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Sunday, February 28, 2010

Riverdale Felon Sentenced to 14 Years in Prison for Gun and Drug Offenses

February 28, 2010 - Greenbelt, Maryland — U.S. District Judge Roger W. Titus sentenced Jamal Siddq Rickenbacker, age 29, of Riverdale, Maryland, today to 14 years in prison followed by four years of supervised release for distributing crack cocaine and being a felon in possession of a gun. Judge Titus enhanced Rickenbacker’s sentence upon finding that Rickenbacker is an armed career criminal based on three previous convictions for drug offenses. Judge Titus also ordered Rickenbacker to forfeit four guns seized from his residence after his arrest.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Theresa R. Stoop of the Bureau of Alcohol, Tobacco, Firearms and Explosives – Baltimore Field Division; Chief Roberto L. Hylton of the Prince George’s County Police Department; and Colonel Terrence Sheridan, Superintendent of the Maryland State Police.

According to his guilty plea, on August 15, 2008, ATF agents observed Rickenbacker provide another individual with 6.64 grams of crack in exchange for $280. When ATF agents and other law enforcement officers attempted to arrest Rickenbacker, he tried to flee by driving his car in reverse into an unmarked car occupied by Maryland State Police. Rickenbacker was removed from his vehicle and officers recovered the $280. Prince George’s County Police detectives subsequently searched Rickenbacker’s residence and seized an additional 12.53 grams of cocaine, 46.5 grams of marijuana, two digital scales with cocaine residue and a razor blade; a loaded .380 caliber handgun; a loaded 9mm caliber handgun; a .45 caliber revolver which was previously reported as stolen; a loaded 12 gauge shotgun; 512 rounds of ammunition; and two high capacity magazines for a MAC-type machine pistol.

United States Attorney Rod J. Rosenstein commended Assistant United States Attorney Stacy Dawson Belf, who prosecuted the case.

Friday, February 26, 2010

Acting Deputy Attorney General Gary G. Grindler on the OPR Investigation into OLC Memoranda

February 26, 2010

Below please find the oral statement of Acting Deputy Attorney General Gary G. Grindler before the Senate Judiciary Committee at a hearing today entitled, “Office of Professional Responsibility Investigation into Office of Legal Counsel Memoranda.”

Chairman Leahy, Ranking Member Sessions, members of the Committee:

Thank you for the opportunity to appear before you today. I am pleased to respond to your interest in the Department’s decisions about the Office of Professional Responsibility's review of work by former attorneys in the Office of Legal Counsel on the lawfulness of certain interrogation techniques.

Last week we provided to the Committee a series of documents on this matter in response to the Chairman’s request. While the nature of the documents we provided was extraordinary, we concluded that their disclosure was necessary for the Committee to fully understand the ultimate decision in this matter. The legal complexity of the issues and our interest in assuring fairness to all of the individuals involved further supported our view that you should receive requested documents that we might not otherwise disclose outside of the Department.

Although some may disagree with our conclusions, we are confident that the Department followed an appropriate process in reviewing the OPR results and reaching a final resolution of this matter. The OPR report was completed on July 29, 2009. In keeping with our current practice regarding cases of alleged professional misconduct, the subjects of the report were given the chance to appeal the adverse findings contained in that report to Associate Deputy Attorney General David Margolis. Mr. Margolis decided this matter without interference from the Attorney General, the Deputy Attorney General or any other Department official, and his decision represents the Department’s final action. It has long been the policy of the Justice Department that a career official should review any appeal of OPR findings of professional misconduct with respect to former Department employees. No Attorney General or Deputy Attorney General has ever overturned the conclusion of the career official in such circumstances.

As some of you are aware, Mr. Margolis has been deciding such matters for the Department for many years now. He brings to that task almost 45 years of Department experience as an Assistant United States Attorney, Strike Force attorney, Chief of the Organized Crime Strike Force, and, for the last 17 years or so, Associate Deputy Attorney General, during which time he served as Acting Deputy Attorney General for a five-week period in February and March of 2009. His lengthy service as a career attorney who has served Administrations of both parties makes Mr. Margolis uniquely qualified to decide matters of this sensitivity on the merits without fear or favor.

My primary role today is to answer questions about the process that led to the Department’s final adjudication of this matter. I hope you will understand that I am not in a position to delve deeply into the substance of the reports. Both OPR and Mr. Margolis reached their conclusions independently and without political influence. That is how it should be. I believe that each of them fulfilled their responsibilities in this matter through diligent and significant good-faith efforts, which I am not prepared to second-guess. The process that began with OPR’s investigation culminated in Mr. Margolis’s decision. The Department stands behind that decision, including the decision not to refer the matter to the bar associations where Mr. Bybee and Mr. Yoo are members. Any effort on my part to summarize or paraphrase the reasoning of OPR or Mr. Margolis would simply run the risk of misrepresenting a record that speaks for itself.

There is one common thread among the documents we provided to the Committee: they reflect a shared conclusion that the OLC memoranda were flawed. The disagreement among the reviewers is whether the legal work at issue here was so flawed as to amount to professional misconduct. That is a difficult and nuanced question. In the end, Mr. Margolis concluded that the authors of the memos exercised “poor judgment,” which in OPR parlance means that they chose a course of action that represents a marked contrast to the action that the Department may reasonably expect an attorney exercising good judgment to take.

The Attorney General and I have great faith in Mr. Margolis and in the process that led to his decision in this matter. At the same time, we continue to have confidence in OPR’s ability to investigate allegations of professional misconduct against Department attorneys. As the documents we provided to the Committee make clear, evaluating the professional obligations of attorneys requires particular expertise, and the Department continues to believe that OPR is the appropriate entity to conduct those investigations.

Under new leadership since last year, OPR is working to resolve cases more quickly and has been allocated additional resources to meet the demands of a workload that has grown substantially. The Department fully supports OPR’s mission.

I hope this information is helpful, and I am happy to respond to your questions.

Indianapolis Man Arrested for Bank Robbery

February 26, 2010 - Leon Fuller, 25, Indianapolis, was charged late yesterday with bank robbery, following an investigation by the Safe Streets Task Force of the Federal Bureau of Investigation.

The complaint alleges that Leon Fuller used a firearm to rob the Teachers Credit Union branch located at 5130 West 71st Street, Indianapolis, Marion County, Indiana, on both January 5, 2010 and again on February 24, 2010.

Law enforcement agents approached Fuller as he walked out of his apartment complex about ninety minutes after the second robbery. Fuller was allegedly wearing clothes similar to those worn by the robber. Once stopped, officers notices a large bulge in Fuller’s pocket. The bulge was a large amount of currency. Purportedly, some of that currency contained serial numbers that matched serial numbers of the money taken from the Credit Union earlier that day. According to Assistant U.S. Attorney Bradley P. Shepard, who is prosecuting the case for the government, Fuller faces a maximum of 20 years in prison and a $250,000 fine on each count. An initial hearing will be scheduled for today before a U.S. Magistrate Judge Kennard P. Foster. A detention hearing will be held sometime next week.

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

Anthony St. Laurent, Sr. Makes Initial Appearance on Extortion Complaint

February 26, 2010 - Anthony St. Laurent, Sr., 68, appearing by teleconference from a federal prison where he is currently detained, made an initial appearance today before U.S. Magistrate Judge Lincoln D. Almond. A federal complaint charging the defendant with conspiracy to commit extortion was issued on February 4, 2010.

On February 5, 2010, FBI agents, working with Rhode Island State Police and Providence Police, arrested Dorothy St. Laurent and Anthony St. Laurent, Jr. on extortion charges. They are the wife and son of Anthony St. Laurent, Sr., and are charged in a federal complaint with conspiring with Anthony St. Laurent, Sr. to extort payments from bookmakers in the Taunton area.

Dorothy St. Laurent, 70, of Johnston, and Anthony St. Laurent, Jr., 44, of Cranston, appeared February 5, 2010 before U.S. Magistrate Judge Lincoln D. Almond, who released them both on bond but confined St. Laurent, Jr. to his home.

St. Laurent, Sr. is presently detained in a federal prison where he is serving a 56-month sentence on a prior extortion conviction. He is also awaiting trial on a charge of solicitation to commit murder-for-hire.

Background

According to an affidavit supporting the complaint, beginning in the late 1980s, Anthony St. Laurent, Sr. collected “protection” money from as many as four Taunton area bookmakers, usually through one bookmaker who acted as an intermediary for the others.

According to the affidavit, at times when Anthony St. Laurent, Sr. was incarcerated or physically incapacitated, Dorothy St. Laurent would make the collections for him, either at locations in Rhode Island or at various locations in Massachusetts.

The extortion collections continued until February 2009, according to the affidavit, and varied in amounts over the years and through the sports seasons. According to the affidavit, the “protection” payments were highest during football seasons.

According to the affidavit, the role of Anthony St. Laurent, Jr. in the operation was to enforce continued payments by the bookmakers.

A complaint is merely an allegation and a defendant is presumed innocent unless and until proven guilty. The charge, interstate extortion in violation of the Hobbs Act, is a felony and subject to review by a federal grand jury.

The FBI, Rhode Island State Police, and Providence Police conducted the investigation. Assistant U.S. Attorney Stephen G. Dambruch and Trial Attorney Scott Lawson of the Department of Justice Organized Crime and Racketeering Section are prosecuting the case.

Two Atlanta-Based Nursing Home Chains and Their Principals Pay $14 Million to Settle False Claims Act Case


February 26, 2010 - WASHINGTON—Atlanta-based Mariner Health Care Inc. and SavaSeniorCare Administrative Services LLC, as well as their principals, Leonard Grunstein, Murray Forman and Rubin Schron, have agreed to pay the United States and several states $14 million, the Justice Department announced today. This settlement arises from allegations of the United States that the defendants solicited kickback payments from Omnicare, the nation’s largest pharmacy that specializes in dispensing drugs to nursing home patients, in exchange for agreements by Mariner and Sava to continue using Omnicare’s pharmacy services for 15 years.

In a complaint filed in March 2009 and unsealed in November 2009, the United States alleged that Omnicare, Mariner, Sava, Grunstein, Forman, and Schron conspired to arrange for Omnicare to pay Mariner and Sava $50 million in exchange for the right to continue providing pharmacy services to the nursing homes, which together constituted one of Omnicare’s largest customers. The parties allegedly attempted to disguise the $50 million kickback as a payment to acquire a small Mariner business unit that had only two employees and was worth far less than $50 million. According to the complaint, Omnicare paid $40 million of this amount prior to actually acquiring the Mariner business unit and, at the same time, Omnicare obtained new 15-year pharmacy contracts from Mariner and from Sava, a new nursing home chain that Grunstein and Forman created from the Mariner chain. The complaint alleged that Grunstein and Forman illegally tied the new pharmacy contracts to Omnicare’s agreement to purchase the small Mariner business unit, and that the total $50 million purchase price for the business unit actually was a kickback by Omnicare to keep the future business of Mariner and Sava.

Approximately $7.84 million of the settlement proceeds will go to the United States, while $6.16 million has been allocated to certain state Medicaid programs. In November 2009, the United States, numerous states and Omnicare entered into a $98 million settlement agreement that, among other things, resolved Omnicare’s civil liability under the False Claims Act for allegedly paying a kickback to Mariner and Sava.

The government’s complaint further alleged that, in 2006, after the government issued subpoenas concerning the transaction, the individual defendants created backdated documents in a further attempt to hide the kickback.

“Nursing home residents and their families are entitled to make health care decisions free from the distortions caused by illegal kickback schemes,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division.

“This case reflects the government’s continuing efforts to pursue those who scheme to hide illegal payments that can affect the way drugs and other services are delivered to nursing home residents, an especially vulnerable patient population,” said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts.

As part of the settlement, Mariner has entered into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services (OIG-HHS). This agreement provides for Mariner to put in place procedures and reviews to avoid and promptly detect conduct similar to that which gave rise to this matter. At the same time, OIG-HHS has reserved its rights to seek exclusions of Sava, Grunstein, Forman and/or Schron from participation in Medicare, Medicaid and all other federal health care programs.

The settlement resolves a whistleblower action, United States ex rel. Resnick v. Omnicare, Inc., et al., No. 06-10149-RGS (D. Mass.), filed under the qui tam provisions of the False Claims Act.

The case was handled by the Justice Department’s Civil Division, the U.S. Attorney for the District of Massachusetts, the Office of Inspector General of the Department of Health and Human Services, and the Federal Bureau of Investigation.

This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.

Suspect Sought in 11 Bank Robberies

  February 26, 2010 - The pictured subject below is suspected to be responsible for 11 bank robberies across the Denver Metro area from December 2008 to February 2010. The suspect approaches the teller and presents a note that is contained in a black portfolio folder.

 
During three of the robberies, the suspect simulated a weapon in his coat or waistband; however, no weapon has been seen.

 
SUSPECT:

Male in his 20's or 30's with olive skin, approximately 6'0", with a thin build. He has worn a baseball cap in all of the robberies.

 
SUSPECT VEHICLES:

Blue Ford Focus or Ford Fusion with tinted windows

Silver Dodge Neon

Dark Colored Chevy S-10 Pickup with a topper or an older Chevy Blazer

 
Bank robbery is punishable by a 20-year prison sentence for each offense and increases if a dangerous weapon is used in the commission of the crime.

 
The FBI continues to provide financial institutions with the best practices for security to make them less vulnerable to robberies.

 
If anyone has any information on these bank robberies, or any bank robbery, please call the FBI Rocky Mountain Safe Streets Task Force at 303-629-7171,or you can remain anonymous and earn up to two thousand dollars ($2,000) by calling CRIMESTOPPERS at 720-913-STOP (7867).

 
Portfolio Bandit

 
Date Day Time Bank Address
  • 12/1/2008 Monday 16:27 Chase Bank 13184 W Ida Ave
  • 8/27/2009 Thursday 15:40 US Bank 10520 N Melody Dr
  • 10/2/2009 Friday 15:23 US Bank 1100 S Broadway
  • 11/5/2009 Thursday 15:00 Wells Fargo 5050 S Federal Blvd
  • 11/5/2009 Thursday 15:36 Wachovia 2807 S Colorado Blvd
  • 11/24/2009 Tuesday 14:14 US Bank 9376 S University Blvd
  • 12/4/2009 Friday 15:40 Bank of the West 8184 S Kipling Pkwy
  • 12/18/2009 Friday 13:38 US Bank 7350 Park Meadows Drive
  • 12/30/2009 Wednesday 16:30 US Bank 9303 S Broadway St
  • 1/21/2010 Thursday 14:13 Bank of the West 11451 South Twenty Mile Road
  • 2/3/2010 Tuesday 14:51 US Bank 7560 South Pierce St
 

Federal Jury Convicts Chico Meth Dealer

February 26, 2010 - SACRAMENTO—United States Attorney Benjamin B. Wagner announced today that a federal jury returned a guilty verdict after a three-day trial before United States District Judge William B. Shubb against FRANCISCO MORALES RODRIGUEZ, 37, of Chico, for possessing methamphetamine with intent to distribute and being a felon in possession of a firearm.

This case is the product of a joint investigation by the Federal Bureau of Investigation in Chico and the Chico Police Department with assistance from the Butte County Sheriff’s Department, the Drug Enforcement Administration and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

According to Assistant United States Attorney Daniel S. McConkie, who is prosecuting the case, the evidence introduced at trial showed that on April 18, 2008, MORALES—a convicted felon—was pulled over in Chico for vehicle code violations and arrested for driving without a license. Officers searched him and found over $1000 cash in his pocket.

Later that day, Chico police officers and Butte County Sheriff deputies went to MORALES’s home and conducted a parole search of his house. In the master bedroom, next to the bed where MORALES slept, officers found a 12-gauge shotgun leaning up against the wall and a box of ammunition next to the gun. On a nearby desk in the bedroom, officers found a small box of plastic sandwich bags used for packaging drugs. A digital gram scale was found in the top right-hand drawer of the desk.

In the backyard, officers searched a shed near the back exit to the master bedroom. There they found a golf-ball sized lump of crystal methamphetamine, which weighed about 39 grams (over 20 grams of pure methamphetamine) and had a street value of around $1000. In addition, they found two false-bottomed soft-drink cans (used to transport drugs secretly) with methamphetamine residue inside. Finally, $1,444 U.S. currency was found in the backyard, wrapped in the same kind of plastic as the methamphetamine.

The defendant is scheduled to be sentenced by Judge William B. Shubb on May 17, 2010, at 8:30 a.m.

The maximum statutory penalty for a violation of possession of at least five grams of pure methamphetamine with intent to distribute and with a prior felony drug offense is life imprisonment. The maximum statutory penalty for a violation of possessing a firearm as a felon is 10 years. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Red Rock Man Convicted of Assaulting a Tribal Police Officer

February 26, 2010 - OKLAHOMA CITY—Yesterday, a federal jury found SONNY RAY HAZE, 28, of Red Rock, Oklahoma, guilty of assaulting a tribal police officer using a car and causing serious bodily injury, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.

Evidence at trial showed that shortly after 1:00 a.m. on November 1, 2009, Haze, while at the 7 Clans Paradise Casino near Red Rock in Noble County, used a car to assault a police officer with the Otoe-Missouria Tribal Police Department. The officer was responding to a call for assistance from security guards at the Casino. Evidence showed that Haze was parked in front of the Casino and was blocked in by a tribal police truck as it arrived. Evidence from eyewitnesses who were Casino security guards, as well as video surveillance recordings, showed that upon arrival by the police, Haze immediately got in his car and began to maneuver it to get around the police truck. Observing Haze’s conducts, the responding officer exited the truck and opened the passenger door of Haze’s car. Despite being ordered to stop, Haze continued to accelerate backwards and backed into the tribal officer’s truck, with the officer caught in the open passenger door. The police officer was thrown into the parking lot and sustained serious bodily injury. Haze ultimately fled the scene in his car and a high-speed chase ensued by multiple police vehicles. Although Haze was not immediately apprehended, he later turned himself in to tribal authorities. Because Haze is an Indian and the offense occurred on tribal land, federal authorities became involved and the matter was presented in federal court in Oklahoma City.

The defendant was found guilty of one count of assault with a dangerous weapon, and one count of assault resulting in serious bodily injury. At sentencing, Haze faces up to 10 years in prison and a $250,000 fine on each count. Sentencing will be set by the Court in approximately 90 days.

This case was investigated by the Stillwater Office of the Federal Bureau of Investigation and the Ponca City Office of the Bureau of Indian Affairs - Office of Justice Services. The case was prosecuted by Assistant U.S. Attorney Arvo Q. Mikkanen.

American Heroes Radio 100th Anniversary Show Update

American Heroes Radio will broadcast its 100th show, tonight, February 26, 2010, at 1700 hours Pacific. Guest for the Anniversary Show will include:

Former USMC Major Richard Botkin; Private Investigator Jimmie Mesis; former San Francisco Police Department Detective Linda Flanders, former Deputy Sheriff Brian Kinnard; former marine and Howard County Police Department police officer James H. Lilley; Vietnam Veteran Arthur Wiknik; former St. Louis County Police Department law enforcement official Ken Dye; the son of Colonel James R. Haun, a World War II fighter pilot; attorney and former police officer Sean Rogers; Senior Sergeant Martin Katz, Broward County Sheriff’s Office (ret.); Special Agent Bob Hamer, Federal Bureau of Investigation (ret.); Vietnam Veteran and former New York Police Department police officer Joe Sanchez; Vietnam Veteran and retired New York Police Department Detective Alan Sheppard; Retire New York State Correction Officer Al Bermudez Pereira; retired Sergeant Gregory Allen Doyle, Upland Police Department; Lieutenant Art Adkins Gainesville Police Department; Dr. Andrew J. Harvey, retired police captain, educator and author; Detective Don Howell, Huntington Beach Police Department (ret.); and, Captain Frank Root, Arizona Department of Public Safety (ret.).

Listen Live
http://www.blogtalkradio.com/lawenforcement/2010/02/27/100th-anniversary-show

Carjacking and Murder

Arrest of Individual Wanted for Carjacking and Murder


On February 25, 2010, JORGE AGUILERA-ENCHAUTEGUI, age 39, was arrested, without incident, at approximately 6:00 p.m. at his place of employment in Orlando, Florida by the FBI-Metro Orlando Safe Streets Gang Task Force and the Orlando Police Department. At the time of his arrest, AGUILERA-ENCHAUTEGUI had been employed for the past three years as a front desk clerk for a local motel in the Orlando, Florida area.

On February 26, 2009, AGUILERA-ENCHAUTEGUI will have his initial appearance before a U.S. Magistrate Judge from the Middle District of Florida in Orlando, Florida. It is anticipated AGUILERA-ENCHAUTEGUI will eventually be remanded to the U.S. District of Puerto Rico to face the federal charges of carjacking and murder.

The criminal complaint states that on June 13, 2007, Leonardo Gamallo-Sotolongo, a well respected professor at the Inter American University in Aguadilla, Puerto Rico was carjacked and murdered by AGUILERA-ENCHAUTEGUI. It is believed that sometime during the afternoon of June 13, 2007, Gamallo-Sotolongo left his residence in his gray 2007 Toyota Yaris and went to a local bank to cash a check in order to pay AGUILERA-ENCHAUTEGUI for yard work done at Gamallo-Sotolongo’s residence. After cashing the check, Gamallo-Sotolongo met with AGUILERA-ENCHAUTEGUI at an unknown location and never returned to his residence. Gamallo-Sotolongo was eventually reported missing to the Police of Puerto Rico.

On June 23, 2007, the Police of Puerto Rico recovered Gamallo-Sotolongo’s vehicle on a remote dirt road abandoned and completely burned in Isabela, Puerto Rico, and on June 26, 2007, the decomposed body of Gamallo-Sotolongo was recovered near a garbage dump also in Isabela, Puerto Rico.

The criminal complaint further states that during an autopsy of Gamallo-Sotolongo’s body, it was found that his cranium, facial skeleton, and ribs had been fractured and that he had sustained several stab wounds. The autopsy report concluded that the cause of death was homicide by severe trauma and stabbing.

AGUILERA-ENCHAUTEGUI is charged with carjacking/murder, and under the federal statute he faces a maximum penalty of life imprisonment or may be sentenced to death.

This case is being prosecuted by U.S. District of Puerto Rico Senior Litigation Counsel Antonio R. Bazán.

The public is reminded that a criminal complaint is not evidence of any guilt. A defendant is presumed innocent and entitled to a fair trial. The U.S. government has the burden of proving guilt beyond a reasonable doubt.

Destroying Railroad Communication Lines

Three Charged with Conspiracy to Destroy Railroad Communication Lines


February 26, 2010 - Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, today announced the filing of an information charging James R. Mills, Jr., age 43, of Hamilton, Indiana; William R. Mills, age 40, of Richmond, Indiana; and Robert E. Ross, age 42, of Liberty, Indiana, with conspiracy to destroy railroad communication lines. The information alleges that the defendants would cut and steal copper wires along railroad lines in Indiana and Ohio, which wires provided power for the railroad signaling system. The information charges that between January 2006 and January 2008, on approximately 80 occasions, one or more of the defendants stole copper wire totaling 360,000 linear feet of copper wire from railroad right-of-ways, which wire they sold to scrap metal processors.

If convicted, the defendants' sentences will be determined by the Court after review of factors unique to each case, including the defendants' prior criminal records, if any, the defendants' roles 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 investigating agency in this case is the United States Federal Bureau of Investigation. The case is being handled by Assistant United States Attorney Thomas A. Karol, who may be reached at the above telephone number.

An information 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.

Baltimore Man Exiled to Over 17 Years in Prison for Heroin Conspiracy

February 26, 2010 - BALTIMORE, MD—U.S. District Judge William D. Quarles, Jr. sentenced Walter Taylor, age 28, of Baltimore today to 210 months in prison, followed by five years of supervised release, for conspiracy to distribute and possess with intent to distribute heroin. The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Baltimore City State’s Attorney Patricia C. Jessamy; Baltimore Police Commissioner Frederick H. Bealefeld III; and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.

According to Taylor’s guilty plea, from 2004 until July 2008, he was a street level distributor in a drug organization that sold heroin under the brand name “Dynasty” in the Westport section of Baltimore City. During the period of the conspiracy, Taylor was observed by law enforcement in and around the “street shop,” distributing heroin to customers. Taylor admits that he and the other members of the organization conspired to distribute at least 30 kilograms of heroin.

United States Attorney Rod J. Rosenstein thanked Baltimore City Assistant State’s Attorney Keri Borzilleri for her assistance in the investigation and prosecution. Mr. Rosenstein commended Assistant United States Attorney James T. Wallner and Special Assistant United States Attorney Christopher M. Mason, a cross-designated Baltimore City Assistant State’s Attorney assigned to EXILE cases, who are prosecuting the case.

Former CareFirst Employee Sentenced to Two Years in Prison for Embezzling More Than $234,000

February 26, 2010 - BALTIMORE, MD—U.S. District Judge William D. Quarles, Jr. sentenced Nicole Stepney Turner, age 34, of Baltimore, Maryland, today to two years in prison, followed by two years of supervised release, for embezzlement from a health care benefit program.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.

According to Stepney Turner’s plea agreement, she was employed as a Billing and Enrollment Technician with CareFirst, an independent licensee of the Blue Cross and Blue Shield Association, which offers health insurance and managed care services to Maryland residents. Beginning in at least June 2001, Stepney Turner caused 84 checks to be issued by CareFirst, in amounts ranging from $335.59 to $3,956.13, purportedly to pay refunds to CareFirst Blue Cross/Blue Shield of Maryland’s customers. At Stepney Turner’s direction, those premium refund checks were made payable to ten co-conspirators. At the direction of Stepney Turner and one of the co-conspirators, the payees cashed the checks and were generally provided a small fee. Stepney Turner and her co-conspirator received the majority of the money from the cashed checks which totaled $234,964.11.

Five co-conspirators have pleaded guilty to their roles in the scheme and been sentenced. Melvin Turner is in federal custody and is awaiting trial. Three other conspirators have been charged and are fugitives.

United States Attorney Rod J. Rosenstein commended Assistant United States Attorney Bonnie S. Greenberg, who prosecuted the case.

Child Pornography Offense

Winnsboro Man Sentenced for Child Pornography Offense


February 26, 2010 - TYLER, TX—U.S. Attorney John M. Bales announced today that a 31-year-old Winnsboro, Texas man has been sentenced to federal prison for child exploitation violations in the Eastern District of Texas.

RYAN HEATH CLARK pleaded guilty on Aug. 25, 2009, to an Information charging him with possession of child pornography and was sentenced to 97 months in federal prison on Feb. 25, 2010, by U.S. District Judge Michael H. Schneider. Clark was also ordered to forfeit his laptop computer.

According to information presented in court, on Mar. 24, 2009, law enforcement agents executed a federal search warrant at Clark's residence in Winnsboro and seized personal computer equipment. A forensic analysis of the computer equipment revealed the presence of material involving the sexual exploitation of children. Clark was found to be in possession of over 3800 images and 232 videos of material involving child pornography, which had been shipped to him through interstate and foreign commerce.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Bill Baldwin.

Mortgage Fraud Scheme

Former Real Estate Appraiser Sentenced to Four Years in Mortgage Fraud Scheme


February 26, 2010 - JACKSONVILLE, FL—United States Attorney A. Brian Albritton announces that U.S. District Judge Henry Lee Adams, Jr. yesterday sentenced Barry C. Westergom (age 60, of Jacksonville) to four years in federal prison for conspiracy to commit wire and bank fraud. The court also ordered restitution in the amount of $866,141.62 and entered a money judgment for $100,000, the amount that Westergom had obtained from the fraud. Westergom had pleaded guilty on October 8, 2009.

According to court documents, during 2004 and 2005, Westergom’s co-conspirator, Juan Carlos Gonzalez, contracted to purchase about 55 houses. Gonzalez retained Westergom, who was a licensed real estate appraiser, to appraise most of the properties. Westergom then fraudulently inflated the appraisals, valuing each property at a significantly higher price than the negotiated purchase price. Westergom knew that Gonzalez intended to submit the appraisals to lenders in support of mortgage loan applications in which the inflated appraisal value was listed as the purchase price. The lender was not informed that the price listed in the transaction documents was higher than the actual price negotiated with the seller. Gonzalez also submitted fraudulent financial documents and information, including altered bank statements and payroll records, to the lenders in support of the loan applications.

At each closing, Gonzalez received the difference between the loan amount, which was based on the inflated appraisal, and the actual purchase price, and Westergom received commissions and fees.

Westergom's plea agreement details one transaction in which Westergom, acting as a buyer’s agent for Gonzalez, negotiated with a seller to purchase a house for $490,000. Westergom then fraudulently appraised the house for $625,000. Gonzalez submitted first and second mortgage loan applications for the house reflecting a sales price of $625,000. Gonzalez also submitted altered bank account statements showing significantly larger cash balances in the account than actually existed. The lender approved the loans and, at the closing, Gonzalez received $134,000, which was listed on closing documents as an "Assignment of Contract Fee." Westergom received $12,250 as a broker’s fee and $550 as an appraisal fee.

The conspirators’ fraudulent acts resulted in lenders extending more than $29,272,000 in first and second mortgage loans. Westergom received a total of about $100,000 in commissions and fees. Gonzalez received $6,296,303.65 from the scheme.

Gonzalez pleaded guilty to a conspiracy charge and was sentenced to seven years in federal prison on November 5, 2009.

The case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Arnold B. Corsmeier. It was brought as part of the Middle District of Florida’s Mortgage Fraud Surge, a joint effort by the U.S. Attorney’s Office for the Middle District of Florida, the Federal Bureau of Investigation, Tampa and Jacksonville Divisions, and numerous other federal, state, and local law enforcement agencies. The Surge focused intensive investigative and prosecutorial resources on the mortgage fraud crisis that plagues middle Florida and has contributed to the current economic situation nationwide. The Surge accelerated mortgage fraud cases to bring perpetrators to justice quickly and provide maximum deterrence, and it was the first step in an ongoing effort to prosecute mortgage fraud of all types throughout the Middle District. For more information on the Middle District of Florida’s Mortgage Fraud Surge, please contact Steve Cole, Public Affairs Officer for the United States Attorney’s Office.

Two Sentenced to Prison for Distributing Drugs in the Huntington Area

February 26, 2010 - HUNTINGTON, WV—Two were sentenced to prison today for distributing drugs in the Huntington area. Tracey Robbins, 31, of Huntington, West Virginia, was sentenced to 70 months' imprisonment and fined $2,000 for conspiring to distribute over 50 grams of cocaine base. Robbins previously pled guilty in November, admitting to the federal drug charge.

An investigation jointly conducted by the Huntington Police Department and the Drug Enforcement Administration revealed that Robbins was part of a drug trafficking ring responsible for bringing crack cocaine from Detroit, Michigan to the Huntington area and elsewhere from November 2007 to November 2008. Most of the organizations' drug activities occurred in the Huntington and Beckley areas. Robbins admitted her involvement in storing drugs and money at her Huntington residence at the direction of other members of the drug ring. Robbins also admitted to selling cocaine base in Beckley.

In an unrelated case, Aaron Datawn Ferguson, 22, of Huntington, West Virginia, was sentenced today by Judge Chambers to 70 months in prison for distributing cocaine base. Ferguson previously pled guilty in August 2009. On April 19, 2008, Ferguson distributed a quantity of crack cocaine to a confidential informant working with the Huntington Drug and Violent Crime Task Force. The controlled drug transaction took place in the parking lot of a Huntington pharmacy. The Federal Bureau of Investigation, West Virginia State Police, and Huntington Police Department assisted in the investigation. Assistant United States Attorney Lisa G. Johnston handled the prosecution.

Putnam County Man Sentenced to Prison for Possessing Child Pornography

February 26, 2010 - HUNTINGTON, WV—Roger Gilmore, 42, of Scott Depot, West Virginia, was sentenced to 51 months in prison and fined $10,000 for possessing child pornography. Gilmore previously pled guilty in November 2009, admitting he knowingly possessed hundreds of images of child pornography. A forensic examination of Gilmore's home computer, conducted by the West Virginia State Police's Digital Forensic Unit, revealed over 600 images depicting minors engaged in sexually explicit conduct. Gilmore downloaded the images via the Internet. The West Virginia State Police and the Bureau of Immigration and Customs Enforcement jointly conducted the investigation. Assistant United States Attorney Lisa G. Johnston handled the prosecution.

This case was brought as part of Project Safe Childhood. In February 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys Offices, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims. For more information about cases and related activities please visit www.usdoj.gov/usao/wvs and http://www.projectsafechildhood.gov/.

Thursday, February 25, 2010

St. Rose Resident Pleads Guilty to Defrauding Louisiana Road Home Program

February 25, 2010 - RYANT PRICE, age 47, a resident of St. Rose, pled guilty today in federal court before U.S. District Judge Sarah Vance to a charge of theft of government funds, announced U.S. Attorney Jim Letten.

According to the factual basis, prior to and during the time of Hurricane Katrina, RYANT PRICE resided in his primary residence on River Road in Saint Rose, Louisiana. In 2006, PRICE applied for funds from the Louisiana Road Home Program, claiming that a second home he owned, located in New Orleans, Louisiana, was his primary residence at the time of the storm. PRICE admitted that as a result of his fraudulent application, he received approximately $105,000 in Louisiana Road Home Program funds to which he was not entitled.

PRICE faces a maximum term of imprisonment of ten (10) years, a fine of $250,000.00, and three (3) years of supervised release following any term of imprisonment. Sentencing has been set for May 12, 2010.

The case was investigated by the U.S. Department of Housing and Urban Development, Office of the Inspector General, and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Spiro G. Latsis.

Mail Fraud

Baton Rouge Woman Pleads Guilty to Defrauding American Red Cross


February 25, 2010 - NEW ORLEANS, LA—SHANDA MOORE, age 26, a resident of Baton Rouge, Louisiana, pled guilty in federal court today before U.S. District Judge Martin L.C. Feldman to one count of mail fraud relating to fraudulent applications for financial assistance that she submitted to the American Red Cross between September and October 2005, announced U.S. Attorney Jim Letten.

According to court documents, the Red Cross made disaster assistance money of up to $1565 available to those affected by the hurricanes of 2005 on a one-time only basis. MOORE repeatedly applied for and received disaster assistance funds from the American Red Cross on approximately eight (8) occasions throughout the fall of 2005, each time indicating that she hah not yet received any money. In all, MOORE fraudulently obtained approximately $8,490 from the American Red Cross.

MOORE faces a maximum term of imprisonment of twenty (20) years, a $250,0000 fine, restitution to the American Red Cross, and three (3) years of supervised release. Sentencing has been scheduled for June 23, 2010.

The case was investigated by the Federal Bureau of Investigation. The prosecution is being handled by Assistant U.S. Attorney Peter M. Thomson.

Woman Distributes Child Pornography


Dundalk Woman Sentenced for Distributing Child Pornography

February 25, 2010 - BALTIMORE—U.S. District Judge William M. Nickerson sentenced Michelle Lynn Smith, age 33, of Dundalk, Maryland, today to five years in prison followed by 20 years of supervised release for distributing child pornography. The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.

According to Smith’s plea agreement, while text messaging with a cooperating witness in April 2009, Smith offered a minor child to the individual for sex. The cooperating witness contacted the FBI, and agents reviewed the messages and saw pictures that Smith had sent to the cooperating witness on April 29, 2009 of sexually explicit conduct. The cooperating witness agreed to have an FBI agent pose as the cooperating witness in order to continue the conversations with Smith. Smith continued to talk about the minor in sexually explicit terms. In addition to the text messages, on May 5, 2009, Smith sent the undercover agent pictures of a minor engaged in sexually explicit conduct. Smith also admitted that she sent these same pictures to a man in Tennessee using her cellular phone.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov. Details about Maryland’s program are available at http://www.usdoj.gov/usao/md/Safe-Childhood/index.html.

United States Attorney Rod J. Rosenstein thanked Assistant U.S. Attorneys Solette Magnelli and Paul E. Budlow, who prosecuted the case.

Two Armed Bank Robbers Plead Guilty to Stealing More Than $25,000

February 25, 2010 - BALTIMORE, MD—David Wayne Holloway, age 43, of Glenarden, Maryland, pleaded guilty today to armed bank robbery and use of a firearm in connection with a crime of violence. Co-defendant David Dwyane Ford, age 26, of District Heights, Maryland pleaded guilty on February 24, 2010, to the same charges.

The guilty pleas were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Howard County Chief of Police William J. McMahon.

According their plea agreements, on November 13, 2009, Ford and Holloway robbed the Bank of America located at 7399 Assateague Drive, Jessup, Maryland. They entered the bank wearing masks and gloves, as well as displaying handguns. After they ordered the customers to the ground, Holloway went to the teller windows and demanded money. Ford went to the personal banking area and confronted other employees and customers. The bank tellers removed money from their teller drawers and placed it on the counter or in the bags Holloway provided. Holloway and Ford left the bank in a green Dodge Durango and headed towards a truck stop. A security guard watched Holloway and Ford get out of the Durango and enter a Nissan Maxima. A Howard County Police officer was on the lot of the truck stop and the security guard informed the officer what he had observed. The officer located the Nissan Maxima stopped at a traffic light nearby. When the traffic light turned green, the officer turned on his vehicle's emergency lights and siren in order to perform a traffic stop. The Nissan Maxima did not stop. The officer followed the Maxima, which eventually crashed into a house on Cedar Avenue in Jessup, Maryland.

After the crash, Holloway and Ford got out of the Nissan Maxima and ran away. The officer saw Holloway throw two items during the chase. After catching and arresting Holloway, the officer returned to the area where he observed Holloway throw the two items and recovered two loaded handguns, a silver Taurus Int., PT145, .45 caliber handgun and a black Taurus Int., PT58S, .380 caliber handgun. Ford was caught a short time later by Howard County Police officers.

Holloway and Ford stole approximately $25,824 and approximately $25,400 was recovered from the Dodge Durango and the Nissan Maxima.

Holloway and Ford face a maximum sentence of 25 years in prison for armed bank robbery and a mandatory minimum sentence of seven years and a maximum of life in prison, consecutive to any other sentence, for use of a firearm in connection with a crime of violence. U.S. District Judge William D. Quarles, Jr. has scheduled sentencing for Holloway on May 26, 2010 and for Ford on May 25, 2010, both at 1:00 p.m.

United States Attorney Rod J. Rosenstein commended Assistant United States Attorney Bonnie S. Greenberg, who is prosecuting the case.

DME Owner Convicted of Health Care Fraud and Aggravated Identity Theft

February 25, 2010 - HOUSTON—The owner and operator of Logic World Medical has been convicted of conspiracy, health care fraud, and aggravated identity theft arising from an adult diaper fraud scheme, United States Attorney José Angel Moreno and Texas Attorney General Greg Abbott announced today.

Benjamin Essien, 34, of Houston, has pleaded guilty to conspiracy to commit health care fraud, five counts of health care fraud, and two counts of aggravated identity theft at a hearing before United States District Judge Gray Miller this afternoon. He faces a maximum of 10 years' imprisonment and a $250,000 fine for the conspiracy conviction and each of the five counts of health care fraud. Essien also faces two mandatory two-year terms of imprisonment for each count of aggravated identity theft which must be served consecutive to any other prison terms imposed.

Essien, who owned and operated Logic World Medical—a Houston durable medical equipment (DME) company—used the names, addresses, and account numbers of Medicaid beneficiaries he had unlawfully obtained from others to routinely file false claims for payment for adult urinary incontinence supplies he did not deliver to the Medicaid beneficiaries. In other instances, Essien billed for delivering supplies in amounts significantly less than the amounts billed to Medicaid. Additionally, Essien routinely billed Medicaid for adult urinary incontinence supplies provided to Medicaid beneficiaries who either did not need the supplies or whose physicians had not prescribed them. Adult incontinence supplies includes adult diapers, underpads, wipes, and pull-up briefs.

Even after his delivery staff and/or delivery contractors were told by the beneficiaries they did not need or want the incontinence supplies, Essien continued to bill Medicaid for the maximum allowed amount of incontinence supplies each month per beneficiary and for extra large size diaper briefs, which have the highest Medicaid reimbursement rate, without consideration to the actual size needed by the beneficiary. He even billed Medicaid for delivering a quantity of adult diapers far in excess of the amount he purchased from wholesale suppliers.

The scheme to defraud began in April 2004, with the last false claim having been filed in August 2006. Essien billed Medicaid for claims totaling approximately $1,782,861.88 and received payments for those claims totaling approximately $1,101,865.37.

Essien remains free on bond pending his sentencing hearing scheduled for May 14, 2010.

The investigation leading to the charges filed against Essien in April 2009 were the result of an investigation conducted by the FBI and the Texas Attorney General’s Medicaid Fraud Unit in Houston. Special Assistant United States Attorney Justo A. Mendez prosecuted the case.

Bank Robber Sentenced

February 25, 2010 - Dennis C. Pfannenschmidt, United States Attorney for the Middle District of Pennsylvania, announced today that a Hanover, Pennsylvania man charged with robbing six banks was sentenced last week by United States District Court Judge Christopher C. Conner. Judge Conner sentenced Mark Shane Herrick to a 170-month term of imprisonment followed by four years of supervised release. Additionally, Judge Conner ordered Herrick to pay $15,720.05 in restitution.

 
According to U.S. Attorney Pfannenschmidt, in May 2009, Herrick, age 33, was charged and pleaded guilty to a felony information charging six counts of bank robberies and three counts of Hobbs Act Robbery throughout Pennsylvania and Maryland. Those banks include: 
  • June 6, 2008 - Fulton Bank, Harrisburg, Pennsylvania;
  • June 7, 2008 - M&T Bank, Harrisburg, Pennsylvania;
  • June 13, 2008 - PNC Bank, Lower Macungie, Pennsylvania;
  • June 16, 2008 - PNC Bank, Hazleton, Pennsylvania;
  • June 19, 2008 - PNC Bank, Baltimore, Maryland; and
  • June 21, 2008 - PA State Bank, Harrisburg, Pennsylvania

During each robbery, Herrick possessed a tire iron/crow bar.

 
This case was investigated by the Federal Bureau of Investigation; United States Marshals Service; Pennsylvania State Police; Pennsylvania State Parole; and police departments from Baltimore County, Lower Paxton Township, Middlesex Township, Swatara Township, Susquehanna Township, and Upper Merion Township and was prosecuted by Assistant United States Attorney Daryl F. Bloom.

Two “Sovereign Citizens” Sentenced in Illegal Insurance Scheme

February 25, 2010 - SACRAMENTO, CA—United States Attorney Benjamin B. Wagner announced today that JAMES S. KALFSBEEK, 72, of Arbuckle, and DONNA JEAN ROWE, 59, of Lodi, were sentenced yesterday by United States District Judge Lawrence K. Karlton to terms of imprisonment of 10 years and four years, respectively. On June 11, 2009, both defendants were convicted by a federal jury of conspiracy, mail fraud, and money laundering in connection with a fraudulent insurance scheme. Both defendants were also ordered to pay restitution in an amount to be determined at a later hearing and to serve a term of supervised release after serving their prison sentences.

This case was the product of an extensive investigation by the Federal Bureau of Investigation and the California Department of Insurance.

According to Assistant United States Attorneys R. Steven Lapham and Russell L. Carlberg, who prosecuted the case, KALFSBEEK was the founder, president, and chairman of the board of Puget’s Sound Agricultural Society, Limited (PSASL), which operated from 1994 to 2002. While claiming not to be an insurance company and not to be selling insurance, PSASL nevertheless sold a product that for all intents and purposes was automobile insurance. For a lifetime membership fee of $500 and an additional lifetime fee of $250 per vehicle, PSASL agreed to pay accident claims involving the PSASL member. PSASL paid those claims by assessing its members after the fact for the money needed to pay claims. Between 1996 and 2002, many states, including California, where PSASL was based, issued cease and desist orders and other regulatory actions against PSASL for illegally engaging in the business of insurance. Two Canadian provinces also took regulatory action against PSASL.

KALFSBEEK and ROWE are self-avowed “sovereign citizens,” claiming that the United States and state governments are “alien corporations” with no authority over the “organic, Christian people.” They put their beliefs into action by operating PSASL completely outside of state insurance regulatory authorities, but they issued insurance identification cards through PSASL that purported to be “in compliance with all state law.” Against state law and public policy, PSASL’s “policies” excluded coverage if alcohol was involved. Also contrary to state law, they did not pay for pain and suffering associated with car accidents because they considered pain and suffering part of “God’s plan.”

The evidence at trial showed that, from 1994 through 2002, PSASL collected millions of dollars in fees. PSASL paid the smaller automobile insurance claims, but ignored large claims. In some cases PSASL members involved in accidents were sued or had to pay for the damages out of their own pocket. They also had their licenses suspended when it was determined that they did not have real insurance, and had to pay costs associated with getting their driving privileges restored, including paying higher insurance premiums because of the licenses’ suspension.

But by far the biggest victims were the innocent third parties who were involved in accidents with PSASL members. In a Michigan case, a man was killed and a woman was severely disabled in a single car accident in which a PSASL member was driving. That case resulted in a $20 million judgment against PSASL. The defendants “paid” the grieving families the $20 million judgment, plus $5 million in interest, with a bogus financial document called a “Bill of Exchange.” That document fraudulently purported to authorize the Secretary of the Treasury to pay $25 million to the families.

In a South Carolina case, a homeless man who was riding his bicycle was struck and severely injured by a PSASL member. PSASL paid the man approximately $6,000, but only after the injured man hired an attorney and secured a $25,000 judgment. PSASL’s meager payment was not even enough to cover the medical bills much less pain and suffering and future rehabilitative care.

“The loss in this case was by no means confined to the individuals who unwittingly purchased the defendants’ bogus insurance. Innocent third parties suffered grievous injuries for which they never received adequate compensation,” stated U.S. Attorney Wagner.

Two Charged in $4.5 Million Fraud

February 25, 2010 - Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced today that a federal grand jury in Cleveland, Ohio, returned an indictment against Thomas K. Fink, age 61, and Thomas C. Fink, age 35. Thomas K. Fink was charged with eight counts of mail fraud, and Thomas C. Fink was charged with 10 counts of mail fraud. The efendants are former residents of Ashtabula, Ohio.

The indictment alleges that in July 2005, Thomas K. Fink, then an investment advisor with AXA Advisors in Ashtabula, Ohio, left Northeast Ohio to start two investment businesses with his son, Thomas C. Fink, in Las Vegas, Nevada. The defendants solicited friends, family, and AXA clients to transfer their investments to the defendants’ new businesses. The defendants promised a conservative investment model, but instead Thomas C. Fink looted the client accounts to fund a motion picture called “Who’s Your Monkey,” and for his own use.

The indictment alleges further that from July 2005 through July 2008, the defendants sent numerous quarterly statements to their clients representing that account values were increasing despite the downturn in the market. Specifically, the indictment alleges that in January 2008, and April 2008, the defendants sent quarterly account statements to clients representing that their investment accounts had increased in value. The indictment alleges further that in July 2008, the defendants sent a letter to their clients stating that they were “still working on the calculations” for the previous quarter and that they intended to have the calculations finalized within the next few weeks. The indictment alleges that in truth and in fact, client money had already been diverted when the defendants sent the January, April and July, 2008 letters.

The indictment alleges further that Thomas K. Fink ceased working with his son in July 2008. However, as the indictment alleges, Thomas C. Fink sent a letter to clients in October 2008, representing that client account information was inaccessible due to an ongoing audit. In truth and in fact, there was no ongoing audit since Thomas C. Fink had already diverted client funds.

Approximately 25 investors, most from Ohio, have sustained losses of approximately $4.5 million.

United States Attorney Steven M. Dettelbach stated: “It is important, especially during these difficult financial times, to protect the public from financial crimes. This case represents our continued commitment to protecting the rights of investors and policing the financial markets.”

If convicted, the defendants’ sentence will be determined by the court after review of factors unique to this case, including the defendants’ prior criminal record, if any, the defendants’ role in the offense and the characteristics of the violations. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case is being prosecuted by Assistant United States Attorney Bridget M. Brennan after an investigation by the Painesville Office of the Federal Bureau of Investigation and the Cleveland Office of the United States Postal Inspection Service.

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.

Respiratory Therapist Charged with Producing Child Pornography

Admits to Sexual Contact with Children

February 25, 2010 - KANSAS CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced today that a respiratory therapist who sometimes worked in the pediatric unit at Kansas University Medical Center has been charged in federal court with producing child pornography and attempting to distribute child pornography over the Internet.

Michael D. Toal, 55, of Kansas City, Mo., was charged in a criminal complaint filed on Tuesday, Feb. 23, 2010, in the U.S. District Court in Kansas City. Toal had his initial court appearance before U.S. Magistrate Judge Sarah W. Hays this afternoon and remains in federal custody pending a detention hearing on Monday, March 1, 2010.

The federal criminal complaint alleges that Toal used a minor to produce child pornography on Aug. 2, 2009. According to an affidavit filed in support of the complaint, Toal told FBI agents that he sexually abused an 8-year-old child who was in his care at his house. While the victim was asleep, the affidavit says, Toal took sexually explicit photographs of the child with his digital camera and then loaded them onto his computer.

The federal complaint also charges Toal with attempting to distribute child pornography over the Internet on Aug. 10, 2009. According to the affidavit, an agent at the FBI’s Denver, Col., division conducted an investigation using peer-to-peer file-sharing software and downloaded images of child pornography that were available to be shared from Toal’s computer, which was using a similar software program.

Law enforcement officers interviewed Toal at his home earlier this month and seized his computer, which as later investigation revealed, contained a large quantity of child pornography, the affidavit says.

The government filed a motion today to keep Toal in federal custody without bond, alleging that he is a danger to the community. According to the motion for detention, Toal told agents that he inappropriately touched at least one child patient while working as a respiratory therapist. Toal has increased his access to children who are vulnerable, the motion says, by becoming a volunteer with Jackson County’s CASA (Court Appointed Special Advocate) program for abused and neglected children who are in the care and custody of the state.

The motion for detention also alleges that, because Toal faces a lengthy prison sentence if convicted, he is a flight risk. Under federal statutes, a conviction for producing child pornography carries a mandatory minimum sentence of 15 years in federal prison without parole, up to a sentence of 30 years in federal prison without parole.

Phillips cautioned that the charges contained in this complaint are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney Katharine Fincham. It was investigated by task force officers with the Federal Bureau of Investigation.

Project Safe Childhood
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.projectsafechildhood.gov/.

Kansas Cattleman Pleads Guilty to Bank Fraud

February 25, 2010 - KANSAS CITY, KN—Joseph C. Donohue, 70, Greeley, Kan., has pleaded guilty to one count of bank fraud, U.S. Attorney Lanny Welch said today. He also agreed to a monetary forfeiture judgment of more than $9 million.

In his plea, Donohue admitted he provided false information to Lyons State Bank in order to obtain loans for purchasing and feeding cattle. In November 2007, Donohue signed a promissory note to the bank for more than $7.6 million. To secure the debt, he granted the bank an interest in all livestock he owned and he agreed to provide quarterly inventory reports on his cattle.

In September 2008 he provided the bank a financial statement claiming he had cattle inventory of more than $18.2 million when in fact value of the cattle was approximately $3 million. In an inventory report dated Oct. 31, 2008, he claimed to have 13,267 head of cattle. The bank determined there were only 650 head of cattle to secure the loan.

Donohue also obtained loans from other lenders based on false financial statements. Farmers and Merchants State Bank in West Pointe, Neb., loaned him more than $3.2 million and Farmers State Bank in Garnett, Kan., loaned him more than $1 million.

Sentencing is set for June 14, 2010. He faces a maximum penalty of 30 years in federal prison and a fine up to $1 million. Welch commended the Federal Bureau of Investigation and Assistant U.S. Attorney Christine Kenney for their work on the case.

The Evolution of Criminal Antitrust Enforcement Over the Last Two Decades

February 25, 2010 - Over the last two decades the cartel enforcement landscape has dramatically changed in the United States and around the globe. In the early 1990's, the sanctions imposed in criminal cartel cases brought by the Antitrust Division of the U.S. Department of Justice were not sufficiently severe and our original Corporate Leniency Program was simply not producing cases. In the last two decades, the world has seen the proliferation of effective leniency programs, ever-increasing sanctions for cartel offenses, a growing global movement to hold individuals criminally accountable, and increased international cooperation among enforcers in cartel investigations.

The Antitrust Division has spent the last two decades building and implementing a "carrot and stick" enforcement strategy by coupling rewards for voluntary disclosure and timely cooperation pursuant to the Antitrust Division's Corporate Leniency Program with severe sanctions. In addition, the Antitrust Division utilizes all available investigatory tools to create a significant risk and fear of detection and prosecution for violators of U.S. antitrust laws. The seeds of this "carrot and stick" enforcement strategy were planted by the Antitrust Division in the mid-1990s and began to bear fruit over the next decade. Since the mid-1990, the Antitrust Division has uncovered and prosecuted dozens of international cartels, secured convictions and jail sentences against culpable U.S. and foreign executives, and obtained hefty corporate fines. In recent years, competition enforcers around the world have intensified their cartel enforcement efforts and achieved similar results.

Read On
http://www.justice.gov/atr/public/speeches/255515.htm

Bid Rigging Scheme Fails

FORMER EMPLOYEE OF FINANCIAL PRODUCTS AND SERVICES FIRM PLEADS GUILTY FOR ROLE IN BID-RIGGING AND FRAUD CONSPIRACIES INVOLVING PROCEEDS OF MUNICIPAL BONDS

February 25, 2010 - WASHINGTON — A former employee of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), a Beverly Hills, Calif.-based financial products and services firm, pleaded guilty yesterday for his participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced.

According to the charges filed yesterday in the U.S. District Court in Manhattan, Daniel Moshe Naeh, also known as Dani Naeh, of Israel, engaged in separate bid-rigging and fraud conspiracies with companies that provide a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Naeh also pleaded guilty to one count of wire fraud. According to the plea agreement, Naeh has agreed to cooperate with the ongoing investigation.

The department said in court documents that CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process primarily for contracts for the investment of municipal bonds proceeds. Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.

Naeh admitted that, as a part of the bid-rigging conspiracy, from as early as 1998 until at least November 2006, he and other co-conspirators designated in advance which co-conspirator providers would be the winning bidder for certain investment agreements and submitted or caused to be submitted to CDR intentionally losing bids. According to the court documents, kickbacks in the form of fees that were inflated or unearned were paid to CDR in exchange for assistance from Naeh and other CDR co-conspirators in controlling the bidding process and ensuring that certain co-conspirator providers won the bids they were allocated.

As a part of the fraud conspiracy, from as early as August 2001 until at least November 2006, Naeh and others gave a co-conspirator provider information about the prices, price levels or conditions in competitors' bids, a practice known as a "last look," which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, the co-conspirator provider won contracts at artificially determined price levels. In exchange for giving the provider information, CDR requested and received kickbacks from the provider and relied on the provider to submit intentionally losing bids when requested on other contracts.

On Oct. 29, 2009, CDR, along with its owner and president, David Rubin; former chief financial officer and managing director, Zevi Wolmark, also known as Stewart Wolmark; and vice president Evan Andrew Zarefsky, were indicted and charged with participating in bid-rigging and fraud conspiracies. The trial for CDR, Rubin, Wolmark and Zarefsky is scheduled to begin on Feb. 7, 2011.

The bid-rigging conspiracy with which Naeh is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The fraud conspiracy with which Naeh is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge with which Naeh is charged carries a maximum penalty of 20 years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charges announced today resulted from an ongoing investigation into the municipal bonds industry, which is being conducted by the Antitrust Division's New York Field Office, the FBI and IRS Criminal Investigation. The department is coordinating its investigation with the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

Drug Kingpins Fall

Treasury Sanctions La Familia Michoacana Leadership: Action Marks First Derivative Designation Since President Identified This Violent Drug Trafficking Organization Last Year

February 25, 2010 - WASHINGTON – The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today designated seven key leaders of the international drug trafficking organization La Familia Michoacana (La Familia) as Specially Designated Narcotics Traffickers (SDNTs). Today's designation targets two principal leaders of La Familia, Nazario Moreno Gonzalez ("El Chayo") and Jose de Jesus Mendez Vargas ("El Chango"), and five of their lieutenants. OFAC also designated as an SDNT one company owned or controlled by one of La Familia's lieutenants. Today's action, pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act), prohibits U.S. persons from conducting financial or commercial transactions with these individuals and entity and freezes any assets the designees may have under U.S. jurisdiction.

"Today's action targets the senior leadership of La Familia Michoacana, giving further effect to the President's April 2009 identification of this organization for sanctions," said OFAC Director Adam J. Szubin. "La Familia is one of Mexico's newest and most violent drug cartels. We will continue to aggressively pursue this dangerous organization and deny La Familia's leadership, businesses and operatives access to the U.S. financial system."

La Familia, identified by President Obama as a significant foreign narcotics trafficker in April 2009, is an extremely violent drug trafficking organization operating primarily in the State of Michoacán, Mexico. It is a compartmentalized organization heavily involved in narcotics trafficking, kidnapping, extortion, and other criminal activities. La Familia is known for its extreme form of brutal violence – to include execution-style killings and beheadings. Today's action is OFAC's first derivative designation against La Familia since the President identified it as a significant foreign narcotics trafficker.

Nazario Moreno Gonzalez, La Familia's spiritual leader, was indicted for drug trafficking in a U.S. district court in Texas in 2003, and Jose de Jesus Mendez Vargas is responsible for smuggling large shipments of methamphetamine and cocaine into the United States. OFAC also today designated five individuals working immediately below or on behalf of La Familia's principal leaders in Mexico, including Dionicio Loya Plancarte ("El Tio"), considered the current second-in-command, and Servando Gomez Martinez ("La Tuta"), another top leader of the organization believed to be responsible for the July 2009 murders of 12 Mexican federal police officers. OFAC also designated Enrique Plancarte Solis ("La Chiva"), Jose Arnoldo Rueda Medina ("La Minsa"), Nicandro Barrera Medrano, and trucking company Transportadora Purepecha S.A. de C.V, which is owned or controlled by Medrano.

Today's action is due in part to OFAC's cooperation with the Mexico Country Office of the Drug Enforcement Administration (DEA) and DEA's Special Operations Division and is part of ongoing efforts under the Kingpin Act to apply financial measures against significant foreign narcotics traffickers worldwide. Internationally, more than 500 businesses and individuals associated with 82 drug kingpins, 37 of which are based in Mexico, have been designated pursuant to the Kingpin Act since June 2000. Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

Former Quest Chief Financial Officer Found Guilty of Defrauding Company Out of $1 Million

February 25, 2010 - OKLAHOMA CITY, OK—Today, a federal jury in Oklahoma City has found DAVID GROSE, 56, of Edmond, Oklahoma, guilty of three counts of wire fraud stemming from a scheme to defraud Quest Energy Partners, L.P., out of $1 million, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.

“Corporate officers owe special fiduciary duties to their companies, to their investors, and to their employees,” stated U.S. Attorney Sanford C. Coats. “In this case, that fiduciary trust was violated by Mr. Grose solely for the sake of personal profit.” From 2004 to 2008, Grose served as the Chief Financial Officer for Quest Energy Partners, L.P. (“Quest”), a publicly-traded oil and gas exploration and production business based in Oklahoma City. Grose’s responsibilities included supervising Quest’s financial accounting and books, coordinating quarterly reviews and annual audits by outside auditors, certifying the accuracy of reports filed with the U.S. Securities & Exchange Commission (“SEC”), and ensuring that all employees complied with Quest’s internal ethics policies.

According to the evidence at trial, in the summer of 2008, Grose planned to make a $1 million personal investment in a hydrogen fuel technology company. He told the hydrogen fuel technology company that the investment would be funded with his own money. Instead, under the pretext of paying for the purchase of pipe, Grose wired approximately $1 million from Quest to a pipe supplier. Within minutes of the transfer, Grose contacted the pipe company to cancel the order and instructed the pipe company to wire the money to the hydrogen fuel technology company instead of returning the money to Quest. Evidence showed that Grose then caused the transaction to be documented on Quest’s financial records as payment for pipe but did not inform the accounting department he had cancelled the order. As a result of this scheme, Quest lost $1 million. The company cooperated with law enforcement in the investigation.

The trial lasted two days and the jury deliberated approximately one hour before finding Grose guilty on all counts of wire fraud.

At sentencing Grose faces up to 20 years in federal prison on each count and a fine of not more than the greater of twice the gross gain in this case, e.g., $2 million. A sentencing hearing will be set by the Court in approximately 90 days.

The investigation was conducted by the Western District of Oklahoma’s Financial Fraud Task Force, which is comprised of special agents from Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigative Division, and personnel from the U.S. Attorney’s Office. U.S. Attorney Coats thanked the Securities and Exchange Commission and the Oklahoma Department of Securities for their continuing coordination and assistance in the government’s investigation. This case was prosecuted by Assistant U.S. Attorney Jeb Boatman and U.S. Attorney Sanford C. Coats.

Defrauding American Red Cross

February 25, 2010 - NEW ORLEANS, LA—CHRISTY ALEXANDER, age 24, a resident of Hammond, LA, was charged in a one-count bill of information today with mail fraud relating to fraudulent applications she made to the American Red Cross for financial assistance during the aftermath of Hurricane Katrina, announced U.S. Attorney Jim Letten.

According to the bill of information, the American Red Cross made disaster assistance money of up to $1,565 available to those affected by the hurricanes of 2005 on a one-time only basis. The bill alleges that on three occasions between September 2005 and October 2005, ALEXANDER applied for and received disaster assistance funds from the Red Cross and based on these fraudulent applications, she obtained $2,830 from the American Red Cross that she was not entitled to.

If convicted, ALEXANDER faces a maximum term of imprisonment of twenty (20) years, a $250,0000 fine, restitution to the American Red Cross, and three (3) years of supervised release following imprisonment.

U.S. Attorney Letten reiterated that the bill of information is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.

The case was investigated by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Sharan E. Lieberman.

Missing Person Case Closed after 22 Years Thanks to Justice Department & ABC Television

By Tracy Russo

February 25, 2010 - In 1987 Paula Beverly Davis went missing from Kansas City, Missouri. She was 21, worked as a store clerk and had a 1-year old son. Later that year, police in Englewood, Ohio, found her remains but could not identify her. They called her Jane Doe, and buried her in a local graveyard.

Jump ahead to October 2009, when Davis’ younger sister, Stephanie Clack, was watching ABC’s “The Forgotten.” At the end of the show, ABC aired a public service announcement about a Justice Department Web site– www.NamUs.gov–designed to match records of missing persons with records from unidentified decedents. (“NamUs” stands for the National Missing and Unidentified Persons System.)

Ms. Clack started surfing www.NamUs.gov and found the record of a woman with tattoos that matched her sister’s tattoos. Authorities used DNA to confirm the match. Thanks to her sister’s search of NamUs and a television show’s public service announcement, Paula Davis’s remains are now going home. She will be buried next to her mother and grandmother in Kansas City.

NamUs is a free, online system. Medical examiners, coroners, law enforcement officials, the general public, families and loved ones can search www.NamUs.gov any time day or night from anywhere in the country—just as they may have searched newspapers or telephoned morgues looking for information. They are all part of the process, helping one another resolve cases involving missing persons and unidentified decedents.

A Bureau of Justice Statistics survey of the nation’s medical examiner and coroner offices found that in 2004 about half had no policy for retaining records (such as X-rays, DNA, or fingerprints) on unidentified human decedents.

The Department of Justice established NamUs to manage the overwhelming need for a central reporting system for unidentified human remains cases. The Web site was launched in 2007; it became fully operational in 2009. It is estimated that, nationwide, about 100,000 missing persons cases are active on any given day.

Wednesday, February 24, 2010

Former Hedge Fund Manager Arthur G. Nadel Pleads Guilty in Manhattan Federal Court to a Massive Ponzi Scheme

February 24, 2010 - PREET BHARARA, the United States Attorney for the Southern District of New York, announced that ARTHUR G. NADEL pleaded guilty today before United States District Judge JOHN G. KOELTL to 15 counts of securities fraud, mail fraud, and wire fraud.

According to the Complaint and Indictment previously filed in this case and statements made during NADEL's guilty plea:

From 1999 through January 2009, NADEL perpetrated a Ponzi scheme to defraud investors in six different investment funds (collectively the "Funds"). During the scheme, NADEL persuaded people to invest their retirement money and savings in the Funds by lying to them about his success in trading and inflating the value of the Funds. For example, NADEL claimed that his trading prowess resulted in consistent, double-digit yearly returns. In reality, NADEL repeatedly lost money and stole investor money to fund his lifestyle and several businesses, including a real estate project in North Carolina, his wife's flower shop, and his purchase of several private planes.

To further the scheme, NADEL created and caused others to create false and fraudulent client account statements and other documents showing fictitious positive returns consistent with the double-digit returns NADEL falsely claimed he achieved. Based in part on NADEL's false statements to investors and others, from 1999 through January 2009, nearly 250 people invested more than $397 million with the Funds. NADEL received tens of millions of dollars in management fees and performance incentive fees and, moreover, transferred and caused to be transferred millions of dollars in investor money in the Funds to accounts and entities that he owned and/or controlled. The investors in the Funds did not authorize NADEL to make these transfers, and NADEL failed to disclose them. As a result of NADEL's Ponzi scheme, investors suffered losses of approximately $162 million.

NADEL pleaded guilty to six counts of securities fraud, one count of mail fraud, and eight counts of wire fraud, and faces a maximum penalty of 20 years in prison on each of thecounts. For the securities fraud charges, NADEL faces a maximum fine of the greater of $5 million or twice the gross gain or loss from the offense. For the mail fraud and wire fraud charges, NADEL faces a maximum fine of the greater of $250,000, or twice the gross gain or less from the offense. In addition, NADEL admitted to allegations in the Indictment seeking forfeiture.

NADEL, 77, of Sarasota, Florida is scheduled to be sentenced by Judge KOELTL on June 11, 2010.

U.S. Attorney PREET BHARARA said, "Arthur Nadel cheated his victims out of hundreds of millions of dollars of their retirement money and savings by lying to them over and over again and claiming false returns and profits. Many of Nadel's victims were elderly and relied on the money that they invested in Nadel's funds for their retirement. While he deceived and impoverished others, Nadel funded a luxurious life for himself and his associates. Today's guilty plea is a significant step in our ongoing effort to bring justice to victims of investment fraud and Ponzi schemes."

Mr. BHARARA praised the investigative work of the Federal Bureau of Investigation and thanked the United States Securities and Exchange Commission for its assistance in the investigation of this case.

Assistant United States Attorneys REED M. BRODSKY and MARIA E. DOUVAS are in charge of the prosecution.

Former Employee of Financial Products and Services Firm Pleads Guilty for Role in Bid-Rigging and Fraud Conspiracies Involving Proceeds of Municipal Bonds

February 24, 2010 - WASHINGTON — A former employee of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), a Beverly Hills, Calif.-based financial products and services firm, pleaded guilty yesterday for his participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced.

According to the charges filed yesterday in the U.S. District Court in Manhattan, Daniel Moshe Naeh, also known as Dani Naeh, of Israel, engaged in separate bid-rigging and fraud conspiracies with companies that provide a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Naeh also pleaded guilty to one count of wire fraud. According to the plea agreement, Naeh has agreed to cooperate with the ongoing investigation.

The department said in court documents that CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process primarily for contracts for the investment of municipal bonds proceeds. Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.

Naeh admitted that, as a part of the bid-rigging conspiracy, from as early as 1998 until at least November 2006, he and other co-conspirators designated in advance which co-conspirator providers would be the winning bidder for certain investment agreements and submitted or caused to be submitted to CDR intentionally losing bids. According to the court documents, kickbacks in the form of fees that were inflated or unearned were paid to CDR in exchange for assistance from Naeh and other CDR co-conspirators in controlling the bidding process and ensuring that certain co-conspirator providers won the bids they were allocated.

As a part of the fraud conspiracy, from as early as August 2001 until at least November 2006, Naeh and others gave a co-conspirator provider information about the prices, price levels or conditions in competitors’ bids, a practice known as a "last look," which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, the co-conspirator provider won contracts at artificially determined price levels. In exchange for giving the provider information, CDR requested and received kickbacks from the provider and relied on the provider to submit intentionally losing bids when requested on other contracts.

On Oct. 29, 2009, CDR, along with its owner and president, David Rubin; former chief financial officer and managing director, Zevi Wolmark, also known as Stewart Wolmark; and vice president Evan Andrew Zarefsky, were indicted and charged with participating in bid-rigging and fraud conspiracies. The trial for CDR, Rubin, Wolmark and Zarefsky is scheduled to begin on Feb. 7, 2011.

The bid-rigging conspiracy with which Naeh is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The fraud conspiracy with which Naeh is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge with which Naeh is charged carries a maximum penalty of 20 years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charges announced today resulted from an ongoing investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS Criminal Investigation. The department is coordinating its investigation with the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.