Terrence Ezekiel Paulin Pleads Guilty in U.S. Federal Court

The United States Attorney’s Office announced that during a federal court session in Great Falls on June 7, 2012, before U.S. District Judge Sam E. Haddon, Terrence Ezekiel Paulin, a 47-year-old resident of Ashland, Kentucky, pled guilty to investment fraud. Sentencing has been set for September 14, 2012. He is currently detained.

In an offer of proof filed by Assistant U.S. Attorney Carl E. Rostad, the government stated it would have proved at trial the following:

During late 2007 or early 2008, Shawn Swor was a mortgage broker in Missoula. Swor’s business consisted, largely, of making hard money loans to clients who could not get loans through conventional banking means. Hard money lenders are lending companies offering a specialized type of real estate backed loan. Hard money lenders provide short-term loans (also called “bridge” loans) that provide funding based on the value of real estate that has been collateralized for the loan. Hard money lenders typically have much higher interest rates than banks because they fund deals that do not conform to bank standards.

At the time, in late 2007 and early 2008, Swor was looking into funding sources from a number of people, mostly over the Internet, who would contact him promoting investment ideas involving securities. Swor promoted himself as someone who could find sources of funds and link them together with people wanting to borrow money. He admitted during interviews with law enforcement that he had difficulty verifying the credibility of those holding themselves out to be viable funding sources.

One of the funding sources Swor met over the Internet in late 2007 was Paulin, who was also a hard money lender and broker. Swor started working with Paulin identifying the validity of different funding sources offered over the Internet. Paulin and Swor found several investment opportunities in securities programs they believed could be used to raise funds for the loans they were working on at the time. Swor and Paulin worked on this project for at least a month before it was determined most of the sources were not legitimate. Over the next couple of months, Paulin and Swor stayed in contact with each other as other opportunities arose.

When Dan Oaheyoh Two Feathers met Swor, Two Feathers claimed he knew several different ways to generate cash flow through the purchase and sale of securities in Europe; providing large rates of return for investors as well as the brokers and traders which could be used to funds the hard money loans both Swor and Paulin were working on. In February 2008, Two Feathers, Swor, and Paulin decided to start a business to offer investments in high yield investment opportunities using several different leveraged investment and securities programs. On February 26, 2008, Two Feathers, Swor, and Paulin formerly established and registered DTF Consulting Group as a Missoula, Montana company.

Two Feathers proposed using a large security, such as a Letter of Credit or a Note, which could be leased from a hedge fund, pension fund, or bank. Once the security was in hand, the concept was to borrow against the large security and those funds would be used to invest in a risk-free investment such as government securities. Two Feathers explained that he had connections in the world of international finance and international banking experience and could purchase securities at a discount and sell them in Europe at a premium. This would allow for additional profit margin on each transaction completed.

The DTF principals would solicit investors whose money would be used to secure the large security through a lease. Prospective investors would, in a short period of time, receive a substantial profit from buying the government securities at a discount and selling them at a premium.

In one particular instance, on or about February 20, 2008, Paulin, using the alias name of Terrence Sovereign, solicited a $10,000 investment in the DTF program from a woman in Florida, representing that the investment would produce a return of 100 percent within a few weeks. He told this investor that he was working with two partners, Dan Latham (the former surname of Two Feathers) and Swor. Paulin collected the investment proceeds in cash and provided the investor with personal checks as a means of assuring the investor of the safety of the investment in the leveraging scheme. Attempts to deposit the checks and recover the investment failed as Paulin had no funds in the account. There was no record of this money being deposited into the DTF account at Farmers State Bank in Victor, Montana, where the money from the scheme was often deposited.

Paulin manufactured a fraudulent letter of credit from Wachovia Bank in the amount of $1.5 billion to show potential investors that DTF had the necessary negotiable instrument available to make the investment trading program work. Paulin acknowledged to investigators that the document he created was fraudulent and that he knew it was fraudulent. Paulin claimed the fraudulent document was created at Two Feathers’ direction and request. Two Feathers advised investigators that it was Paulin’s idea and that he did not request or direct its creation, although he admitted knowing about the Letter of Credit. Paulin’s understanding was that the Letter of Credit was to be used to entice potential investors into DTF’s trading program. However, according to Paulin, Two Feathers started using the letter in other ways, including representation of the document as genuine to a real estate agent for the attempted purchase of property.

Paulin and Swor had a falling out with Two Feathers—after the realtor discovered that the Wachovia Bank Letter of Credit was bogus and turned it over to local law enforcement—and both stopped promoting the DTF scheme in June 2008.

The DTF promotion attracted eight victims. A secondary scheme was tailored more as an advanced fee scheme where the investor would pay money up front for a hard money loan. Three more victims paid the advanced fee on the promise that DTF could and would secure loan funds. The total loss for all 11 victims between February and June 2008 was approximately $800,000. The money, in whole or in part, was wired to the DTF account at Farmers State Bank in Victor, Montana, which was controlled by Two Feathers.

Of that amount—not including the $10,000 in cash received from the Florida victim—Paulin received $278,175 from Two Feathers.

Swor and Two Feathers pled guilty to federal charges and are awaiting sentencing.

Paulin faces possible penalties of 20 years in prison, a $250,000 fine, and three years’ supervised release.

The investigation was a cooperative effort between the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service.

Construction Giant Lend Lease (Bovis) Charged with Defrauding Clients in Three Separate Schemes and Will Pay Over $50 Million and Institute Comprehensive Reforms

Former Principal in Charge of Bovis’ New York Office Pleads Guilty to Fraud Charge, Faces up to 20 Years in Prison

Earlier today, the U.S. Attorney’s Office for the Eastern District of New York filed fraud charges against the construction firm Lend Lease (US) Construction LMB Inc. (formerly Bovis Lend Lease LMB Inc.) (“Bovis”) and James Abadie, the former principal in charge of Bovis’ New York office. Abadie pled guilty this morning in United States District Court to conspiring to commit mail and wire fraud by fraudulently overbilling Bovis’ clients for over a decade. Also this morning, Bovis entered into a deferred prosecution agreement with the U.S. Attorney’s Office for the Eastern District of New York and the New York County District Attorney’s Office in which Bovis admitted to fraudulently overbilling clients for over 10 years. Bovis also admitted defrauding two of its public clients by falsely misrepresenting the work performed by its minority business enterprise partners, thus fraudulently obtaining payments on lucrative contracts. The deferred prosecution agreement requires Bovis to pay up to $56 million in penalties to the federal government and restitution to victims and to institute far-reaching corporate reforms designed to eliminate future problems and enforce best industry practices.

The charges and dispositions were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Cyrus R. Vance, Jr., District Attorney, New York County; Janice K. Fedarcyk, Assistant Director in Charge, Federal Bureau of Investigation; Robert E. Van Etten, Inspector General, The Port Authority of New York and New Jersey, Office of the Inspector General; Brian D. Miller, Inspector General, General Services Administration, Office of the Inspector General; Robert L. Panella, Special Agent in Charge, Department of Labor, Office of Inspector General; and Rose Gill Hearn, Commissioner of the New York City Department of Investigation.

Bovis is one of the largest construction firms operating in New York City. Bovis provides construction, project management, and consulting services on large-scale public and private construction projects. Bovis is a U.S. subsidiary of the company Lend Lease Corporation Limited (“Lend Lease”), which, as of 2009, operated in over 40 countries in Asia and Europe, as well as in Australia and the United States. Bovis’s New York office is its largest. In 2008, Bovis employed over 1,000 people in the United States, with the majority working in the New York office.

The Overbilling Scheme

As alleged in the felony information filed in court today (the “Bovis Information”), Bovis intentionally and fraudulently billed clients, from at least 1999 to 2009, for hours that were not worked by labor foremen from Local 79 Mason Tenders’ District Council of Greater New York (“Local 79”). Bovis systematically added one to two hours of unworked overtime per day to the timesheets for labor foremen. Bovis also systematically completed and submitted timesheets falsely listing unworked hours as worked when labor foremen were absent for sick days, major holidays, and weeks of vacation. Bovis fraudulently billed its clients for this unworked time and, on public projects, falsely submitted certified payrolls, defrauding taxpayers. Finally, Bovis made extra, undisclosed lump sum and stipend payments to a select group of labor foremen and billed those payments to clients as well. The clients were unaware of these practices. Pursuant to the deferred prosecution agreement, Bovis has admitted all of the allegations in the Bovis Information.

As alleged in a separate felony information also filed in court today (the “Abadie information”), defendant James Abadie played a critical role in executing Bovis’s overbilling practices when he served as the principal in charge of Bovis’ New York office from 2002 to June 2009 and as the general superintendent at Bovis prior to 2002. As principal in charge, all aspects of project operations and union labor issues fell under Abadie’s supervision. As the general superintendent for Bovis, Abadie personally oversaw the day-to-day field operations on all projects and had extensive involvement with managing union labor. While in both positions, Abadie explicitly and fraudulently directed his subordinates to carry out the practice of adding unworked hours to labor foremen’s timesheets, knowing that these unworked hours were billed to clients who were unaware that they were the victims of fraud. Abadie pled guilty to the mail and wire fraud conspiracy charged in the Abadie information.

Abadie and Bovis employed the fraudulent overbilling scheme across the broad spectrum of Bovis’ projects in the New York metropolitan area, including some of the area’s most important, large-scale public and private construction projects. Affected projects included the United States Post Office/Bankruptcy Court in Brooklyn, New York; the Bronx Criminal Courthouse in the Bronx, New York; Grand Central Terminal; the Deutsche Bank building deconstruction in New York, New York; Citifield in Queens, New York; and the very United States Courthouse in which Bovis was charged and Abadie pled guilty this morning.

The Minority Business Enterprise Schemes

Bovis was also charged today with defrauding the Dormitory Authority of the State of New York (DASNY) with respect to the Minority Business Enterprise (MBE) requirements on the Bronx Criminal Courthouse construction project and the New Jersey Schools Development Authority (NJSDA) and its predecessor organizations with respect to MBE requirements on school construction projects. Earlier today, Bovis admitted engaging in these MBE fraud schemes.

MBE programs are affirmative-action programs designed to increase the participation of small construction firms and firms owned by women or minorities on public construction projects. New York and New Jersey set goals for the percentage of work to be awarded to MBEs on a particular project. In order to win bids on public projects, Bovis agreed to comply with the MBE program goals. The Bovis information filed today alleges that on two separate projects, Bovis falsely represented that certified MBEs were performing work and fraudulently counted that work towards its required MBE participation goals when Bovis, not the MBE, was actually performing that work.

The Bovis information alleges that in 2000, Bovis told DASNY, which had responsibility for the Bronx Criminal Courthouse construction project, that H.J. Russell & Company (HJR), an MBE, would perform 100 percent of Bovis’ general conditions contract (the “general conditions” contract included the infrastructure costs of the construction project not covered by the trade contracts, such as daily trash removal and operation of the elevators and hoists on the construction site, as well as certain union labor, including workers from Local 79) work that involved union labor, thereby substantially satisfying Bovis’s MBE requirements. Over the course of the project, Bovis falsely informed DASNY in writing every month that HJR was performing the general conditions contract work as promised. In reality, Bovis secretly performed the work itself by directly managing the union labor that was supposed to be employed and supervised by HJR and relegated HJR’s role to a mere pass-through, thereby fraudulently enabling Bovis to get false credit for compliance with its MBE obligations and get paid for its work on the project. Bovis placed many of its long-term union workers on HJR’s payroll, hired other union labor that was then placed on HJR’s payroll, supervised and directed the union workers itself, and made all important decisions. HJR’s only function with respect to the general conditions union labor work was to provide paychecks for work performed by, or at the direction of, Bovis personnel.

Similarly, in 2001, Bovis told the NJSDA and its predecessors that Imperial Construction Group Inc. and Imperial Architectural Group (collectively, “Imperial”) and Qualified Women/Minorities in Construction (QWIC) would satisfy Bovis’ obligation to have MBEs perform 25 percent of Bovis’ project management contract on the Abbott Schools Program in New Jersey. Over the course of the project, Bovis falsely informed the NJSDA in written progress reports that employees of these MBEs were performing work as Bovis had promised and the contract required, when in fact Bovis itself secretly performed this work and relegated the roles of the MBEs to mere pass-throughs. This fraud enabled Bovis to get false credit for compliance with its MBE obligations and to get paid for its work on the projects. During the course of the project, Bovis directed Imperial and QWIC to hire various individuals, some of whom were friends or relatives of Bovis employees. Some Bovis employees were also transferred to the MBEs’ payrolls. Although these employees received paychecks from the MBEs, their work was directed by Bovis, they had Bovis identification and business cards, and they often had little or no contact with the MBEs while working on the project. In March 2004, Bovis and Imperial entered into two “Staffing Secondment Agreements,” pursuant to which 14 Bovis employees were “transferred” to Imperial for a period of 10 to 12 months. As part of these contracts, the employees remained on Bovis’ payroll but were mischaracterized as employees of Imperial to improperly enable Bovis to count these employees toward its MBE obligations.

The Guilty Plea and Deferred Prosecution Agreement

Pursuant to the guilty plea entered this morning, the defendant James Abadie faces a maximum sentence of 20 years’ imprisonment and a fine of $250,000 or the greater of twice the gross gain or loss from the fraudulent conduct.

Pursuant to the deferred prosecution agreement filed in court today, Bovis has admitted and accepted responsibility for its crimes, has agreed to pay up to $56.6 million in penalties to the federal government and restitution to victims, has agreed to continue to cooperate with the government, and has agreed to institute far-reaching corporate compliance reforms. With respect to the financial aspects of the agreement, $40.5 million represents a penalty to be paid by Bovis to the federal government in three installments over two years; up to $13.6 million in restitution will be afforded to all victims of the overbilling scheme; and $2.5 million in restitution will be paid to the victims of the MBE schemes.

The deferred prosecution agreement also requires Bovis to institute comprehensive corporate reforms with respect to its billing practices and its participation in MBE programs. To begin, Bovis has created the position of ethics and compliance officer, as well as a regional risk and compliance committee, to oversee its corporate reforms and compliance with the agreement.

In order to ensure that only hours being worked are being recorded on timesheets and billed to clients, Bovis has revised its policies to require (1) that each individual worker certify the accuracy of all hours recorded on his or her timesheet; (2) multiple layers of supervisory review of the timesheets to verify the accuracy of the timesheets; and (3) maintenance of daily records for cross-referencing purposes, so as to independently verify the accuracy of the timesheets. To verify that the union timesheet recording and billing procedures are being followed at all levels, Bovis will maintain a full-time auditor in the New York office who will utilize site visits, spot audits and regular review of union hours.

In order to ensure compliance with MBE programs, Bovis will create a MBE liaison position based in the New York office whose function is to actively ensure that Bovis is meeting its federal, state, and local MBE obligations. The MBE liaison will regularly meet with federal, state, and local agencies to discuss the agencies’ expectations and implementation of the MBE programs on a project-by-project basis. Furthermore, the MBE liaison will play an active role in the process by which Bovis engages qualified MBEs and uses best efforts to verify that each MBE is capable of performing its subcontracts and provides a commercially useful function.

“Through this deliberate scheme of billing clients for work not done, Bovis deceived their customers and stole taxpayer dollars. They also abused a program—designed to benefit and train minority contractors—for their own profit motive. Today’s charges, guilty plea and settlement mark a significant step in our effort to eliminate fraud in the construction industry in New York City. Our investigation of the industry continues, and the resolution we reached today should send a very clear message,” stated United States Attorney Lynch. “Given the public nature of many of these projects, we must ensure that taxpayers get their money’s worth and that the industry complies with the law. The defense of ‘everyone does it’ will not be a shield against law enforcement.” Ms. Lynch expressed her grateful appreciation to the investigating agencies.

FBI Assistant Director in Charge Fedarcyk stated, “Today’s proceedings mark the culmination of a three-year investigation into a systemic pattern of audacious fraud by one of the world’s largest construction firms. The overbilling fraud affected city, state, and federal public building projects. If you are a New York City resident, Bovis indirectly swindled you on three different levels. Whether projects are publicly or privately funded, padding contracts and skirting the law are crimes. And we are watching.”

Port Authority Inspector General Van Etten stated, “I commend United States Attorney Loretta Lynch and her staff for spearheading this prosecution and thorough investigation that now brings this conspiracy out of the shadows and into the light. Bovis’s conduct, as outlined in the deferred prosecution agreement and information, has gone on for nearly a decade unchecked. Under-the-table deals with employees, at the cost of clients, that continue to plague the regional construction industry are simply unacceptable. This investigation reminds us how both the government and private sectors must remain vigilant in monitoring the conduct of contractors.

“Equally egregious was Bovis’ manipulation of minority and women-owned businesses. The goal of M/WBE programs is to provide valuable opportunities for smaller, disadvantaged businesses to gain market share, not to fill the coffers of multi-national corporations.”

“Today’s guilty plea by Mr. Abadie and the multi-million-dollar settlement by Bovis puts an end to a fraud scheme to overbill various construction contracts, including taxpayer-funded public works contracts throughout New York City, for bogus overtime hours by Bovis’ labor foremen. We will continue to work with our law enforcement partners to vigorously investigate such crimes related to the nation’s unions, workers, and public contracts,” said Special Agent in Charge Panella, New York Regional Office of the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.

The government’s case is being prosecuted by Assistant United States Attorneys Sarah Coyne and Stephen Meyer.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The Defendant:

Name: James Abadie

Age: 55

La Habra Man Who Became a Fugitive Convicted of Defrauding Elderly Couple in $5.5 Million Gold Mining Scheme; Also Faces Weapons Charges

SANTA ANA—A La Habra man who was convicted by a federal jury last Friday for defrauding an elderly couple in a $5.5 million gold investment scheme, and for absconding to avoid prosecution for the fraud, also faces new charges, announced United States Attorney André Birotte Jr. and Steven Martinez, Assistant Director in Charge of the FBI in Los Angeles.

At the conclusion of a trial that lasted four weeks in United States District Court in Santa Ana, California, a jury found John Arthur Walthall, 56, guilty of four counts of wire fraud and one count of failure to appear. On November 2, 2011, a federal grand jury in Santa Ana charged Walthall with firearms violations in connection with his unlawful possession of a gun while he was a fugitive.

During the recent trial, prosecutors presented evidence to establish that Walthall persuaded an elderly couple to invest $5.5 million in a partnership known as Advanced Recycling General Partnership (ARGP) during 2007. Walthall purportedly created the partnership to fund the extraction of gold from abandoned mines. In order to boost his credibility, Walthall told the couple he had conducted research on the gold mining process for 20 years and that they would earn a profit on their investment. Walthall also told the couple they would be in the position to authorize all expenses.

Prosecutors presented evidence to demonstrate how Walthall went about spending investor money for various personal items. In an effort to conceal the way in which he spent their investment, prosecutors argued, Walthall transferred the partnership funds to 27 separate bank accounts through which he spent the money, without the couple’s knowledge or approval, on a large number of personal items. For instance, Walthall used ARGP money to pay off his personal vehicles, pay off his credit cards, and pay part of a $250,000 personal loan he received in 2005 from a former fiancée.

Walthall set up a fake bank account which purported to process payments for a ”temporary secretarial services” company. Walthall then prepared checks in the amount of approximately $3200 per month from ARGP funds, noting “temporary secretarial services” in the memo section. The evidence showed that Walthall then deposited these checks into the fake bank account, only to immediately transfer the money to make court ordered alimony and child support payments.

Walthall used investment money to buy $2.5 million dollars of gold coins, gold bars, and gold dust without the approval of the investor couple. Additional personal expenses included a hyperbaric oxygen chamber estimated to be worth $60,000 and thousands of dollars worth of exercise equipment, health supplements, and other personal health items. The evidence showed that Walthall used investor funds to pay for his child’s rent payments and $10,000 tuition for a film school, as well as thousands of dollars on personal expenses for his family and friends.

Earlier this year, Walthall requested a postponement of his trial date based on a medical condition. Walthall, who was out on bail at the time, was observed carrying out normal activities in the following weeks, including walking and dining out with friends. In June, the court revoked Walthall’s bail and ordered him to appear in court for a hearing on June 27, 2011.

Walthall failed to appear for the June 27 hearing and fled the state of California. Walthall remained a fugitive for a short time and was arrested on July 26, 2011, in Mesquite, Nevada. A gun and a book entitled, “How to Be Invisible,” were found in Walthall’s possession when he was arrested. Walthall was subsequently indicted on charges of receiving the gun while under indictment, and possessing a gun while a fugitive. He is scheduled for trial on the weapons charges on January 3, 2011.

Evidence introduced during the trial revealed that, at the time of his arrest, Walthall was using the name Art Langford. Using the false name, Walthall obtained approximately $10,000 from an Orange County businessman and used part of that money to facilitate his escape. Investigators believe that Walthall may have defrauded others using the name Art Langford during this time.

Walthall faces a maximum statutory sentence of 130 years in prison when he is sentenced on March 5, 2012.

This investigation was conducted by the Federal Bureau of Investigation. The case leading to Walthall’s conviction was prosecuted by the United States Attorney’s Office, which is also handling the weapons charges.

Media Contact

FBI: 310 996-3343
U.S. Attorney’s Office: 213 894-6947

FBI Releases Bank Crime Statistics for Second Quarter of 2011

During the second quarter of 2011, there were 1,023 reported violations of the Federal Bank Robbery and Incidental Crimes Statue, a decrease from the 1,146 reported violations in the same quarter of 2010.1 According to statistics released today by the FBI, there were 1,007 robberies, 15 burglaries, one larceny, and two extortions of financial institutions2 reported between April 1, 2011 and June 30, 2011.

Highlights of the report include:

■Loot was taken in 91 percent of the incidents, totaling more than $7.8 million.

■Of the loot taken, 23 percent of it was recovered. More than $1.8 million was recovered and returned to financial institutions.

■Bank crimes most frequently occurred on Friday. Regardless of the day, the time frame when bank crimes occurred most frequently was between 9:00 a.m. and 11:00 a.m.

■Acts of violence were committed in 4 percent of the incidents, resulting in 31 injuries, one death, and three persons taken hostage.3

■Demand notes 4 were the most common modus operandi used.

■Most violations occurred in the Southern region of the U.S., with 373 reported incidents.

These statistics were recorded as of August 2, 2011. Note that not all bank crimes are reported to the FBI, and therefore the report is not a complete statistical compilation of all bank crimes that occurred in the U.S.

1 In the second quarter of 2010, there were 1,135 robberies, 11 burglaries, zero larcenies, and one extortion reported.

2 Financial institutions include commercial banks, mutual savings banks, savings and loan associations, and credit unions.

3 One or more acts of violence may occur during an incident.

4 More than one modus operandi may have been used during an incident.

Indictment: Adoption Fraud Targeted Would-Be Parents for Cash, Gifts

KANSAS CITY, KS—A Kansas City woman and a man who allegedly posed as her boyfriend have been indicted on charges of running an adoption scam in which she pretended to be pregnant with twins and willing to let them be adopted in return for money and gifts, U.S. Attorney Barry Grissom said today.

The indictment alleges the defendants defrauded 14 couples who spent money hiring attorneys and adoption agencies, purchasing airline tickets, booking hotel rooms, and making gifts they believed would pave the way for them to adopt.

Roxanne Janel Jones, 34, Kansas City, Mo., and Taj A. Isaiah, 28, Kansas City, Mo., are charged with one count of conspiracy and four counts of wire fraud. In addition, Jones is charged with three counts of mail fraud and one count of aggravated identity theft.

Jones initially was charged in a criminal complaint filed April 13, 2011, in U.S. District Court in Kansas City.

The indictment alleges Isaiah was an acquaintance of Jones who helped her with the scam by pretending at various times to be her husband, her boyfriend, or her landlord. The indictment alleges the defendants defrauded couples from California, Georgia, Massachusetts, Minnesota, New York and Tennessee, as well as Bonner Springs, Kan., Olathe, Kan., Shawnee, Kan., Leavenworth, Kan., and Florence, Kan.

In one case, the indictment alleges, Jones contacted American Adoptions, an adoption agency in Overland Park, Kan., claiming to be pregnant with twin boys and willing to give them up for adoption. Jones told the company’s adoption specialist she needed help with rent and groceries. As a result, a couple in Minnesota wired $16,265 to an escrow account in Kansas City and the adoption agency began drawing from the account to make payments to Jones.

In another case, the indictment alleges, a California couple flew to Kansas City where they took Jones and Isaiah to dinner and bought Jones massages, a haircut, groceries, and meals. When Jones sent them texts to say the twins had been born and could be picked up at the nursery at KU Medical Center, the hospital told the couple there was no record of Jones giving birth. When Jones tried to renew the talk of adoption, she told the couple at various times she had been diagnosed with a brain tumor and she had been injured in a car accident.

Upon conviction, the crimes carry the following penalties:

■Conspiracy: A maximum penalty of 20 years in federal prison and a fine up to $1 million.

■Wire fraud: A maximum penalty of 20 years in federal prison and a fine up to $1 million on each count.

■Mail fraud: A maximum penalty of 20 years in federal prison and a fine up to $1 million on each count.

■Aggravated identity theft: A mandatory two years consecutive to other sentences and a fine up to $250,000.

The Overland Park Police Department and the U.S. Secret Service investigated. U.S. Attorney Barry Grissom and Assistant U.S. Attorney Chris Oakley are prosecuting.

OTHER INDICTMENTS

A grand jury meeting in Kansas City, Kan., also returned the following indictments:

Craig Williams, 21, is charged with one count of possession with intent to distribute crack cocaine and one count of unlawful possession of a firearm in furtherance of drug trafficking. The crimes are alleged to have occurred April 28, 2011, in Kansas City, Kan.

If convicted, he faces a penalty of not less than five years and not more than 40 years in federal prison and a fine up to $5 million on the possession with intent to distribute charge, and a penalty of not less than five years and not more than life and a fine up to $250,000 on the firearms charge. The Kansas City, Kan., Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Assistant U.S. Attorney Scott Rask is prosecuting.

Jeffrey Whitmore, 37, Kansas City, Kan., is charged with one count of possession with intent to distribute marijuana, one count of possession with intent to distribute crack cocaine, one count of unlawful possession of a firearm in furtherance of drug trafficking and one count of unlawful possession of a firearm after a felony conviction. The crimes are alleged to have occurred July 20, 2011, in Kansas City, Kan.

Upon conviction, the crimes carry the following penalties:

■Possession with intent to distribute marijuana: A maximum penalty of five years in federal prison and a fine up to $250,000.

■Possession with intent to distribute crack cocaine: A maximum penalty of 20 years and a fine up to $1 million.

■Unlawful possession of a firearm in furtherance of drug trafficking: Not less than five years and not more than life and a fine up to $250,000.

■Unlawful possession of a firearm after a felony conviction: A maximum penalty of 10 years and a fine up to $250,000.

The Kansas City, Kan., Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Assistant U.S. Attorney Sheri McCracken is prosecuting.

John B. Holmes, 34, is charged with one count of unlawful possession of a firearm in furtherance of drug trafficking, one count of possession with intent to distribute marijuana within 1,000 feet of Olathe North High School, one count of unlawful possession of a firearm after a felony conviction, and one count of maintaining a residence for the purpose of drug trafficking. The crimes are alleged to have occurred March 17, 2011, in Johnson County, Kan.

Upon conviction the crimes carry the following penalties:

■Unlawful possession of a firearm in furtherance of drug trafficking: Not less than five years and not more than life and a fine up to $250,000.

■Possession with intent to distribute within 1,000 feet of a school: Not less than one year and not more than 10 years and a fine up to $50,000.

■Unlawful possession of a firearm after a felony conviction: A maximum penalty of 10 years and a fine up to $250,000.

■Maintaining a residence in furtherance of drug trafficking: Not less than one year and not more than 40 years and a fine up to $1 million.

The Olathe Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Assistant U.S. Attorney Sheri McCracken is prosecuting.

Jimmy A. Barnes, 41, Iola, Kan., and Stacy Lynn Burdine, 42, Iola, Kan., are charged with two counts of distributing methamphetamine and one count of possession with intent to distribute methamphetamine. In addition, Barnes is charged with one count of unlawful possession of a firearm in furtherance of a drug trafficking crime, one count of unlawful possession of a sawed off shotgun, and one count of unlawful possession of a firearm while a user of controlled substances. The crimes are alleged to have occurred in January and February 2011 in Allen County, Kan.

Upon conviction, the crimes carry the following penalties:

■Distributing methamphetamine: A maximum penalty of 20 years and a fine up to $1 million.

■Possession with intent to distribute methamphetamine: A maximum penalty of 20 years and a fine up to $1 million.

■Unlawful possession of a firearm in furtherance of drug trafficking: Not less than 10 years and not more than life and a fine up to $4 million.

■Unlawful possession of a sawed off shotgun: A maximum penalty of 10 year and a fine up to $250,000.

■Unlawful possession of a firearm by a user of controlled substances: A maximum penalty of 10 year and a fine up to $250,000.

The Kansas Bureau of Investigation investigated. Special Assistant U.S. Attorney Aaron Smith is prosecuting.

Leon Smith, 54, is charged with one count of distributing child pornography and one count of possessing child pornography. The crimes are alleged to have occurred in June and November 2010 in Leavenworth, Kan.

If convicted, he faces a penalty of not less than five years and not more than 20 years and a fine up to $250,000 on the distribution charge, and a maximum penalty of 10 years and a fine up to $250,000 on the possession charge. The FBI investigated. Assistant U.S. Attorney Scott Rask is prosecuting.

Raul Zapata-Martinez, 35, a citizen of Mexico, is charged with unlawfully re-entering the United States after being deported. He was found July 20, 2011, in Wyandotte County, Kan.

If convicted, he faces a maximum penalty of 20 years without parole and a fine up to $250,000. Immigration and Customs Enforcement’s Homeland Security Investigations investigated. Assistant U.S. Attorney Jabari Wamble is prosecuting.

Manuel Amparan-Mendoza, a citizen of Mexico, is charged with three counts of possession and use of false documents and three counts of aggravated identity theft. The crimes are alleged to have occurred at various times in 2008, 2010 and 2011 in Sedgwick County, Kan.

If convicted, he faces a maximum penalty of 10 years without parole and a fine up to $250,000 on each false document charge and a mandatory two years consecutive to any other sentence on each aggravated identity theft count. The Wichita Police Department and Immigration and Customs Enforcement’s Homeland Security Investigations investigated. Assistant U.S. Attorney Brent Anderson is prosecuting.

Laura Velasquez-Galvan, 26, a citizen of Mexico, is charged with one count of possession of false documents, three counts of aggravated identity theft, one count of making a false statement on an I-9 Employment Eligibility Verification form, and one count of misusing a Social Security card. The crimes are alleged to have occurred in 2007 in Saline County, Kan.

Upon conviction, the crimes carry the following penalties:

■Possession of false documents: A maximum penalty of 10 years in federal prison without parole and a fine up to $250,000.

■Aggravated identity theft: A mandatory two years in prison to run consecutively to any other sentence on each count and a fine up to $250,000.

■False statement on an I-9 form: A maximum penalty of five years without parole and a fine up to $250,000.

■Misusing a Social Security number: A maximum penalty of five years without parole and a fine up to $250,000.

The Salina Police Department and Immigration and Customs Enforcement’s Homeland Security Investigations investigated. Assistant U.S. Attorney Brent Anderson is prosecuting.

Michael E. Best, 46, Scammon, Kan., is charged with one count of distributing Hydrocodone within 1,000 feet of a public school and one count of possessing Hydrocodone within 1,000 feet of a public school. The crimes are alleged to have occurred in June and July 2011 in Cherokee County, Kan.

If convicted, he faces a penalty of not less than one year and not more than 20 years without parole and a fine up to $1 million on each count. The Cherokee County Sheriff’s Department and the Kansas Bureau of Investigation investigated. Assistant U.S. Attorney Brent Anderson is prosecuting.

Larry L. Lyons, 57, Wichita, Kan., is charged with one count of fraudulently receiving Social Security Disability Insurance benefits. The crime is alleged to have occurred Dec. 20, 2010, in Sedgwick County, Kan.

If convicted, he faces a maximum penalty of five years without parole and a fine up to $250,000. The Social Security Administration - Office of Inspector General and the Kansas Department of Revenue investigated. Assistant U.S. Attorney Brent Anderson is prosecuting.

In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.