, according to the factual resume filed in the case, Hart met “Person B” and fast-tracked Person B through the Project Reconnect program. While Person B was qualified for the program, Hart propositioned her for sex and expedited her placement in an apartment because she agreed to have sex with him. In January 2013, Person B ended her intimate relationship with Hart. Acting under color of law, Hart removed her from the HUD-subsidized apartment, wilfully depriving her of the right to be free from discrimination in the terms, condition, and privileges of rental of a dwelling because of her sex.
The DPD, HUD, and FBI investigated the case. Assistant U.S. Attorney Errin Martin is prosecuting.
Purchaser and Seller in Loan Fraud Scheme are Sentenced
DALLAS—Plano, Texas, residents, Vathany Teng, 43, and Lina Ma, 55, were sentenced yesterday for their roles in a loan fraud scheme they ran from August 2007 to April 2008 that resulted in the total funding of more than $3 million in fraudulent loans, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
U.S. District Judge David C. Godbey sentenced Teng to 27 months in federal prison and ordered him to pay $4.2 million in restitution. Ma was sentenced to 18 months in federal prison and ordered to pay $2.1 million in restitution. Both must surrender to the Bureau of Prisons on July 7, 2014.
Both Teng and Ma pleaded guilty to one count of conspiracy to commit bank fraud. The other defendant in the case, Jerry Goh, 51, a lawyer who had offices in the Dallas-Fort Worth Metroplex and who acted as the escrow officer for the Prosper Bank loan, pleaded guilty to one count of misprision of a felony. He was sentenced in February 2014 to serve seven months in federal prison, and he must surrender to the Bureau of Prisons on May 26, 2014, to begin serving that sentence. Judge Godbey also ordered that he serve the first seven months of a one-year term of supervised release on home confinement, and he was ordered to pay more than $2.1 million in restitution.
According to documents filed in Teng and Ma’s case, Teng, Ma, and Goh participated in a scheme to defraud and deceive Prosper Bank, United Central Bank (UCB), and the Small Business Administration (SBA). The conspiracy involved one fraudulent SBA-guaranteed loan from Prosper Bank and two fraudulent loans from UCB.
The scheme involved making false representations and deliberate omissions of material information when fraudulent loan applications were submitted to these banks in connection with the three loans. According to Teng and Ma’s factual resumes, Teng, Ma, and Goh falsely represented to Prosper Bank and UCB and caused the HUD-1 Settlement Statement on all three loans to falsely represent that Ma was the true source of loan down payments.
Goh, acting in his capacity as the escrow officer on the Prosper Bank loan, and thus with control of the loan proceeds, concealed from lender Prosper Bank the fraudulent release of $498,720 of loan proceeds to provide funds for a $431,000 down payment. Goh wired $498,720 of lender Prosper Bank’s funds from an escrow account, knowing that these seller proceeds funds would later be used as the source of borrower Lina Ma’s down payment on her loan from Prosper Bank.
This case was prosecuted in connection with the President’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. Attorney’s 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.
The case was investigated by the U.S. Small Business Administration-Office of Inspector General and the FBI. Assistant U.S. Attorney David L. Jarvis prosecuted.
U.S. District Judge David C. Godbey sentenced Teng to 27 months in federal prison and ordered him to pay $4.2 million in restitution. Ma was sentenced to 18 months in federal prison and ordered to pay $2.1 million in restitution. Both must surrender to the Bureau of Prisons on July 7, 2014.
Both Teng and Ma pleaded guilty to one count of conspiracy to commit bank fraud. The other defendant in the case, Jerry Goh, 51, a lawyer who had offices in the Dallas-Fort Worth Metroplex and who acted as the escrow officer for the Prosper Bank loan, pleaded guilty to one count of misprision of a felony. He was sentenced in February 2014 to serve seven months in federal prison, and he must surrender to the Bureau of Prisons on May 26, 2014, to begin serving that sentence. Judge Godbey also ordered that he serve the first seven months of a one-year term of supervised release on home confinement, and he was ordered to pay more than $2.1 million in restitution.
According to documents filed in Teng and Ma’s case, Teng, Ma, and Goh participated in a scheme to defraud and deceive Prosper Bank, United Central Bank (UCB), and the Small Business Administration (SBA). The conspiracy involved one fraudulent SBA-guaranteed loan from Prosper Bank and two fraudulent loans from UCB.
The scheme involved making false representations and deliberate omissions of material information when fraudulent loan applications were submitted to these banks in connection with the three loans. According to Teng and Ma’s factual resumes, Teng, Ma, and Goh falsely represented to Prosper Bank and UCB and caused the HUD-1 Settlement Statement on all three loans to falsely represent that Ma was the true source of loan down payments.
Goh, acting in his capacity as the escrow officer on the Prosper Bank loan, and thus with control of the loan proceeds, concealed from lender Prosper Bank the fraudulent release of $498,720 of loan proceeds to provide funds for a $431,000 down payment. Goh wired $498,720 of lender Prosper Bank’s funds from an escrow account, knowing that these seller proceeds funds would later be used as the source of borrower Lina Ma’s down payment on her loan from Prosper Bank.
This case was prosecuted in connection with the President’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. Attorney’s 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.
The case was investigated by the U.S. Small Business Administration-Office of Inspector General and the FBI. Assistant U.S. Attorney David L. Jarvis prosecuted.
Caribbean Corridor Strike Force Seizes 1,774 Kilos of Cocaine
SAN JUAN—On March 31, 2014, the Caribbean Corridor Strike Force (CCSF) intercepted a Zodiac-type vessel off the coast of Dorado while attempting to smuggle a load of cocaine into Puerto Rico. Two Venezuelan nationals and 1,774 kilograms of cocaine were seized during the interdiction, announced United States Attorney Rosa Emilia Rodríguez-Vélez today. Yesterday, U.S. Magistrate Camille L. Vélez-Rivé authorized a complaint charging Reny Alexander López-Meneces and Andri Rivas Rojas-Irving with conspiracy to possess a controlled substance on board a vessel subject to the jurisdiction of the United States.
On March 31, 2014, at approximately 6:00 p.m., a U.S. Customs and Border Protection (CBP) marine patrol aircraft of the Caribbean Air & Marine Branch (CAMB) detected a Zodiac vessel traveling southbound heading directly to Puerto Rico. While under surveillance, the aircraft coordinated with the CBP Marine Patrol Units to intercept the Zodiac. Upon detection of the CBP marine units, the occupants of the vessel began to jettison what appeared to be bales of contraband into the water.
Additionally, while avoiding interdiction, one of the Zodiac crew members fell overboard while in the process of throwing bales into the water. A total of three bales were recovered from the ocean, along with the man that had fallen overboard. The Zodiac type boat was detained with a total of 58 additional bales and one more crew member.
The contraband, in the form of brick shape objects, was field tested and yielded positive results to cocaine. A total of two crew members were placed under arrest. The crew members were later identified as Reny Alexander López-Meneces and Andri Rivas Rojas-Irving. Further, a total of 61 bales of cocaine were seized with an approximate weight of 1,774.4 kilograms.
“These arrests are a clear indication of the continued success of the Caribbean Corridor Strike Force,” said Rosa Emilia Rodríguez-Vélez, U.S. Attorney for the District of Puerto Rico. “This is just another example of the fine work our state and federal law enforcement partners accomplish every day. With the continued collaboration and assistance of our law enforcement partners, we will continue our efforts to bring the most powerful and prolific drug organizations to justice.”
“ICE-HSI is committed to working with our federal, state, and local counterparts in an effort to stop the movement of contraband in the Caribbean,” said Ángel M. Meléndez, Special Agent in Charge of HSI San Juan. “Those involved in drug trafficking should know that the Caribbean is no longer an option to transship narcotics into the United States.”
“Our air and marine assets are always ready to assist all federal, state, and local law enforcement partners to interdict smuggling ventures and curb criminal activity in the island,” stated Johnny Morales, Director of Air Operations at the CBP Caribbean Air and Marine Branch.
“With this significant cocaine seizure the Caribbean Corridor Strike Force proves once more its effectiveness in cutting the Caribbean pipeline of drugs between South America and the United States,” said Vito Salvatore Guarino, Special Agent in Charge of the DEA, Caribbean Division.
The case was investigated by agents from the Caribbean Corridor Strike Force (CCSF). The CCSF is an initiative of the U.S. Attorney’s Office created to disrupt and dismantle major drug trafficking organizations operating in the Caribbean. CCSF is part of the Organized Crime Drug Enforcement Task Force (OCDETF) that investigates South American-based drug trafficking organizations responsible for the movement of multi-kilogram quantities of narcotics using the Caribbean as a transshipment point for further distribution to the United States. The initiative is composed of DEA, HSI, FBI, U.S. Coast Guard, U.S. Attorney Office for the District of Puerto Rico, and PRPD’s Joint Forces for Rapid Action.
The case is being prosecuted by Assistant United States Attorney Carlos R. Cardona.
The defendants are facing terms of imprisonment from 10 years to life for the narcotics violations. Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
On March 31, 2014, at approximately 6:00 p.m., a U.S. Customs and Border Protection (CBP) marine patrol aircraft of the Caribbean Air & Marine Branch (CAMB) detected a Zodiac vessel traveling southbound heading directly to Puerto Rico. While under surveillance, the aircraft coordinated with the CBP Marine Patrol Units to intercept the Zodiac. Upon detection of the CBP marine units, the occupants of the vessel began to jettison what appeared to be bales of contraband into the water.
Additionally, while avoiding interdiction, one of the Zodiac crew members fell overboard while in the process of throwing bales into the water. A total of three bales were recovered from the ocean, along with the man that had fallen overboard. The Zodiac type boat was detained with a total of 58 additional bales and one more crew member.
The contraband, in the form of brick shape objects, was field tested and yielded positive results to cocaine. A total of two crew members were placed under arrest. The crew members were later identified as Reny Alexander López-Meneces and Andri Rivas Rojas-Irving. Further, a total of 61 bales of cocaine were seized with an approximate weight of 1,774.4 kilograms.
“These arrests are a clear indication of the continued success of the Caribbean Corridor Strike Force,” said Rosa Emilia Rodríguez-Vélez, U.S. Attorney for the District of Puerto Rico. “This is just another example of the fine work our state and federal law enforcement partners accomplish every day. With the continued collaboration and assistance of our law enforcement partners, we will continue our efforts to bring the most powerful and prolific drug organizations to justice.”
“ICE-HSI is committed to working with our federal, state, and local counterparts in an effort to stop the movement of contraband in the Caribbean,” said Ángel M. Meléndez, Special Agent in Charge of HSI San Juan. “Those involved in drug trafficking should know that the Caribbean is no longer an option to transship narcotics into the United States.”
“Our air and marine assets are always ready to assist all federal, state, and local law enforcement partners to interdict smuggling ventures and curb criminal activity in the island,” stated Johnny Morales, Director of Air Operations at the CBP Caribbean Air and Marine Branch.
“With this significant cocaine seizure the Caribbean Corridor Strike Force proves once more its effectiveness in cutting the Caribbean pipeline of drugs between South America and the United States,” said Vito Salvatore Guarino, Special Agent in Charge of the DEA, Caribbean Division.
The case was investigated by agents from the Caribbean Corridor Strike Force (CCSF). The CCSF is an initiative of the U.S. Attorney’s Office created to disrupt and dismantle major drug trafficking organizations operating in the Caribbean. CCSF is part of the Organized Crime Drug Enforcement Task Force (OCDETF) that investigates South American-based drug trafficking organizations responsible for the movement of multi-kilogram quantities of narcotics using the Caribbean as a transshipment point for further distribution to the United States. The initiative is composed of DEA, HSI, FBI, U.S. Coast Guard, U.S. Attorney Office for the District of Puerto Rico, and PRPD’s Joint Forces for Rapid Action.
The case is being prosecuted by Assistant United States Attorney Carlos R. Cardona.
The defendants are facing terms of imprisonment from 10 years to life for the narcotics violations. Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
Barboursville Man Pleads Guilty to Role in Marijuana Conspiracy
HUNTINGTON, WV—A Barboursville man who participated in a marijuana conspiracy from 2012 to the summer of 2013 pleaded guilty today to a federal drug charge, announced U.S. Attorney Booth Goodwin. Brandon L. Madden, 33, pleaded guilty in federal court in Huntington to conspiracy to distribute marijuana. In July 2013, United States Postal inspectors intercepted a package containing controlled substances that was to be delivered to Madden. When confronted by inspectors, Madden admitted his role in a drug conspiracy in the Cabell County area. In addition to pleading guilty, Madden will forfeit $16,640 in cash and a 2013 Dodge Durango seized by the Postal Service in connection with this case.
Madden faces up to 10 years in federal prison when he is sentenced on July 24, 2013.
This case was investigated by the United States Postal Inspector with the assistance of the Huntington Violent Crime/Drug Task Force, which is coordinated by the FBI. The prosecution is being handled by Special Assistant United States Attorney Sharon M. Frazier.
Madden faces up to 10 years in federal prison when he is sentenced on July 24, 2013.
This case was investigated by the United States Postal Inspector with the assistance of the Huntington Violent Crime/Drug Task Force, which is coordinated by the FBI. The prosecution is being handled by Special Assistant United States Attorney Sharon M. Frazier.
Barboursville Man Sentenced to Federal Prison for Distributing Heroin
HUNTINGTON, WV—A Barboursville man who admitted he distributed heroin was sentenced in federal court today, U.S. Attorney Booth Goodwin announced. DeMarco D. Calvin, 31, of Barboursville, West Virginia, previously pleaded guilty in December 2013 to heroin distribution. Calvin admitted that he sold several hundred grams of heroin in the Barboursville area over the past few years. At today’s hearing, Chief United States District Judge Robert C. Chambers sentenced Calvin to 63 months of federal imprisonment, to be followed by three years of supervised release.
This case was investigated by the Huntington Violent Crime/Drug Task Force, which is composed of officers from the FBI, Cabell County Sheriff’s Department, and the Huntington and Barboursville Police Departments. Special Assistant United States Attorney Sharon M. Frazier handled the prosecution.
This case was prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs and heroin. The U.S. Attorney’s Office, joined by federal, state, and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin in communities across the Southern District.
This case was investigated by the Huntington Violent Crime/Drug Task Force, which is composed of officers from the FBI, Cabell County Sheriff’s Department, and the Huntington and Barboursville Police Departments. Special Assistant United States Attorney Sharon M. Frazier handled the prosecution.
This case was prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of prescription drugs and heroin. The U.S. Attorney’s Office, joined by federal, state, and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin in communities across the Southern District.
Philadelphia Man Pleads Guilty in Multi-Million-Dollar Mortgage Fraud Scheme
PHILADELPHIA—Eric Sijohn Brown, 46, of Philadelphia, pleaded guilty today to 20 counts in connection with a mortgage fraud scheme involving KREW Settlement Services. Brown pleaded guilty to conspiracy, two counts of FHA loan fraud, 12 counts of loan fraud, and three counts of tax evasion. Between May 2004 and February 2009, Brown and his co-conspirators inflated purchase prices on loan documents for more than 100 Philadelphia properties, resulting in more than $20 million in fraudulent loan proceeds. A sentencing hearing is scheduled for July 8, 2014. Brown faces a maximum possible sentence of 486 years in prison, including a mandatory two year term, five years of supervised release, a fine of up to $15 million, and $2,000 special assessment. A forfeiture notice was also filed seeking more than $13.7 million from all defendants.
KREW As alleged in the indictment, KREW is an acronym of the first names of Kevin Joseph Franklin, Roderick L. Foxworth, Sr., Eric Sijohn Brown, and Walter Alston Brown, Jr. Settlement Services was a Philadelphia real estate settlement company, and Brown was a general contractor who worked with his co-defendants to identify distressed properties to purchase, typically in the West Philadelphia area. The scheme involved recruiting straw buyers whose credit history and personal information was used to purchase the properties, obtain mortgage loans, and take title to the properties, when, in reality, the properties were owned and controlled by the defendants. Mortgage loan applications were then prepared in the names of the straw buyers containing a host of false information, including false purchase prices, false employment and income information, and false statements about the straw buyers living in the properties. Mortgage brokers—including Roderick Foxworth, Walter Brown, and John William Polosky (charged separately in the Western District of Pennsylvania)—allegedly submitted the fraudulent loan applications to lenders to secure the loans for the buyers, knowing that the information was false.
Charged with Brown were Roderick L. Foxworth, Sr., Cynthia Evette Brown, Walter Alston Brown, Jr., and Kevin Joseph Franklin. Cynthia Brown is alleged to have falsely verified that many of the straw buyers worked for her employer, Unicco Service Company, when they did not. Kevin Joseph Franklin, a title agent, is alleged to have falsely prepared two deeds and settlement statements (referred to as Form HUD-1)—one for the seller that showed the actual agreed-upon purchase price and a false one for the lender that showed the grossly inflated purchase price. Franklin is also alleged to have created false title insurance policies for the lenders.
After the loans funded, the seller was paid the agreed-upon purchase price, and the difference between the actual purchase price and the false purchase price quoted to the lender was shared with and distributed by Franklin to Eric Brown, Foxworth, Walter Brown, and Cynthia Brown, and many of these payments were not reflected on the HUD-1 forms.
In addition to the five defendants charged with Brown and the three defendants charged by the Western District of Pennsylvania, seven defendants were charged by information.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigations, and the Department of Housing and Urban Development’s Office of Inspector General. It is being prosecuted by Assistant United States Attorney Michael S. Lowe.
KREW As alleged in the indictment, KREW is an acronym of the first names of Kevin Joseph Franklin, Roderick L. Foxworth, Sr., Eric Sijohn Brown, and Walter Alston Brown, Jr. Settlement Services was a Philadelphia real estate settlement company, and Brown was a general contractor who worked with his co-defendants to identify distressed properties to purchase, typically in the West Philadelphia area. The scheme involved recruiting straw buyers whose credit history and personal information was used to purchase the properties, obtain mortgage loans, and take title to the properties, when, in reality, the properties were owned and controlled by the defendants. Mortgage loan applications were then prepared in the names of the straw buyers containing a host of false information, including false purchase prices, false employment and income information, and false statements about the straw buyers living in the properties. Mortgage brokers—including Roderick Foxworth, Walter Brown, and John William Polosky (charged separately in the Western District of Pennsylvania)—allegedly submitted the fraudulent loan applications to lenders to secure the loans for the buyers, knowing that the information was false.
Charged with Brown were Roderick L. Foxworth, Sr., Cynthia Evette Brown, Walter Alston Brown, Jr., and Kevin Joseph Franklin. Cynthia Brown is alleged to have falsely verified that many of the straw buyers worked for her employer, Unicco Service Company, when they did not. Kevin Joseph Franklin, a title agent, is alleged to have falsely prepared two deeds and settlement statements (referred to as Form HUD-1)—one for the seller that showed the actual agreed-upon purchase price and a false one for the lender that showed the grossly inflated purchase price. Franklin is also alleged to have created false title insurance policies for the lenders.
After the loans funded, the seller was paid the agreed-upon purchase price, and the difference between the actual purchase price and the false purchase price quoted to the lender was shared with and distributed by Franklin to Eric Brown, Foxworth, Walter Brown, and Cynthia Brown, and many of these payments were not reflected on the HUD-1 forms.
In addition to the five defendants charged with Brown and the three defendants charged by the Western District of Pennsylvania, seven defendants were charged by information.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigations, and the Department of Housing and Urban Development’s Office of Inspector General. It is being prosecuted by Assistant United States Attorney Michael S. Lowe.
Serial Bank Robber Sentenced to 15 Years in Prison for Two Long Island Bank Robberies
Earlier today, at the federal courthouse in Central Islip, New York, Steven Bertuglia was sentenced to 15 years in prison by United States District Judge Joseph F. Bianco. On October 3, 2012, Bertuglia pleaded guilty to committing two bank robberies in Nassau and Suffolk Counties while on release to a halfway house for convictions stemming from a string of 14 bank robberies he committed in 2007.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge of the Federal Bureau of Investigation (FBI), New York Field Office; Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD); and Edward Webber, Commissioner, Suffolk County Police Department (SCPD).
“Having refused to learn from his mistakes, this serial bank robber will now have the next 15 years to contemplate the consequences of his actions. We stand committed to protecting the public from dangerous repeat offenders,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the FBI, the NCPD, and the SCPD for their participation in this case.
On June 16, 2008, United States District Judge Jack B. Weinstein, in federal court in Brooklyn, sentenced Bertuglia to five years in prison for committing 14 bank robberies in 2007 in Nassau, Suffolk, and Queens Counties and in New Jersey and Connecticut. On May 3, 2011, Bertuglia was released from prison to live in a halfway house in Brooklyn, where he was scheduled to finish serving the remainder of the 2008 sentence, which would have ended on January 13, 2012.
During his guilty plea proceeding before Judge Bianco, Bertuglia admitted that in June 2011, he committed two bank robberies in Nassau and Suffolk Counties while on release at the Brooklyn halfway house. Specifically, on June 9, 2011, Bertuglia rented a car, drove to an Atlantic Bank branch in Hicksville, New York, presented the teller with a threatening note, and made off with cash. Nearly four years earlier in June 2007, Bertuglia had robbed that same Atlantic Bank branch while armed with a pellet gun. On June 16, 2011, Bertuglia again used a threatening note to rob a TD Bank branch in Farmingville, New York.
On January 13, 2012, Bertuglia was arrested by the FBI, with assistance from NCPD and SCPD.
The government’s case was prosecuted by Assistant United States Attorney Charles N. Rose.
Defendant:
Steven Bertuglia, age 41
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge of the Federal Bureau of Investigation (FBI), New York Field Office; Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD); and Edward Webber, Commissioner, Suffolk County Police Department (SCPD).
“Having refused to learn from his mistakes, this serial bank robber will now have the next 15 years to contemplate the consequences of his actions. We stand committed to protecting the public from dangerous repeat offenders,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the FBI, the NCPD, and the SCPD for their participation in this case.
On June 16, 2008, United States District Judge Jack B. Weinstein, in federal court in Brooklyn, sentenced Bertuglia to five years in prison for committing 14 bank robberies in 2007 in Nassau, Suffolk, and Queens Counties and in New Jersey and Connecticut. On May 3, 2011, Bertuglia was released from prison to live in a halfway house in Brooklyn, where he was scheduled to finish serving the remainder of the 2008 sentence, which would have ended on January 13, 2012.
During his guilty plea proceeding before Judge Bianco, Bertuglia admitted that in June 2011, he committed two bank robberies in Nassau and Suffolk Counties while on release at the Brooklyn halfway house. Specifically, on June 9, 2011, Bertuglia rented a car, drove to an Atlantic Bank branch in Hicksville, New York, presented the teller with a threatening note, and made off with cash. Nearly four years earlier in June 2007, Bertuglia had robbed that same Atlantic Bank branch while armed with a pellet gun. On June 16, 2011, Bertuglia again used a threatening note to rob a TD Bank branch in Farmingville, New York.
On January 13, 2012, Bertuglia was arrested by the FBI, with assistance from NCPD and SCPD.
The government’s case was prosecuted by Assistant United States Attorney Charles N. Rose.
Defendant:
Steven Bertuglia, age 41
Elma Man Pleads Guilty to Gun Charges
BUFFALO, NY—U.S. Attorney William J. Hochul, Jr. announced today that Bernard T. Grucza, 38, of Elma, New York, pleaded guilty to possession of a firearm by a person subject to as domestic violence order of protection before Chief U.S. District Court Judge William M. Skretny. The charge carries a maximum penalty of 10 years in prison and a $250,000 fine.
Assistant U.S. Attorney Timothy C. Lynch, who is handling the case, stated the defendant made false written statements to Big Daddy Guns in order to obtain a Ruger .380 caliber pistol. Between July 13, 2013 and October 16, 2013, the defendant possessed the pistol despite being the subject of a restraining order issued by Elma Town Court. In addition, Grucza made false statements to special agents with the Bureau of Alcohol, Tobacco, Firearms, and Explosives that he had destroyed the pistol and thrown out the parts when, in fact, he had not.
As part of his plea, the defendant admitted to stealing more than $200,000 worth of merchandise and cash from his employer, Toys R Us. Grucza then sold the merchandise on eBay. The plea agreement requires the defendant to pay restitution to Toys R Us in the amount of $223,000.
The plea is the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, under the direction of Special Agent in Charge Thomas J. Cannon; the Federal Bureau of Investigation; the Erie County Sheriff’s Department, under the direction of Sheriff Timothy Howard; and the Hamburg Police Department, under the direction of Michael Williams.
Sentencing is scheduled for July 23, 2014, at 11:00 a.m. before Judge Skretny.
Assistant U.S. Attorney Timothy C. Lynch, who is handling the case, stated the defendant made false written statements to Big Daddy Guns in order to obtain a Ruger .380 caliber pistol. Between July 13, 2013 and October 16, 2013, the defendant possessed the pistol despite being the subject of a restraining order issued by Elma Town Court. In addition, Grucza made false statements to special agents with the Bureau of Alcohol, Tobacco, Firearms, and Explosives that he had destroyed the pistol and thrown out the parts when, in fact, he had not.
As part of his plea, the defendant admitted to stealing more than $200,000 worth of merchandise and cash from his employer, Toys R Us. Grucza then sold the merchandise on eBay. The plea agreement requires the defendant to pay restitution to Toys R Us in the amount of $223,000.
The plea is the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, under the direction of Special Agent in Charge Thomas J. Cannon; the Federal Bureau of Investigation; the Erie County Sheriff’s Department, under the direction of Sheriff Timothy Howard; and the Hamburg Police Department, under the direction of Michael Williams.
Sentencing is scheduled for July 23, 2014, at 11:00 a.m. before Judge Skretny.
Federal Jury Convicts Pittsford Father and Son on Multiple Fraud Charges
ROCHESTER, NY—U.S. Attorney William J. Hochul, Jr. announced today that a jury has convicted Michael C. Kaufman and his son, Richard A. Kaufman, both of Pittsford, New York, of conspiracy to commit bank fraud, bank fraud, and loan fraud. The charges carry a maximum penalty of 30 years in prison, a fine of $1,000,000, or both.
Assistant U.S. Attorneys Bradley E. Tyler and Craig R. Gestring, who handled the trial of the case, stated that between 2002 and November 2007, the defendants directed the controller of American Industrial Sales, d/b/a RAK Industries, to provide false financial statements to Key Bank and to the company’s outside accounting firm. The false financial statements significantly overvalued the accounts receivable and inventory, which were the two assets that Key Bank relied upon as collateral for a total loan credit of $2,000,000.
The loan proceeds were used by the defendants to fund their personal lifestyles, including expensive homes, generous salaries, and country club memberships. After the defendants defaulted on the Key Bank loan in the summer of 2007, they converted to their personal use approximately $53,000 of accounts receivable proceeds that were the property of Key Bank. As a result of the fraud scheme, Key Bank suffered an immediate loss of more than $1.5 million.
The conviction is the culmination of an investigation on the part of special agents of the Federal Bureau of Investigation.
Sentencing is scheduled for July 16, 2014, at 3:00 p.m. before Judge Geraci.
Assistant U.S. Attorneys Bradley E. Tyler and Craig R. Gestring, who handled the trial of the case, stated that between 2002 and November 2007, the defendants directed the controller of American Industrial Sales, d/b/a RAK Industries, to provide false financial statements to Key Bank and to the company’s outside accounting firm. The false financial statements significantly overvalued the accounts receivable and inventory, which were the two assets that Key Bank relied upon as collateral for a total loan credit of $2,000,000.
The loan proceeds were used by the defendants to fund their personal lifestyles, including expensive homes, generous salaries, and country club memberships. After the defendants defaulted on the Key Bank loan in the summer of 2007, they converted to their personal use approximately $53,000 of accounts receivable proceeds that were the property of Key Bank. As a result of the fraud scheme, Key Bank suffered an immediate loss of more than $1.5 million.
The conviction is the culmination of an investigation on the part of special agents of the Federal Bureau of Investigation.
Sentencing is scheduled for July 16, 2014, at 3:00 p.m. before Judge Geraci.
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